COMMISSIONER OF INCOME TAX Vs. JAWAHAR KALA KENDRA

JUDGEMENT

(1.) This appeal u/s 260-A of the Income Tax Act, 1961 (for short, "IT Act") has been preferred by the appellant-revenue against the order of the Income Tax Appellate Tribunal, Jaipur Bench 'B', Jaipur (for short, "ITAT") dt.04/11/2011 passed in ITA No.1191/JP-2010 by which the ITAT has dismissed the appeal filed by the appellant-revenue against the order of the Commissioner of Income Tax (Appeals)-II, Jaipur (for short, the "CIT(A)". The relevant assessment year is the assessment year 2007-08.

(2.) The brief facts, as emerging on the fact of record, are that the respondent-assessee is a renowned cultural society generating creative artistic activities through programs in the field of performing arts, visual arts, literature, electronic media & film, folklore, indigenous craft etc.. The assessee-society was constituted as an autonomous body by the Government of Rajasthan vide order dt.11/08/2003 to preserve and promote art and culture in Rajasthan and to contribute to the cultural and social development of the people of the State. Consequent to the order dt.11/08/2003, the assessee-society came to be formed and was registered under the Societies Registration Act, 1958 on 19/09/2003. During the course of hearing before the Assessing Officer (for short, the 'AO'), the registration certificate, memorandum of association were also placed on record. It has also been granted registration u/s 12A w.e.f. 01/04/2005. Prior to the constitution of the assessee-society, Jawahar Kala Kendra was managed by the Government of Rajasthan. On its constitution as a society, all the assets and liabilities were transferred and incorporated in the books of the assessee-society. The Chairperson of the assessee-society is the Chief Minister of the State of Rajasthan and all other members of the governing body are persons of eminence. On the transfer of assets in its books of accounts, the assessee-society recorded the value of the land of Jawahar Kala Kendra at Rs.42.62 croes and building at Rs.9.05 crores in its books of accounts as on 01/08/2004.

(3.) The short controversy involved in the instant appeal is about claim of depreciation which the assessee-society started claiming on and from the Assessment Year 2005-06 i.e. the year ended on 31/03/2005 and it was the claim of the assessee-society that consequent to all the assets and liabilities having been transferred to the assessee-society and the assessee-society having become owner of the assets, it was certainly entitled to statutory claim of depreciation on the assets so transferred. It is submitted that on and from 01/08/2004, from the order of the Hon'ble Governor dt.11/08/2003 or 19/09/2003, when the assessee-society was constituted, it became an independent entity in its own right and was entitled to claim depreciation from the assessment year 2004-05 but it started claiming depreciation on and from the Assessment Year 2005-06. It was the further claim of the assessee-society that the claim admittedly was made and allowed from the Assessment Year 2005-06 and stood allowed in the Assessment Year 2005-06 and the Assessment Year 2006-07. It is only in the Assessment Year under appeal i.e. for the Assessment Year 2007-08 that the claim has been disallowed by the AO for the first time when the claim of depreciation became final from the Assessment Year 2005-06. It was further submitted that the the word "asset" remaining the same, there was no question of disallowing depreciation in the third year as facts & circumstances of the issue remain the same.