TaxTMI 
TaxTMI 
TaxTMI 
2025 (11) TMI 331
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.... ITA No.1179/Ahd/2025 3. The brief facts of the case are that the assessee is a registered charitable Trust under Section 12A of the Act run by the State Government of Gujarat. Its main activities are to diffuse knowledge in the various fields of energy and thereby to deal with the problems caused on account of rapid depletion of non-renewable resource. The assessee had filed its return of income for the A.Y. 2017-18 on 27.10.2017 declaring total income of Rs. 6,09,65,540/-. The case was selected for scrutiny and the original order under Section 143(3) of the Act was passed on 20.12.2019 at total income of Rs. 9,35,55,487/-, wherein addition of Rs. 3,25,89,950/- was made on account of expenses out of earlier year's accumulation as application of income. Thereafter, the Ld. CIT(Exemption) had set aside the assessment order under Section 263 of the Act to examine the following two issues: - 1) Impairment loss arising out of revaluation of assets amounting to Rs. 9,35,16,377/-. 2) Claim of abnormal loss of Rs. 1,07,10,358/- arising out of write off of spares. The Assessing Officer had passed a fresh assessment order under Section 143(3) r.w.s. 263 of the Act on....
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.... 5. Your Appellant reserve the right to add, alter, amend and/or withdraw any of the above Grounds of Appeal." 6. Shri Sanjay R. Shah, Ld. AR of the assessee explained that the assessee had debited Rs. 9,35,16,377/- to the Profit & Loss Account on account of book value of the assets (Wind Turbine Generators) written off due it to having become non-functional. He explained that the assessee had set up Wind Turbine Generators which had suffered heavy damage in the cyclone that hit Saurashtra coastal line on 09.06.1998 and that the generators were non-functional thereafter. The assessee had taken up the matter with the Ministry of New & Renewable Energy (MNRE) for disposal of Wind Turbine Generators and its spares, as those were setup with the assistance of MNRE in early nineties. The MNRE had granted approval to the assessee on 18.04.2017 for decommissioning of the demonstration wind farm and disposal of the non-performing assets. The Ld. AR submitted that as per the certificate of the Chartered Accountant, the written down value of the non-performing assets was assessed to 'zero', and, therefore, an amount of Rs. 9,35,16,377/- was debited to the Income & Expenditure accoun....
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....part from this business income, the assessee had also claimed deduction under Section 11 of the Act in respect of voluntary contribution in the form of "Grants from Government" and "Other donations", which were applied for charitable purpose. It is found that the assessee had disclosed total voluntary contribution of Rs. 1,17,18,89,144/- during the year which was applied towards charitable purpose and no taxable income was reported in this respect. From the disclosure as made by the assessee in the return of income, it is evident that the business income of Rs. 6,09,65,537/- disclosed in the return was not subject to deduction under Sections 11 & 12 of the Act. Therefore, the contention of the assessee that the general provisions for allowability of expenses applicable to business income should not be applied, where income is computed under Section 11 and 12 of the Act for a public charitable trust, is found to be misleading. The assessee had not claimed any deduction u/s. 11 or 12 of the Act in respect of business income earned by it. Therefore, the reliance of the assessee on various judicial pronouncements in respect of its contention that the claim in respect of impairment of a....
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....t is evident from above Notes that the amount of Rs. 9,35,16,377/- debited in the Income & Expenditure Account as impairment of assets was actually fixed assets written off during the year as scrap. The balance of spares amounting to Rs. 1,07,10,358/- debited to the account as abnormal loss, was also on account of fixed assets only. These claims pertaining to the fixed assets were clearly capital in nature. The assets were acquired in the nineties and the assessee had already claimed depreciation thereon, till the time they were operational. The assessee did not claim any depreciation since the time they were damaged in the cyclone, as they were no longer in use. As per the provisions of the Act, any asset on which depreciation has been claimed by the assessee, cannot be claimed as deduction as revenue expenditure. The assessee was required to adjust the written down value of the "fixed assets written off" in the "Block of Assets" only. These losses could not have been claimed as business expense under the provisions of the Act. Even the Auditor had certified that the impairment of loss of Rs. 9,35,16,377/- was required to be written down by creating depreciation fund against the f....
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....iled by the appellant as well as on wrong assumption of facts that the quantum appeal is not filed and without affording opportunity to the Appellant to file submissions on merits of the case, and thus, passing the order in violation of principles of natural justice. Based on the facts and circumstances of the case mentioned above, the order levying the penalty under Section 270A is legally unsustainable and therefore, the order passed by the learned CIT(A) ought to be quashed and penalty of Rs. 7,40,73,908/- confirmed by the learned CIT(A) be deleted. 3. Even on merits of the case, the learned CIT(A) failed to appreciate that the learned Assessing Officer has not specified any limb u/s. 270A(9) due to which he alleges that there was misreporting of income and levies penalty for underreporting of income as a consequence of misreporting of income as envisaged u/s. 270A(8), and thus, levies penalty at the rate of 200%. It is submitted that without recording finding as to for which default u/s. 270A(9), the case of the Appellant is construed as that of misreporting of income, the penalty levied u/s. 270A at the rate of 200% for underreporting of income as a consequen....
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....r had levied penalty for "under-reporting of income which is in consequence of misreporting thereof". As per the provisions of Section 270A(7) of the Act, penalty is required and levied at the rate of 50% for underreporting of income. However, in the case of misreporting of income, the penalty is imposed at the rate of 200% of the underreported income. In the present case, the Assessing Officer had computed the penalty at the rate of 200%. Thus, the penalty was imposed in the present case for misreporting of income and not for underreporting of income. As per the provisions of Section 270A(9) of the Act, misreporting of income is attracted in the following cases :- (9) The cases of misreporting of income referred to in sub-section (8) shall be the following, namely:- (a) misrepresentation or suppression of facts; (b) failure to record investments in the books of account; (c) claim of expenditure not substantiated by any evidence; (d) recording of any false entry in the books of account; (e) failure to record any receipt in books of account having a bearing on total income; and (f) failure to report any international tra....