Swargeeya Sanjibhai Rupjibhai Memorial Trust, Dadra and Nagar Haveli V. The DCIT (Exemprion), Circle-2, Ahmedabad

ITA 1432/AHD/2019

AI Insights

The case involves Swargeeya Sanjibhai Rupjibhai Memorial Trust, which appealed against the order of the CIT(A)-9, Ahmedabad, concerning the Assessment Year 2015-16. The primary contention was the disallowance of depreciation amounting to Rs.58,00,028 by the Assessing Officer under Section 11(6) of the Income Tax Act, 1961, which was upheld by the CIT(A). The Trust argued that the amendment to Section 11(6) by the Finance (No.2) Act, 2014, was prospective and applicable from 01.04.2015, thus should not affect the assessment for the year 2015-16. The Tribunal found merit in the Trust's arguments regarding the prospective application of the amendment and remanded the matter back to the Assessing Officer for re-evaluation.

• Counselvise Citation: [2023] 140 COUNSELVISE.COM (IT) 129258 (ITAT-AHMEDABAD)
• Duration Of Justice: 3 year(s) 4 month(s) 25 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 07-02-2023
• Appeal Filed By: Assessee
• Order Result: PartlyAllowed
• Bench Allotted: SMC
• Next Hearing Date: 22-01-2023
• Assessment Year: 2015-2016
• Appeal Filed On: 12-09-2019
• Other Referred Cases: Escorts Limited, 199 ITR 43
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Depreciation; Condonation of delay
• Section: 11; 142(1); 234B; 12A; 143(1); 143(2)

