M/s. Centre for Learning, Bengaluru V. Income Tax Officer, (Exemptions), Ward- 1, Bengaluru

ITA 581/BANG/2020

• Counselvise Citation: [2021] 109 COUNSELVISE.COM (IT) 4858 (ITAT-BANGALORE)
• Duration Of Justice: 7 month(s) 20 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 11-02-2021
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: B
• Assessment Year: 2016-2017
• Appeal Filed On: 22-06-2020
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Keywords: Depreciation; Charitable institution; Opportunity of being heard; Cost of acquisition; Set aside
• Section: 11; 12A

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL SMC - A BENCH : BANGALORE ` BEFORE SHRI N.V. VASUDEVAN, VICE PRESIDENT ITA NO.581/BANG/2020 ASSESSMENT YEAR : 2016-17 M/S. CENTRE FOR LEARNING, NO.462, 9 TH CROSS ROAD, JAYANAGAR I BLOCK, BENGALURU-560 011. PAN: AAATC 0825 E VS. THE INCOME TAX OFFICER (EXEMPTIONS), UNITY BUILDING ANNEXE, MISSION ROAD, BENGALURU. APPELLANT RESPONDENT APPELLANT BY : SHRI. ASHOK A. KULKARNI, CA RESPONDENT BY : SHRI. GANESH R. GHALE, STANDING COUNSEL FOR DEPARTMENT DATE OF HEARING : 1 0 . 02 .202 1 DATE OF PRONOUNCEMENT : 10 . 02 .202 1 O R D E R PER N.V.VASUDEVAN, VICE-PRESIDENT: THIS APPEAL BY THE ASSESSEE IS AGAINST THE ORDER DATED 24.04.2020 OF THE CIT(A)-14, BENGALURU, RELATING TO ASSESSMENT YEAR 2016-17. 2. THE ASSESSEE IS A CHARITABLE TRUST AND IS REGISTERED UNDER SECTION 12A OF THE INCOME TAX ACT, 1961 (HEREINAFTER CALLED THE ACT) VIDE CERTIFICATE OF REGISTRATION ISSUED BY CIT(A), KARNATAKA II, BENGALURU, DATED 07.08.1990. FOR ASSESSMENT YEAR 2016-17, THE ASSESSEE FILED RETURN OF ITA NO.581/BANG/2020 2 INCOME DECLARING NIL INCOME AFTER CLAIMING EXEMPTION UNDER SECTION 11 OF THE ACT. 3. IN COURSE OF ASSESSMENT PROCEEDINGS, THE AO NOTICED THAT THE ASSESSEE HAD CLAIMED DEPRECIATION ON FIXED ASSETS OF RS.7,97,671/-. THE AO RELIED ON THE PROVISIONS OF SECTION 11(6) OF THE ACT WHICH WERE INSERTED BY THE FINANCE ACT, 2014 W.E.F. 01.04.2015 AND DISALLOWED THE CLAIM OF THE ASSESSEE FOR DEPRECIATION ON THE GROUND THAT THE COST OF ACQUISITION OF THE ASSETS HAS BEEN CLAIMED AS APPLICATION OF INCOME UNDER SECTION 11 OF THE ACT IN EARLIER PREVIOUS YEARS WHEN THE ASSETS WERE ACQUIRED AND THEREFORE ALLOWING DEPRECIATION ON THOSE ASSETS WOULD AMOUNT TO ALLOWING DOUBLE DEDUCTION WHICH IS NOT PERMISSIBLE U/S.11(6) OF THE ACT. SECTION 11(6) READS AS FOLLOWS: (6) IN THIS SECTION WHERE ANY INCOME IS REQUIRED TO BE APPLIED OR ACCUMULATED OR SET APART FOR APPLICATION, THEN, FOR SUCH PURPOSES THE INCOME SHALL BE DETERMINED WITHOUT ANY DEDUCTION OR ALLOWANCE BY WAY OF DEPRECIATION OR OTHERWISE IN RESPECT OF ANY ASSET, ACQUISITION OF WHICH HAS BEEN CLAIMED AS AN APPLICATION OF INCOME UNDER THIS SECTION IN THE SAME OR ANY OTHER PREVIOUS YEAR. 4. BEFORE CIT(A), THE ASSESSEE SUBMITTED THAT EVEN BEFORE THE AO, SUFFICIENT EVIDENCE WAS LAID TO SHOW THAT THE ASSETS ON WHICH DEPRECIATION WAS CLAIMED BY THE ASSESSEE, THE COST OF ACQUISITION OF THOSE ASSETS WERE NOT CLAIMED AS