The DCIT (Exemptions), Circle-2, Ahmedabad V. Amreli Jilla Vidhyasabha,

ITA 2344/AHD/2016

• Counselvise Citation: [2018] 119 COUNSELVISE.COM (IT) 2099 (ITAT-AHMEDABAD)
• Duration Of Justice: 2 year(s) 2 month(s) 2 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 14-11-2018
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: Not Allotted
• Assessment Year: 2012-2013
• Appeal Filed On: 12-09-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: S K DEV
• Keywords: Capital asset; Depreciation; Charitable institution; Capital expenditure
• Section: 143(3); 11

Judgement Text

, A IN THE INCOME TAX APPELLATE TRIBUNAL A BENCH, AHMEDABAD BEFORE SHRI PRADIP KUMAR KEDIA, ACCOUNTANT MEMBER & SHRI MAHAVIR PRASAD, JUDICIAL MEMEBR ./ I.T.A. NO. 2344/AHD/2016 ( ASSESSMENT YEAR : 2012-13) DEPUTY COMMISSIONER OF INCOME-TAX (EXEMPTIONS) CIRCLE-2, AHMEDABAD / VS. AMRELI JILLA VIDHYASABHA PLACE VIDHYA VIHAR, VARASADA ROAD, AMRELI 365 601 ./ ./ PAN/GIR NO. : AAATA4252C ( APPELLANT ) .. ( / RESPONDENT ) / APPELLANT BY : SHRI S. K. DEV, SR. D.R. / RESPONDENT BY : WRITTEN SUBMISSION DATE OF HEARING 01/11/2018 !'# / DATE OF PRONOUNCEMENT 14/11/2018 / O R D E R PER PRADIP KUMAR KEDIA - AM: THE CAPTIONED APPEAL HAS BEEN FILED AT THE INSTANCE OF THE REVENUE AGAINST THE ORDER OF THE COMMISSIONER OF INCOME TAX (APPEALS)-9, AHMEDABAD (CIT(A) IN SHORT), DATED 01.07.2016 ARISING IN THE ASSESSMENT ORDER DATED 16.03.2015 PA SSED BY THE ASSESSING OFFICER (AO) UNDER S. 143(3) OF THE INCOM E TAX ACT, 1961 (THE ACT) CONCERNING ASSESSMENT YEAR 2012-13. ITA NO.2344/AHD/16 [DCIT VS. AMRELI JILLA VIDHYASABHA] A.Y. 2012-13 - 2 - 2. BY WAY OF ITS GROUNDS OF APPEAL, THE REVENUE HAS IMPUGNED THE ACTION OF THE CIT(A) IN DELETING THE ADDITION O F RS.1,43,07,625/- TOWARDS DEPRECIATION DISALLOWED BY THE AO. 3. AS POINTED OUT ON BEHALF OF THE ASSESSEE THROUGH ITS WRITTEN SUBMISSIONS, WE FIND THAT THE ISSUE IS SQUARELY COV ERED IN FAVOUR OF THE ASSESSEE BY THE JUDGMENT OF THE HONBLE SUPR EME COURT IN THE CASE OF RAJASTHAN GUJARATI CHARITABLE FOUNDATIO N, POONA. IN THE LIGHT OF THE JUDGMENT OF HONBLE SUPREME COURT, THE CO- ORDINATE BENCH IN CASE OF DCIT(EXEMPTIONS) VS. N. H . KAPADIA EDUCATION TRUST ITA NO. 3090/AHD/2015 ORDER DATED 0 8.01.2018 HAS DEALT WITH THE ISSUE IN FAVOUR OF THE ASSESSEE AS UNDER: 8. WE HAVE CAREFULLY CONSIDERED THE RIVAL SUBMISSI ON. THE CORE CONTROVERSY IN THE CASE IN HAND IS WHETHER DEPRECIA TION IS ALLOWABLE ON THE EXPENDITURE INCURRED FOR CAPITAL PURPOSES WHERE SUCH EXPENDITURE HAS BEEN TREATED AS APPLICATION OF INCOME FOR THE OBJEC T OF THE TRUST IN TERMS OF SECTION 11(1)(A) OF THE ACT. IT IS THE CASE OF THE REVENUE THAT ONCE THE CAPITAL EXPENDITURE HAS BEEN CLAIMED AS DEDUCTION U NDER S.11(1)(A) AS APPLICATION OF INCOME FOR THE OBJECT OF THE TRUST, THE DEPRECIATION CLAIMED ON THE SAME ASSETS AMOUNT TO DOUBLE DEDUCTION WHICH IS NOT PERMISSIBLE