Case Law Details
Government Tool Room and Training Centre Vs ITO (ITAT Bangalore)
The recent case of Government Tool Room and Training Centre vs. ITO before the ITAT Bangalore delves into a critical taxation issue regarding the treatment of depreciation income versus deferred grant income under Section 11 of the Income Tax Act, 1961. The appeal, arising from the CIT(A)’s decision, highlights the importance of accurate application and adjudication in taxation matters.
Detailed Analysis: The appellant, a Trust registered under section 12A of the Act, filed its return of income for the Assessment Year 2021-22, declaring Nil income. However, during scrutiny, the Assessing Officer (AO) disallowed a substantial amount claimed as depreciation, stating it as not an allowable expense under Section 11. Despite various notices and opportunities, the appellant failed to provide sufficient evidence to justify the claim.
The CIT(A) upheld the AO’s decision, emphasizing the appellant’s failure to substantiate its case despite ample opportunities. The dismissal of the appeal by the CIT(A) further complicated the matter.
However, before the ITAT Bangalore, the appellant argued that depreciation was not claimed as application of income since the corresponding deferred grant income was also included in receipts under Section 11. This contention, if proven, would nullify the effect of both receipts and depreciation on income determination.
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