The Dy. Commissioner of Income Tax (Exemptions), Circle-1, Ahmedabad V. Dawat Properties Trust, Ahmedabad

ITA 1907/AHD/2016

• Counselvise Citation: [2018] 125 COUNSELVISE.COM (IT) 8575 (ITAT-AHMEDABAD)
• Duration Of Justice: 1 year(s) 8 month(s) 15 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 04-04-2018
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: Not Allotted
• Assessment Year: 2012-2013
• Appeal Filed On: 19-07-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: APRANA M AGARWAL
• Keywords: Depreciation; Charitable institution
• Section: 12AA; 11

Judgement Text

, - IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD A BENCH AHMEDABAD BEFORE SHRI PRAMOD KUMAR, ACCOUNTANT MEMBER AND SHRI RAJPAL YADAV, JUDICIAL MEMBER ./ ITA NO. 1907/AHD/2016 / ASSTT. YEAR: 2012-2013 THE DEPUTY COMMISSIONER OF INCOME-TAX(EXEMPTIONS), CIR.- 1, AHMEDABAD, 2 ND FLOOR, NATURE VIEW BUILDING, NEAR H.K. HOUSE, ASHRAM ROAD, AHMEDABAD VS. DAWAT PROPERTIES TRUST, QUTBI MAZAR, SYEDNA QUTBUDDIN SHAHEED, AMDUPURA, AHMEDABAD- 382345 / (APPELLANT) / (RESPONDENT) ASSESSEE BY : NONE REVENUE BY : APRANA M. AGARWAL, CIT-D.R ! / DATE OF HEARING : 13/03/2018 '#$ ! / DATE OF PRONOUNCEMENT: 04/04/2018 %& / O R D E R PER RAJPAL YADAV, JUDICIAL MEMBER: THE REVENUE IS IN APPEAL BEFORE THE TRIBUNAL AGAINS T THE ORDER OF LEARNED COMMISSIONER OF INCOME TAX (APPEALS) DAT ED 20.05.2016 PASSED FOR ASSESSMENT YEAR 2012-2013. ITA NO.1907/AHD/2016 A.Y. 2012-13 2 2. THE GROUNDS OF APPEAL TAKEN BY THE REVENUE READ AS UNDER:- 1) WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE THE LD. CIT(A) IS JUSTIFIED IN ALLOWING THE ASSESSEE'S APPE AL NEGLECTING THE FINDING OF ASSESSING OFFICER REGARDING ADDITION OF RS. 19,8 1,117/- BEING DEPRECIATION. 2) WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE THE LD. CIT(A) IS JUSTIFIED IN ALLOWING THE ASSESSEE'S CLAI M TO SET OFF CARRIED FORWARD LOSSES OF RS. 11,84,10,585/- WHICH THE A.O. DISALLOWED 3) ON THE FACTS AND CIRCUMSTANCES OF THE CASE, THE LD. COMMISSIONER OF INCOME-TAX (APPEALS) OUGHT TO HAVE UPHELD THE ORDER OF THE ASSESSING OFFICER. 3. WITH THE ASSISTANCE OF LD. REPRESENTATIVE WE HAV E GONE THROUGH CAREFULLY. IT IS PERTINENT TO OBSERVE THAT ASSESSEE TRUST IS REGISTERED UNDER SECTION 12AA OF THE INCOME TAX ACT VIDE ORDER NO. HQ.III/64/D-74/74/V DATED 28.12.1978. IT HAS FILED ITS RETURN OF INCOME ON 25.09.2012 DECLARING NIL INCOME. IT HAS C LAIMED EXEMPTION OF RS. 29,28,45,074/-. THE CASE OF THE ASSESSEE WAS SELECTED FOR SCRUTINY ASSESSMENT AND NOTICE UNDER SECTION 143(2) WAS ISSUED AND SERVED UPON THE ASSESSEE. 