Asst. Commissioner of Income Tax (Exemptions), Circle-1, Ahmedabad V. Blind People's Association India, Ahmedabad

ITA 2376/AHD/2016

• Counselvise Citation: [2018] 125 COUNSELVISE.COM (IT) 8516 (ITAT-AHMEDABAD)
• Duration Of Justice: 1 year(s) 6 month(s) 17 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 02-04-2018
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: Not Allotted
• Assessment Year: 2013-2014
• Appeal Filed On: 15-09-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Capital asset; Depreciation; Charitable institution; Capital expenditure
• Section: 11

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL A BENCH, AHMEDABAD , , BEFORE SHRI RAJPAL YADAV, JUDICIAL MEMBER & SHRI PRADIP KUMAR KEDIA, ACCOUNTANT MEMBER ./ I.T.A. NO.2376/AHD/2016 ( / ASSESSMENT YEAR : 2013-14) THE ASST.CIT (EXEMPTIONS) CIRCLE-1, AHMEDABAD / VS. BLIND PEOPLES ASSOCIATION INDIA OPP: IIM, VASTRAPUR AHMEDABAD # ./ ./ PAN/GIR NO. : AAAAB 0440 L ( #% / APPELLANT ) .. ( &#% / RESPONDENT ) #%' / APPELLANT BY : SHRI RAJDEEP SINGH, SR.DR &#%(' / RESPONDENT BY : SHRI PARIN SHAH, AR )*(+ / DATE OF HEARING 02/04/2018 ,-./(+ / DATE OF PRONOUNCEMENT 02/04/2018 / O R D E R PER PRADIP KUMAR KEDIA - AM: THE CAPTIONED APPEAL HAS BEEN FILED AT THE INSTANC E OF THE REVENUE SEEKING TO ASSAIL THE APPELLATE ORDER OF THE COMMIS SIONER OF INCOME TAX(APPEALS)-9, AHMEDABAD [CIT(E) IN SHORT] DATED 11/07/2016 ARISING IN THE ASSESSMENT ORDER PASSED UNDER S.143(3) OF T HE INCOME TAX ACT, 1961 (HEREINAFTER REFERRED TO AS 'THE ACT') DATED 28/09/2015 RELEVANT TO ASSESSMENT YEAR (AY) 2012-13. ITA NO.2376/AHD /2016 ACIT (E) VS. BLIND PEOPLES ASSOCIATION INDIA ASST.YEAR 2013-14 - 2 - 2. THE REVENUE HAS CHALLENGED THE ACTION OF THE C IT(A) IN DELETING THE DISALLOWANCE OF DEPRECIATION OF DEPRECIATION ON CAPITAL ASSETS AMOUNTING TO RS.62,37,844/- MADE BY THE ASSESSING O FFICER (AO). 3. THE SHORT ISSUE IN THE INSTANT CASE IS WHETHER DEPRECIATION IS ALLOWABLE ON THE EXPENDITURE INCURRED FOR CAPITAL P URPOSES WHERE SUCH EXPENDITURE HAS BEEN TREATED AS APPLICATION OF INCO ME FOR THE OBJECT OF THE TRUST IN TERMS OF SECTION 11(1)(A) OF THE ACT. 4. THE AFORESAID ISSUE IS SQUARELY COVERED IN FAVO UR OF ASSESSEE IN ITS OWN CASE IN ITA NO.2657/AHD/2012 RELEVANT TO AY 200 9-10 ORDER DATED 24/01/2013. THE IDENTICAL ISSUE WAS ALSO CROPPED U P BEFORE THE COORDINATE BENCH OF TRIBUNAL IN DCIT (E) VS. N.H. K APADIA EDUCATION TRUST IN I.T.A. NO.3090/AHD/2015 ORDER DATED 08/01 /2018. IN TERMS OF THE RECENT JUDGEMENT OF THE HONBLE SUPREME COURT I N THE CASE OF CIT VS. RAJSTHAN AND GUJARATI CHARITABLE FOUNDATION PUN E IN CIVIL APPEAL NO.7186 OF 2014 DELIVERED ON 13/12/2017, THE COORDI NATE BENCH ADJUDICATED THE ISSUE IN FAVOUR OF ASSESSEE. THE RELEVANT OPERATIVE PARA OF THE ORDER OF THE COORDINATE BENCH IN THE CASE O F N.H.KAPADIA EDUCATION TRUST (SUPRA) IS REPRODUCED HEREUNDER FOR READY REFERENCE:- 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 SUC H EXPENDITURE HAS BEEN TREATED AS APPLICATION OF INCOME FOR THE OBJECT OF THE TRUST IN TERMS OF SECTION ITA NO.2376/AHD /2016 ACIT (E) VS. BLIND PEOPLES ASSOCIATION INDIA ASST.YEAR 2013-14 - 3 - 11(1)(A) OF THE ACT. IT IS THE CASE