The ITO, Ward 3 (2), JAMNAGAR V. Umiya Mataji Mandir Trust, JAMNAGAR

ITA 1245/RJT/2010

• Counselvise Citation: 124524914 RSA 2010
• Duration Of Justice: 1 year(s) 6 month(s) 28 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 25-05-2012
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: DB
• Next Hearing Date: 21-05-2012
• Assessment Year: 2005-2006
• Appeal Filed On: 27-10-2010
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: MK SINGH
• Keywords: Depreciation; Charitable institution; Capital expenditure
• Section: 11; 142(1); 12A

Judgement Text

, IN THE INCOME TAX APPELLATE TRIBULAL; RAJKOT BENCH, RAJKOT . .. . . . . . , , , , . .. . . . . . , , , , $ $ $ $ BEFORE SHRI T. K. SHARMA, JM AND SHRI D. K . SRIVASTAVA, AM ITA NO 1245/RJT/2010 / ASSESSMENT YEAR 2005-06 ITO, WARD 3(2) V. UMIYA MATAJI MANDIR TRUST JAMNAGAR. AT: SIDSAR, TAL: JAM-JODHPUR JAMNAGAR PAN: AAATS9825M . DATE OF HEARING : 21-05-2012. DATE OF PONOUNCEMENT : 25-05-2012 REVENUE BY: SHRI M. K. SINGH, D.R ASSESSEE BY : NONE / // / ORDER . .. . . . . . /D. K. SRIVASTAVA: THE APPEAL FILED BY THE DEPARTMENT IS DIRECTED AGAINST THE ORDER PASSED BY THE CIT(A) ON 03-08-2010, ON THE FOLLOWING GROUNDS:- 1. THE LD. CIT(A)HAS ERRED IN LAW AND ON FACTS IN DELETING PENALTY LEVIED U/S. 271(1)(C) OF THE ACT AMOUNTING TO RS.2,64,475/ -. 2. THAT ON THE FACTS AND IN THE CIRCUMSTANCES OF TH E CASE, THE LD. CIT(A) OUGHT TO HAVE UPHELD THE ORDER OF THE ASSESSING OFF ICER. 3. IT IS THEREFORE PRAYED THAT THE ORDER OF THE LD. CIT(A) BE SET ASIDE AND THAT OF THE ASSESSING OFFICER BE RESTORED. 4. THAT THE REVENUE CRAVES LEAVE TO ADD, AMEND, ALT ER OR WITHDRAW ANY GROUNDS OF APPEAL. 2. THE ASSESSEE IS A TRUST ENGAGED IN CHARITABLE AC TIVITIES. IT FILED ITS RETURN OF INCOME ON 09-06-2005 RETURNING TOTAL DEFICIT OF RS. 42,83,220/-. AFTER PROCESSING, THE RETURN WAS TAKEN UP FOR SCRUTINY AS A RESULT OF WHI CH DEPRECIATION AMOUNTING TO RS.8,64,298/- CLAIMED BY THE ASSESSEE WAS DISALLOWE D BY THE AO WITH THE FOLLOWING OBSERVATIONS:- 3. ASSESSEE IS A TRUST, REGISTERED UNDER SEC. 12A (A) OF THE ACT UNDER THE NAME OF SHRI UMIYA MATAJI MANDIR TRUST AT SIDSAR, C REATED MAINLY FOR CHARITABLE ACTIVITIES WIDE REGISTRATION NO.66-U-13/ 78CIT-V. THE MAIN SOURCE OF THE INCOME OF THE TRUST IS FROM DONATION FROM TH E VARIOUS WELL WISHERS AND INTEREST ON FDR.S DURING THE YEAR UNDER CONSIDERAT ION THE ASSESSEE TRUST HAS SHOWN DEFICIT OF RS (-) 4283220/- WHICH INCLUDE S THE DEPRECIATION OF RS.8,84,298/- ON THE COST OF VARIOUS ASSET ALLOWED AS DEDUCTION BY WAY OF 2 ITA 1245/RJT/2010 EXEMPTION US.11 OF I.T. ACT. AS PER THE DECISION O F THE SUPREME COURT