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JUDGMENT J.K. Ranka, J. - Instant appeal u/s 260-A of the Income Tax Act, 1961 (for short, IT Act) is directed against the order of the Income Tax Appellate Tribunal, Jaipur Bench, Jaipur (for short, "ITAT") dt.23/01/2014 passed in ITA No.821/JP/2011 and pertains to assessment year 2005-06 where the ITAT had deleted penalty u/s 271(1)(c) of the IT Act. 2. The brief facts, as emerging on the face of record, are that the respondent-assessee is a 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. 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 booksof 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 crores and building at Rs.9.05 crores in its books of account as on 01/08/2004. 3. The short controversy involved in the instant appeal is that the assessee claimed depreciation for the first time during the previous year relevant to the year under appeal stating that the assets were transferred to it by the Government of Rajasthan on 11/08/2003 and since then the assessee-society…

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