Podar Literacy and Education Trust Vs DCIT (ITAT Mumbai)
Summary: The Mumbai Bench of the Income Tax Appellate Tribunal allowed the appeal of Podar Literacy and Education Trust against the order dated 19.05.2025 passed by the Commissioner of Income Tax (Appeals)-47, Mumbai, confirming a penalty of ₹37,61,672/- levied under section 270A of the Income-tax Act, 1961. The Tribunal held that the essential foundation for levy of penalty under section 270A was absent because the assessee’s returned and assessed income remained Nil and the disallowance of depreciation did not result in any taxable income, reduction of a declared loss or conversion of loss into income. The order was pronounced on 09.12.2025.
The assessee was a public charitable trust registered under section 12AA(1)(b)(i) and approved under section 10(23C)(vi) of the Act. For the assessment year under consideration, it filed its return declaring total income at Nil. A search under section 132 and survey under section 133A were conducted on the Podar Education Group on 09.01.2018, pursuant to which the assessee filed a return under section 153A, again declaring Nil income.
The assessment was completed under section 143(3) read with section 153A vide order dated 27.12.2019, determining total income at Nil. During the assessment, however, the Assessing Officer disallowed depreciation of ₹2,19,21,165/- claimed by the assessee. The disallowance was based on section 11(6), as the acquisition cost of the relevant assets had already been treated as application of income in earlier years. The provision restricts a further depreciation claim where the acquisition cost of the asset has already been claimed as application of income. TaxGuru has also discussed the operation of section 11(6) in relation to charitable trusts in its Income Tax Exemptions for registered charitable & religious Trust reference.
