The Income Tax Appellate Tribunal (ITAT), Mumbai bench has held that the write-off of donations, as well as fixed assets, shall be treated as application of funds depending on the fact.
In the instant case, the assessee Apne Aap Women Worldwide (India) Trust claimed certain amounts in the books of accounts as written-off. However, the same has been rejected by the department.
The assessee has submitted that the said donations were already been offered as Trust receipts in earlier years and therefore the non-recovery should be treated as application of income. Similarly, the assessee has written-off an amount of Rs.43.02 Lacs on account of fixed assets which have been found to be non-usable upon physical inspection by management. It was contended that neither the acquisition thereof nor the depreciation against the same has even been considered as the application of funds.
While granting relief to the assessee, the Tribunal observed that “Keeping in view the submissions made by Ld. AR, the claim of the assessee is, prima facie, allowable subject to the verification of the stated assertions made by Ld. AR. Therefore, the write-off of donations, as well as fixed assets, shall be treated as application of funds subject to verification of the facts as narrated by Ld. AR before us. The Ld. AO is directed to allow the claim after due verification.”
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