OF THE REVENUE THAT ONCE THE CAPITAL EXPENDITURE HAS BEEN CLAIMED AS DEDUCTION UNDER S.1 1(1)(A) AS APPLICATION OF INCOME FOR THE OBJECT OF THE TRUST, THE DEPRECIATIO N 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 PR OHIBITS SUCH DOUBLE DEDUCTION. THE ASSESSEE, ON THE OTHER HAND, CONTEN DS THAT THERE IS NO BAR IN MAKING CLAIM OF DEPRECIATION ALLOWANCES AS PER COMM ERCIAL PRINCIPLES FOR THE ASSESSMENT YEAR 2008-09 IN QUESTION SINCE SECTION 1 1 (6) OF THE ACT HAS BEEN INSERTED PROSPECTIVELY AND OPERATES FROM AY 2015-16 ONWARDS. IT IS THUS THE CASE OF THE ASSESSEE THAT THE COST INCURRED TOWARDS CAPITAL ASSETS IS ELIGIBLE FOR DEPRECIATION ALLOWANCE NOTWITHSTANDING PARALLEL EXEMPTION EXPLOITED 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.7186 OF 2014 J UDGEMENT DATED 13/12/2017 HELD THAT EVEN IF THE ENTIRE EXPENDITURE INCURRED FOR ACQUISITION FOR A CAPITAL ASSET IS TREATED AS APPLICATION OF IN COME FOR CHARITABLE PURPOSES UNDER S.11(1)(A) OF THE ACT, THE ASSESSEE CONTINUE S TO BE ENTITLED TO DEPRECIATION UNDER S.32 OF THE ACT. THE HONBLE SU PREME COURT OBSERVED THAT THE ARGUMENT THAT THE GRANT OF DEPRECIATION AMOUNTS TO GIVING DOUBLE BENEFIT TO THE ASSESSEE IS NOT ACCEPTABLE. THE HONBLE SUP REME COURT FURTHER HELD THAT SPECIFIC PROVISION OF SECTION 11(6) WHICH BARS CLAIM OF DEPRECIATION ON EXPENDITURE APPLIED FOR CHARITY PURPOSES IS PROSPEC TIVE AND APPLIES ONLY FROM AY 2015-16. IN VIEW OF THE DECISION OF THE HONBLE SUPREME COURT, THE ASSESSEE IS ENTITLED TO DEPRECIATION ALLOWANCE NOTW ITHSTANDING THE FACT THAT THE ENTIRE EXPENDITURE INCURRED FOR ACQUISITION OF CAPI TAL WAS ADMITTED AS APPLICATION OF INCOME FOR CHARITABLE PURPOSES UNDER S.11(1)(A) OF THE ACT. 4. THUS, THE ISSUE IS NOW WELL SETTLED. IN PARITY, THE CIT(A) HAS RIGHTLY GRANTED RELIEF TO THE ASSESSEE TOWARDS DEPR ECIATION ON CAPITAL EXPENDITURE AS CLAIMED. THUS, WE DECLINE TO INTERF ERE. ITA NO.2376/AHD /2016 ACIT (E) VS. BLIND PEOPLES ASSOCIATION INDIA ASST.YEAR 2013-14 - 4 - 5. IN THE RESULT, REVENUES APPEAL IS DISMISSED. THIS ORDER PRONOUNCED IN OPEN COURT ON 02/ 0 4 /201 8 SD/- SD/- () ( ) (RAJPAL YADAV) ( PRADIP KUMAR KEDIA ) JUDICIAL MEMBER ACCOUNTANT MEMBER AHMEDABAD; DATED 02/ 04 /2018 3..),.)../ T.C. NAIR, SR. PS !'#$%$' / COPY OF THE ORDER FORWARDED TO : 1. #% / THE APPELLANT 2. &#% / THE RESPONDENT. 3. 456+ 7+ / CONCERNED CIT 4. 7+ ( ) / THE CIT(A)-9, AHMEDABAD 5. 89:+)56 , 56/ , 4 / DR, ITAT, AHMEDABAD 6. :<* / GUARD FILE. / BY ORDER, &8++ //TRUE COPY// / ( DY./ASSTT.REGISTRAR) , / ITAT, AHMEDABAD 1. DATE OF DICTATION .. 02.04.18 (DICTATION-PAD 8- PAGES ATTACHED AT THE END OF THIS APPEAL-FILE) 2. DATE ON WHICH THE TYPED DRAFT IS PLACED BEFORE THE DICTATING MEMBER 02.04.18 3. OTHER MEMBER 4. DATE ON WHICH THE APPROVED DRAFT COMES TO THE SR.P. S./P.S.. 5. DATE ON WHICH THE FAIR ORDER IS PLACED BEFORE THE D ICTATING MEMBER FOR PRONOUNCEMENT 6. DATE ON WHICH THE FAIR ORDER COMES BACK TO THE SR.P .S./P.S.2.4.18 7. DATE ON WHICH THE FILE GOES TO THE BENCH CLERK 2.4.18 8. DATE ON WHICH THE FILE GOES TO THE HEAD CLERK ... 9. THE DATE ON WHICH THE FILE GOES TO THE ASSISTANT RE GISTRAR FOR SIGNATURE ON THE ORDER.. 10. DATE OF DESPATCH OF THE ORDER