Sadhu Vaswani Mission Bombay vs Pravin Kumar, Income Tax Officer, Exemptions

Parties Involved

Facts Summary

The assessee, Sadhu Vaswani Mission Bombay, filed its return of income on 24/09/2016 along with income and expenditure account, balance sheet, and audit report in Form 10B, declaring total income at Rs. Nil. The assessee is a Trust registered as a Charitable organization with DIT(Exemption), Mumbai u/s 12A of the Act and also with the Charity Commissioner, Mumbai. The assessee had claimed exemption u/s 11 of the Act. The return of income was selected for scrutiny, and statutory notices were issued and served upon the assessee. The Assessing Officer noticed that the assessee had claimed an amount of Rs.72,17,907/- accumulated u/s 11(2) of the Act. The assessee was asked to show cause to explain in the absence of a specific purpose why the accumulation/setting apart of the claim u/s 11(2) should not be disallowed. On receiving no plausible reply, the Assessing Officer disallowed the accumulation claimed u/s 11(2) of the Act amounting to Rs.72,71,907/-. The Assessing Officer also noticed that the assessee had claimed depreciation of Rs. 92,91,361/-. The Assessing Officer found that the assessee had also claimed capital expenditure as application of funds and was of the opinion that by claiming depreciation, the assessee had claimed double deduction. The Assessing Officer accordingly disallowed Rs.92,91,361/-.…

Legal Issues

• 1. Whether the Ld. CIT(A) erred in allowing relief when the assessee is aware that the fund are not utilized as per the provisions of section 11(1)(a)?
• 2. Whether the Ld. CIT(A) was justified in allowing the claim of depreciation to the assessee without appreciating the fact that no supporting evidences have been provided to prove that the cost of such assets has been claimed as application of income for the year?
• 3. Whether the Ld. CIT(A) was justified in allowing the claim of depreciation to the assessee without appreciating the fact that as per Section 11(6) of the Income-tax Act, 1961, the acquisition of any asset has been claimed as an application of income in any previous year, no deduction or allowance for depreciation in respect to that asset would be allowable?

Judgment Outcome

Decided in favour of Partly Assessee / Partly Revenue.

Precedents Relied Upon

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