Nirma University, Ahmedabad V. The Dy.CIT.(Exemp), Ahmedabad

ITA 1216/AHD/2011

• Counselvise Citation: [2015] 140 COUNSELVISE.COM (IT) 85576 (ITAT-AHMEDABAD)
• Duration Of Justice: 3 year(s) 9 month(s) 4 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 29-01-2015
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: A
• Next Hearing Date: 22-01-2015
• Assessment Year: 2008-2009
• Appeal Filed On: 25-04-2011
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Assessee Lawyers: S N SOPARKAR
• Keywords: Depreciation; Charitable institution

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD A BENCH AHMEDABAD , BEFORE SHRI SHAILENDRA KUMAR YADAV, JUDICIAL MEMBER, AND SHRI N. S. SAINI, ACCOUNTANT MEMBER. ITA.NO.1216/AHD/2011 (ASSESSMENT YEAR:2008-09) NIRMA UNIVERSITY, S.G. HIGHWAY, AHMEDABAD APPELLANT VS. DY. DIRECTOR OF INCOME-TAX (EXEMPTION), AHMEDABAD RESPONDENT PAN: AAATT6829N /BY APPELLANT : SHRI S. N. SOPARKAR, A.R. /BY RESPONDENT : SHRI SUBHASH BAINS, CIT D.R. !'# /DATE OF HEARING : 22.01.2015 $%& !'# /DATE OF PRONOUNCEMENT : 29.01.2015 I.T.A. NO. 1216/AHD/2011 A.Y. 2008-09 (NIRMA UNIVERSITY VS. DDIT(EXEMP.) PAGE 2 ORDER PER SHAILENDRA KUMAR YADAV, J.M: THIS APPEAL HAS BEEN FILED BY THE ASSESSEE AGAINST THE ORDER OF COMMISSIONER OF INCOME TAX (APPEALS)-XXI, AHMEDABAD, DATED 16.03.2011 FOR A.Y. 2008-09 ON THE FOLLOWING GROUNDS: 1) IN LAW AND IN FACTS AND CIRCUMSTANCES OF THE APPELLANTS CASE, THE LEARNED CIT(A) HAS GROSSLY ER RED IN POINTS OF LAW AND FACTS. 2) IN LAW AND IN FACTS AND CIRCUMSTANCES OF THE APPELLANTS CASE, THE LEARNED CIT(A) HAS GROSSLY ER RED IN CONFIRMING DISALLOWANCE OF DEPRECIATION OF RS.6,47,32,014. 3) IN LAW AND IN FACTS AND CIRCUMSTANCES OF THE APPELLANTS CASE, THE LEARNED CIT(A) HAS GROSSLY ER RED IN DISMISSING APPELLANTS GROUND THAT THE LD. A.O. HAS GROSSLY ERRED IN ALLOWING LESS INTEREST U/S.244 A. 4) IN LAW AND IN FACTS AND CIRCUMSTANCES OF THE APPELLANTS CASE, THE LEARNED CIT(A) HAS GROSSLY ER RED IN DISMISSING APPELLANTS GROUND THAT THE LD. A.O. HAS GROSSLY ERRED IN NOT ALLOWING INTEREST ON INTEREST. 