ACIT (E), Jaipur V. SETH RAMJI DAS MODI VIDYA NIKETAN SOCIETY, Kota

ITA 1086/JPR/2016

• Counselvise Citation: [2017] 128 COUNSELVISE.COM (IT) 2184 (ITAT-JAIPUR)
• Duration Of Justice: 4 month(s) 1 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 10-04-2017
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: B
• Assessment Year: 2012-2013
• Appeal Filed On: 09-12-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: NINA JAIF
• Assessee Lawyers: MAHENDRA GARGIA DHK
• Keywords: Capital asset; Depreciation; Charitable institution; Capital expenditure
• Section: 143(3); 11

Judgement Text

VK;DJ VIHYH; VF/KDJ.K] T;IQJ U;K;IHB] T;IQJ IN THE INCOME TAX APPELLATE TRIBUNAL, JAIPUR BENCHE S, JAIPUR JH HKKXPUN] YS[KK LNL; ,OA JH DQY HKKJR] U;KF;D LNL; DS LE{K BEFORE: SHRI BHAGCHAND, AM AND SHRI KUL BHARAT, JM VK;DJ VIHY LA-@ ITA NO. 1086/JP/2016 FU/KZKJ.K O'K Z@ ASSESSMENT YEAR : 2012-13. THE ASSTT. CIT(E), CIRCLE, JAIPUR. CUKE VS. M/S SETH RAMJI DAS MODI VIDYA NIKETAN SOCIETY, MODI HOUSE, GUMANPURA, KOTA. LFKK;H YS[KK LA-@THVKBZVKJ LA-@ PAN NO. AAATN1183H VIHYKFKHZ@ APPELLANT IZR;FKHZ@ RESPONDENT JKTLO DH VKSJ LS@ REVENUE BY : SMT. NINA JAIF ( ADDL.CIT) FU/KZKFJRH DH VKSJ LS@ ASSESSEE BY : SHRI MAHENDRA GARGIA (ADVOCATE) LQUOKBZ DH RKJH[K@ DATE OF HEARING : 05.04.2017. ?KKS'K .KK DH RKJH[K@ DATE OF PRONOUNCEMENT : 10 /04/2017. VKNS'K@ ORDER PER SHRI KUL BHARAT, JM. THIS APPEAL FILED BY THE REVENUE IS DIRECTED AGAINS T THE ORDER OF LD. CIT (APPEALS)-5, JAIPUR DATED 26.09.2016 PERTAINING TO A.Y. 2012-13. THE REVENUE HAS RAISED FOLLOWINGS GROUNDS OF APPEAL. 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CA SE AND IN LAW THE CIT(A) HAS ERRED IN ALLOWING CLAIM OF DEPRECIATION ON FIXED ASSETS IN SPITE OF THE FACT THAT THE SAME WAS ALLOWED AS APPL ICATION OF INCOME U/S 11 AT THE TIME OF PURCHASE. 2. ON THE FACTS IN THE CIRCUMSTANCES OF THE CASE A ND IN LAW THE IT(A) HAS ERRED IN ALLOWING DEPRECIATION WITHOUT APPRECIA TING THE FACT THAT THE APPLICATION OF 100% EXPENDITURE OF THE CAPITAL ASSET IS ALREADY ALLOWED AS CAPITAL EXPENDITURE HENCE FURTHER ALLOWA NCE OF THE DEPRECIATION ON THE SAME CAPITAL ASSET WOULD AMOUNT TO DOUBLE ALLOWANCE. 3. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E AND IN LAW THE CIT(A) HAS ERRED IN ALLOWING DEPRECIATION WITHOUT A PPRECIATING THE FACT THAT THE ASSESSEE HAS NOT CARRIED OUT THE BUSINESS ACTIVITIES BUT THE RECEIPTS UTILIZED FOR CHARITY. AS THERE WAS NO BUS INESS ACTIVITY THE CLAIM OF DEPRECIATION WAS NOT ALLOWABLE, THE DEPRECIATION IS ALLOWABLE ONLY IN 2 ITA NO. 1086/JP/2016 M/S SETH RAMJI DAS MODI VIDYA NIKETAN SOCIETY. THE CASE OF BUSINESS OR HJMF PROFESSION OR IN THE C ASE OF INCOME FROM OTHER SOURCES. 2. THE ONLY EFFECTIVE GROUND IS AGAINST DISALLOWANC E OF DEPRECIATION OF FIXED ASSETS. 3. BRIEFLY STATED THE FACTS ARE THAT THE CASE OF TH E ASSESSEE WAS PICKED UP FOR SCRUTINY ASSESSMENT AND THE ASSESSMENT UNDER SECTIO N 143(3) OF THE INCOME TAX ACT, 1961 (HEREINAFTER REFERRED TO AS THE ACT) WAS FRAMED VIDE ORDER DATED 16 TH MARCH 2015, WHILE FRAMING THE ASSESSEMENT, THE ASSE SSING OFFICER DISALLOWED THE CLAIM OF DEPRECIATION. AGAINST THIS, THE ASSESSEE PREFERRED AN APPEAL BEFORE LD. CIT(A), WHO ALLOWED THE APPEAL BY FOLLOWING THE JUD GMENT OF THE HONBLE JURISDICTIONAL HIGH COURT IN THE CASE OF CIT VS. KR ISHI UPAJ MANDI SAMITI JAISALMER (2015) 125 DTR 0281(RAJ). 