TMI Blog2020 (4) TMI 745X X X X Extracts X X X X X X X X Extracts X X X X ..... assessee is entitled to rely upon the certificate granted to an institution under section 35CCA of the Act for claiming deduction under section 35CCA of the Act for claiming deduction under that section which was valid and subsisting when donation was made to it - We set aside the order of Ld. CIT(A) and direct the AO to allow the deduction as claimed under section 35 of the Act by the assessee. Addition towards depreciation on the let out property - HELD THAT:- As decided in own case 2019 (9) TMI 544 - ITAT MUMBAI] no deprecation u/s 32 of the 1961 Act can be allowed on the two properties which were acquired in earlier years and were let out throughout the year under consideration income thereof being offered for tax under the head income from house properties, as doctrine of supervening impossibility has set in as neither these properties were used for business purposes, nor ready to be used for business nor available for business user for the purposes of business of the assessee, for the entire year under consideration. Thus, deprecation u/s 32 of the 1961 Act under these circumstances can not be allowed on these two properties merely on the grounds that once these proper ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cation. The AO also noted that the CBDT vide its letter F.No.203/11/2015/ITA.II dated 24.08.2016 has ordered for withdrawal of notification issued under section 35(1)(ii), 1961 granted to Matravaini Institute of Experimental Research Education w.e.f. 21.08.2007 and accordingly the AO issued show cause notice to the assessee as to why the deduction claimed out of donation to the said institute, Kolkata should not be disallowed as the same were bogus donation which was replied by the assessee vide letter dated 28.09.2016. The Ld. A.R. submitted before the AO that donation paid of ₹ 60 lakhs to the said institute is a genuine as the same is paid by cheque vide cheque No.000378 dated 06.03.2014 and the assessee has checked the registration and approval given to the said trust under section 35(1)(ii) of the Act and on the date of giving donation the said institution was having and holding the exemption to receive the donation and it was only after by a subsequent order dated 24.08.2016 the said registration has been withdrawn w.e.f. 21.08.2007. The AO on the basis of statement recorded under section 131 of two directors namely Shri Bipin K Shah and Shri Ravinath K. Shah who gave t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... onation of ₹ 60 lakhs during the year to Kolkata based research institute named Matravaini Institute of Experimental Research Education. The said institute was registered as eligible institute to receive donation to carry out the research work but when the same was found to be engaged in accepting the bogus donations, the CBDT vide letter No.203/11/2015/ITA.ii DATED 24.08.2016 ordered the withdrawal of Notification under section 35(1)(ii) of the Act granted to the said institute w.e.f. 21.08.2007. Now the issue before us is whether the donation given by the assessee of ₹ 60 lakhs is to be allowed to the assessee under section 35 or not. In this case, admittedly the two directors of the company have denied to have any knowledge of the said research institute to whom the donation was given whereas the assessee s contention is that only the working director was having this knowledge and he has not denied the said fact. We have carefully examined the facts of the case in the light of the various decisions relied upon by the assessee and observed that the assessee is entitled to deduction of section 35(1)(ii) of the Act as the said research institute was eligible to accep ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... consistency and judicial discipline, we apply the same findings which are applicable mutatis mutandis in the present case. Therefore, we direct the AO to grant deduction u/s 35(1)(ii) of the Act to the assessee as claimed by him for the year under consideration. 7. Similarly, the Hon ble Bombay High Court in the case of Ram Das Maniklal Gandhi vs. UOI (2000) 108 Taxman 590 (Bom) has held that the donation to an institution whose approval was withdrawn by the prescribed authority with retrospective effect would not affect the assessee who gave the donation. The assessee is entitled to rely upon the certificate granted to an institution under section 35CCA of the Act for claiming deduction under section 35CCA of the Act for claiming deduction under that section which was valid and subsisting when donation was made to it. We, therefore, respectfully following the ratio laid down in the above decisions, set aside the order of Ld. CIT(A) and direct the AO to allow the deduction as claimed under section 35 of the Act by the assessee. 8. The issue in 2nd ground of appeal is against the confirmation of addition of ₹ 8,81,137/- by Ld. CIT(A) as made by the AO towards depreciati ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r consideration purchased two new immovable properties while one immovable property was sold during the previous year under consideration. Thus, undisputedly, assessee owns in all seven immovable properties as at the end of the previous year under consideration before us, out of which four properties were let out by assessee income from which was offered to taxation by assessee under the head Income from House Property , while rest of the three properties were used for the purposes of business of the assessee. All these seven immovable properties owned by assessee company are separate and distinct properties identifiable individually. Out of these four immovable properties which were let out by assessee during the previous year under consideration, two immovable properties let out were new immovable properties acquired during the year under consideration while two immovable properties were acquired in earlier years. It is also observed that three remaining immovable properties which were not let out by assessee but were forming part of Block of Asset viz. Building were used by assessee for its business purposes. The dispute has arisen between rival parties as to claim of deduction ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... by assessee of being put to use as business assets for godwon of the assessee for the purposes of business of the assessee before it was let out on rent and now Prayers are made to set aside and restore this matter to the file of the AO for verification of this fresh plea and accordingly then the AO can re- adjudicate/decide the issue on merits in accordance with law. It is pertinent to mention that if properties were acquired with an objective of letting on rent and were never used for purposes of business of the assessee , of which rental income thereof is offered for taxation under the head