The Asst. Commissioner of Income Tax (Exemptions), Circle-1, Ahmedabad V. Gujarat Maritime Board, Morbi

ITA 171/AHD/2020

AI Insights

The case involves the Gujarat Maritime Board, which appealed against the order of the CIT(A)-9, Ahmedabad, concerning the Assessment Year 2016-17. The primary issues revolved around the denial of benefits under Section 11 and 12 of the Income Tax Act, 1961, by the Assessing Officer, citing the applicability of the proviso to Section 2(15). The CIT(A) had partly allowed the assessee's appeal, which the Revenue contested. The Tribunal's decision focused on the depreciation claims and the applicability of exemptions under Sections 11 and 12, referencing previous rulings by the Gujarat High Court and the Tribunal.

• Counselvise Citation: [2023] 140 COUNSELVISE.COM (IT) 129283 (ITAT-AHMEDABAD)
• Duration Of Justice: 3 year(s) 8 month(s) 17 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 31-10-2023
• Appeal Filed By: Department
• Order Result: PartlyAllowed
• Bench Allotted: C
• Next Hearing Date: 04-09-2023
• Assessment Year: 2016-2017
• Appeal Filed On: 13-02-2020
• Other Referred Cases: Rajasthan and Gujarati Charitable Foundation
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Keywords: Depreciation; Principle of natural justice; Capital expenditure; TDS
• Section: 11; 142(1); 143(2)

