ABHISEK EDUCATIONAL AND CHARITABLE TRUST,BHUBANESWAR V. INCOME TAX OFFICER, EXEMPTION WARD, BHUBANESWAR, PRATYAKSHA KAR BHAWAN,

ITA 346/CTK/2024

AI Insights

The case involves Abhisek Educational and Charitable Trust, which appealed against the order of the CIT(A), NFAC, Delhi, concerning the assessment year 2017-18. The primary issues in the appeal were the non-granting of depreciation, the application of tax at the Maximum Marginal Rate, and the non-granting of TDS credit. The Tribunal found that although the Trust was not registered under section 12A of the Income Tax Act, it was still entitled to depreciation under section 32 as it was not running a business but was involved in educational activities. The Tribunal upheld the application of the maximum marginal rate of tax due to the indeterminate individual shares in the AOP and restored the TDS credit issue to the Assessing Officer for further verification.

• Counselvise Citation: [2024] 140 COUNSELVISE.COM (IT) 25922 (ITAT-CUTTACK)
• Duration Of Justice: 3 month(s) 1 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 19-11-2024
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: SMC
• Next Hearing Date: 19-11-2024
• Assessment Year: 2017-2018
• Appeal Filed On: 17-08-2024
• Laws Referred To: Income Tax Act, The Charitable and Religious Trust Act, 1920
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: CHARAN DASS
• Assessee Lawyers: K.C.JENA
• Keywords: Depreciation; TDS; Rectification of order; Charitable institution; Maximum Marginal Rate
• Section: 32