Income from House Property, the said property will never enter into Block of Asset and no depreciation can be allowed. Reference is drawn to co-ordinate Bench decision in the case of Sonu Nigam v. ACIT reported in (2019) 105 taxmann.com 331(Mum-trib.), wherein co-ordinate Bench of Mumbai-tribunal held as under:- 11. In the present case we find that the flats which never entered into the block of depreciable assets as income from the same were being offered under the head income from house property can by no stretch of imagination be said to be entitled for automatic entry into the block ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the 1961 Act clearly stipulates that even in case of Block of Assets depreciation shall be restricted to a fair proportionate basis on assets having regard to the user of such asset for purposes of business or profession of the tax-payer, which are not exclusively being put to use for business and profession purposes. Income-tax statute is a self contained code in itself. Heads of Incomes are stipulated within 1961 Act and if an income falls under a particular head , computation of income has thereof to be made only in accordance with computation provisions relating to that head of income only. The assessee has declared its income from rent from letting out of house properties under the head Income from House Property which falls under Chapter IV-C of the 1961 Act containing Section 22 to 27. The assessee will be entitled for deductions as are stipulated u/s 22 to 27 under Chapter IV-C of the 1961 Act while computing Income from House Property chargeable to tax. This chapter IV-C of the 1961 Act does not provide for depreciation on immovable properties as one of deductions from income earned by assessee from letting out of such house property. Section 32 of the 1961 Act provid ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in the interest of justice and then adjudicated on merits in accordance with law. We clarify that all the contentions are kept open . Needless to say that proper and adequate opportunity of being heard shall be provided by AO to the assessee in set aside de-novo assessment proceedings in accordance with principles of natural justice in accordance with law. We order accordingly. Coming to two immovable properties which were acquired in earlier years and were let out during the entire year under consideration income of which was offered for taxation by assessee under the head Income from House Property , these two properties were never used for the purposes of business of the assessee during the entire previous year relevant to impugned assessment year and one of the condition stipulated u/s 32 for grant of Depreciation on assets is its user for business purposes, which test these two house properties had failed.The claim set up by assessee is that since these two properties fall within Block of Asset viz. Building for which same percentage rate of depreciation is provided, the depreciation has to be allowed u/s 32 of the 1961 Act. It is not the contention of the assessee th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d v. DCIT reported in (2015) 153 ITD 6 (Mum-trib.), to support above proposition . Thus, there is no question of allowing any deduction as depreciation u/s 32 from rental income on letting out of these house properties for the period for which these house properties were let out and income thereof was offered for tax under the head Income from House Properties , keeping also in view firstly that admittedly there was no business user of these properties by assessee during the entire year under consideration and secondly there was no possibility of these two properties being available/ready to be used for the purposes of the business of the assessee. The concept of Block of Assets as defined u/s 2(11) of the 1961 Act cannot be stretched to an extent wherein separate and distinct properties acquired by assessee were let out on rent for years and there is no usage of these properties for purposes of business or profession of the assessee nor there is any possibility of these properties being ready /available to be used for the purposes of business of the assessee, merely on the grounds that these properties continued to form part of Block of Asset as defined u/s 2(11). User of the as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Oswal Agro Mills Limited(supra) wherein Lordships observed in para 21 observed in context of passive user of the assets as under: 21. We feel that counsel for the Revenue is right in their submission. In the instant case, the entire Bhopal Unit came to a standstill and there was a complete halt in its functioning from the assessment year 1997-98. In that year, the Assessing Officer still allowed the depreciation treating it to be a 'passive user'. However, when it was found that even in subsequent year, the Bhopal Unit remained non-functional, Assessing Officer(s) disallowed the depreciation. Present appeals relate to the assessment years from 1998- 99. In the process six years passed till the last assessment year before us, but there was no sign of this unit becoming functional. The 'passive user', in these circumstances, cannot be extended to absurd limits. Other- wise, the words used for the purpose of business will lose their total sanctity. It cannot be the intention of the Legislature that the words 'used' when it is to be interpreted in a wider sense to mean, 'ready to use', the same is stretched to the limits of non-user for number of y ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... reof was offered for taxation by assessee under the head Income from House Property , no depreciation can be allowed u/s 32 as there is no business user of these two properties by assessee for the entire year as well for earlier years. These two properties are not even available or ready to be used for business purposes as these are let out on rent for years and doctrine of supervening impossibility of business user has set in keeping in view long period of these properties being let out . The assessee has manifested its intentions by letting out these properties on rent for last several years that it intends not to use these properties for the purposes of its business which is writ large from the facts as emanating from records and as stated by learned counsel of the assessee before us. Under these circumstances , we hold that no deprecation u/s 32 of the 1961 Act can be allowed on these two properties which were acquired in earlier years and were let out throughout the year under consideration income thereof being offered for tax under the head income from house properties, as doctrine of supervening impossibility has set in as neither these properties were used for business pu ..... X X X X Extracts X X X X X X X X Extracts X X X X
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