ACIT, UDAIPUR V. M/s. Vijay Shanti Educational Trust, UDAIPUR

ITA 219/JODH/2012

• Counselvise Citation: [2013] 120 COUNSELVISE.COM (IT) 1595 (ITAT-JODHPUR)
• Duration Of Justice: 8 month(s) 29 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 14-02-2013
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: DB
• Next Hearing Date: 15-11-2012
• Assessment Year: 2008-2009
• Appeal Filed On: 16-05-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: G R KOKANI
• Keywords: Depreciation; Revenue expenditure; Capital expenditure
• Section: 12AA

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL JODHPUR BENCH, JODHPUR BEFORE SHRI HARI OM MARATHA, JUDICIAL MEMBER AND SHRI R.C. SHARMA, ACCOUNTANT MEMBER ITA NOS. 218 & 219/JU/2012 ASSESSMENT YEAR: 2008-09 THE A.C.I.T VS. VIJAY SHANTI EDUCATIONAL TRUST CIRCLE 2 RANAKPUR ROAD, VILLAGE LOYRA UDAIPUR UDAIPUR PAN NO. AAATV 3381 R (APPELLANT) (RESPONDENT) ASSESSEE BY : NONE DEPARTMENT BY : SHRI G.R. KOKANI DATE OF HEARING : 15.11.2012 DATE OF PRONOUNCEMENT : 14.12.2012 ORDER PER HARI OM MARATHA, J.M. THE ABOVE APPEALS FILED BY THE REVENUE WERE HEARD TOGETHER. WHEN NO ONE CAME PRESENT TO REPRESENT TH E CASES OF THE ASSESSEE DESPITE BEING DULY SERVED, WE PROCEEDED EX-PARTE AGAINST THE RESPONDENT-TRUST. 2 2. WE HAVE HEARD THE LD. COUNSEL FOR THE DEPARTMENT AT LENGTH AND HAVE PERUSED THE RELEVANT MATERIAL ON RE CORD. THE FACTS OF THE CASE ARE THAT THE ASSESSEE IS A TR UST, REGISTERED U/S 12AA OF THE ACT. THE ASSESSEE HAS S HOWN TOTAL RECEIPTS AT RS. 6,20,97,477/- AND RS. 7,03,03 ,411/- FOR ASSESSMENT YEARS 2007-08 AND 2008-09 RESPECTIVE LY. THE ASSESSEE-TRUST HAS CLAIMED DEPRECIATION OF RS. 1,09,40,494/- AND RS. 1,05,82,746/- IN ASSESSMENT Y EARS RESPECTIVELY. AS PER THE A.O., THE ASSESSEE TRUST HAS ALREADY CLAIMED 100% DEDUCTION IN THE YEAR OF PURCH ASE ON THE ASSETS ACQUIRED THROUGH APPLICATION OF INCOME. IN OTHER WORDS, THE ASSESSEE HAS CLAIMED DOUBLE-DEDUCT ION. THE TRUST HAS BEEN RUNNING A DENTAL CLINIC. 3. THE CASE OF THE ASSESSEE CAN BE EXPLAINED FURTHE R AS UNDER. AS PER THE ASSESSMENT ORDER, THE ASSESSEE I S A REGISTERED TRUST U/S 10(23)(VI) OF THE ACT AS WELL AS REGISTERED U/S 12AA. THE A.O. PASSED ASSESSMENT OR DER MENTIONING THAT ABOVE DEPRECIATION WERE CLAIMED ON THE ASSETS ACQUIRED THROUGH APPLICATION OF INCOME IN EA RLIER 3 YEARS, AGAINST WHICH 100% DEDUCTION CAN BE CLAIMED IN THE YEAR OF PURCHASE. THE ASSESSEE CLAIMED DOUBLE DEDU CTION. THE A.O. RELIED ON THE DECISION OF THE HON'BLE SUPR EME COURT IN THE CASE OF ESCORTS VS. UOI 199 ITR 43 AND HELD THAT DEPRECIATION IS NOT ADMISSIBLE ON THOSE ASSETS AGAINST WHICH 100% DEDUCTION HAS ALREADY BEEN TAKEN I.E. IN CASE OF TRUST WHERE ASSETS HAVE BEEN ACQUIRED BY WAY OF APPLICATION OF FUNDS. THE A.O. ALSO MENTIONED THAT IT IS ALSO CLEAR BECAUSE WHEREVER ANY PURPOSE OF ASSET IS