SAMYUKTA HEALTH &ACADEMIC SOCIETY, ANAKAPALLE V. INCOME TAX OFFICER, EXEMPTION WARD, Visakhapatnam

ITA 232/VIZ/2022

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The case involves Samyukta Health & Academic Society, a charitable trust, which appealed against the order of the Commissioner of Income Tax (Appeals) regarding the disallowance of depreciation claimed in the return of income for the Assessment Year 2017-18. The return was initially processed under section 143(1) of the Income Tax Act, 1961, where depreciation was denied, and income was assessed at Rs.10,68,691. The assessee's rectification application under section 154 was rejected, leading to the appeal before the CIT(A), which was also dismissed. The Tribunal heard arguments from both sides, focusing on whether the assessee had claimed any exemption on the cost of the asset purchase, which would affect the entitlement to depreciation.

• Counselvise Citation: [2023] 140 COUNSELVISE.COM (IT) 135975 (ITAT-VISAKHAPATNAM)
• Duration Of Justice: 3 month(s) 23 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 15-03-2023
• Appeal Filed By: Assessee
• Order Result: PartlyAllowed
• Bench Allotted: SMC
• Next Hearing Date: 13-03-2023
• Assessment Year: 2017-2018
• Appeal Filed On: 22-11-2022
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Depreciation; Condonation of delay
• Section: 154; 11; 143(1)

