I.T.O. (EXEMP) - 2(3), MUMBAI V. SHREE KUTCHI KADVA PATIDAR GNYATI TRUST FUND, MUMBAI

ITA 2119/MUM/2016

• Counselvise Citation: [2017] 127 COUNSELVISE.COM (IT) 0467 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 4 month(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 01-08-2017
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: Not Allotted
• Assessment Year: 2012-2013
• Appeal Filed On: 01-04-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: RAM TIWARI
• Keywords: Depreciation; Charitable institution; Capital expenditure
• Section: 12A

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL 'E' BENCH, MUMBAI BEFORE SHRI P K BANSAL, VICE PRESIDENT AND SHRI PAWAN SINGH, JUDICIAL MEMBER ITA NO.2119 /MUM/2016 (ASSESSMENT YEAR: 2012-13) INCOME TAX OFFICER (E) - 2 - 3 VS. SHREE KUTCHI KADVA PATIDAR ROOM NO. 513, 5TH FLOOR PIRAMAL CHAMBERS LALBAUG, MUMBAI 400012 GNYATI TRUST FUND PATIDAR WADI, LBS MARG GHATKOPAR (W), MUMBAI 400086 PAN AACTS0647K APPELLANT RESPONDENT APPELLANT BY: SHRI RAM TIWARI RESPONDENT BY: NONE DATE OF HEARING: 01.08.2017 DATE OF PRONOUNCEMENT: 01.08.2017 O R D E R PER P.K. BANSAL, VICE PRESIDENT THIS APPEAL FILED BY THE REVENUE IS DIRECTED AGAINS T THE ORDER OF THE CIT(A)-1, MUMBAI DATED 07.01.2016 FOR A.Y. 2012-13. 2. THE ONLY ISSUE INVOLVED IN THIS APPEAL RELATES TO T HE CLAIM OF DEPRECIATION ON FIXED ASSETS BY THE ASSESSEE. 3. THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE I S A CHARITABLE TRUST REGISTERED UNDER SECTION 12A OF THE INCOME TAX ACT. THE ASSESSEE FILED ITS RETURN ON INCOME DECLARING NIL INCOME. THE AO, DURI NG THE COURSE OF ASSESSMENT PROCEEDINGS, NOTED THAT THE ASSESSEE HAS CLAIMED DEPRECIATION AMOUNTING TO ` 1,06,62,435/- AS WELL AS APPLICATION IN RESPECT OF THE ADDITION TO FIXED ASSETS WHILE COMPUTING THE TOTAL INCOME. THE AO, THEREFORE, WAS OF THE VIEW THAT THE ASSESSEE HAS CL AIMED DOUBLE DEDUCTION SINCE THE CAPITAL EXPENDITURE HAS ALREADY BEEN ALLO WED. THEREFORE THE ASSESSEE SHOULD NOT BE ALLOWED DEPRECIATION AND ACC ORDINGLY HE DISALLOWED A SUM OF ` 1,06,62,435/-. THE ASSESSEE WENT BEFORE THE CIT(A). THE CIT(A) ALLOWED THE DEPRECIATION. ITA NO. 2119/MUM/2016 SHREE KUTCHI KADVA PATIDAR GNYATI TRUST FUND 2 4. WE HEARD THE RIVAL SUBMISSIONS AND GONE THROUGH THE ORDERS OF THE TAX AUTHORITIES BELOW. WE NOTED THAT THE IMPUGNED I SSUE IS NO MORE RES INTEGRA IN VIEW OF THE DECISION OF THE HON'BLE JURI SDICTIONAL HIGH COURT IN THE CASE OF CIT VS. INSTITUTE OF BANKING PERSONNEL SELECTION 264 ITR 110 IN WHICH THE HON'BLE HIGH COURT HAS HELD AS UNDER: - 4. QUESTION NO. 2 HEREIN IS IDENTICAL TO THE QUESTION WHICH WAS RAISED BEFORE THE BOMBAY HIGH COURT IN THE CASE OF DIRECTOR OF INCOME-TAX (EXEMPTION) VS. FRAMJEE CAWASJEE INSTITU TE (1993) 109 CTR 463 (BOM). IN THAT CASE, THE FACTS WERE AS FOLL OWS : THE ASSESSEE WAS THE TRUST. IT DERIVED ITS INCOME FROM DEPRECIAB LE ASSETS. THE ASSESSEE TOOK INTO ACCOUNT DEPRECIATION ON THOSE AS SETS IN COMPUTING THE INCOME OF THE TRUST. THE ITO HELD THAT DEPRECIA TION COULD NOT BE TAKEN INTO ACCOUNT BECAUSE, FULL CAPITAL EXPENDITUR E HAD BEEN ALLOWED IN THE YEAR OF ACQUISITION OF THE ASSETS. THE ASSES SEE WENT IN APPEAL BEFORE THE AAC. THE APPEAL WAS REJECTED. THE TRIBUN AL, HOWEVER, TOOK THE VIEW THAT WHEN THE ITO STATED THAT FULL EXPENDI TURE HAD BEEN ALLOWED IN THE YEAR OF ACQUISITION OF THE ASSETS, W HAT HE REALLY MEANT WAS THAT THE AMOUNT SPENT ON ACQUIRING THOSE ASSETS HAD BEEN TREATED AS APPLICATION OF INCOME OF THE TRUST IN THE YEAR IN WHICH THE INCOME WAS SPENT IN ACQUIRING THOSE ASSETS. THIS DI D NOT MEAN THAT IN COMPUTING INCOME FROM THOSE ASSETS IN SUBSEQUENT YE ARS, DEPRECIATION IN RESPECT OF THOSE ASSETS CANNOT BE T AKEN INTO ACCOUNT. THIS VIEW OF THE TRIBUNAL HAS BEEN CONFIRMED BY THE BOMBAY HIGH COURT IN THE ABOVE JUDGMENT. HENCE, QUESTION NO. 2 IS COVERED BY THE DECISION OF THE BOMBAY HIGH COURT IN THE ABOVE JUDG MENT. CONSEQUENTLY, QUESTION NO. 2 IS ANSWERED IN THE AFF IRMATIVE I.E., IN FAVOUR OF THE ASSESSEE AND AGAINST THE DEPARTMENT. 5. THE LEARNED D.R. BEFORE US INVITED OUR ATTENTION TO SECTION 11(6) WHICH WAS INSERTED BY THE FINANCE ACT, 2014. WE NOT ED THAT SECTION 11(6) HAS BEEN INSERTED W.E.F. 1 ST APRIL, 2015 AND IS NOT RETROSPECTIVE IN NATURE. IN VIEW OF THIS FACT WE DO NOT FIND ANY INFIRMITY O R ILLEGALITY IN THE ORDER OF THE CIT(A). 6. IN THE RESULT, THE REVENUES APPEAL FOR A.Y. 2012-1 3 IS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 1 ST AUGUST, 2017. SD/ - SD/ - (PAWAN SINGH) (P.K. BANSAL) JUDICIAL MEMBER VICE PRESIDENT MUMBAI, DATED: 1 ST AUGUST, 2017 ITA NO. 2119/MUM/2016 SHREE KUTCHI KADVA PATIDAR GNYATI TRUST FUND 3 COPY TO: 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT(A) -1, MUMBAI 4. THE CIT - (EXEMPTIONS), MUMBAI 5. THE DR, E BENCH, ITAT, MUMBAI BY ORDER //TRUE COPY// ASSISTANT REGISTRAR ITAT, MUMBAI BENCHES, MUMBAI N.P.