2009 (7) TMI 1263 - AT - Income Tax

Summary

Issues Involved:

1. Deletion of addition made on account of receipts towards advertisement in souvenir.
2. Deletion of disallowance of the claim of depreciation.
3. Dismissal of the ground relating to the claim of the assessee u/s 10(23C)(vi).

Summary:

Issue 1: Deletion of Addition on Account of Receipts Towards Advertisement in Souvenir

The Revenue appealed against the CIT(A)'s order deleting additions made for receipts from advertisements in souvenirs for the assessment years (AY) 2001-02 to 2004-05. The Assessing Officer (AO) had treated these receipts as revenue receipts, arguing they were not voluntary contributions and thus required 85% application for charitable purposes. The CIT(A) deleted the additions, referencing decisions from the Bombay and Gujarat High Courts (CIT v. Trustees Of Visha Nima Charity Trust and CIT v. S.V.Vanik Jain Sangh). The Tribunal upheld the CIT(A)'s decision, noting that the advertisements were incidental to the trust's activities and did not provide any market benefit to the contributors, thus qualifying as capital receipts.

Issue 2: Deletion of Disallowance of the Claim of Depreciation

The Revenue contested the CIT(A)'s decision to allow depreciation claims for AY 2001-02 to 2004-05. The AO had disallowed these claims, arguing that depreciation u/s 32 is not applicable when computing income u/ss 11, 12, and 13. The CIT(A) allowed the claims, citing the Gujarat High Court's decision in CIT v. Sheth Manilal Ranchhoddas Vishram Bhavan Trust. The Tribunal upheld the CIT(A)'s decision, agreeing that income should be computed in a commercial sense, which includes allowing depreciation. However, the Tribunal noted that allowing depreciation as further application in subsequent years could lead to double deduction, which is not explicitly provided in the law. Despite this, the Tribunal followed the High Court's precedent and dismissed the Revenue's appeal.

Issue 3: Dismissal of the Ground Relating to the Claim of the Assessee u/s 10(23C)(vi)

The assessee's cross-objections involved the CIT(A)'s dismissal of their claim u/s 10(23C)(vi), arguing that the application for exemption had not been decided by the CCIT/DGIT. The Tribunal found that it could not adjudicate on this issue as no order u/s 10(23C)(vi) had been passed, and Section 253 does not provide for an appeal against a non-existent order. The Tribunal suggested that the assessee seek remedy under the law for the pending application and dismissed the cross-objections.

Conclusion:

All appeals by the Revenue were dismissed, and the cross-objections by the assessee were also dismissed. The Tribunal upheld the CIT(A)'s decisions regarding the deletion of additions for advertisement receipts and the allowance of depreciation claims.