TaxTMI 
TaxTMI 
TaxTMI 
2023 (4) TMI 813
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....of the Act without properly appreciating the facts and evidences available on record. 2.2 The ld. CIT(A) seriously erred in law as well as on the facts of the case in completely ignoring the factual assertion made before the AO as also before him that the appellant never claimed the cost of acquisition of the related fixed assets as application of income. Neither in the relevant previous years nor in any the earlier previous years. This fact, neither having been considered nor having been rebutted by the authorities below, it is binding upon the ld. CIT(A) to have allowed the claimed amount of depreciation of Rs. 54,63,625/- for the first time on the acquisition of capital asset, the cost of which has never been claimed. The claim of depreciation of Rs. 54,63,625/-, so denied being contrary to the provisions of law and facts, the same may be allowed in full. 3. Rs. 1,33,01,256/-: Alternatively, and without prejudice to above the ld. CIT(A) seriously erred in law as well as the facts of the case even denying/declining to accept and allow the alternate claim being that the entire cost of the acquisition of capital assets incurred during the year be allowed as application of incom....
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.... Therefore, a show-cause letter was issued on 12/11/2018 vide No. IBA/AST/F/143(3)/(SCN)/20/18- 19/1013576014(1), the relevant portion of which is as under- "You have claimed depreciation in the I&E account at Rs 54,63,625/-, In the absence of documentary evidence to prove that the capital expenditure on fixed assets was not claimed as application of income in the year of acquisition or later, the same is not allowable in view of section 11(6) of I.T. Act, 1961. If you wish to state anything on the above proposed completion of assessment proceedings, the same may please be furnished by 16/11/2018. 3.3. However, nothing has been submitted against the proposed completion of assessment proceedings. This clearly shows that the assesse has no objection in the proposed disallowance of depreciation. Therefore, taking into account the position of law provided in section 11(6) which states that ""(6) In this section where any income is required to be applied or accumulated or set apart for application, then, for such purposes the income shall be determined without any deduction or allowance by way of depreciation or otherwise in respect of any asset, acquisition of which has been claim....
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.... before this tribunal on the grounds raised here in above para 2. To support the various grounds so raised by the assessee, ld. AR appearing on behalf of the assessee has placed their written submission which is extracted in below; "The Assesse is an AOP/ Trust (Society) under Income Tax Act,1961 and e-filed his Return of Income declaring NIL income for the A.Y. 2016- 17 on 13.10.2016. The case of the assessee Society was selected for scrutiny under CASS. Accordingly, notice u/s 143(2) dated 27/06/2017 was issued and served upon the assessee. Consequent to change of incumbent, notice u/s 142(1) was issued and served upon the assessee calling for certain details/information through e-portal. In response to the above mentioned notices, required details/information were submitted by the assessee in e-assessment portal which have been examined. The Society is engaged in providing education and registered under Rajasthan Societies Registration Act, 1958 vide No. 710/ Jaipur/1998-99 (PB1). The Society is also registered u/s 12AA(1)(b) of I.T. Act 1961 by the Commissioner of Income tax, Jaipur vide letter No. CIT/Sec 12A(a) /85/10/99-2000/9771 dated 23/12/1999 (PB 2). During the asses....
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....rrent year. 2.1 Disallowance of depreciation bad in law: At the outset it is submitted that the subjected amount of depreciation of Rs.54,63,625/- has been claimed with reference to the opening balances of various assets and also on those, which were purchased, during the year totaling to Rs.1.33 crore as shown in the depreciation chart (PB 8- 9), which was submitted to the AO also along with the ROI. Thus, the subjected depreciation has been computed with reference to the various assets which were acquired by the assessee in previous years. Notably however, the expenditure incurred for acquisition of such capital assets, in the earlier years was never treated as application income for charitable purposes u/s 11(1)(a) of the Income Tax Act, 1961. Neither the opening balance of the cost of earlier assets were claimed as an application of income in the past nor the cost of acquisition of the new assets during the year at Rs.1.33 crores was treated as application of income, which fact is evident from the computation of total income and the ROI (PB 3-5). In support of contention of this fact, a reference may be made to the computation of total income and depreciation chart of vario....
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....0B (PB 10-11), and from the preceding years computation of total income from AY's 2009-10 to 2015-16, it is evident that the cost of such assets, were not (always) claimed as application of income in the earlier year/s to reach the benchmark of 85% in as much as the revenue expenditure including depreciation itself used to be more than 85% the assessee never required the help of capital expenditure. (This is except A.Y. 12-13 wherein a small amount of cost of fixed assets of Rs.3,34,043/- was claimed as application by our side due to clerical mistake to bring the figure of the application up to 85% (PB 25). At the same time however, huge amount of depreciation of Rs.25,47,076/- was not claimed as per the practice in the past and in the later years. Whereas, in the depreciation chart such amount of depreciation was deducted and the resultant closing WDV was taken in the later years meaning thereby, on one hand no depreciation was claimed but at the same time the WDV was reduced hence benefit of deferred claimed was also not availed by the assessee. For this minor amount of Rs.3,34,043/- , need not be disallowed). The ld. CIT(A) however, didn't apply its mind on these submissions....