ALLOWED AS REVENUE EXPENDITURE, DEPRECIATION ON THE SAME CANNOT AGAIN BE ALLOWED TREATING THE SAME ASSET AS CAPITAL EXPENDITURE. THE ACCOUNTS OF THE TRUST ARE REQUIRED TO BE MAINTAINED IN RECEIPT AND PAYMENT FORM AND THE DEPRECIATION BEING A NOTIONAL EXPENSE IT CANNOT BE HELD TO BE A PAYMENT IN THE ACCOUNTS. ACCORDINGLY, THE CLAI M OF DEPRECIATION WAS DISALLOWED. FURTHER, THE INCOME O F THE TRUST WAS HELD TO BE EXEMPTED U/S 10(23)(VI). THE RETURNED INCOME OF THE ASSESSEE WAS ACCEPTED, EXCEP T FOR CLAIM OF DEPRECIATION. THE LD. COUNSEL FOR THE ASSE SSEE RELIED ON SECTION 10(23C)(VI) AND SUBMITTED THAT HA VING 4 REGARD TO THE PLAIN LANGUAGE OF THE ABOVE PROVISION S, IT IS CLEAR THAT EXEMPTION U/S 10(23C)(VI) IS AVAILABLE I N RESPECT OF INCOME DERIVED BY EDUCATIONAL INSTITUTED EXIST SOLELY FOR EDUCATION AND NOT FOR PROFIT AND APPLIES ITS INCOME FOR THE OBJECT OF THE TRUST. HE FURTHER REL IED ON VARIOUS DECISIONS AND SUBMITTED THAT IT IS APPARENT THAT FOR THE PURPOSE OF DETERMINING PERCENTAGE OF APPLICATIO N OF FUNDS FROM INCOME OF PROPERTY HELD FOR CHARITABLE A ND RELIGIOUS PURPOSES, BOTH DEPRECIATION AND COST OF C APITAL ASSET ARE TO BE CONSIDERED. HE FURTHER SUBMITTED T HAT ON SIMILAR ISSUE, THE LD. CIT(A) HAS ALLOWED THE APPEA L IN THE CASE OF PACIFIC EDUCATIONAL SOCIETY IN APPEAL NO. 276/IT,UDR/2009-10 FOR THE ASSESSMENT YEAR 2007-08 BY PASSING THE ORDER DATED 29.2.2012 IN FAVOUR OF THE ASSESSEE BY UPHOLDING THAT IT IS APPARENT THAT DECI SION OF HON'BLE SUPREME COURT IN THE CASE OF ESCORT LTD AS RELIED UPON BY THE A.O. IS DISTINGUISHED IN THE FACTS AND CIRCUMSTANCES OF THE APPELLANTS CASE AND THUS DISALLOWANCE ON DEPRECIATION OF ASSET, COST OF WHIC H HAD BEEN FULLY ALLOWED IN THE EARLIER YEARS AS MADE BY THE A.O. 5 IS NOT SUSTAINABLE AND DEPRECIATION AS CLAIMED IS A LLOWED IN THE CASE OF THE ASSESSEE. ACCORDINGLY, THE ASSE SSEE CLAIMED DEPRECIATION OF RS. 1,09,494/- AND RS. 1,05,82,746/-. 4. IN APPEAL BEFORE THE LD. CIT(A), THE LD. CIT(A) ALLOWED THE APPEAL BY HOLDING THAT THE BASIS OF DISALLOWANC E MADE BY THE A.O. IS NOT SUSTAINABLE AND THE DEPRECIATION AS CLAIMED FOR BOTH THE ASSESSMENT YEARS I.E. 2007-08 AND 2008-09 IS ALLOWABLE IN THE CASE OF THE ASSESSEE. 5. AFTER HEARING THE LD. COUNSEL FOR THE DEPARTMENT SHRI G.R. KOKANI AND GOING THROUGH THE RECORDS, WE ARE CONVINCED THAT THERE IS NO ERROR IN THE FINDING OF THE LD. CIT(A) AND HIS FINDING DESERVES TO BE UPHELD. WE U PHOLD THE ACTION OF THE LD. CIT(A) AND DISMISS BOTH THE A PPEALS OF THE REVENUE. 6 6. IN THE RESULT, BOTH THE APPEALS OF THE REVENUE A RE DISMISSED. ORDER PRONOUNCED IN THE COURT ON 14.12.2012. SD/- SD/- (R.C. SHARMA) [HARI OM MARATHA] ACCOUNTANT MEMBER JUDICIAL MEMBER DATED : 14 TH DECEMBER, 2012 VL/- COPY TO: THE APPELLANT THE RESPONDENT THE CIT BY ORDER THE CIT(A) THE DR ASSISTANT REGISTRAR ITAT, JODHPUR