SINDHU EDUCATIONAL SOCIETY,CHENNAI vs. ITO, CHENNAI

This appeal by the assessee is directed against the order passed by the Ld. Commissioner of Income Tax (Appeals)-17, Chennai dated 31.03.2017 in for the assessment year 2012-13 passed U/s.250(6) r.w.s. 143(3) of the Act.

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

The brief facts of the case are that the assessee is a Society registered U/s.12A(a) of the Act, filed its return of income for the assessment year 2012-13 on 18.09.2012 declaring gross receipts of Rs.8,53,08,055/- and admitting total income of Rs.Nil after claiming exemption U/s.11 of the Act. The case was selected for scrutiny under CASS and notice U/s. 143(2) of the Act was issued on 06.08.2013 and finally the assessment order was passed U/s.143(3) of the Act on 31.03.2015 wherein the Ld.AO rejected the assessee’s claim of depreciation on fixed assets amounting to Rs.50,14,609/- and assessed the taxable income of the assessee at Rs.50,08,266/-. The Ld.AO was of the view that under the provisions of Section 11 of the Act, only the actual expenditure expended can be treated as application of income and notional expenditure such as depreciation cannot be considered as application of income.

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

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