M/s Durgoji Gopal Rao Educational and Charitable Trust , Davangere V. The Assistant Commissioner of Income TAx Circle-2(1), Davangere

ITA 1158/BANG/2018

• Counselvise Citation: [2018] 118 COUNSELVISE.COM (IT) 9197 (ITAT-BANGALORE)
• Duration Of Justice: 8 month(s) 9 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 19-12-2018
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: A
• Assessment Year: 2010-2011
• Appeal Filed On: 09-04-2018
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: C H SUNDAR RAO I
• Assessee Lawyers: V SRINIVASAN
• Keywords: Depreciation; Charitable institution; Capital expenditure
• Section: 143(3); 12AA; 32; 263

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL A BENCH : BANGALORE BEFORE SHRI N. V. VASUDEVAN, VICE PRESIDENT AND SHRI JASON P BOAZ , ACCOUNTANT MEMBER ITA NO. 115 8 /BANG/201 8 ASSESSMENT YEAR : 20 1 0 - 1 1 M/S. DURGOJI GOPAL RAO EDUCATIONAL AND CHARITABLE TRUST, K R NAGAR, HARIHAR, DAVANGERE DIST. PAN : AADTS 1938 A VS. THE ASSISTANT COMMISSIONER OF INCOME TAX, CIRCLE 2[1], DAVANGERE. APPELLANT RESPONDENT ASSESSEE BY : SHRI. V. SRINIVASAN, ADVOCATE REVENUE BY : SHRI. C. H. SUNDAR RAO, CIT-DR-I DATE OF HEARING : 2 7 . 1 1 .201 8 DATE OF PRONOUNCEMENT : 19 . 1 2 .201 8 O R D E R PER SHRI JASON P BOAZ, A.M. : THIS APPEAL BY THE ASSESSEE-TRUST IS DIRECTED AGAINST THE EX-PARTE ORDER OF CIT(A), DAVANGERE DATED 20.02.2018 FOR ASSESSMENT YEAR 2010-11. 2. BRIEFLY STATED, THE FACTS OF THE CASE ARE AS UNDER: 2.1 THE ASSESSEE-TRUST, REGISTERED U/S 12AA OF THE INCOME TAX ACT, 1961 (IN SHORT THE ACT) FILED ITS RETURN OF INCOME FOR ASSESSMENT YEAR 2010-11 DECLARING NIL INCOME. THE CASE WAS TAKEN UP FOR SCRUTINY FOR THIS YEAR AND THE ASSESSMENT WAS COMPLETED U/S 143(3) OF THE ACT VIDE ORDER DATED 20.03.2013. SUBSEQUENTLY, THE CIT, ITA NO. 1158/BANG/2018 PAGE 2 OF 5 DAVANGERE PASSED AN ORDER U/S 263 OF THE ACT SETTING ASIDE THE ORDER OF ASSESSMENT DATED 20.03.2013 AS BEING ERRONEOUS AND PREJUDICIAL TO THE INTERESTS OF REVENUE. THE RESULTANT ORDER OF ASSESSMENT FOR ASSESSMENT YEAR 2010-11 WAS PASSED U/S 143(3) R.W.S. 263 OF THE ACT VIDE ORDER DATED 16.03.2015; WHEREIN THE ASSESSEEES INCOME WAS DETERMINED AT RS.5,54,320/- IN VIEW OF THE FOLLOWING DISALLOWANCES: (I) DISALLOWANCE OF DEPRECIATION RS.10,04,041/- (II) DISALLOWANCE OF DONATION RS.23,175/- 2.2. AGGRIEVED BY THE ORDER OF ASSESSMENT DATED 16.03.2015 FOR ASSESSMENT YEAR 2010-11, THE ASSESSEE-TRUST FILED AN APPEAL BEFORE THE CIT(A), DAVANGERE WHICH WAS DISMISSED BY THE IMPUGNED EX-PARTE ORDER DATED 20.02.2018. 3. AGGRIEVED BY THE IMPUGNED EX-PARTE ORDER OF THE CIT(A), DAVANGERE DATED 20.02.2018, THE ASSESSEE HAS FILED THIS APPEAL BEFORE THIS TRIBUNAL, WHEREIN IT HAS RAISED THE FOLLOWING GROUNDS: ITA NO. 1158/BANG/2018 PAGE 3 OF 5 4. GROUND NOS. 1 AND 6, BEING GENERAL IN NATURE AND NOT URGED BEFORE US, ARE RENDERED INFRUCTUOUS AND ACCORDINGLY DISMISSED. 5. GROUND NO. 2 GROUND NO. 4 5.1 AT THE OUTSET, THE LEARNED AR FOR THE ASSESSEE SUBMITTED THAT GROUND NOS. 2 AND 4 (SUPRA) ARE NOT BEING PRESSED BY THE ASSESSEE IN THIS APPEAL. THESE GROUNDS ARE CONSEQUENTLY RENDERED INFRUCTUOUS AND WE, THEREFORE, DISMISS GROUNDS 2 AND 4 RAISED IN THIS APPEAL AS NOT PRESSED. 