9911796707
|
Home
Forgot password New User/ Regiser ⇒ Register to get Live Demo
2019 (12) TMI 1128 - AT - Income TaxExemption u/s 11 - Disallowance of depreciation on the assets purchased by the assessee by application of funds - HELD THAT - In assessee s own case also, Hon ble jurisdictional High Court in DIT vs Indraprastha Cancer Society 2014 (11) TMI 733 - DELHI HIGH COURT considered the question whether after claiming deduction in respect of the cost of the assets u/s 35(1) of the Act, assessee again claimed deduction on account of depreciation in respect of the same asset. Hon ble jurisdictional High Court held the issue in favour of the assessee. In view of the binding precedent of the jurisdictional High Court in assessee s own case, we do not find any unreasonableness in the order of the Id. CIT(A). We, therefore, confirm the order of the Id. CIT(A) and dismiss Ground Nos. 1 2. Disallowing the loss on sale of assets - Plea of the assessee is that the assets were sold at a price lesser than the WDV of the assets and when the depreciation is allowed following the commercial principle, there is no bar to consider the loss and the learned AO committed error in taking the sale proceeds as income and ignoring the loss - HELD THAT - CIT(A) considered the plea of the assessee and satisfied that the assessee could demonstrate that the income u/s 11 had to be determined on commercial principles. We are also of the considered opinion that the income u/s 11 has to be determined on commercial principles and to determine the same, the losses arising on sale of assets of the society shall be considered. Therefore, the capital loss has to be considered while calculating the income of the assessee. With this view of the matter, we uphold the finding of the Id. CIT(A) on this ground and dismiss Ground No.3.
Issues Involved:
- Challenge to the correctness of the order of the Commissioner of Income Tax [Appeals] - 40, New Delhi dated 17.11.2016 pertaining to assessment year 2012-13. - Disallowance of depreciation claimed by the assessee. - Disallowance of provision for doubtful debts and bad debts. - Disallowance of loss on sale of fixed assets. Analysis: Issue 1: Challenge to the Correctness of the CIT(A) Order The Revenue challenged the CIT(A) order claiming that the provisions related to charitable or religious institutions under sections 11, 12, 12AA, and 13 of the Income Tax Act are independent and should be applied separately. They argued that certain provisions related to business activities should not be applicable to charitable organizations. The ITAT considered the facts that the assessee society was registered under section 12A and engaged in charitable activities. The ITAT reviewed the submissions and upheld the CIT(A) order, citing precedents where similar issues were decided in favor of the assessee. Issue 2: Disallowance of Depreciation The Assessing Officer disallowed the depreciation claimed by the assessee, stating it would amount to double deduction as the benefit of fund application was already claimed during asset acquisition. The ITAT referred to previous judgments and held that the depreciation claim was allowable as per commercial principles, supporting the assessee's position based on precedents and the commercial nature of the claim. Issue 3: Disallowance of Provision for Doubtful Debts and Bad Debts The Assessing Officer disallowed the provision for doubtful debts and bad debts, arguing that only bad debts actually written off should be considered for income determination. The ITAT analyzed relevant legal provisions and previous decisions, concluding that the provision for doubtful debts should be allowed based on commercial principles, as demonstrated by the judgments of the Hon'ble Delhi High Court. Issue 4: Disallowance of Loss on Sale of Fixed Assets The Assessing Officer disallowed the claim of loss on sale of fixed assets, asserting that certain sections related to business activities did not apply to charitable organizations. The ITAT reviewed precedents and upheld the CIT(A) decision, allowing the capital loss on sale of assets to be considered while calculating the income of the assessee based on commercial principles. In conclusion, the ITAT dismissed the Revenue's appeal, following the decisions of the co-ordinate bench and upholding the CIT(A) order in favor of the assessee.
|