Judgement Text

ITA No.171/Ahd/2020 A.Y: 2016-17 Page 1 of 4 IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD “C” BENCH, AHMEDABAD BEFORE Ms. SUCHITRA KAMBLE, JUDICIAL MEMBER AND SHRI WASEEM AHMED, ACCOUNTANT MEMBER ITA No.171/Ahd/2020 Assessment Year: 2016-17 The Assistant Commissioner of Income Tax (Exemptions), Circle – 1, Ahmedabad. Vs. Gujarat Maritime Board, V C Para, Morbi, Gujarat – 363 641 [PAN – AABCG 6676 L] (Appellant) (Respondent) Assessee by Shri S.N. Soparkar, AR & Shri Parin Shah, AR Revenue by Shri Kamlesh Makwana, CIT (DR) Da te o f He a r in g 04.09.2023 Da te o f P ro n o u n ce m e n t 31.10.2023 O R D E R PER SUCHITRA KAMBLE, JUDICIAL MEMBER : This appeal is filed by the Revenue against order dated 04.12.2019 passed by the CIT(A)-9, Ahmedabad for the Assessment Year 2016-17. 2. The Revenue has raised the following ground of appeal :- “1. Whether, on the facts and in the circumstances of the case, the Ld. Commissioner of Income Tax (Appeals) is justified in allowing the assessee's appeal, negating the finding of the Assessing Officer denying the benefits of Section 11 and 12 of the Act by invoking proviso to Section 2(15) of the Act? 2. Whether on the facts and in the circumstances of the case, the Ld. Commissioner of Income Tax (Appeals) is justified in allowing the accumulation of 15% without appreciating the fact that once the provisions of Section 2(15) is applicable to the assessee, the assessee forfeits all the exemptions u/s. 11 and 12 of the Act in view of provisions of Section 13(8) of the Act? 3. Whether, on the facts and in the circumstances of the case, the Ld. Commissioner of Income Tax (Appeals) is right in allowing depreciation on assets, full cost of which was already allowed as application in earlier years. The ratio of decision of the Supreme Court in Rajasthan and Gujarati Charitable Foundation is not applicable in the present case as in ITA No.171/Ahd/2020 A.Y: 2016-17 Page 2 of 4 that case exemption under Section 11 and 12 was available to the assessee, whereas in the present case, the exemption under Section 11 and 12 is not available to the assessee as per the stand of the department. Therefore an AOP cannot be granted benefit of both depreciation and capital expenditure in accordance with normal business provisions of the Act. 4. Whether, on the facts and in the circumstances of the case, the Ld. Commissioner of Income Tax (Appeals) is right in allowing the claim of depreciation to the assessee by ignoring the fact that allowance of depreciation on the fixed assets, acquisition of which has been allowed as application of income in earlier years, will tantamount to double deduction particularly when benefit of Section 11 & 12 has not been allowed and proviso to Section 2(15) has been held to be applicable?” 3. The assessee Gujarat Maritime Board was constituted under the Gujarat Maritime Board Act, 1981 for the purpose of development and maintenance of Minor Port in the State of Gujarat. The activities of the Board is related with providing of Port Infrastructure Faculty’s Marine Services and other related services which is in the nature of advancement of objects of general public utility. The assessee Trust has been granted registration under Section 12A(a) of the Income Tax Act, 1961 vide order dated 15.06.2005. During the course of scrutiny assessment of A.Y. 2009-10 to 2015-16, the assessee is engaged in providing of port infrastructure faculty’s and the other related objects as stated earlier in this paragraph and hence the Assessing Officer observed that the provisions of Section 2(15) read with Section Proviso 1 & 2 were held to be applicable to the facts of the assessee’s case. The assessee filed return of income on 15.10.2016 at Rs.2,92,62,66,333/-. The case was selected for compulsory manual scrutiny and accordingly a notice under Section 143(2) of the Act was issued and served upon the assessee. Thereafter, notice under Section 142(1) of the Act was issued which was responded by the assessee with the details and reply. The Assessing Officer observed that during the course of assessment proceedings in progress for the A.Y. 2016-17, activities carried out by the assessee is out of the purview of provisions of Section 2(15) of the Act and issued the show cause notice accordingly. The assessee filed its reply. After taking cognisance of the reply of the assessee, the Assessing Officer held that in the light of provisions of Section 13(a) of the Act, the assessee looses all exemptions claimed under Section 11 & 12 of the Act and, therefore, not eligible for any exemption under Section 11 & 12 of the Act. Thus, the Assessing Officer made addition of Rs.38,05,76,447/- in respect of assessee’s ITA No.171/Ahd/2020 A.Y: 2016-17 Page 3 of 4 claim of depreciation. The Assessing Officer also made addition of Rs.45,32,39,598/- in respect of assessee’s claim of deduction of TDS. The Assessing Officer also made addition of Rs.1,00,00,000/- that of capital grant from GOG which was claimed as exempt under Section 11(1)(d) of the Act and Rs.1,00,67,47,356/- as income from accumulation under Section 11 (maximum 15% gross) and added the same back due to denial of exemption under Section 11 & 12 of the Act. 4. Being aggrieved by the Assessment Order, the assessee filed appeal before the CIT(A). The CIT(A) partly allowed the appeal of the assessee. 5. At the time of hearing, Ld. AR submitted that the assessee filed the appeal in respect of depreciation on fixed assets and the said claim on the very assessed depreciation should have been taken into consideration by the CIT(A) and then the matter should go back to the file of the CIT(A). The Ld. AR submitted that the issue in respect of depreciation has not been decided by the Tribunal in consonance with A.Y. 2014-15 and thus the same may be remanded back. 6. The Ld. DR relied upon the Assessment Order and the order of the CIT(A). 7. We have heard both the parties and perused all the relevant material available on record. The contention of the Ld. AR that the CIT(A) while adjudicating the issue has given an express finding that the assessee never claimed the impugned asset as application of income in the respective year of purchase and was accordingly entitled to depreciation since the same does not tantamount to double deduction. The same needs to be taken into consideration. In respect of findings given by the Hon’ble Gujarat High Court in assessee’s own case passed in order dated 28.09.2020 for A.Ys. 2010-11 to 2013-14 wherein the Hon’ble High Court expressed the view that the assessee is entitled to exemption under Section 11 of the Act. Therefore, we are remanding back this issue to the file of the CIT(A) for proper adjudication in the light of observations made by the Hon’ble High Court as well as by the Tribunal in earlier order. The same may be adjudicated as per low by the CIT(A). Needless to say the assessee be given opportunity of hearing by following the principles of natural justice. ITA No.171/Ahd/2020 A.Y: 2016-17 Page 4 of 4 8. In the result, appeal filed by the Revenue, to the extent of ground nos.3 & 4, is partly allowed for statistical purpose. Order pronounced in the open Court on this 31 st October, 2023. Sd/- Sd/- (WASEEM AHMED) (SUCHITRA KAMBLE) Accountant Member Judicial Member Ahmedabad, the 31 st day of October, 2023 PBN/* Copies to: (1) The appellant (2) The respondent (3) CIT (4) CIT(A) (5) Departmental Representative (6) Guard File By order UE CO Assistant Registrar Income Tax Appellate Tribunal Ahmedabad benches, Ahmedabad