MITHRA Vs ITO (ITAT Chennai)
The Income Tax Appellate Tribunal (ITAT), Chennai Bench, has delivered an order in the case of MITHRA Vs. ITO (ITAT Chennai) for the Assessment Year (AY) 2016-17. The appeal, filed by the assessee trust, challenged the confirmation by the First Appellate Authority (FAA) of the Assessing Officer’s (AO) action to disallow a deduction for depreciation amounting to Rs. 20,94,730/-, which resulted in a tax demand of Rs. 81,797/-. The Tribunal’s final decision did not conclude the matter but instead restored the central issue to the files of the AO for verification, allowing the appeal for “statistical purposes.”
Background of the Assessee and Assessment
The assessee, MITHRA, is a charitable trust that is registered under Section 12A of the Income Tax Act, 1961 (the Act). For the AY 2016-17, the trust filed its return of income under Section 139(4A), declaring its total income as ‘Nil’. The return reported gross receipts of Rs. 98,76,907/- and claimed revenue expenditure of Rs. 93,52,302/-.
The assessment was selected for scrutiny, and a notice under Section 143(2) was issued. During the ensuing proceedings, the AO noted two key discrepancies. First, the AO observed that the gross income recorded by the assessee in the books was actually higher at Rs. 1,19,71,637/-, with the difference of Rs. 20,94,730/- being the amount claimed as a deduction for depreciation. Second, the AO, citing Section 11(6) of the Act, concluded that the assessee was not entitled to claim depreciation and disallowed the entire amount. Consequently, the assessment was completed under Section 143(3) of the Act, confirming the disallowance.