4. ON VERIFICATION OF THE ACCOUNTS IT REVEAL TO TH E ASSESSING OFFICER THAT ASSESSEE HAS CLAIMED DEPRECIATION OF RS. 19,81 ,117/-. THE ASSESSING OFFICER WAS OF THE OPINION THAT SINCE ASS ESSEE HAS CLAIMED EXEMPTION UNDER SECTION 11(1)(A) WHILE ACQUIRING TH E ASSETS. IT CLAIMED IT AS APPLICATION OF TRUST FUNDS TOWARDS CH ARITABLE OBJECTS HENCE IT CANNOT CLAIM DEPRECIATION AGAIN ON THAT VE RY AMOUNT. IT WILL BE DOUBE DEDUCTION TO THE ASSESSEE. ACCORDINGLY HE DISALLOWED A SUM OF RS. 19,81,117/-. SIMILARLY THE ASSESSEE HAS A DE FICIT WHICH WAS CLAIMED FOR CARRY FORWARD THE ASSESSING OFFICER AS DISALLOWED IT. ITA NO.1907/AHD/2016 A.Y. 2012-13 3 5. ON APPEAL LEARNED FIRST APPELLATE AUTHORITY HAS ALLOWED BOTH THE CLAIMS OF THE ASSESSEE BY PUTTING RELIANCE UPON THE DECISION OF HONBLE JURISDICTIONAL HIGH COURT. THE DISCUSSION M ADE BY THE CIT(A) IS WORTH TO NOTE WHICH READ AS UNDER:- 5.2 I HAVE CAREFULLY CONSIDERED THE RIVAL CONTENTIO N AS WELL AS THE OBSERVATION OF THE A.O. AS WELL AS THE CASE LAWS RE LIED UPON BY THE APPELLANT. THE ISSUE OF ALLOWABLY OF DEPRECIATION I N THE CASE OF CHARITABLE TRUST HAS BEEN DECIDED BY THE HON'BLE GUJARAT HIGH COURT IN THE CASE OF CIT VS. SHETH MANILAL RANCHHODDAS VISHRAM BHAVAN TR UST 198 ITR 598 (GUJ). HEAD NOTE AND THE MAIN FACTS ARE REPRODUCED BELOW FOR REFERENCE:- SECTION 11 OF THE INCOME-TAX ACT, 1961 - CHARITABLE OR RELIGIOUS TRUST - EXEMPTION OF INCOME FROM PROPERTY HELD UNDER - ASSE SSMENT YEARS 1971-72 AND 1972-73 -WHETHER WHILE COMPUTING INCOME UNDER SECTION 11(1)(A), DEPRECIATION HAS TO BE ALLOWED - HELD, YE S HEAD NOTES OF THE JUDGEMENT IS: THE INCOME OF THE ASSESSEE-TRUST WAS MAINLY FROM IM MOVABLE PROPERTY FOR THE ASSESSMENT YEARS 1971-72 AND 1972-73, THE A SSESSEE CLAIMED DEPRECIATION. THE ITO REJECTED THE ASSESSEE'S CLAIM ON THE GROUND THAT THE INCOME FROM HOUSE PROPERTY WAS TO BE CALCULATED ACCORDING TO SECTIONS 22 TO 27. HOWEVER, ON APPEAL, THE AAC ALLO WED THE ASSESSEE'S CLAIM. ON APPEAL BY THE REVENUE, THE TRIBUNAL UPHEL D THE ORDER OF THE AAC. ON REFERENCE : IN THE CASE OF CIT V. RAO BAHADUR CALAVALA CUNNAN C HETTY CHARITIES [1982] 135 ITR 485, THE MADRAS HIGH COURT HELD THAT THE INCOME FROM THE PROPERTIES HELD UNDER TRUST WOULD HAVE TO BE AR RIVED AT IN THE NORMAL COMMERCIAL MANNER WITHOUT CLASSIFICATION UNDER THE VARIOUS HEADS SET OUT IN SECTION 14. IT HELD THAT THE EXPRESSION 'INC OME' HAS TO BE ITA NO.1907/AHD/2016 A.Y. 2012-13 4 UNDERSTOOD IN THE POPULAR OR GENERAL SENSE AND NOT IN THE SENSE IN WHICH THE INCOME IS ARRIVED AT FOR THE PURPOSE OF A SSESSMENT TO TAX BY APPLICATION OF SOME ARTIFICIAL PROVISIONS EITHER GI VING OR DENYING DEDUCTION. IT OBSERVED THAT THE COMPUTATION UNDER T HE DIFFERENT CATEGORIES