SINDHU EDUCATIONAL SOCIETY,CHENNAI vs. ITO, CHENNAI

PDF · subscribers
ITA 1168/CHNY/2017Status: DisposedITAT Chennai27 February 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, following the Apex Court's decision in CIT vs. Rajasthan & Gujarati Charitable Foundation, held that charitable trusts are entitled to claim depreciation for arriving at their net income. The Assessing Officer was directed to grant the benefit of depreciation.

What were the facts?

The assessee, a registered educational society, claimed exemption under Section 11. The Assessing Officer disallowed depreciation on fixed assets, treating it as notional expenditure. The assessee appealed the CIT(A)'s confirmation of this disallowance.

What were the issues?

Whether depreciation on fixed assets is allowable as an application of income for a charitable institution claiming exemption under Section 11.

Which sections of the Income-tax Act were involved?

Section 11,Section 143(3),Section 250(6)

AI-generated summary — verify with the full judgment below

Cases cited in this judgment(1)Show list

Detected automatically from the text. Citations are also linked where they appear in the judgment. The count shows how many other judgments on BharatTax rely on the same authority.

Income Tax Appellate Tribunal, ‘B’ BENCH, CHENNAI

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

Hearing: 27.02.2018

आदेश / O R D E R

Per A. Mohan Alankamony, AM:-

1.

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.

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 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.

3.

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.

4.

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

Section 11 of the Act would be entitled to avail the claim of depreciation for arriving at its net income. However the Ld.DR vehemently argued in support of the orders of the Ld.Revenue Authorities. After hearing both sides, respectfully following the decision of the Hon’ble Apex Court cited supra, we hereby direct the Ld.AO to grant the benefit of depreciation to the assessee while arriving at its income.

5.

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

Order pronounced in the open court on the 27th February, 2018 at Chennai.

More judgments on Section 11

All 7,190 judgments and leading authorities on Section 11 →

Recent GST High Court judgments

Search GST case law →