9911796707
|
Home
Forgot password New User/ Regiser ⇒ Register to get Live Demo
2018 (3) TMI 1933 - AT - Income TaxBenefit of exemption u/s 11 - Whether Assessee society is a charitable organization despite the fact that the assessee society was doing business within the meaning of amended provisions of section 2(15)? - HELD THAT - A copy of such order has been placed on record. After considering all the relevant material the Tribunal has upheld the order of the first appellate authority in grant the benefit of section 11 to this extent. It is further a matter of record that the order of the Tribunal has been approved by the Hon ble jurisdictional High Court 2017 (10) TMI 1584 - DELHI HIGH COURT - In view of the foregoing facts we are of the considered opinion that the ld. CIT(A) was right in granting the benefit of exemption u/s 11 to the extent impugned in the above three grounds. Depreciation to assessee trust - AO did not allow the claim of depreciation on the premise that the purchase of assets was an application of income and hence the grant of depreciation would amount to double benefit - We find that sub-section (6) has been inserted to section 11 by the Finance (No.2) Act 2014 w.e.f. 01.04.2015 providing that no depreciation can be allowed once the purchase of assets has been treated as application of income. The Hon ble Supreme Court in a recent decision dated 13.12.2017 in CIT vs. Rajasthan Gujarati Charitable Foundation Poona 2017 (12) TMI 1067 - SUPREME COURT has approved the granting of depreciation in the period prior to amendment of section 11(6) by holding such amendment to be prospective. We therefore uphold the impugned order on this score.
Issues:
1. Classification of the assessee society as a charitable organization under section 2(15) of the Income-Tax Act, 1961. 2. Allowance of benefits under sections 11 & 12 of the Income-tax Act despite alleged violations of section 13(1)(c) and section 13(1). 3. Disallowance of depreciation amounting to Rs. 5,38,64,605 on the grounds of double benefit. Analysis: Issue 1: Classification of the assessee society as a charitable organization The Revenue challenged the CIT(A)'s decision classifying the assessee society as a charitable organization despite engaging in business activities. The Tribunal reviewed the case history and noted that for the assessment year 2009-10, the Assessing Officer considered the case under section 13(1)(c). However, the CIT(A) and subsequently the Tribunal granted the benefit of section 11 after thorough examination. The Tribunal's decision was upheld by the jurisdictional High Court, affirming the correctness of the CIT(A)'s decision to grant exemption under section 11. Issue 2: Allowance of benefits under sections 11 & 12 despite alleged violations of section 13(1)(c) and section 13(1) The Revenue contested the CIT(A)'s direction to allow benefits under sections 11 & 12, arguing violations of section 13(1)(c) and section 13(1). The Tribunal examined the case history and upheld the CIT(A)'s decision based on the previous order for the assessment year 2009-10 and the subsequent approval by the High Court. The Tribunal found the CIT(A) justified in granting exemption under section 11 despite the alleged violations. Issue 3: Disallowance of depreciation on the grounds of double benefit The Revenue objected to the allowance of depreciation amounting to Rs. 5,38,64,605, claiming it would result in double benefit as the purchase of assets was considered an application of income. The CIT(A) overturned the assessment order on this issue. The Tribunal referred to the amendment to section 11 by the Finance Act, 2014, which prohibited depreciation once assets were treated as income application. However, citing a Supreme Court decision, the Tribunal deemed the amendment prospective and upheld the allowance of depreciation prior to the amendment. Consequently, the Tribunal dismissed the appeal, affirming the CIT(A)'s decision on the depreciation claim. In conclusion, the Tribunal dismissed the appeal, upholding the CIT(A)'s decisions on all the issues raised, including the classification of the assessee society as charitable, allowance of benefits under sections 11 & 12, and the disallowance of depreciation.
|