Judgement Text

ITA No.1432/Ahd/2019 Assessment Year: 2015-16 Page 1 of 4 IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD “SMC” BENCH, AHMEDABAD BEFORE Ms. SUCHITRA KAMBLE, JUDICIAL MEMBER ITA No.1432/Ahd/2019 Assessment Year: 2015-16 Swargeeya Sanjibhai Rupjibhai vs. The D.C.I.T. (Exemption), Memorial Trust, Circle-2, Ahmedabad. Opp. Vinoba Bhave Hospital, Sanjibhai Delkar Road, Sayli Silvassa, Dadra and Nagar Haveli (UT) Gujarat – 396 230. [PAN – AAKTS 6843 D] (Appellant) (Respondent) Assessee by : Shri Parin Shah, AR Revenue by : Shri Rakesh Jha, Sr. DR Date of hearing : 23.01.2023 Date of pronouncement : 08.02.2023 O R D E R This appeal is filed by the Assessee against order dated 25.06.2019 passed by the CIT(A)-9, Ahmedabad for the Assessment Year 2015-16. 2. The Assessee has raised the following grounds of appeal :- “1. The order passed by Ld. AO and confirmed by CIT(A) is bad, illegal and required to be quashed. 2. Ld. CIT(A) erred in law and on facts in disallowing depreciation Rs.58,00,028/- by invoking provision of section 11(6) of the act ignoring submission of the appellant. Ld. CIT(A) ought to have considered the submission and delete the disallowance. It be so held now. 3. Ld. CIT(A) ought to have considered the fact that amendment in section 11(6) brought by Finance (No.2) Act, 2014 is prospective in nature and applicable from 01.04.2015 and subsequent years. It be so held now. 4. Ld. CIT(A) ought to have considered that as per section 43(6)(c) of the Act only assets sold or discarded or demolished or destroyed cab be reduced from block of assets and there is no provision to tinker the block value otherwise. It be so held now. 5. Charging of interest u/s.234A and 234B is unjustified.” ITA No.1432/Ahd/2019 Assessment Year: 2015-16 Page 2 of 4 3. There is a delay of 19 days in filing the present appeal for which the assessee has filed condonation of delay application explaining delay. The delay appears to be genuine hence the delay is condoned. 4. The assessee trust is registered under the Indian Trust Act, 1882 dated 17.07.2003. The assessee trust is carried out the educational activities of four colleagues affiliated to University of Pune. The main source of income of the trust is interest, rent & fees. The assessee trust is registered under Section 80G(5) of the Income Tax Act, 1961 in the A.Y. 2003-04 and under Section 12A on 13.08.2013. The assessee filed its return of income on 30.09.2015 declaring nil income. The said return was processed under Section 143(1) of the Act and was selected for limited scrutiny assessment. Accordingly, notice under Section 143(2) of the Act was issued on 29.07.2016 and subsequent notices under Section 142(1) of the Act was issued on various dates. The assessee filed details through the Ld. AR before the Assessing Officer. The Assessing Officer made addition of Rs.10,800/- in respect of claim of deduction under Section 24(a) of the Act under the head income from house property. The Assessing Officer also disallowed the claim of depreciation of Rs.58,00,028/- as per provisions of Section 11(6) of the Act. 5. Being aggrieved by the assessment order, the assessee filed appeal before the CIT(A). The CIT(A) dismissed the appeal of the assessee. 6. The Ld. AR submitted that the Assessing Officer was not justified in disallowing depreciation of Rs. 58,00,028/- by invoking Section 11(6) of the Act as the assessee is registered trust and is exempt in respect of income derived from property held under the Trust and voluntary contribution. The assessee’s Trust’s case cannot be equated with the decision of Hon’ble Apex Court in case of Escorts Limited, 199 ITR 43, as the computation of income of Trust cannot be equated with computation of business income of business entity. The primary condition for grant of exemption is that the income derived from property held under the trust should be applied for charity purpose and where such income cannot be applied for the previous year. As relates to amendment in Section 11(6) of the Act brought by Finance Act, 2014 is prospective in nature and applicable from 01.04.2015 which is consequent to the A.Y. 2015-16. The Ld. AR submitted that normal depreciation debited to Profit & Loss Account of the trust needs to be taken into account and the assessee is not claiming double ITA No.1432/Ahd/2019 Assessment Year: 2015-16 Page 3 of 4 deduction on account of depreciation. Ld. AR submitted that the Assessing Officer has not taken cognisance and the matter may be remitted back to the file of the Assessing Officer for proper adjudication. 7. The Ld. DR relied upon the Assessment Order and the order of the CIT(A). 8. Heard both the parties and perused all the relevant material available on record. The income of the assessee being exempt, the assessee was only claiming that depreciation should be reduced from the income for determining the percentage of funds which had to be applied for the purpose of the trust for computing income for purposes of Section 11 of the Act. This aspect needs to be verified and, therefore, the issue is remanded back to the file of the Assessing Officer for proper adjudication after verification. Needless to say assessee be given opportunity of hearing by following principles of natural justice. Hence, ground no.2 is partly allowed for statistical purpose. 9. As regard to Ground no.3, it is undeniable fact that the assessee is registered trust from 17.07.2003 and was registered under Section 12A of the Act vide order dated 13.08.2013. The assessee trust is registered under Section 80G(5) as well. Section 11(6) of the Act brought by Finance Act, 2014 is prospective in nature and applicable from 01.04.2015. This aspect is consequential to ground no.2 and, therefore, the same is also needs to be adjudicated by the Assessing Officer. 10. As regard to ground nos.4 & 5, the same are consequential and hence no adjudication is required at this juncture. 11. In the result, appeal of the assessee is partly allowed for statistical purpose. Order pronounced in the open Court on this 8 th day of February, 2023. Sd/- (SUCHITRA KAMBLE) Judicial Member Ahmedabad, the 8 th day of February, 2023 PBN/* ITA No.1432/Ahd/2019 Assessment Year: 2015-16 Page 4 of 4 Copies to: (1) The appellant (2) The respondent (3) CIT (4) CIT(A) (5) Departmental Representative (6) Guard File By order UE COPY Assistant Registrar Income Tax Appellate Tribunal Ahmedabad benches, Ahmedabad