IN THE CASE OF ESCORTS LTD. VS. UNION OF INDIA (1983) 199 ITR 43, ASSESSEE CLAIM FOR DEPRECIATION IS LIABLE TO BE REJECTED TO THE EXTENT OF ABOVE AMOUNT. IN THIS REGARD THIS OFFICE HAD ISSUED A LETTER CUM NOTICE U /S. 142(1) OF I.T. ACT. TO SHOW CAUSE WHY THE DEPRECIATION CLAIMED AT RS.8,64, 298/- SHOULD NOT BE DISALLOWED OR REDUCE THE DEFICIT CLAIMED. IN RESPO NSE TO THIS LETTER ASSESSEE C.A. WIDE LETTER DATED 07/08/2008 IS REPLIED AS UND ER: YOUR ASSESSEE HAS FILED ITS RETURN OF INCOME FOR A .Y. 2005-06 VIDE R.NO.0322000749 DATED 09/06/2005 WITH WARD 3(2) JAM NAGAR SHOWING TOTAL OF RS.4283220/- WHILE CALCULATING TOTAL INCOME YOUR ASSESSEE HAS CLAIMED RS.864298/- DEPRECIATION ON IS ASSETS AT THE BEGINN ING OF THE YEAR IN IT OTHER WORDS OPENING OF ASSETS. NO DEPRECIATION HAS BEEN P ROVIDED ON ADDITION MADE IN ASSETS DURING THE YEAR BUT IT HAS BEEN CLAI M AS DEDUCTION AS CAPITAL EXPENDITURE FROM THE GROSS TOTAL INCOME. SIR, YOUR ASSESSEE HAS GROSS TOTAL INCOME WERE RS.8754574/- AND MADE EXPENDITURE FOR T HE OBJECT OF THE TRUST INCLUDING CAPITAL EXPENDITURE MADE DURING THE YEARS WERE RS.1303779/- HENCE TOTAL DEFICIT WERE RS.283217/-. FURTHER WE WOULD LIKE TO STATE THAT DURING THE ABOV E ASSESSMENT YEAR YOUR ASSESSEE HAD SHOWN DEFICIT OF RS.4283220/-. T HIS DEFICIT INCLUDES DEPRECIATION OF RS.864298/- WHICH IS NOT ALLOWABLE AS THE ENTIRE COST OF ASSET HAS BEEN ALLOWED AS A DEDUCTION BY WAY OF EXEMPTION U/S 11 FOR THE I.T. ACT 1961 AS PER THE DECISION OF THE SUPREME COURT IN TH E CASE OF ESCORT LTD. V/S. UNION OF INDIA (1993) 194 ITR 43. 3. KEEPING IN TO CONSIDERING THE ABOVE REPLY OF THE ASSESSEES C.A., IT IS STATED THAT THE DEPRECIATION CLAIMED AS ABOVE IS NO T ALLOWABLE AND THEREFORE THE DEFICIT SHOWN IS REDUCED TO RS.34,18,922/-. THU S, THE DEFICIT IS REDUCED BY RS.8,64,298/-. THEREFORE IT IS PROVED BEYOND DOUBT THAT THE INCOME CHARGEABLE TO TAX HAS ESCAPED THE ASSESSMENT TO THE EXTENT OF RS.8,64,298/- THEREFORE PANEL PROCEEDING FOR FURNISHING INACCURAT E PARTICULARS OF INCOME IS INITIATED. SHOW CAUSE NOTICE U/S.274 READ WITH SEC TION 271(1)(C) OF I.T. ACT IS ISSUED FOR FURNISHING INACCURATE PARTICULARS OF INC OME. 3. IT IS WITH REFERENCE TO THE AFORESAID AMOUNT THA T THE IMPUGNED PENALTY HAS BEEN LEVIED BY THE AO. ON APPEAL, THE LD. CIT(A) HA S CANCELLED THE PENALTY WITH THE FOLLOWING OBSERVATIONS:- 5. I HAVE CAREFULLY CONSIDERED THE ISSUE. IT IS N OTICED THAT SIMILAR CLAIM OF DEPRECIATION WAS BEING ALLOWED TO THE APPELLANT IN ALL THE EARLIER YEARS AND THUS A SIMILAR CLAIM MADE IN THIS YEAR CANNOT BE SA ID TO BE A CLAIM WITH ANY MALAFIDE INTENTION. IT IS ALSO SEEN THAT DECISION OF