Income Tax Officer (Exemptions)-3, Hyderabad V. Gospel for Tribunal's Social Servise Society, Hyderabad

ITA 2052/Hyd/2017

• Counselvise Citation: [2018] 121 COUNSELVISE.COM (IT) 6014 (ITAT-HYDERABAD)
• Duration Of Justice: 5 month(s) 24 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 31-05-2018
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Assessment Year: 2014-2015
• Appeal Filed On: 07-12-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Depreciation; Capital expenditure
• Section: 12A; 11

Judgement Text

THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD BENCH A, HYDERABAD BEFORE SHRI D. MANMOHAN, VICE PRESIDENT AND SHRI B. RAMAKOTAIAH, ACCOUNTANT MEMBER ITA NO.2052/HYD/2017 ASSESSMENT YEAR: 2014-15 ITO (EXEMPTIONS)-3, HYDERABAD. VS. M/S GOSPEL FOR TRIBALS SOCIAL SERVICE SOCIETY, KHAMMAM. PAN AAAAG1765G (APPELLANT) (RESPONDENT) REVENUE BY : SHRI J. SIRI KUMAR ASSESSEE BY : SHRI A.V. RAGHURAM DATE OF HEARING : 28-05-2018 DATE OF PRONOUNCEMENT : 31-05-2018 ORDER PER SHRI B. RAMAKOTAIAH, AM: THIS IS AN APPEAL BY REVENUE AGAINST THE ORDER OF CIT(A)-9, HYDERABAD DATED 28.08.2017. THE ISSUE INVOLVED IN THIS APPEAL IS ON THE CLAIM OF DEPRECIATION. 2. BRIEF FACTS OF THE CASE ARE THAT, ASSESSEE A SOCIETY REGISTERED U/S 12A OF THE IT ACT FILED NIL INCOME CLAIMING EXEMPTION U/S 11 OF THE IT ACT. ONE OF THE ISSUE CONSIDERED IN THE ASSESSMENT WAS CLAIM OF DEPRECIATION. ASSESSEE CLAIMED DEPRECIATION OF RS. 1,56,41,174/-. A.O ALLOWED THE DEPRECIATION TO AN EXTENT OF RS. 13,54,759/- ONLY ON THE ASSETS PURCHASED DURING THE YEAR COMPUTED ON COMMERCIAL PRINCIPLES. AS FAR AS THE DEPRECIATION ON THE ASSETS PURCHASED IN EARLIER YEARS IS CONCERNED, A.O HELD THAT AS THE CAPITAL EXPENDITURE WAS ALREADY ALLOWED AS 2 ITA NO. 2052/HYD/2017 APPLICATION OF INCOME, ALLOWING DEPRECIATION AGAIN WOULD AMOUNT TO DOUBLE DEDUCTION. ON CONSIDERATION OF THE FACTS OF THE CASE AND CONSISTENT STAND OF THE ITAT, LD. CIT(A) HELD THAT DEPRECIATION CANNOT BE DENIED ONLY BECAUSE THE CAPITAL EXPENDITURE WAS ALLOWED IN EARLIER YEARS AS APPLICATION OF INCOME A.O WAS DIRECTED TO ALLOW THE DEPRECIATION CLAIM. 3. AGGRIEVED, REVENUE HAS RAISED THE FOLLOWING 2 GROUNDS OF APPEAL: 2. THE LD. CIT(A) IS NOT CORRECT IN ALLOWING DEPRECIATION OF RS. 1,42,86,415/- ON CAPITAL EXPENDITURE WHICH WAS ALLOWED AS APPLICATION OF INCOME IN EARLIER YEARS. 3. CIT(A) IGNORED THAT WITH REGARD TO THIS ISSUE, NEW PROVISION SUB-SECTION (6) OF 11 HAS BEEN INTRODUCED W.E.F 01.04.2014 ACCORDING TO WHICH DEPRECIATION ON ASSETS, THE ACQUISITION OF WHICH HAVE BEEN CLAIMED AS APPLICATION SHALL NOT BE ALLOWED. GROUNDS NO. 1 & 4 ARE GENERAL IN NATURE. 4. IT WAS THE CONTENTION THAT THE PROVISIONS ARE APPLICABLE FOR A.Y 2014-15 AND THE DEPRECIATION CLAIMED UNDER ASSETS WHICH WERE ALSO CONSIDERED FOR APPLICATION OF INCOME CANNOT BE ALLOWED. LD. COUNSEL, HOWEVER, SUBMITTED THAT ISSUE WAS CRYSTALIZED BY THE HONBLE SUPREME COURT IN THE CASE OF CIT VS. RAJASTHAN AND GUJARATI CHARITABLE FOUNDATION POONA, REPORTED IN 300 CTR 001 (SC) DATED 13.12.2017, WHEREIN THE HONBLE SUPREME COURT HAS CONSIDERED THE ALLOWABILITY OF DEPRECIATION AND HELD THAT THE INCOME OF THE TRUST IS REQUIRED TO BE COMPUTED U/S 11 OF THE IT ACT ON COMMERCIAL PRINCIPLES, AFTER PROVIDING FOR ALLOWANCE FOR NORMAL DEPRECIATION AND DEDUCTION THEREOF FROM GROSS 3 ITA NO. 2052/HYD/2017 INCOME OF THE TRUST. FURTHER IT WAS NOTED DOWN THAT THE AMENDED PROVISIONS OF SEC. 11(6) VIDE FINANCE ACT NO. 2/2014, BECAME EFFECTIVE FROM A.Y 2015-16. 5. SINCE THE ORDER OF THE CIT(A) IS IN TUNE WITH THE PRINCIPLES LAID DOWN BY THE HONBLE SUPREME COURT ON THE SUBJECT, WE DO NOT SEE ANY MERIT IN THE REVENUES CONTENTIONS, ACCORDINGLY, THE GROUNDS ARE DISMISSED. 6. IN THE RESULT APPEAL FILED BY THE REVENUE IS DISMISSED. PRONOUNCED IN THE OPEN COURT ON 31 ST MAY, 2018. SD/- SD/- (D. MANMOHAN) (B. RAMAKOTAIAH) VICE PRESIDENT ACCOUNTANT MEMBER HYDERABAD, DATED 31 ST MAY, 2018. KRK 1) M/S GOSPEL FOR TRIBALS SOCIAL SERVICE SOCIETY, H.NO. 1- 2-399/1, BEHIND CRPF CAMP, BANDARUGUDEM (POST), MANUGURU, KHAMMAM. 2) ITO(EXEMPTIONS)-3, HYDERABAD. 3) CIT(A) -9, HYDERABAD. 4) THE ADDL. CIT, EXEMPTIONS, HYDERABAD. 5) THE DEPARTMENTAL REPRESENTATIVE, I.T.A.T., HYDERABAD. 6) GUARD FILE