TaxTMI 
TaxTMI 
2020 (4) TMI 745
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.... 4. That the appellant craves leave to add, to alter, amend, modify, substitute, delete & for rescind all or any of the ground of appeal on or before the final hearing if necessity so arises." 3. The issue raised in ground No.1 & 2 is against the order of Ld. CIT(A) confirming the order of AO in disallowing the assessee's claim under section 35 of the Act of Rs. 1,05,00,000/-. 4. The facts in brief are that the AO during the course of assessment proceedings received information of bogus donation from ACIT-12(3)(1), Mumbai vide letter No.ACIT Cir- 12(3)(1)/survey 2016-17 dated 20.09.2016 wherein it was intimated that assessee company had given donation to Matravaini Institute of Experimental Research Education, Kolkata. During the course of assessment proceedings, the AO on the perusal of profit & loss account and computation of income observed that assessee has claimed deduction under section 35 of the Act amounting to Rs. 60 lakh on account of donation given to Matravaini Institute of Experimental Research Education. The AO also noted that the CBDT vide its letter F.No.203/11/2015/ITA.II dated 24.08.2016 has ordered for withdrawal of notification issued under section 35(1)(ii)....
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....e donation and the existence of the donee, if the transaction was genuine. Considering all the facts brought on record by the AO, it can be safely inferred that the donation was bogus. 4.4.2 In her submissions which is reproduced above, the AR of the appellant submitted that the appellant was not aware of any wrongdoing on the part of the donee. The AR of the appellant contended that the donation is evidenced by a valid receipt. On going through the receipt (copy enclosed as Annexure - 1), I find that the receipt has been doctored. I find that the digit '2' has been inserted in the serial number of the receipt and the serial number has been changed. Therefore, the receipt is not valid. In absence of a valid receipt and in view of the facts mentioned herein above, I uphold the disallowance made by the AO. In the result, grounds of appeal No. 1 & 1.1 are dismissed." 6. After hearing both the parties and perusing the material on record, we observe that in this case the assessee has given donation of Rs. 60 lakhs during the year to Kolkata based research institute named Matravaini Institute of Experimental Research Education. The said institute was registered as eligible ins....
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....e case of DCIT vrs. Maco Corporation (I) Pvt. Ltd. in ITA No. 16/Kol/2017 dated 14.03.18 for AY 2013-14. 7. Apart from this, Ld. AR had also placed on the decisions of Hon'ble Supreme Court in the case of CIT vs Chotatingrai Tea reported in (2003) 126 Taxman 399 (SC) dated 29.10.2002 and State of Maharashtra vs Suresh Trading Company reported in (1998) 1998 taxmann.com 1747 (SC) dated 7.2.1996 which are squarely applicable to the facts of the instant case before us. The ratio decidendi of the said judgements are not being reproduced herein for the sake of brevity. In any case, we find that the provisions of section 35(1)(ii) of the Act vide its Explanation reproduced hereinabove clearly proves that the donor (i.e assessee herein) cannot be affected due to subsequent withdrawal of recognition with retrospective effect. Therefore, respectfully following the provisions of the Act and the decisions of the Coordinate Benches of ITAT as mentioned above and in order to maintain judicial consistency and judicial discipline, we apply the same findings which are applicable mutatis mutandis in the present case. Therefore, we direct the AO to grant deduction u/s 35(1)(ii) of the Act to the....
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....d and simultaneously directed the AO to reduce the claim of depreciation by Rs. 8,81,157/- under section 38(2) of the Act. 11. After hearing both the parties and perusing the material on record, we observe that in the assessee's own case the identical issue has been decided by the co-ordinate bench of the Tribunal in ITA No.703/M/2018 A.Y. 2013-14 wherein the issue was restored to the file of the AO. The operative part is reproduced as under: "6. We have considered rival contentions and perused the material on record including cited case laws. We have observed that assessee is engaged in the business of trading in chemicals & dyes, intermediate & commission agents. We have observed that assessee, inter-alia, has assets being immovable properties in its "Block of Assets' viz. Building, as defined u/s. 2(11) of the 1961 Act which consisted at the beginning of the previous year, six immovable properties owned by assessee. The assessee during the previous year under consideration purchased two new immovable properties while one immovable property was sold during the previous year under consideration. Thus, undisputedly, assessee owns in all seven immovable properties as at the end o....
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....erty' , on which the assessee has set up claim for allowability of depreciation u/s 32 citing justification that since they form part of Block of Assets viz. Building as defined u/s 2(11) and hence depreciation u/s 32 ought to be allowed irrespective of fact that these properties were never used for purposes of business of the assessee for the entire year under consideraion . With respect to two immovable properties acquired during the year under consideration and which were let out on rent, a fresh plea is now raised before the Bench for the first time by learned counsel for the assessee by making statement before the Bench that these two new immovable properties acquired during the previous year under consideration were in-fact used for business purposes initially by the assessee as godowns for its business purposes before being let out by assessee on rent in previous year under consideration itself. These two newly acquired immovable properties are now claimed by assessee of being put to use as business assets for godwon of the assessee for the purposes of business of the assessee before it was let out on rent and now Prayers are made to set aside and restore this matter to the ....
