AURELIA HOUSING CO-OPERATIVE SOCIETY LTD. ,KOLKATA vs. ITO, WARD-49(4), KOLKATA. , KOLKATA
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Income Tax Appellate Tribunal, “SMC” BENCH, KOLKATA
Before: DR. MANISH BORAD, HON’BLE & SHRI PRADIP KUMAR CHOUBEY, HON’BLE
PER DR. MANISH BORAD, ACCOUNTANT MEMBER :
The present appeal is directed at the instance of the assessee against the order of the National Faceless Appeal Centre (hereinafter the “ld. CIT(A)”) dt. 22/08/2023, passed u/s 250 of the Income Tax Act, 1961 (“the Act”) for Assessment Year 2017-18. 2. None appeared on behalf of the assessee. On the previous occasion when the case was fixed for hearing on 07/02/2024 and 23/01/2024, the assessee sought adjournment. Today, there is no appearance. We, therefore, decide to adjudicate the appeal on the basis of available record and hearing the ld. D/R.
The sole issue involved in the instant appeal is the disallowance of depreciation claimed of Rs. 33,69,260/-. Facts in brief are that the 2 Assessment Year: 2017-18 Aurelia Housing Co-perative Society Ltd. assessee is a co-operative society and declared Nil income for Assessment Year 2017-18 in the return filed on 30/01/2018. Case selected for limited scrutiny through CASS for the reason that “large deduction claimed under section 57 (Deduction against income from Other Sources”. After serving the valid notice u/s 143(2) and 142(1) of the Act, the ld. Assessing Officer asked the assessee to explain the large deduction claimed u/s 57 and more particularly depreciation being claimed at Rs.33,69,260/-. In reply, the assessee merely made general submission stating that depreciation is a legitimate claim and is part of audited books but no details were filed. The ld. Assessing Officer on observing that assessee society has showed income towards maintenance charges to the tune of Rs. 6,72,172/-. No other business activity is being carried out. Depreciation has been claimed under the head income from other sources but no details have been filed. Considering this aspect, the ld. Assessing Officer disallowed the depreciation of Rs.33,69,260/- and assessed income at Rs.10,84,098/-.
Aggrieved the assessee preferred appeal before the ld. CIT(A) challenging the said addition but again general submissions were filed but no details were provided about the calculation and the usage of assets for business purposes.
Now, the assessee is in appeal before this Tribunal.
Apart from filing the appeal documents and statement of facts and grounds of appeal, no other details/paper book has been filed. On the other hand, vehemently argued supporting the order of the lower authorities.
We have heard the ld. D/R and perused the record placed before us. Disallowance of depreciation at Rs.33,69,260/- claimed under the 3 Assessment Year: 2017-18 Aurelia Housing Co-perative Society Ltd. head “income from other sources” is in dispute before us at the end of the assessee. We observe that the assessee is a co-operative society and it provides services to its members who resides in the housing complex. It is claimed that activities are mutuality in the eyes of law. The claim by the assessee in its written submission filed before the ld. CIT(A) is that the assessee barred to give services other than to its members and cannot generate profit because one cannot do business with himself. We further note that in the income tax return, under the schedule OS, relevant to income from other sources, deduction u/s 57 of the Act has been claimed for depreciation at Rs.33,69,260/-. Now, Section 57 of the Act, provides for the deductions which can be claimed against the income under the head “income from other sources”. For the sake of convenience, Section 57 of the Act is reproduced below:- “Deductions.