Judgement Text

आयकरअपीलीयअधिकरण, धिशाखापटणम “एसएमसी”पीठ, धिशाखापटणम IN THE INCOME TAX APPELLATE TRIBUNAL, VISAKHAPATNAM “SMC” BENCH, VISAKHAPATNAM श्री द ु व्वूरु आर एल रेड्डी, न्याधयक सदस्य के समक्ष BEFORE SHRI DUVVURU RL REDDY, HON’BLE JUDICIAL MEMBER आयकर अपील सं./I.T.A.No.232/Viz/2022 (ननधधारण वर्ा / Assessment Year : 2017-18) Samyukta Health & Academic Society Ramalayam Street Gandhi Nagar Anakapalle [PAN : AAGTS9608E] Vs. Income Tax Officer Exemption Ward Visakhapatnam (अपीलार्थी/ Appellant) (प्रत्यर्थी/ Respondent) अपीलधथी की ओर से/ Appellant by : Shri G.V.N.Hari, AR प्रत्यधथी की ओर से / Respondent by : Shri O.N.Hari Prasada Rao, DR सुनवधई की तधरीख / Date of Hearing : 14.03.2023 घोर्णध की तधरीख/Date of Pronouncement : 16 .03.2023 आदेश /O R D E R Per Shri Duvvuru RL Reddy, Judicial Member : Condonation of Delay : This appeal is filed by the assessee against the order of Commissioner of Income Tax (Appeals) [CIT(A)], National Faceless Appeal Centre (NFAC), Delhi in DIN & Order No.ITBA/NFAC/S/250/2021-22/1035073486(1) dated 25.08.2021 for the Assessment Year (A.Y.) 2017-18 with the delay of 178 days. The assessee filed petition for condonation of delay stating that the order of 2 I.T.A. No.232/Viz/2022, A.Y.2017-18 Samyukta Health & Academic Society, Anakapalle the Ld.CIT(A) was passed on 25.08.2021 and appeal ought to have been filed on or before 24.09.2021, but the appeal could be filed only on 23.11.2022, resulting in a delay of 178 days after taking into account the extension granted by the Hon’ble Supreme Court vide orders dated 23.03.2020, 27.04.2021, 23.09.2022 and 10.01.2022 in SMW(A) No.3 of 2020. The Ld.AR submitted that there was delay in filing the appeal as the President of the Trust, Sri D.Govinda Rao underwent treatment for severe skin infection at Visakhapatnam and Kerala and also filed medical record before me. The Ld.AR submitted that the delay was neither intentional nor deliberate and pleaded to condone the delay of 178 days and admit the appeal for hearing. I have heard the Ld.AR and perused the petition filed by the assessee. Keeping in view the extension granted by the Hon’ble Supreme Court during the Covid pandemic in SMW(A) No.3 of 2020 and the genuine medical reasons cited by the Ld.AR supported by the medical record, I condone the delay and admit the appeal for hearing. 2. Brief facts of the case are that the assessee is a charitable trust, filed its return of income for the A.Y.2017-18. The return was processed u/s 143(1) of the Income Tax Act, 1961 (in short “Act”). While processing the return, the assessee was denied depreciation and the 3 I.T.A. No.232/Viz/2022, A.Y.2017-18 Samyukta Health & Academic Society, Anakapalle income was determined at Rs.10,68,691/-. The assessee filed an application for rectification u/s 154 of the Act. The CPC, Bengaluru rejected the application u/s 154 of the Act vide order dated 07.06.2019. 3. Aggrieved by the order of the AO, the assessee preferred appeal before the CIT(A) and the Ld. CIT(A) dismissed the appeal of the assessee. 4. Aggrieved by the order of the Ld.CIT(A), the assessee preferred appeal before the Tribunal and raised the following grounds : 1. The order of the learned Commissioner of Income Tax (Appeals) is contrary to the facts and also the law applicable to the facts of the case. 2. The learned Commissioner of Income Tax (Appeals) is not justified in holding that there is no mistake in the intimation u/s 143(1) of the Act in not allowing the depreciation claimed by the appellant and thereby holding that the assessing officer is justified in rejecting the petition filed by appellant u/s 154 of the Act. 3. Any other grounds may be urged at the time of hearing. 5. Ground No. 1 and 3 are general in nature which does not require specific adjudication. 6. Ground No.2 is related to disallowance of depreciation claimed by the assessee. At the outset, the Ld.AR submitted that the assessee, being a charitable organization, the depreciation claimed by the assessee in the return of income is allowable. The adjustment made by the assessing 4 I.T.A. No.232/Viz/2022, A.Y.2017-18 Samyukta Health & Academic Society, Anakapalle authority’s order u/s 143(1) was not correct and not in accordance with law because the assessee never claimed any exemption on cost of purchase of asset. He, therefore, prayed for depreciation. 7. Per contra, the Ld.DR submitted that the Ld.CIT(A) after careful consideration of the submissions made by the assessee has rightly confirmed the disallowance made by the CPC, Bengaluru. The Ld.DR submitted that according to the amendment made in the Finance Act, 2014 w.e.f. 01.04.2015, depreciation cannot be allowed in the case of a Trust, which claims exemption u/s 11 of the Act. He, therefore, pleaded to uphold the order passed by the Ld.CIT(A) and dismiss the appeal of the assessee. 8. I have heard both the parties and perused the material placed on record. The main contention of the assessee is that the assessee has never claimed any exemption on cost of purchase of the asset. The assessment order is also silent on this aspect. Considering the above said fact, I remit the matter back to the file of the AO to examine whether the assessee has claimed any exemption on cost of purchase of the asset, If the assessee has not claimed any exemption, then the assessee is entitled for depreciation. AO is directed to give opportunity of being heard to the assessee. 5 I.T.A. No.232/Viz/2022, A.Y.2017-18 Samyukta Health & Academic Society, Anakapalle 9. In the result, appeal of the assessee is allowed for statistical purpose . Order pronounced in the open court on 16 th March, 2023. Sd/- (द ु व्वूरु आर.एल रेड्डी) (DUVVURU RL REDDY) न्याधयक सदस्य/JUDICIAL MEMBER Dated : 16 .03.2023 L.Rama, SPS आदेश की प्रतितिति अग्रेतिि/Copy of the order forwarded to:- 1. ननधधाऩरती/ The Assessee– Samyukta Health & Academic Society, Ramalayam Street, Gandhi Nagar, Anakapalle 2. रधजस्व/The Revenue – The Income Tax Officer, Exemption Ward, Visakhapatnam 3. The Principal Commissioner of Income Tax, Visakhapatnam 4. नवभधगीय प्रनतनननध, आयकर अपीलीय अनधकरण, नवशधखधपटणम / DR,ITAT, Visakhapatnam 5..गधर्ा फ़धईल / Guard file आदेशधनुसधर / BY ORDER Sr. Private Secretary ITAT, Visakhapatnam