M.V.A.TRUST,CHENNAI vs. ITO, CHENNAI

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ITA 1024/CHNY/2017Status: DisposedITAT Chennai16 April 2018AY 2012-133 pages

In favour of the assessee: the assessee's appeal was allowed. From the AI summary of this appeal.

AI SummaryAllowed

What did the Tribunal hold?

The Tribunal held that a charitable institution eligible for exemption under Section 11 is entitled to claim depreciation for arriving at its net income. Following the Apex Court's decision, the disallowance was set aside.

What were the facts?

The assessee, a charitable trust, claimed depreciation on fixed assets. The Assessing Officer disallowed this claim, stating it would amount to double deduction as the cost was already claimed as application of income. The CIT(A) confirmed this disallowance.

What were the issues?

Whether a charitable institution claiming exemption under Section 11 can claim depreciation on fixed assets.

Which sections of the Income-tax Act were involved?

Section 11,Section 143(3)

AI-generated summary — verify with the full judgment below

Cases cited in this judgment(1)Show list

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Income Tax Appellate Tribunal, ‘A’ BENCH, CHENNAI

Before: SHRI N.R.S. GANESAN & SHRI A.MOHAN ALANKAMONY

Hearing: 16.04.2018

आदेश / O R D E R

Per A. Mohan Alankamony, AM:- This appeal by the assessee is directed against the order passed by the learned Commissioner of Income Tax (Appeals)-17, Chennai, dated 01.03.2017 in for the assessment year 2012-13 passed U/s.250(6) r.w.s. 143(3) of the Act.

1.

2 The assessee has raised several grounds in its appeal however the crux of the issue is that the Ld.CIT(A) has erred in Ld.AO who had disallowed the assessee’s claim of depreciation on fixed assets on the ground that it would amount to double deduction.

3.

The brief facts of the case are that the assessee is a Trust registered U/s.12A(a) of the Act, filed its return of income for the assessment year 2012-13 on 27.09.2012 declaring gross receipts of Rs.47,83,691/- and admitting total income as ‘Nil’ after claiming exemption U/s.11 of the Act. The case was selected for scrutiny as per Board’s guidelines and notice U/s. 143(2) of the Act was issued on 23.09.2013 and finally the assessment order was passed U/s.143(3) of the Act on 19.03.2015 wherein the Ld.AO rejected the assessee’s claim of depreciation on fixed assets amounting to Rs.24,84,684/- by holding that the assessee is not eligible to claim depreciation on the fixed asset, the cost of which has been claimed as application of income and thereby assessed the taxable income of the assessee at Rs.40,66,137/-.

4.

On appeal the Ld.CIT(A) confirmed the order of the Ld.AO by agreeing with his view.

5.

At the outset we find that the issue is decided in favour of the assessee by the Hon’ble Apex Court in the case CIT vs. Rajasthan & Gujarati Charitable Foundation, Pune reported in 89 taxmann.com 127 wherein it was held that the assessee though charitable institution eligible for the benefit of Section 11 of the Act would be entitled to avail the claim of depreciation for arriving at its net income. Therefore following the ratio laid down by the Hon’ble Apex Court in the case cited supra, we hereby direct the Ld.AO to allow the claim of depreciation on the eligible asset. It is ordered accordingly.

6.

In the result, the appeal of the assessee is allowed.

Order pronounced on the 16th April, 2018 at Chennai.

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