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....e by learned counsel of the assessee, we are of the considered view that this plea of the assessee of business user of these two newly acquired immovable properties for business purposes as godown for assessee's business during the previous year under consideration before being let out on rent need verification by AO and the matter need to be set aside and restored to the file of the AO for framing of fresh de-novo assessment after considering explanations/evidences filed by the assessee during said de-novo proceedings before the AO. This is now important for assessee to demonstrate with credible, cogent and clinching evidences before the AO to prove that newly acquired immovable properties were used for business purposes of the assessee as godown during the year under consideration before being let out on rent. This is a fact finding exercise which could only be done after necessary verifications of the facts by the AO. We have also observed that Section 38(2) of the 1961 Act clearly stipulates that even in case of Block of Assets depreciation shall be restricted to a fair proportionate basis on assets having regard to the user of such asset for purposes of business or profession ....
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....acquired properties over succeeding years. The assessee is also required to demonstrate whether these properties continued to be let out on rent in succeeding years or were used for own business purposes in later year. The AO is to consider totality of the surrounding circumstances to arrive at conclusion as to whether fresh claim set up by assessee as to user of these two immovable properties for godown purposes in previous year under consideration before being let out on rent was a genuine and bonafide claim or is a frivolous claim set up in an act of desperation . Thus, under these circumstances and in the interest of justice, we are inclined to restore the matter back to the file of the AO for framing of denovo determination of the issue on merits in accordance with law keeping in view our aforesaid directions/discussions. The assessee shall be allowed by AO to file evidences/explanations in its defence in set aside proceedings which shall be admitted by AO in the interest of justice and then adjudicated on merits in accordance with law. We clarify that all the contentions are kept open . Needless to say that proper and adequate opportunity of being heard shall be provided by A....
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.... assessee has declared its income from rent from letting out of these two house properties which were acquired in earlier years under the head 'Income from House Property' which falls under Chapter IV-C of the 1961 Act containing Section 22 to 27. The assessee will be entitled for deductions as are stipulated u/s 22 to 27 under Chapter IV-C of the 1961 Act while computing Income from House Property chargeable to tax. This chapter IV-C of the 1961 Act does not provide for depreciation on immovable properties as one of deductions from income earned by assessee from letting out of such house property. Section 32 of the 1961 Act provides for depreciation and falls under Chapter IV-D which concerns itself with computation of income from Profits or Gains from Business or Profession. Reference is drawn to decision of Mumbai-tribunal in the case of DCIT v. Godrej Properties & Investments Limited (2005) 93 ITD 308(Mumbai) and Rolta Holding & Finance Corporation Limited v. DCIT reported in (2015) 153 ITD 6 (Mum-trib.), to support above proposition . Thus, there is no question of allowing any deduction as depreciation u/s 32 from rental income on letting out of these house properties for the ....
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....ermits the same. It is well settled that every year is an independent unit and merely because depreciation was allowed earlier by Revenue erroneously does not mean that the same will continued to be allowed in this year also. Allowing depreciation u/s 32 of the 1961 Act on these two let out properties which are distinct, independent and separately identifiable properties, on the grounds that they form part of Block of Asset , will lead to taking concept of Block of Asset to limits of absurdity , keeping in view peculiar factual matrix prevailing in the instant appeal and doctrine of supervening impossibility of business usage of these properties . There is admittedly no business user of these two properties by assessee for its business for the entire year under consideration as well for earlier years. The concept of Block of Asset cannot be stretched to an extent where it leads to an absurdity. Reference is drawn to observation of Lordships in the case of Oswal Agro Mills Limited(supra) wherein Lordships observed in para 21 observed in context of passive user of the assets as under: "21. We feel that counsel for the Revenue is right in their submission. In the instant case, the....
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....that said Barge Jay II never ceased to be business asset of the tax-payer. In the instant case before us, the two house properties may at some point of time several years ago was used for business of the assessee but for last several years , these properties were let out income thereof offered for tax under the head 'Income from House Properties'. The assessee manifested its intention of change of user from business to that of giving these properties on rent for longer period of time wherein doctrine of supervening impossibility had set in preventing business user of these properties for the purposes of business of the assessee. Similar is the case of Ansal Properties(supra), wherein the Hon'ble Delhi High Court was not seized of the matter concerning change of user of the assets by the taxpayer. Thus, so far as these two house properties which were acquired in earlier years and were let out on rent from years including year under consideration , income thereof was offered for taxation by assessee under the head 'Income from House Property' , no depreciation can be allowed u/s 32 as there is no business user of these two properties by assessee for the entire year as well for earlie....