The income chargeable under the head "Income from other sources" shall be computed after making the following deductions, namely :— (i) in the case of dividends, or interest on securities, any reasonable sum paid by way of commission or remuneration to a banker or any other person for the purpose of realising such dividend or interest on behalf of the assessee; (ia) in the case of income of the nature referred to in sub-clause (x) of clause (24) of section 2 which is chargeable to income-tax under the head "Income from other sources", deductions, so far as may be, in accordance with the provisions of clause (va) of sub-section (1) of section 36; (ii) in the case of income of the nature referred to in clauses (ii) and (iii) of sub- section (2) of section 56, deductions, so far as may be, in accordance with the provisions of sub-clause (ii) of clause (a) and clause (c) of section 30, section 31 and sub-sections (1) and (2) of section 32 and subject to the provisions of section 38; (iia) in the case of income in the nature of family pension, a deduction of a sum equal to thirty-three and one-third per cent of such income or fifteen thousand rupees, whichever is less. Explanation.—For the purposes of this clause, "family pension" means a regular monthly amount payable by the employer to a person belonging to the family of an employee in the event of his death; (iii) any other expenditure (not being in the nature of capital expenditure) laid out or expended wholly and exclusively for the purpose of making or earning such income;
4 Assessment Year: 2017-18 Aurelia Housing Co-perative Society Ltd. (iv) in the case of income of the nature referred to in clause (viii) of sub-section (2) of section 56, a deduction of a sum equal to fifty per cent of such income and no deduction shall be allowed under any other clause of this section: Provided that no deduction shall be allowed from the dividend income, or income in respect of units of a Mutual Fund specified under clause (23D) of section 10 or income in respect of units from a specified company defined in the Explanation to clause (35) of section 10, other than deduction on account of interest expense, and in any previous year such deduction shall not exceed twenty per cent of the dividend income, or income in respect of such units, included in the total income for that year, without deduction under this section. Explanation.—[Omitted by the Finance Act, 1988, w.e.f. 1-4-1989.]”
Perusal of the above Section, indicates that an assessee is entitled to claim depreciation as provided u/s 32(ii) of the Act if the assessee declares income from other sources u/s 56(2)(ii) &(iii) of the Act, which relates to the following income:-
“56. (1)……………………… (2) In particular, and without prejudice to the generality of the provisions of sub- section (1), the following incomes, shall be chargeable to income-tax under the head "Income from other sources", namely :—…….. …….. (ii) income from machinery, plant or furniture belonging to the assessee and let on hire, if the income is not chargeable to income-tax under the head "Profits and gains of business or profession"; (iii) where an assessee lets on hire machinery, plant or furniture belonging to him and also buildings, and the letting of the buildings is inseparable from the letting of the said machinery, plant or furniture, the income from such letting, if it is not chargeable to income-tax under the head "Profits and gains of business or profession";
Now, examining the facts available on record and submissions filed before the lower authorities, we notice that the assessee had not furnished any details about the fixed assets used by it for the purpose of business, no details have been filed for any income having been earned as provided u/s 56(2)(ii) & (iii) of the Act. Further we note that 5 Assessment Year: 2017-18 Aurelia Housing Co-perative Society Ltd. the assessee is claiming that it is not running any activity for earning profits which means that the assessee is a non-profit making organisation. Also we note that after claiming the depreciation the assessee has declared net loss of Rs.22,85,162/- but for claiming such depreciation audited financial statements are not filed, purpose of acquiring the assets and whether they have been used for the purpose of business has not been explained before the lower authorities and even before us. Only source of revenue is from maintenance charges. All these facts indicates that assessee is either not engaged in regular business or the assessee does not have necessary details to justify the claim of depreciation made under the head “income from other sources” which could have been claimed only if the assessee had declared income u/s 56(2)(ii) & (iii) of the Act. Under these given facts and circumstances, we fail to find any infirmity in the finding of the ld. CIT(A) and uphold the same. The effective ground/s raised by the assessee are dismissed.
In the result, appeal of the assessee is dismissed. Order pronounced in the Court on 5th June, 2024 at Kolkata. (PRADIP KUMAR CHOUBEY) ACCOUNTANT MEMBER Kolkata, Dated 05/06/2024 *SC SrPs Assessment Year: 2017-18 Aurelia Housing Co-perative Society Ltd. आदेश क" "ितिलिप अ"ेिषत/Copy of the Order forwarded to : 1. अपीलाथ" / The Assessee
""यथ" / The Respondent 3. संबंिधत आयकर आयु" / Concerned Pr. CIT 4. आयकर आयु" अपील ( ) / The CIT(A)- 5. िवभागीय "ितिनिध ,आयकर अपीलीय अिधकरण, कोलकाता/DR,ITAT, Kolkata, 6. गाड" फाई/ Guard file.
आदेशानुसार/ BY ORDER,