6. GROUND NO. 3 DISALLOWANCE OF DEPRECIATION 6.1 IN THIS GROUND (SUPRA), THE ASSESSEE ASSAILS THE ORDERS OF AUTHORITIES BELOW IN REJECTING THE ASSESSEES CLAIM OF DEPRECIATION AMOUNTING TO RS.10,04,041/- ON THE GROUND THAT THE CAPITAL EXPENDITURE WAS ALREADY ALLOWED AS APPLICATION TOWARDS CHARITABLE PURPOSES AND ALLOWANCE OF DEPRECIATION THEREON WOULD AMOUNT TO DOUBLE ITA NO. 1158/BANG/2018 PAGE 4 OF 5 DEDUCTION. IN SUPPORT OF THE ASSESSEES CLAIM THAT IT IS ENTITLED TO DEPRECIATION U/S 32 OF THE ACT ON ASSETS WHOSE COST HAS BEEN ALLOWED AS APPLICATION TOWARDS CHARITABLE PURPOSES, THE LEARNED AR FOR THE ASSESSEE PLACED RELIANCE ON THE DECISION OF THE HONBLE APEX COURT IN THE CASE OF CIT VS. RAJASTHAN AND GUJARATI CHARITABLE FOUNDATION (2018) (402 ITR 441) (SC). 6.2 PER CONTRA, THE LEARNED DR SUPPORTED THE ORDERS OF THE AUTHORITIES BELOW ON THIS ISSUE. 6.3.1 WE HAVE HEARD THE RIVAL CONTENTIONS OF BOTH PARTIES AND PERUSED AND CAREFULLY CONSIDERED THE MATERIAL ON RECORD; INCLUDING THE JUDICIAL PRONOUNCEMENTS CITED. IN THE CASE ON HAND, THE AUTHORITIES BELOW HAVE DENIED THE ASSESSEE THE CLAIM OF DEPRECIATION OF RS.10,04,041/- ON THE GROUND THAT THE CAPITAL EXPENDITURE ON THE ASSETS WAS ALREADY ALLOWED AND FURTHER ALLOWING THE ASSESSEE DEPRECIATION THEREON WOULD AMOUNT TO DOUBLE DEDUCTION. WE FIND THAT ON THIS VERY ISSUE OF DEPRECIATION WAS CONSIDERED BY THE HONBLE APEX COURT AND IN ITS DECISION IN THE CASE OF CIT VS. RAJASTHAN AND GUJARATI CHARITABLE FOUNDATION (2018) (402 ITR 441) (SC) HAS HELD THAT THE ASSESSEE TRUST IS ENTITLED TO DEPRECIATION U/S 32 OF THE ACT ON ASSETS WHOSE COST HAS BEEN ALLOWED AS APPLICATION TOWARDS CHARITABLE PURPOSES U/S 11(1)(A) OF THE ACT. THE HONBLE COURT FURTHER HELD THAT THE AMENDMENT IN SECTION 11(6) OF THE ACT BROUGHT ABOUT BY FINANCE (NO.2) ACT, 2014 WHICH BECAME EFFECTIVE FROM ASSESSMENT YEAR 2015-16 AND PROHIBITED THE ALLOWANCE OF DEPRECIATION IN SUCH CASES, IS PROSPECTIVE IN NATURE. IN OUR CONSIDERED VIEW, THE AFORESAID CASE OF RAJASTHAN AND GUJARATI CHARITABLE FOUNDATION (SUPRA) IS SQUARELY APPLICABLE TO THE ISSUE FOR CONSIDERATION I.E., DEPRECIATION, IN THE CASE ON HAND AND THEREFORE, RESPECTFULLY FOLLOWING THE SAME, WE HOLD THAT THE ASSESSEE IS ENTITLED TO BE ALLOWED DEPRECIATION U/S 32 OF THE ACT ON ASSETS WHOSE COST HAS BEEN ALLOWED AS APPLICATION TOWARDS CHARITABLE PURPOSES. THE ASSESSING OFFICER (AO) IS ACCORDINGLY DIRECTED. CONSEQUENTLY, GROUND NO. 3 OF ASSESSEES APPEAL IS ALLOWED. ITA NO. 1158/BANG/2018 PAGE 5 OF 5 7. IN THE RESULT, THE ASSESSEES APPEAL FOR ASSESSMENT YEAR 2010-11 IS PARTLY ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON THIS 19 TH DAY OF DECEMBER, 2018. SD/- SD/ - SD/ - (N. V. VASUDEVAN) VICE PRESIDENT (JASON P BOAZ) ACCOUNTANT MEMBER BANGALORE. DATED: 19 TH DECEMBER, 2018. /NS/* COPY TO: 1. APPELLANTS 2. RESPONDENT 3. CIT 4. CIT(A) 5. DR 6. GUARD FILE BY ORDER ASSISTANT REGISTRAR, ITAT, BANGALORE.