Case Law Details
Annaimullai Educational and Social Service Trust Vs ITO (ITAT Chennai)
Admittedly, the assessee is a trust but it is not registered. It got registered u/s.12AA of the Act by CIT (Exemptions), Chennai only on 11.07.2018. The registration is effective from assessment year 2018-19. Hence in the relevant assessment year 2017-18, the assessee is not a registered trust u/s.12AA of the Act. Admittedly, the assessee is running an educational institute and its gross receipt is to the tune of Rs.2,11,38,336/-. The AO while framing assessment allowed administration expenses of Rs.1,85,97,333/- but he disallowed depreciation, which ultimately was confirmed by CIT(A) only on one reason that depreciation cannot be allowed u/s.32 of the Act, as the assessee is not carrying on any business. From the facts, it is clear that the assessee is running educational institute and its gross receipts are to the tune of Rs.2,11,38,336/-. It means that the assessee is engaged in the business and it has been assessed as AOP. Once the assessee is assessed as an AOP and no exemption has been allowed u/s.11 of the Act, the entire receipts are to be assessed as business receipt and consequently, depreciation has to be allowed. In view of the above, I’m of the view that the assessee is entitled for the claim of depreciation in this year i.e., Assessment year 2017-18. Hence, I direct the AO to allow depreciation as claimed by assessee after verifying the facts. In term of the above, the appeal of the assessee is allowed.
FULL TEXT OF THE ORDER OF ITAT CHENNAI
This appeal by the assessee is arising out of the order of the Commissioner of Income Tax (Appeals), National Faceless Appeal Centre (NFAC), Delhi in Appeal No. NFAC/2016-17/10089724 dated 04.11.2022. The return of income was processed and intimation u/s.143(1) of the Income Tax Act, 1961 (hereinafter the ‘Act’) was issued by the Deputy Commissioner, Income Tax, CPC, Bangalore for the assessment year 2017-18 vide order dated 31.03.2019.
2. The only issue in this appeal of assessee is as regards to the order of CIT(A) confirming action of the CPC, Bangalore disallowing depreciation amounting to Rs.25,11,323/- u/s.143(1) of the Act.
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