2020 (12) TMI 411 - AT - Income Tax

Disallowance of depreciation to assessee trust - HELD THAT - In assessee s own case for A.Y. 2005-06 and 2010-11 the assessing officer made similar additions, however on appeal before Ld. CIT(A) the disallowances were deleted. On further appeal before Tribunal the order of Ld. CIT(A) was upheld. Disallowance of claim under section 11(1)(a) of the Act i.e. 15% of the total income before application of expenses - HELD THAT - There is no bar in law and there is no specific provision in the act which says that such deduction of 15% for accumulation will not be allowed in case of deficit but such 15% accumulation is allowable irrespective of whether 15% of income have been applied or not - See Gnyan Dham Vapi Charitable Trust 2020 (10) TMI 238 - ITAT AHMEDABAD .

Summary

Issues:
1. Disallowance of depreciation
2. Disallowance of claim under section 11(1)(a) of the Act

Issue 1: Disallowance of Depreciation
The appeal concerned the disallowance of depreciation amounting to ?44,59,566. The assessee contended that similar disallowances in previous years were overturned in their favor by the Tribunal. The Departmental Representative for the Revenue agreed that this ground was covered. The Tribunal upheld the decision in favor of the assessee based on consistent rulings in the assessee's previous cases, citing specific judgments and amendments to the law. The appeal on this ground was allowed.

Issue 2: Disallowance of Claim under Section 11(1)(a)
The second ground of appeal related to the disallowance of a claim under section 11(1)(a) of the Act, amounting to 15% of the total gross income. The Assessing Officer disallowed the claim, stating that the method used for computing the deficit was not in accordance with the law. The assessee argued that the claim was allowable based on a Mumbai Tribunal decision and the recall of a previous Tribunal order. The Tribunal referred to similar cases and recent decisions to support the assessee's position. It was held that the deduction of 15% for accumulation was permissible regardless of whether the income had been fully applied, and the appeal on this ground was also allowed.

In conclusion, the Tribunal ruled in favor of the assessee on both issues, allowing the appeal against the disallowance of depreciation and the claim under section 11(1)(a) of the Act. The judgments cited, along with the specific provisions of the law, supported the decisions in favor of the assessee.