OR HEADS ARISES ONLY FOR THE PURPOSE OF ASCERTAINING THE TOTAL INCOME FOR THE PURPOSES OF CHARGE. THOSE PROVISIONS CANNOT BE INTRODUCED TO FIND OUT WHAT THE INCOME DERIVED FROM THE PROPERTY R\ELD UNDER TRUST TO BE EXCLUDED FROM THE TOTAL INCOME IS , FOR THE PURPOSE OF THE EXEMPTIONS UNDER CHAPTER III. FOLLOWING THE AFO RESAID DECISION IN THE INSTANT CASE THE TRIBUNAL WAS JUSTIFIED IN HOLDING THAT HAVING REGARD TO THE SCHEME OF THE ACT, 'INCOME' REFERRED TO IN SECT ION 11 (1)(A) WAS NOT TO BE COMPUTED NOT IN ACCORDANCE WITH THE PROVISION S OF THE ACT BUT IN ACCORDANCE WITH THE NORMAL RULES OF THE ACCOUNTANCY UNDER WHICH THE DEPRECIATION HAS TO BE ALLOWED WHILE COMPUTING SUCH INCOME UNDER SECTION 11(1)(A). 5.3 IN VIEW ABOVE AND RESPECTFULLY FOLLOWING THE JU DGMENTS BY HON'BLE GUJARAT HIGH COURT IN THE CASE OF SHETH MANILAL RAN CHHODDAS VISHRAM BHAVAN TRUST, 198 ITR 598 (GUJ.) MENTIONED ABOVE, I AM OF THE VIEW THAT ADDITION OF RS.19,81,117/- ON ACCOUNT OF DISALLOWAN CE OF DEPRECIATION BE DELETED. GROUND NO.2, IS ACCORDINGLY ALLOWED. FURTH ER, I AGREE WITH THE CONTENTION OF THE APPELLANT THAT U/S.11(1)(A) OF TH E ACT, THE TERM USED IS 'INCOME' AND NOT 'TOTAL INCOME.' ACCORDINGLY, THE D EPRECIATION WILL BE ALLOWED WHILE COMPUTING THE INCOME U/S. 11(1)(A) OF THE ACT. THUS, GROUND OF APPEAL NO. 1 IS ALLOWED. 6. GROUND NO.2, IS REGARDING NOT ALLOWING TO SET OF F CARRIED FORWARD LOSSES OF RS. 11,84,10,585/- TO THE FUTURE YEARS. I HAVE P ERUSED THE ORDER OF A.O AND SUBMISSIONS MADE IN THIS REGARD BY THE APPELLAN T. RELYING ON THE DECISIONS OF HON'BLE GUJARAT HIGH COURT IN THE CASE OF CIT VS SHRI PLOT SHWETAMBAR MURTIPUJAK JAIN MANDAL 211 ITR 293, I FI ND THAT THE APPELLANT SHOULD GET THE BENEFIT OF THE DEFICIT OF EARLIER YEARS AGAINST THE FUTURE INCOME. THUS, THIS GROUND OF APPEAL IS ALLOW ED. ITA NO.1907/AHD/2016 A.Y. 2012-13 5 6. A PERUSAL OF THE ABOVE ORDER WOULD INDICATE THAT LD. FIRST APPELLATE AUTHORITY HAS PLACED RELIANCE ON THE DECI SION OF THE HONBLE JURISDICTIONAL HIGH COURT. WE DO NOT FIND ANY ERROR IN THE ORDER OF LD. CIT(A) BECAUSE IT IS BASED UPON THE POSITION OF LAW PROPOUNDED BY THE HONBLE JURISDICTIONAL HIGH COURT. HENCE THIS A PPEAL IS DISMISSED. 10. IN THE RESULT APPEAL OF THE REVENUE IS DISMISSE D. ORDER PRONOUNCED IN THE COURT ON 04 TH APRIL, 2018. SD/- SD/- (PRAMOD KUMAR) ACCOUNTANT MEMBER (RAJPAL YADAV) JUDICIAL MEMBER AHMEDABAD; DATED 04/04/2018 %& '() *%)$ / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. + / THE RESPONDENT. 3. ,, - / CONCERNED CIT 4. - ( ) / THE CIT(A) 5. )./ '' , / DR, ITAT, 6. /01 2 / GUARD FILE. %& / BY ORDER, 3 / ,4 (DY./ASSTT.REGISTRAR) , / ITAT, AHMEDABAD