Besant Montesori School Ground Floor Vs ITO (ITAT Mumbai)
Background and Penalty Proceedings
The appeal was filed by the assessee against the order dated 29.12.2025 passed by the NFAC, Delhi, concerning penalty proceedings under Section 270A of the Income-tax Act, 1961 for AY 2017-18. The assessee, a charitable trust running a Montessori school, had filed its return on 07.11.2017 declaring a loss of ₹13,43,655, with gross receipts of ₹2,97,13,513 and depreciation expenditure of ₹38,42,253.
During assessment, the Assessing Officer disallowed the depreciation claim by invoking Section 11(6), holding that where acquisition of a capital asset by a trust registered under Section 12A had been treated as application of income, depreciation on the same asset could not again be allowed as application or deduction. Similar disallowances had also been made in earlier assessment years. Penalty proceedings under Section 270A were consequently initiated and penalty of ₹9,36,103, stated to be 50% of the tax payable, was levied.
Assessee’s Submissions
Before the Tribunal, the assessee contended that the penalty was unsustainable because, in the quantum proceedings, the CIT(A) had directed the Assessing Officer to allow the benefit of accumulation under Section 11(2), which had previously been denied. After giving effect to that appellate order, the assessee’s income was computed at Nil.
