आयकर अपील(cid:547)य अ(cid:876)धकरण, ‘बी’ Ûयायपीठ, चÛे नई IN THE INCOME TAX APPELLATE TRIBUNAL ‘B’ BENCH, CHENNAI (cid:302)ी जॉज (cid:91) जॉज (cid:91) के, उपाÚय¢ एवं (cid:302)ी एस.आर.रघुनाथा, लेखा सदèय के सम¢

BEFORE SHRI GEORGE GEORGE K, VICE PRESIDENTAND SHRI S.R. RAGHUNATHA, ACCOUNTANT MEMBER आयकर अपील सं./ITA No.: 1839/CHNY/2025 िनधा(cid:6981)रण वष(cid:6981)/Assessment Year: 2016-17 M/s. MITHRA (Madras The Income Tax Officer, Institute To Habilitate Vs. Exemptions Ward 3, Retarded Afflicted), Chennai.

Plot No.D-171, R V Nagar, Anna Nagar East, S.O, Anna Nagar, Chennai – 600 102.

PAN: AAATM 0481H (अपीलाथ(cid:7278)/Appellant) ((cid:7079)(cid:7004)यथ(cid:7278)/Respondent)

अपीलाथ(cid:7278) क(cid:7409) ओर से/Appellant by : Shri M. Karuppiah, F.C.A (cid:7079)(cid:7004)यथ(cid:7278) क(cid:7409) ओर से/Respondent by : Ms. Gouthami Manivasagam,JCIT सुनवाई क(cid:7409) तारीख/Date of Hearing : 22.09.2025 घोषणा क(cid:7409) तारीख/Date of Pronouncement : 23.09.2025 आदेश/ O R D E R PER GEORGE GEORGE K, VICE PRESIDENT:

This appeal filed by the assessee is directed against the order of the Addl/JCIT(A)-1, Nashik dated 11.06.2025, passed under section 250 of the Income Tax Act, 1961 (hereinafter called ‘the Act’). The relevant Assessment Year is 2016-17.

2. The solitary issue raised is whether the First Appellate Authority (FAA) is justified in confirming AO’s order wherein he had disallowed depreciation of Rs.20,94,730/- and thereby raising a demand of Rs.81,797/-.

3. Brief facts of the case are as follows:

The assessee is a trust registered u/s.12A of the Act. For the assessment year 2016-17, the return of income was filed u/s.139(4A) of the Act on 30.07.2016 declaring total income at ‘Nil’. The gross receipt as per the return of income filed was Rs.98,76,907/- and assessee had claimed expenditure of Rs.93,52,302/- towards revenue expenditure. The assessment was selected for scrutiny and notice u/s.143(2) of the Act was issued on 19.07.2017. During the course of assessment proceedings, the AO noticed that assessee had claimed depreciation of Rs.20,94,730/- as deduction from the gross income received. Further, the AO noted that the gross income of the assessee was Rs.1,19,71,637/-, however, the assessee admitted only an income of Rs.98,76,907/-. The AO found that remaining amount of Rs.20,94,730/- was claimed as deduction towards depreciation. The AO by referring to section 11, sub-section (6) of the Act held that assessee is not eligible to claim depreciation.

Accordingly, assessment was completed u/s.143(3) of the Act vide order dated 13.11.2018.

4. Aggrieved by the assessment completed, assessee filed appeal before the FAA. Before the FAA, assessee submitted that AO has erred in disallowing depreciation of Rs.20,94,730/- us/.11(6) of the Act. Further, it was submitted by the assessee that the capital expenditure incurred in the current year amounting to Rs.40,08,670/- ought to be allowed as application of income. The FAA however rejected the contentions of the assessee. The FAA held that as per Section 11(6) of the Act, assessee is not entitled to depreciation on assets for which cost has been allowed as application of income in the previous years or in the current year. Further, FAA held as regards application of capital expenditure of Rs.40,08,670/-, assessee has not claimed the same in the return of income i.e, ITR 7 filed by the assessee. Hence, the FAA concluded the assessment order passed u/s.143(3) of the Act is correct and confirmed the same.

5. Aggrieved by the order of the FAA, the assessee has filed the present appeal before the Tribunal. The Ld.AR submitted that the cost of assets were never claimed as application of income u/s.11 of the Act in the relevant assessment year or in the earlier assessment years. It was submitted that the assessee trust had purchased assets out of capital funds. Therefore, depreciation claimed cannot be disallowed u/s.11(6) of the Act. Further, the Ld.AR submitted that in the current assessment year, assessee