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2023 (2) TMI 339 - AT - Income TaxExemption u/s 11 - Scope of newly inserted section 11(6) - Depreciation on assets - Double benefit - whether insertion of section 11(6) brought into the Act with effective from 01.04.2015 is ' prospective in nature and therefore shall not apply on the case of the present assessment year i.e. A.Y. 2014-15 ? - HELD THAT - AO could not assert anything with regard to fact that revenue s appeal for assessment year 2010-11 and 2011-12 stand dismissed 2018 (6) TMI 1827 - ITAT DELHI and for assessment year 2012-13 2021 (5) TMI 358 - ITAT DELHI Hon ble Supreme Court of India in CIT vs. Rajasthan and Gujarati Charitable Foundation, Pune 2017 (12) TMI 1067 - SUPREME COURT has settled the issue and specifically observing and taking into cognizance the fact that amendment brought in Section 11(6) of the Act vide Finance Act, no. 2 / 2014 is prospective in nature, from assessment year 2015-1,6 while the present year under consideration is A.Y. 2014-15. Therefore ground decided against the Revenue.
Issues:
1. Allowability of depreciation claimed by the assessee. 2. Allowability of carried forward deficit and accumulation under section 11(1)(a). 3. Interpretation of provisions relating to income from property held for charitable purposes. 4. Prospective application of section 11(6) from assessment year 2015-16. Issue 1: Allowability of depreciation claimed by the assessee: The appeal by the Revenue was against the order passed by the Commissioner of Income Tax (Appeals) regarding the allowability of depreciation claimed by the assessee on fixed assets. The Assessing Officer disallowed the depreciation claim of Rs. 3,04,41,942, stating it would result in double deduction. However, the CIT(A) allowed the depreciation claim based on relevant findings and case laws, including the decision of the Hon'ble Delhi High Court in the matter of DIT vs. Indraprastha Cancer Society. The CIT(A) held that depreciation is now allowed for charitable institutions post an amendment in the Income Tax Act, effective from the assessment year 2015-16. Issue 2: Allowability of carried forward deficit and accumulation under section 11(1)(a): The assessee claimed carried forward of excess expenditure over income and accumulation under section 11(1)(a). The Assessing Officer disallowed the claim for carry forward of deficit and accumulation. However, the CIT(A) allowed the claim based on past precedents and the decision of the Hon'ble Delhi High Court in the matter of DIT vs. Raghuvanshi Charitable Trust. The CIT(A) directed the AO to allow the carry forward of the net deficit of the current year, emphasizing the benefit of carry forward of deficit. Issue 3: Interpretation of provisions relating to income from property held for charitable purposes: The Revenue raised various grounds challenging the CIT(A)'s decision, including the interpretation of provisions related to income from property held for charitable purposes. The CIT(A) relied on relevant findings and judgments to support the allowance of depreciation and carry forward of deficit. The Revenue contended that depreciation for charitable institutions is not eligible as it results in double deduction. However, the CIT(A) upheld the allowance of depreciation based on legal provisions and case laws. Issue 4: Prospective application of section 11(6) from assessment year 2015-16: The Revenue argued against the prospective application of section 11(6) brought into the Act with effect from 01.04.2015. The CIT(A) held that the amendment is prospective and does not apply to the assessment year 2014-15. The Revenue's appeal was dismissed based on the settled issue by the Hon'ble Supreme Court and the specific observation regarding the prospective nature of the amendment. The CIT(A)'s decision on this ground was upheld, leading to the dismissal of the Revenue's appeal. In conclusion, the ITAT Delhi dismissed the Revenue's appeal, upholding the CIT(A)'s decision on the allowability of depreciation, carried forward deficit, and the prospective application of section 11(6). The judgment was based on detailed analysis, legal interpretations, and precedents, ensuring compliance with the relevant provisions of the Income Tax Act.
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