2. ASSESSEE TRUST IS A CHARITABLE TRUST REGISTERED WITH INCOME-TAX DEPARTMENT. ASSESSING OFFICER REJECTED THE CLAIM OF DEPRECIATION. HE RELIED ON DECISION OF HON'BLE SUP REME COURT IN CASE OF ESCORTS LTD. VS. UNION OF INDIA (1993) 1 99 ITR 43 (SC). HOWEVER, FACTS OF ESCORTS LTD. ARE NOT APPLIC ABLE TO ASSESSEE. ESCORTS LTD IS NOT A CHARITABLE TRUST. I N VIEW OF ABOVE, CIT(A) ALLOWED DEPRECIATION. SAME HAS BEEN OPPOSED BEFORE US. IN THIS REGARD, LEARNED AUTHORIZED REPR ESENTATIVE RELIED ON THE DECISION OF HONBLE GUJARAT HIGH COUR T IN TAX I.T.A. NO. 1216/AHD/2011 A.Y. 2008-09 (NIRMA UNIVERSITY VS. DDIT(EXEMP.) PAGE 3 APPEAL NO. 933 OF 2010 WITH 934 TO 936 OF 2010 IN C ASE OF DIRECTOR OF INCOME TAX (EXEMPTION) VS. AHMEDABAD SO UTH INDIAN ASSOCIATION CHARITABLE TRUST, WHEREIN ASSESS ING OFFICER DISALLOWED THE DEPRECIATION. MATTER TRAVELLED UP T O TRIBUNAL, WHEREIN FOLLOWING DECISION OF HONBLE GUJARAT HIGH COURT IN CASE OF COMMISSIONER OF INCOME-TAX VS. SHETH MANILA L RANCHHODDAS VISHRAM BHAVAN TRUST REPORTED IN (1992) 198 ITR 598 (GUJ.) DECIDED THE ISSUE IN FAVOUR OF ASSES SEE. WE FIND THAT IN SHETH MANILAL RANCHHODDAS VISHRAM BHAVAN TR UST (SUPRA) IN WHICH COURT HAD FOLLOWED EARLIER DECISIO N OF KARNATAKA AND MADHYA PRADESH HIGH COURTS IN CASE OF CIT VS. SOCIETY OF THE SISTERS OF ST. ANNE (1984) 146 ITR 2 8 (KAR.) AND CIT VS. RAIPUR PALLOTTINE SOCIETY (1989) 180 ITR 57 9 (MP) HAVE DECIDED THE ISSUE IN FAVOUR OF ASSESSEE BY OBSERVIN G AS UNDER: 'WHETHER DEPRECIATION HAS TO BE ALLOWED AS A NECESS ARY DEDUCTION FOR COMPUTING THE INCOME OF A CHARITABLE INSTITUTION WAS THE QUESTION WHICH CAME UP BEFORE T HE KARNATAKA HIGH COURT IN CIT V. SOCIETY OF THE SISTE RS OF ST. ANNE (1984) 146 ITR 28. NOTICING THE DIFFERENCE B ETWEEN THE WORD 'INCOME' AND THE EXPRESSION 'TOTAL INCOME' AND THE NECESSITY FOR PROVIDING DEPRECIATION IN ORDER T O MAINTAIN CORRECT ACCOUNTS, THE HIGH COURT HELD THAT THE A MOUNT OF DEPRECIATION DEBITED TO THE ACCOUNTS OF THE CHARITA BLE INSTITUTION HAS TO BE DEDUCTED TO ARRIVE AT TH E INCOME AVAILABLE FOR APPLICATION TO CHARITABLE AND REL IGIOUS PURPOSES. SAME VIEW HAS BEEN TAKEN BY THE MADHYA PRADESH HIGH COURT IN CIT V RAIPUR PALLOTTINE SOCI ETY (1989) 180 ITR 579. 'IN CIT V. RAO BAHADUR CALAVALA CUNNAN CHETTY CHANT IES (1982) 135 ITR 485, THE MADRAS HIGH COURT WAS REQUI RED TO CONSIDER WHETHER, FOR THE PURPOSE OF COMPUTING ACCUMULATION IN EXCESS OF 25 PER CENT AS LAID DOWN IN SECTION 11(1)(A) OF THE ACT, 'INCOME' HAS TO BE COMPUTED UNDER THE VARIOUS HEADS ENUMERATED IN THE INCOME-TA X ACT. I.T.A. NO. 1216/AHD/2011 A.Y. 2008-09 (NIRMA UNIVERSITY VS. DDIT(EXEMP.) PAGE 4 IT HELD THAT THE INCOME FROM THE PROPERTIES HELD UN DER