×Latest Case Laws on Income Tax by various Income Tax Appellate Tribunals in India
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10-01-2020, Maa Saraswati Gyan Mandir, Section 11(1)(a), Tribunal Kolkata
The captioned appeal filed by the revenue, pertaining to assessment year 2012-13, is directed against the order passed by the Commissioner of Income Tax (Appeal)-25, Kolkata, in appeal no. Ld. CIT(A), Kolkata-25/10121/2015-16, which in turn arises out of an assessment order passed by the Assessing Officer u/s 143(3) of the Income Tax Act, 1961 (in short the ‘Act’) dated 27/03/2015.
2. The grounds of appeal raised by the revenue are as follows:
1. That on the facts and circumstances of the case as well as law, the Ld. CIT(A) has erred in granting relief to the assessee on account of Depreciation amounting to Rs. 2,84,67,351/-.
2. That on the facts and circumstances of the case as well as law, claim of depreciation onassets for which the acquisition cost to the assessee is nil, allows the assessee to enjoy double deduction.
3. That on the facts and circumstances of the case, the Ld. CIT(A) has erred in considering capital gain of Rs. 8,40,000/- on sale of cars to be qualified for exemption u/s. 11(1 A) of the Income Tax Act, 1961 ignoring that the sale proceeds was not utilized to acquire new assets as required in the provision, instead sale proceed was deducted from the block of fixed assets in a case where cost of acquisition of ail fixed assets is considered as nil after Exemption u/s. 11(1)(d) of the Income Tax Act, 1961.
4. That on the facts and circumstances of the case, the Ld. CIT(A) has erred in allowing administrative and establishment expenses" of Rs 3,54,12,977/- in computation for determination of quantum of a cumulation u/s. 11(1)(a) of the I. T. Act, 1961.
5. That on the facts and circumstances of the case the Ld. CIT(A) has erred in allowing to set off of earlier loss of Rs. 6,04 16,031/- against the principles that loss is negative profit and when profit is exempted, loss is also exempted.
6. That on the facts and circumstances of the case, the Ld. CIT(A) has erred in allowing loss of Rs. 1,14,75,323/ from the business of running school bus and loss of Rs. 20,56,394/- from r nning of hostel qualified for exemption u/s. 11(4A) of the Income Tax Act, 1961 ignoring that no separate account was submitted along with the return of income as required in the provision.
7. That the appellant craves for leave to amend, alter, modify, substitute, add or abridge and/or rescind any or all of the grounds of appeal during any stage of appeal.
3. Ground nos. 1 and 2 raised by the revenue relates to grant of relief to the assessee on account of depreciation amounting to Rs. 2,84,67,351/-.
4. Brief facts qua the issue are that during the assessment proceedings, the AO noticed that assessee trust, in the course of its activities, acquired different assets, which were purchased with the surplus funds available. The entire expenditure incurred for acquisition of capital assets was treated as application of income for charitable purposes under section 11(1)(a) of the Act, in the respective years in which such assets were procured.
In addition to this, assessee trust in its computation of income and expenditure account had claimed depreciation amounting to Rs.2,84,67,351/- as application of income. Therefore, the AO was of the view that the practice so followed by the assessee has resulted into double deduction. That is, when acquisition of assets is treated as application of income for charitable purposes, the value of assets stands fully written off, and over and above, if depreciation is allowed, the same will result in double deduction of capital expenditure leading to violation of the provisions of section 11(1) of the Act, therefore, AO disallowed the depreciation claim of Rs.2,84,67,351/-.
5. On appeal, ld CIT(A) deleted the addition. Aggrieved, by the order of the ld. CIT(A), the revenue is in appeal before us.
6. We heard both the parties and carefully gone through the submission put forth on behalf of the assessee along with the documents furnished and the case laws relied upon, and perused the fact of the case including the findings of the ld CIT(A) and other materials brought on record. Learned DR for the Revenue
submitted before the Bench written submissions, the same is not being reproduced in this order for the sake of brevity. The sum and substance of the written submissions filed by ld DR is that the ld CIT(A) has erred in granting relief to the assessee on account of Depreciation amounting to Rs. 2,84,67,351/-, as the claim of depreciation on assets for which the acquisition cost to the assessee is nil, allows the assessee to enjoy double deduction, which is not permitted under the Act. The ld DR further submitted that section 11(6) of the Act, inserted in this finance Act, put the debate to rest. Section 11(6) of the Act clearly stated that claim of depreciation would not be allowed if the cost of the asset is taken as application, therefore, the addition made by the AO should be sustained. On the other hand, ld Counsel for the assessee defended the order passed by the ld CIT(A).