4. AGGRIEVED BY THIS, THE REVENUE HAS PREFERRED THE PRESENT APPEAL. THE LD. DEPARTMENTAL REPRESENTATIVE SUPPORTED THE ORDER OF THE ASSESSING OFFICER. HOWEVER, CONCEDED THE FACT THAT THE ISSUE IS COVERE D IN THE FAVOUR OF THE ASSESSE BY JUDGMENT OF THE HONBLE JURISDICTIONAL HIGH COURT I N THE CASE OF COMMISSIONER OF INCOME TAX VS. KRISHI UPAJ MANDI (SUPRA). 4.1 THE LD. COUNSEL FOR THE ASSESSEE REITERATED THE SUBMISSIONS AS MADE IN THE WRITTEN SUBMISSIONS AND SUBMITTED THAT THE ISSUE IS COVERED IN FAVOUR OF THE ASSESSEE. 4.2 WE HAVE HEARD THE RIVAL CONTENTIONS, AND PERUSE D THE MATERIAL AVAILABLE ON RECORD AND GONE THROUGH THE ORDER OF THE AUTHORITIE S BELOW. THE HONBLE HIGH COURT IN THE CASE OF CIT VS. KRISHI UPAJ MANDI SAMITI HAS DECIDED THE ISSUE BY HOLDING AS UNDER:- 3 ITA NO. 1086/JP/2016 M/S SETH RAMJI DAS MODI VIDYA NIKETAN SOCIETY. ASSESSEE IS A CHARITABLE INSTITUTION REGISTERED U/ S 12-A OF THE ACT OF 1961 AND 100% CAPITAL EXPENDITURE WAS AVAILED BY IT AGAINST THE ASSET CONCERNED I.E. A BUILDING. SECTION 32(1)OF THE ACT OF 1961 PROVIDES FOR DEPRECIATION IN RESPECT OF BUILDING, PLANT AND MACH INERY OWNED BY THE ASSESSEE AND USED FOR BUSINESS PURPOSES. INCOME OF A CHARITABLE TRUST LIKE THE PRESENT ASSESSEE DERIVED FROM THE DEPRECIA BLE HEADS IS ALSO LIABLE TO BE COMPUTED ON COMMERCIAL BASIS, HOWEVER, WHILE DOING SO IT IS TO BE KEPT IN MIND THAT ULTIMATELY ASSESSEE IS A CHARITABLE INSTITUTION AND ITS INCOME FOR TAX PURPOSES IS REQUIRED TO BE D ETERMINED BY TAKING INTO CONSIDERATION PROVISIONS OF SECTION 11 OF THE ACT OF 1961 AFTER EXTENDING NORMAL DEPRECIATION AND DEDUCTIONS FROM I TS GROSS INCOME. IN COMPUTING THE INCOME OF A CHARITABLE INSTITUTION /TRUST DEPRECIATION OF ASSETS OWNED BY SUCH INSTITUTION IS A NECESSARY DEDUCTION OF COMMERCIAL PRINCIPLES, HENCE, THE AMOUNT OF DEPRECI ATION HAS TO BE DEDUCTED TO ARRIVE AT THE INCOME AVAILABLE. IN VIEW OF THE ABOVE BINDING PRECEDENTS, WE DO NOT SEE ANY REASON TO INTERFERE INTO THE ORDER OF THE LD. CIT(A), THEREFORE, THE SAME IS HEREBY AFFIRMED. ACCORDINGLY, THIS GROUND OF THE REVENUES APPEAL IS REJECTED. 5. IN THE RESULT, APPEAL OF THE REVENUE IN ITA NO. 1086/JP/2016 IS DISMISSED. ORDER IS PRONOUNCED IN THE OPEN COURT ON MONDAY, THE 10TH DAY OF APRIL 2017. SD/- SD/- ( HKKXPUN ( DQY HKKJR ) ( BHAGCHAND) ( KUL BHARAT ) YS[KK LNL;@ ACCOUNTANT MEMBER U;KF;D LNL;@ JUDICIAL MEMBER JAIPUR DATED:- 10/04/2017. POOJA/ VKNS'K DH IZFRFYFI VXZSF'KR@ COPY OF THE ORDER FORWARDED TO: 1. THE APPELLANT- ASSTT. CIT(E), CIRCLE, JAIPUR. 2. THE RESPONDENT M/S SETH RAMJI DAS MODI VIDYA N IKETAN SOCIETY. 3. THE CIT(A). 4. THE CIT, 5. THE DR, ITAT, JAIPUR 6. GUARD FILE (ITA NO. ITA NO. 1086/JP/2016 ) VKNS'KKUQLKJ@ BY ORDER, LGK;D IATHDKJ@ ASSISTANT. REGISTRAR 4 ITA NO. 1086/JP/2016 M/S SETH RAMJI DAS MODI VIDYA NIKETAN SOCIETY.