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2018 (4) TMI 626

cided against revenue - Disallow the depreciation only in respect of assets acquired for the year in which benefit of Section 12A has been availed by the assessee - Held that:- CIT(A) has rightly directed the AO to disallow the depreciation only in respect of the assets acquired for the year in which benefit of Section 12A of the Act had been first availed by the assessee. There is no dispute with regard to the fact that the assessee would be entitled for depreciation if he is not getting benefit of Section 12A of the Act. Under this fact, there is no infirmity in the order of the learned CIT(A). The same is hereby dismissed. - Excess application of income for charitable purposes to be carried forward - Held that:- CIT(A) was was justified in allowing the carry forward excess application of income as relying on Raghuvanshi Charitable Trust & Ors [2010 (7) TMI 158 - DELHI HIGH COURT] - Disallowance on account of expenses which cannot be treated as application of mind - Held that:- There is no discussion on this addition in the assessment order. The AO has merely made addition without specifying ground on which the addition has been made. Under this fact, such approach o .....

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and that of the AO restored. 3. The facts giving rise to the appeal are that the case of the assessee was fixed up for scrutiny and the assessment under Section 143(3) of the Income Tax Act, 1961 (hereinafter referred to the as the Act ) was completed vide order dated 29th December, 2011 / 30th December, 2011 pertaining to the assessment year 2008-09. While framing the assessment, the AO made addition of ₹ 4,67,10,428/-. By disallowing the claim of capitalization of the expenses, addition of ₹ 83,37,115/- and ₹ 12,70,76,891/- on account of disallowance of free hold charges and stamp duty. Further, the AO made the addition of ₹ 2,00,00,000/- in respect of the amount received against sale of the property. Further, the AO disallowed the depreciation of ₹ 33,1,291/- and further made addition of ₹ 16,95,46,061/- in respect of the cheque presented but not cleared. Against this, the assessee preferred the appeal before the learned CIT(A) who after considering the submissions partly allowed the appeal whereby he deleted the addition of ₹ 2,00,00,000/- made in respect of and also addition of ₹ 16,95,46,061/- apart from allowing the depreciatio .....

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learned CIT(A). The same is hereby dismissed. The ground of the Revenue is dismissed. 6. Ground no. 2 is against the direction of the learned CIT(A) to disallow the depreciation only in respect of assets acquired for the year in which benefit of Section 12A has been availed by the assessee. The learned DR supported the assessment order. On the contrary, learned counsel for the assessee supported the finding of the learned CIT(A). We have heard the rival contention and perused the material on record. The learned CIT(A) has decided the issue in para 6.3 as under:- 6.3 The facts of the case have been considered. In the decision in the case of Tiny Tots Education Society, reliance has been placed on another decision of the same court in the case of Market Committee, Pipli (330 ITR 16).-In this decision, the Honorable Court held that it was not a case of double deduction. The income of an assessee being exempt, the assessee is only claiming that depreciation should be reduced from the income for determining the percentage of funds which have two be applied for the purposes of the trust. The judgment of the Supreme Court in the case of Escorts Ltd (199 ITR 43) in which it was held that a .....

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the grant of registration, had actually been allowed as application of income. In view of the above-discussion, the AO is directed to disallow depreciation only in respect of assets acquired for the year in which benefit of section 12A had first been availed by the appellant and the subsequent years. 7. The above finding of the learned CIT(A) cannot be interfered with as the learned CIT(A) has rightly directed the AO to disallow the depreciation only in respect of the assets acquired for the year in which benefit of Section 12A of the Act had been first availed by the assessee. There is no dispute with regard to the fact that the assessee would be entitled for depreciation if he is not getting benefit of Section 12A of the Act. Under this fact, there is no infirmity in the order of the learned CIT(A). The same is hereby dismissed. The ground raised by the Revenue is affirmed. The ground raised by the Revenue is dismissed. 8. Ground no. 3 is against allowing excess application of income for charitable purposes to be carried forward. Learned DR supported the orders of the AO and submitted that learned CIT(A) was not justified in allowing the carry forward excess application of incom .....

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und of appeal is admitted. In the submissions filed during the appellate proceedings, it was clarified that the disallowance had apparently been made in respect of cheques issued by the appellant which had-not been presented for payment. Further, the assessee is regularly and consistently following a mercantile system of accounting in which debit/credits are made on the- reCei.pt/issue of cheques. Expenses incurred but not yet paid are debited to the profit and loss account and a liability in this regard is entered on the liability side of the balance sheet. Likewise, in case there are certain unrealised income, these are entered on the credit side of the profit and loss account and correspondingly, they are shown as. an asset in. the balance sheet. No such disallowance had ever been made, either in the past or in subsequent years. The assessee has submitted bank reconciliation statement. It was stated that all such cheques had actually been issued and tax had been deducted at source wherever, applicable: It is noted that no specific comment has been given on this issue in the remand report. The disallowance made by the AO is against the accepted mercantile principles of accounting .....

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