Gujarat Energy Development Agency Vs DCIT (Exemption) (ITAT Ahmedabad)
Trust Loses Deduction, Wins Penalty Battle – ITAT Clarifies Law on 270A; Capital Write-Off Not Deductible, But No Misreporting
Gujarat Energy Development Agency, a State Government charitable trust registered u/s 12A, declared business income of ₹6.09 crore & also claimed exemption u/s 11 on voluntary grants applied for charitable purposes. In original assessment u/s 143(3), certain accumulation expenses were disallowed. Later, CIT(E) invoked revision u/s 263 directing re-examination of impairment loss on wind turbines of ₹9.35 crore & abnormal loss of spares ₹1.07 crore. AO in the fresh order u/s 143(3) r.w.s 263 disallowed the entire ₹10.42 crore, & CIT(A) confirmed.
Before Tribunal, Assessee contended that windmills were destroyed long back, decommissioned with MNRE approval & impairment/ write-off represented genuine losses deductible while computing income of a charitable trust. Tribunal held that Assessee had itself offered business income to tax without claiming exemption u/s 11 & 12 on that portion, therefore normal business provisions apply. Impairment & spares write-off were capital in nature & once depreciation had been claimed in earlier years, the only permissible treatment was adjustment in block of assets, not P&L deduction. Hence, disallowance was upheld & quantum appeal was dismissed.