IN LAW HAVING REGARD TO THE PROVISIONS OF SECTION 11(6 ) OF THE ACT WHICH PROHIBITS SUCH DOUBLE DEDUCTION. THE ASSESSEE, ON THE OTHER HAND, CONTENDS THAT THERE IS NO BAR IN MAKING CLAIM OF DE PRECIATION ALLOWANCES AS PER COMMERCIAL PRINCIPLES FOR THE ASSESSMENT YEA R 2008-09 IN QUESTION SINCE SECTION 11 (6) OF THE ACT HAS BEEN INSERTED P ROSPECTIVELY AND OPERATES FROM AY 2015-16 ONWARDS. IT IS THUS THE CASE OF THE ASSESSEE THAT THE COST INCURRED TOWARDS CAPITAL ASSETS IS EL IGIBLE FOR DEPRECIATION ALLOWANCE NOTWITHSTANDING PARALLEL EXEMPTION EXPLOI TED UNDER S.11(1)(A) OF THE ACT. 9. WE FIND THAT THE ISSUE IS SET TO REST AND IS NO LONGER RES INTEGRA. THE HONBLE SUPREME COURT IN THE CASE OF CIT VS. RAJAST HAN GUJARATI CHARITABLE FOUNDATION POONA IN CIVIL APPEAL NO.718 6 OF 2014 JUDGEMENT DATED 13/12/2017 HELD THAT EVEN IF THE ENTIRE EXPEN DITURE INCURRED FOR ACQUISITION FOR A CAPITAL ASSET IS TREATED AS APPLI CATION OF INCOME FOR CHARITABLE PURPOSES UNDER S.11(1)(A) OF THE ACT, TH E ASSESSEE CONTINUES TO BE ENTITLED TO DEPRECIATION UNDER S.32 OF THE ACT. THE HONBLE SUPREME COURT OBSERVED THAT THE ARGUMENT THAT THE GRANT OF DEPRECIATION AMOUNTS TO GIVING DOUBLE BENEFIT TO THE ASSESSEE IS NOT ACC EPTABLE. THE HONBLE SUPREME COURT FURTHER HELD THAT SPECIFIC PROVISION OF SECTION 11(6) WHICH BARS CLAIM OF DEPRECIATION ON EXPENDITURE APPLIED F OR CHARITY PURPOSES IS PROSPECTIVE AND APPLIES ONLY FROM AY 2015-16. IN V IEW OF THE DECISION OF THE HONBLE SUPREME COURT, THE ASSESSEE IS ENTITLED TO DEPRECIATION ITA NO.2344/AHD/16 [DCIT VS. AMRELI JILLA VIDHYASABHA] A.Y. 2012-13 - 3 - ALLOWANCE NOTWITHSTANDING THE FACT THAT THE ENTIRE EXPENDITURE INCURRED FOR ACQUISITION OF CAPITAL WAS ADMITTED AS APPLICA TION OF INCOME FOR CHARITABLE PURPOSES UNDER S.11(1)(A) OF THE ACT. 4. THUS, PLACED IN THE SIMILAR FACTS, WE DO NOT SEE ANY REASON TO DISTURB THE ORDER OF THE CIT(A) ON THIS SCORE. 5. IN THE RESULT, THE APPEAL OF THE REVENUE IS DISM ISSED. SD/- SD/- (MAHAVIR PRASAD) (PRADIP KUMA R KEDIA) JUDICIAL MEMBER ACCOUNTANT MEMBER AHMEDABAD: DATED 14/11/2018 S. K. SINHA !'#' / COPY OF ORDER FORWARDED TO:- &. / REVENUE 2. / ASSESSEE (. )*+ , / CONCERNED CIT 4. ,- / CIT (A) /. 012 33*+4 *+#4 56) / DR, ITAT, AHMEDABAD 7. 289 : / GUARD FILE. BY ORDER / 4 TRUE COPY /5 *+#4 56) 1.DATE OF DICTATION ON 01.11.2018 2.DATE ON WHICH THE TYPED DRAFT IS PLACED BEFORE TH E OTHER MEMBER 02.11.2018 3.DATE ON WHICH THE APPROVED DRAFT COMES TO THE SR. P.S./P.S. 4.DATE ON WHICH THE FAIR ORDER IS PLACED BEFORE THE DICTATING MEMBER FOR PRONOUNCEMENT 5.DATE ON WHICH THE FAIR ORDER COMES BACK TO THE SR .P.S./P.S 6.DATE ON WHICH THE FILE GOES TO THE BENCH CLERK 7.DATE ON WHICH THE FILE GOES TO THE HEAD CLERK . 8.THE DATE ON WHICH THE FILE GOES TO THE ASSTT. REG ISTRAR FOR SIGNATURE ON THE ORDER 9.DATE OF DESPATCH OF THE ORDER THIS ORDER PRONOUNCED IN OPEN COURT ON 14/11/2018