Judgement Text

" IN THE INCOME TAX APPELLATE TRIBUNAL, BEFORE MANISH AGARWAL Abhisek Educational and Charitable Trust, MIG Nayapalli, Bhubaneswar PAN/GIR No. (Appellant Per Bench This is an CIT(A), NFAC, Delhi dated 1/14814/2019-20 2. Shri K.C. Jena, Dass, Sr. DR appeared for the revenue. 3. It was submitted by ld AR that there are assessee’s appeal, first issue being non IN THE INCOME TAX APPELLATE TRIBUNAL, CUTTACK BENCH, CUTTACK BEFORE SHRI GEORGE MATHAN, JUDICIAL MEMBER AND MANISH AGARWAL, ACCOUNTANT MEMBER ITA No.346/CTK/2024 Assessment Year : 2017-18 Abhisek Educational and Charitable Trust, MIG-B-18, Nayapalli, Bhubaneswar Vs. Income Tax Officer, Exemption Ward, Bhubaneswar. No.AACTA 5203 D (Appellant) .. ( Respondent Assessee by : Shri K.C.Jena,CA Revenue by : Shri Charan Dass, Sr DR Date of Hearing : 19/11/20 Date of Pronouncement : 19/11/20 O R D E R This is an appeal filed by the assessee against the order of the ld CIT(A), NFAC, Delhi dated 21.6.2024 in Appeal No.CIT(A),Bhubaneswar 20 for the assessment year 2017-18. K.C. Jena, ld AR appeared for the assessee and Shri DR appeared for the revenue. It was submitted by ld AR that there are three issues involved assessee’s appeal, first issue being non-granting of depreciation, second P a g e 1 | 5 IN THE INCOME TAX APPELLATE TRIBUNAL, MEMBER , ACCOUNTANT MEMBER Income Tax Officer, Exemption Ward, Respondent) , Sr DR 2024 024 appeal filed by the assessee against the order of the ld No.CIT(A),Bhubaneswar- the assessee and Shri Charan issues involved in granting of depreciation, second ITA No.346/CTK/2024 Assessment Year : 2017-18 P a g e 2 | 5 issue being against the action of the ld CIT(A) in confirming the order of the Assessing Officer levying tax at Maximum Marginal Rate and third issue being non-granting of TDS credit. It was submitted by ld AR that the assessee is an Association of Persons (AOP) being a Trust which is doing the activity of imparting education. It is agreed by ld AR that the assssee is not registered u/s.12A of the Act and, therefore, not eligible for exemption u/s.11 of the Act. It was the submission that the assessee had filed its return of income and intimation came to be issued, wherein, the assessee’s claim of depreciation had been disallowed and tax had been levied at Maximum Marginal Rate and credit for TDS had not been allowed in full. It was the submission that as the assessee was not registered u/s.12A of the Act, the income of the assessee is to be assessed as if the assessee was running business and as per the provisions of section 32, it was compulsorily incumbent upon the Assessing Officer to allow the depreciation. It was the further submission that as the assessee is registered under “The Charitable Religious Trust Act, 1920”, in view of the provisions of section 167B of the Act, maximum marginal rate was not be applied and regular tax rate is to be applied. It is the further submission that as per 26AS statement, TDS was clearly shown in respect of interest from Bank of Baroda and Karnataka Bank Limited and same has not been granted to the assessee. ITA No.346/CTK/2024 Assessment Year : 2017-18 P a g e 3 | 5 4. In reply, ld Sr DR submitted that admittedly the assessee is not registered u/s.12A of the Act and in view of the provisions of section 32 of the Act, depreciation is liable to be allowed to the assessee. In regard to the applicability of provisions of section 167B of the Act, it was submitted by ld AR that individual shares of members of the Association of Persons are indeterminative and unknown and, therefore, tax is liable to be paid on the total income of the AOP at maximum marginal rate. In regard to the issue of non-granting of the benefit of TDS, ld Sr DR submitted that he had no objection if the issue is restored to the file of the Assessing Officer for verification as to whether the said income has been offered to tax by the assessee when computing its total income and the Assessing Officer could draw appropriate conclusion. 5. We have considered the rival submissions. A perusal of the facts in the present case clearly shows that the assessee is an AOP and Trust registered under “The Charitable ad Religious Trust Act 1920”. As the assessee is not registered u/s.12A of the Act, obviously, the income of the assessee will have to be assessed as if the assessee is running the business of imparting education. In such circumstances, its income and expenditure account has not to be prepared but profit and loss account that has to be prepared in the case of the assessee. The provisions of section 32 of the Act makes incumbent on the Assessing Officer to allow the depreciation to the assessee whether the assessee claims it or not. This being so, the ITA No.346/CTK/2024 Assessment Year : 2017-18 P a g e 4 | 5 disallowance of depreciation as made in the intimation and upholding the same in the rectification order u/s.154 of the Act is found to be erroneous. Consequently, the Assessing Officer is directed to re-compute the income of the assessee under the head “business” and allow the depreciation to the assessee in accordance with law. 6. Coming to the issue of application of regular rate of tax or maximum marginal rate as mentioned earlier, the assessee is not registered u/s.12A of the Act, individual shares in the Association of Persons is indeterminative and unknown and consequently, in view of the provisions of section 167B of the Act, maximum marginal rate is applicable and the action of the Assessing Officer in applying the maximum marginal rate to compute the tax liability of the assessee is upheld. 7. Coming to the issue of non-granting of the benefit of TDS, the issue is restored to the file of the Assessing Officer for readjudication. The Assessing Officer shall verify as to whether the corresponding income in relation to TDS as shown in the 26AS statement has been included by the assessee for computing the income for the impugned assessment year for which income has been included in computation of total income of the assessee for the impugned assessment year, then the corresponding TDS is to be allowed. This is to be verified in accordance with law by the Assessing Officer. In these circumstances, this part of the ground of the assessee stands partly allowed for statistical purposes. ITA No.346/CTK/2024 Assessment Year : 2017-18 P a g e 5 | 5 8. In the result, appeal of the assessee stands partly allowed for statistical purposes. Order dictated and pronounced in the open court on 19/11/2024. Sd/- sd/- (Manish Agarwal) (George Mathan) ACCOUNTANT MEMBER JUDICIAL MEMBER Cuttack; Dated 19/11/2024 B.K.Parida, SPS (OS) Copy of the Order forwarded to : By order Sr.Pvt.Secretary ITAT, Cuttack 1. The Appellant : Abhisek Educational and Charitable Trust, MIG-B-18, Nayapalli, Bhubaneswar 2. The respondent: Income Tax Officer, Exemption Ward, Bhubaneswar. 3. The CIT(A)- NFAC, Delhi 4. Pr.CIT, Bhubaneswar-1 5. DR, ITAT, 6. Guard file. //True Copy// "