2019 (11) TMI 1222 - AT - Income Tax

Depreciation to assessee trust - accumulation of income - carry forward deficit @ 15% - whether, for the purposes of section 11(l)(a) of the Income-tax Act, 1961, the amount for the grant of exemption of twenty-five per cent, should be the income of the trust or it should be its total income as determined for the purposes of assessment to income-tax? - HELD THAT - depreciation claimed on the assets acquired from income of trust did not amount to double deduction. Accumulation of income - carry forward deficit @ 15% - Held that - Following the decision of Apex Court in the case of CIT vs. Programme For Comminity Organisation 2000 (11) TMI 4 - SUPREME COURT , decided in favor of assessee.

Issues Involved:
1. Delay in filing appeals by the Assessee.
2. Disallowance of depreciation claimed by the Assessee.
3. Guidelines given by the ld. CIT(A) regarding deficit set-off.
4. Appeal challenging the calculation of deficit in a specific assessment year.
5. Allowance of depreciation and deficit benefit by the ld. CIT(A) disputed by the Revenue.

Issue 1: Delay in filing appeals by the Assessee:
The Assessee filed two appeals with a delay of 65 days, supported by an affidavit explaining the reasons for the delay. The Appellate Tribunal, ITAT Ahmedabad, was satisfied with the reasons provided and decided to condone the delay to proceed with the appeals.

Issue 2: Disallowance of depreciation claimed by the Assessee:
The Assessee claimed depreciation, but it was noted that as a Trust, capital expenditure is allowed as application of income, and hence, no further deduction in the form of depreciation can be allowed. Despite citing legal precedents, the Assessee's claim for depreciation was disallowed and added back to the total income of the Trust.

Issue 3: Guidelines for deficit set-off by ld. CIT(A):
The ld. CIT(A) directed the Assessing Officer (A.O.) to verify and allow the quantum of deficit to be set off against the income of a specific assessment year. The guidelines provided detailed instructions on how deficit carry-forward and accumulation should be handled, citing relevant legal judgments to support the decision.

Issue 4: Appeal challenging the calculation of deficit in a specific assessment year:
The Assessee appealed against the calculation of deficit as per the excel sheet passed by the A.O., arguing that the effect was given from a previous assessment year without rectification or reassessment. The Appellate Tribunal, considering the relief granted in a connected appeal, allowed the Assessee's appeal regarding the deficit calculation.

Issue 5: Allowance of depreciation and deficit benefit disputed by the Revenue:
The Revenue challenged the allowance of depreciation and deficit benefit to the Assessee by the ld. CIT(A). The Revenue contended that recent judicial pronouncements favored them, citing specific cases. However, the Appellate Tribunal, having granted relief in favor of the Assessee in connected appeals, dismissed the Revenue's appeal.

This judgment involved various issues related to the disallowance of depreciation, guidelines for deficit set-off, and challenges to the calculation of deficit in specific assessment years. The legal arguments, precedents cited, and decisions made by the Appellate Tribunal highlighted the complexities surrounding income tax assessments for charitable trusts and the application of relevant provisions of the Income-tax Act.

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