HONBLE GUJARAT HIGH COURT REPORTED IN 198 ITR PAGE 598 WAS EXISTING, WHICH ST ATES THAT IN CASE OF 3 ITA 1245/RJT/2010 CHARITABLE TRUSTS, DEPRECIATION IS AN ALLOWABLE DED UCTION U/S.11 OF THE ACT ON COMMERCIAL PRINCIPLES. THUS IT CANNOT BE SAID THAT THE CLAIM WAS TOTALLY WRONG. IT IS ALSO SEEN THAT WHEN DECISION OF APEX COURT WAS BROUGHT TO THE NOTICE OF THE APPELLANT IT AGREED FOR DISALLOWANCE IN THE RETURN AND IN SUCH CIRCUMSTANCES, MERE REJECTION OF A CLAIM IN ITSELF WOULD NOT LEAD TO LEVEY OF PENALTY AS HELD BY APEX COURT IN THE CASE OF CIT VS . RELIANCE PETRO PRODUCTS LTD. SINCE THE BONAFIDES OF THE APPELLANT IS NOT I N DOUBT, THIS IS NOT A FIT CASE WHERE PENALTY FOR CONCEALMENT SHOULD HAVE BEEN LEIV IED AND THE SAME IS CANCELLED. 4. IN SUPPORT OF APPEAL, THE LD. DEPARTMENTAL REPRE SENTATIVE SUBMITTED THAT THE ASSESSEE HAS MADE INCORRECT CLAIM AND THEREFORE THE ACTION OF THE AO IN LEVYING THE IMPUGNED PENALTY ON THAT BASIS WAS JUSTIFIED. 5. NOTICE OF HEARING WAS SERVED ON THE ASSESSEE BY RPAD. ACKNOWLEDGMENT SLIP EVIDENCING SERVICE OF NOTICE IS AVAILABLE ON F ILE. HOWEVER, NEITHER THE ASSESSEE NOR ITS REPRESENTATIVE WAS PRESENT AT THE TIME OF H EARING. IT WAS HOWEVER, FELT THAT THE ISSUE UNDER APPEAL COULD BE DISPOSED OFF EVEN W ITHOUT THE PRESENCE OF THE ASSESSEE OR ITS REPRESENTATIVE AND THEREFORE THE AP PEAL FILED BY THE DEPARTMENT WAS HEARD IN THE ABSENCE OF THE ASSESSEE. 6. WE HAVE HEARD THE LD. DEPARTMENTAL REPRESENTATIV E AND ALSO PERUSED THE ORDERS PASSED BY THE AO AND THE CIT(A). IN OUR VIEW , THE LD. CIT(A) HAS RIGHTLY CANCELLED THE IMPUGNED PENALTY. THERE IS A LONG LIN E OF JUDICIAL AUTHORITIES FOR THE PROPOSITION THAT MERE REJECTION OF CLAIM MADE BY TH E ASSESSEE IS NOT BY ITSELF SUFFICIENT FOR LEVY OF PENALTY. THERE IS NOTHING ON RECORD TO ESTABLISH THAT THE ASSESSEE HAD FURNISHED INACCURATE PARTICULARS OF IN COME OR OTHERWISE FAILED TO DISCLOSE FULLY AND TRULY ALL THE FACTS MATERIAL TO THE COMPUTATION OF ITS INCOME. IN THIS VIEW OF THE MATTER, THE ORDER PASSED BY THE CIT(A) IS CONFIRMED. APPEAL FILED BY THE DEPARTMENT IS DISMISSED. ) + 25-05-2012 - ) ORDER PRONOUNCED IN THE OPEN COURT ON 25-05-2012 SD/- SD/- ( .. / T. K. SHARMA) ( .. / D. K. SRIVASTAVA) /JUDICIAL MEMBER / ACCOUNTANT MEMBER +/ DATE -05-2012. /RAJKOT 4 ITA 1245/RJT/2010 ) )) ) 01 01 01 01 21 21 21 21 / COPY OF ORDER FORWARDED TO:- 1. 5 / APPELLANT-. THE INCOME TAX, OFFICER, WD.-3(2), J AMNAGAR 2. 075 / RESPONDENT-UMIYA MATAJI MANDIR TRUST, JAMNAGAR. 3. : / CONCERNED CIT, JAMNAGAR. 4. :- / CIT (A), JAMNAGAR. 5. 1 0, , / DR, ITAT, RAJKOT 6. / GUARD FILE. / BY ORDER , ASSTT. REGISTRAR/ , / ITAT, RAJKOT