APPLICATION OF INCOME IN THE YEAR OF THEIR ACQUISITION. FROM THE PAPER BOOK, I FIND A CHART HAS BEEN GIVEN BY THE ASSESSEE WHICH IS AT PAGES 84 AND 85 OF THE PAPER BOOK. THIS CHART LISTS OUT VARIOUS ITEMS OF FIXED ASSETS ON WHICH DEPRECIATION WAS CLAIMED BY THE ASSESSEE AND THE LIST OF THOSE ASSETS IS AT PAGE 83 OF THE PAPER BOOK. 5. IT WAS THE CASE OF THE ASSESSEE BEFORE CIT(A) THAT THE DISALLOWANCE OF DEPRECIATION BY INVOKING OF PROVISIONS OF SECTION 11(6) WAS UNSUSTAINABLE BECAUSE THE COST OF ACQUISITION OF THE ASSETS HAD NOT BEEN CLAIMED AS ITA NO.581/BANG/2020 3 APPLICATION OF INCOME IN THE YEAR OF ACQUISITION. IT APPEARS THAT THE APPEAL OF THE ASSESSEE WAS LISTED FOR HEARING BEFORE THE CIT(A) ON 18.03.2020 AND THEREAFTER IT WAS ADJOURNED TO A DATE IN THE MONTH OF APRIL. LEARNED COUNSEL BROUGHT TO OUR ATTENTION EMAIL COMMUNICATION SENT BY THE AR OF THE ASSESSEE SHRI. VINAYAKA HEGDE TO THE OFFICE OF THE CIT(A), REQUESTING FOR ADJOURNMENT ON THE GROUND THAT DUE TO LOCK DOWN SITUATION OWING TO COVID-19 PANDEMIC, THE AR WAS UNABLE TO ATTEND AND PRODUCE THE REQUIRED DOCUMENTS. FROM THE PERUSAL OF THE ORDER OF THE CIT(A) IN PARAGRAPH 4, IT APPEARS THAT THIS ASPECT HAS NOT BEEN CONSIDERED BY THE CIT(A) AND HE HAS PROCEEDED TO DECIDE THE APPEAL ON THE BASIS OF MATERIAL ON RECORD. THE CIT(A) ULTIMATELY CONCLUDED THAT THE ASSESSEE FAILED TO PROVE THAT THE COST OF ACQUISITION OF THE ASSETS ON WHICH DEPRECIATION WAS CLAIMED HAD NOT BEEN CLAIMED AS APPLICATION OF INCOME IN THE YEAR OF THEIR ACQUISITION. 5. AGGRIEVED BY THE ORDER OF THE CIT(A), ASSESSEE IS IN APPEAL BEFORE THE TRIBUNAL. AFTER HEARING THE RIVAL SUBMISSIONS, I AM OF THE VIEW THAT THE ISSUE WITH REGARD TO GRANT OF DEPRECIATION SHOULD BE REMANDED TO THE AO FOR FRESH CONSIDERATION. ADMITTEDLY, THE ASSESSEE DID NOT HAVE PROPER OPPORTUNITY OF BEING HEARD BEFORE THE CIT(A). THE ASSESSEE HAS GIVEN THE LIST OF FIXED ASSETS ON WHICH DEPRECIATION WAS CLAIMED BY THE ASSESSEE AND THE CHART AT PAGES 84 AND 85 OF THE PAPER BOOK TOGETHER WITH PAGE 86 OF THE PAPER BOOK DETAILING AS TO HOW THE VALUE OF FIXED ASSETS WERE NOT CLAIMED AS APPLICATION OF INCOME IN THE YEAR OF ACQUISITION. THIS HAS NOT BEEN CONSIDERED EITHER BY THE AO OR BY THE CIT(A). SINCE THE MATTER REQUIRES VERIFICATION BY THE AO, I DEEM IT FIT AND PROPER TO SET ASIDE THE ISSUE TO THE AO FOR FRESH CONSIDERATION IN THE LIGHT OF THE OBSERVATIONS MADE ABOVE AND THE EVIDENCE ALREADY ON RECORD WITH LIBERTY TO THE ASSESSEE TO PRODUCE SUCH OTHER EVIDENCE AS MAY BE NECESSARY OR REQUIRED TO SUBSTANTIATE THE CLAIM OF THE ASSESSEE. ITA NO.581/BANG/2020 4 6. IN THE RESULT, APPEAL OF THE ASSESSEE IS TREATED AS ALLOWED FOR STATISTICAL PURPOSES. PRONOUNCED IN THE OPEN COURT ON THE DATE MENTIONED ON THE CAPTION PAGE. SD/- SD/- (B. R. BASKARAN) (N.V VASUDEVAN) ACCOUNTANT MEMBER VICE PRESIDENT BANGALORE, DATED : 10.02.2021 /NS/* COPY TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(A) 5. DR, ITAT, BANGALORE. 6. GUARD FILE BY ORDER ASSISTANT REGISTRAR, ITAT, BANGALORE.