The Kolkata bench of the Income Tax Appellate Tribunal (ITAT) held that depreciation should be allowed for the computing income available for accumulation under section 11(6) of the Income Tax Act, 1961.
Anand Education Trust, the application assessee was a Charitable Trust, which was running a School by the name of GEMS Akademia International School and had been enjoying registration under section 12AA of the Income Tax Act. The assessee appealed against the order passed by the Commissioner of Income Tax (Appeals) for confirming the disallowance made by the assessing officer for the depreciation claim by the assessee.
Miraj D. Shah, A.R., the counsel for the assessee contended that there was no dispute where any income is required to be applied or accumulated or set apart for application. It was also submitted that the income shall be determined without any deduction or allowance by way of depreciation or otherwise.
It was further contended that because of section 11(6) of the Income Tax Act as inserted by the Finance Act, 2014, applicable which stipulates that where any income was required to be applied or accumulated or set apart for application, then, for such purposes, the income shall be determined without any deduction or allowance by way of depreciation or otherwise in respect of any asset, acquisition of which had been claimed as an application of income.
G. Hukugha Sema, the counsel for the revenue submitted that they were unable to controvert the contention of the counsel for the assessee except by submitting that relied upon the orders of the revenue authorities.
The bench observed that after the change in the law in section 11(6) of the Income Tax Act the assessee had not claimed acquisition of property towards the application of income while computing the total taxable income, then depreciation cannot be disallowed to the assessee.
The two-member bench comprising Rajpal Yadav( Vice-President) and Girish Agrawal, (Accountant) held that the depreciation should be allowed for computing the income available for accumulation and no further submissions were adduced to rebut the assessing officer’s findings of fact and or position of law while allowing the appeal filed by the assessee.
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