TRUST WOULD HAVE TO BE ARRIVED AT IN THE NORMAL COMMERCIA L MANNER WITHOUT CLASSIFICATION UNDER THE VARIOUS HEA DS SET OUT IN SECTION 14. IT HELD THAT THE EXPRESSION 'INC OME' HAS TO BE UNDERSTOOD IN THE POPULAR OR GENERAL SENSE AN D NOT IN THE SENSE IN WHICH THE INCOME IS ARRIVED AT FOR THE PURPOSE OF ASSESSMENT TO TAX BY APPLICATION OF SOME ARTIFIC IAL PROVISIONS EITHER GIVING OR DENYING DEDUCTION. IT O BSERVED THAT THE COMPUTATION UNDER THE DIFFERENT CATEGORIES OR HEADS ARISES ONLY FOR THE PURPOSES OF ASCERTAINING THE TO TAL INCOME FOR THE PURPOSES OF CHARGE. THOSE PROVISIONS CANN OT BE INTRODUCED TO FIND OUT WHAT THE INCOME DERIVED FROM THE PROPERTY HELD UNDER TRUST TO BE EXCLUDED FROM THE T OTAL INCOME IS, FOR THE PURPOSE OF THE EXEMPTIONS UNDER CHAPTER III. 'WE ARE IN RESPECTFUL AGREEMENT WITH THE VI EW TAKEN BY THE KARNATAKA, MADHYA PRADESH AND MADRA S HIGH COURTS. WE, THEREFORE, ANSWER BOTH THE QUESTIONS REFERRED TO US IN THE AFFIRMATIVE AND AGAINST THE REVENUE. N O ORDER AS TO COSTS. ' FOLLOWING THE SAME HONBLE GUJARAT HIGH COURT IN AH MEDABAD SOUTH INDIAN ASSOCIATION CHARITABLE TRUST (SUPRA) H AS DECIDED THE ISSUE IN FAVOUR OF ASSESSEE. THUS, THE ISSUE B EFORE US I.E. ALLOWABILITY OF DEPRECIATION OF RS.6,47,32,014/- IS DECIDED IN FAVOUR OF ASSESSEE. 2.1 NEXT ISSUE IS WITH REGARDS TO ALLOWING INTEREST U/S. 244A. INTEREST FOR THE MONTHS OF AUGUST AND SEPTEMBER, 20 08 WAS NOT GRANTED. ACCORDING TO ASSESSEE, INTEREST U/S.2 44A SHOULD BE GRANTED TILL THE DATE OF ISSUE OF REFUND I.E. UP TO 31ST DECEMBER, 2010, WHEREAS SAME WAS GRANTED TILL 31ST MARCH, 2010. THEREFORE, INTEREST FROM APRIL, 2010 TO DECE MBER, 2010 (NINE MONTHS) WAS REQUESTED. ACCORDINGLY TO THE OR DER OF ASSESSING OFFICER ON THE ISSUE WAS CONFIRMED. THIS REASONED I.T.A. NO. 1216/AHD/2011 A.Y. 2008-09 (NIRMA UNIVERSITY VS. DDIT(EXEMP.) PAGE 5 FINDING OF CIT(A) NEEDS NO INTERFERENCE FROM OUR SI DE. WE UPHOLD THE SAME. 3. IN THE RESULT, APPEAL FILED BY THE ASSESSEE IS P ARTLY ALLOWED. PRONOUNCED IN THE OPEN COURT ON THIS THE 29 TH DAY OF JANUARY, 2015. SD/- SD/- (N. S. SAINI) (SHAILENDR A KUMAR YADAV) ACCOUNTANT MEMBER JUDICIAL MEMBE R TRUE COPY S.K.SINHA ' ' ' ' !( !( !( !( )(&! )(&! )(&! )(&! / COPY OF ORDER FORWARDED TO:- 1. ,- / REVENUE 2. / ASSESSEE 3. 00! 1 / CONCERNED CIT 4. 1- / CIT (A) 5. (56 !, , / DR, ITAT, AHMEDABAD 6. 69: ;< / GUARD FILE. BY ORDER / ' , =/ 0, , ?