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

ITA 2720/AHD/2017

• Counselvise Citation: [2019] 118 COUNSELVISE.COM (IT) 2542 (ITAT-AHMEDABAD)
• Duration Of Justice: 1 year(s) 3 month(s) 2 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 07-03-2019
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: B
• Assessment Year: 2014-2015
• Appeal Filed On: 05-12-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: APARNA A GARWAL
• Keywords: Capital asset; Depreciation; Charitable institution; Capital expenditure
• Section: 11

Judgement Text

, IN THE INCOME TAX APPELLATE TRIBUNAL, B BENCH, AHMEDABAD BEFORE SHRI AMARJIT SINGH , ACCOUNTANT MEMBER AND MS MADHUMITA ROY, JUDICIAL MEMBER ./ ITA NO. 2720/AHD/2017 & / ASSTT. YEAR: 2014 - 201 5 D.C.I.T , (EXEMPTION) , CIRCLE - 2, AHMEDABAD. VS . AMRELI JILLA VIDHYASABHA, PLACE VIDHYA VIHAR, VARASADA ROAD, AMRELI - 365601. PAN: AAATA4252C (APPLICANT) (RESPONENT) REVENUE BY : MS APARNA AGARWAL , CIT,D.R ASSESSEE BY : WRITTEN SUBMISSION / DATE OF HEARING : 06 / 03 / 201 9 / DATE OF PRONOUNCEMENT: 07 / 03 /201 9 / O R D E R PER MS MADHUMITA ROY, JUDICIAL MEMBER : THE INSTANT APPEA L PREFERRED BY THE REVENUE IS AGAINST THE ORDER DATED 20.09.2017 , PASSED BY THE LEARNED COMMI SSIONER OF INCOME TAX(APPEALS) - 7 , AHMEDABAD, U/S.143(3) OF THE INCOME TAX ACT, 1961( HEREIN AFTER REFERRED TO AS THE ACT ) A RISING OUT OF THE ORDER DATED 26. 1 2.2016 PASSED BY THE D.C.I.T, (EXEMPTION) , CIRCLE - 2, AHMEDABAD) FOR THE ASSESSMENT YEAR 2014 - 15 , AGAINST THE DELETION OF ADDITION IN RESPECT OF DEPRECIATION OF THE ASSET OF THE ASSESSEE S TRUST TO THE TUNE OF RS.1 , 91 , 78,218 / - MADE BY T HE ASSESSING OFFICER . ITA NO. 2720/AHD/2017 A.Y. 2014 - 2015 2 2. AT THE VERY OUTSET OF THE PROCEEDING THE LD. ADVOCATE APPEARING FOR THE ASSESSEE SUBMITTED BEFORE US THAT THE ISSUE IS SQUARELY COVERED BY THE ORDER PASSED BY THE CO - ORDINATE BENCH IN AS SESSEE S OWN CASE IN ITA BEARING NO.2344/AHD/2016 FOR A.Y. 2012 - 13 PASSED RELYING UPON THE RATIO LAID DOWN BY THE HON BLE APEX COURT IN THE MATTER OF RAJASTHAN GUJARATI CHARITABLE FOUNDATION, POONA. THE CO - ORDINATE BENCH IN THE CASE OF DCIT ( EXEMPTION ) V S N.H. KAPADIA EDUCATION TRUST IN ITA NO.3090/AHD/2015 BY IT S ORDER DATED 08.01.2018 HAS ALSO SETTLED THE ISSUE IN FAVOUR OF THE ASSESSEE. 3. HOWEVER, THE LD. DR , FAILED TO CONTROVERT THE ARGUMENT ADVANCED BY THE LD.AR. 4. WE HAVE HEARD THE RESPECTIVE PARTIES, PERUSED THE MATERIAL AVAILAB LE ON RECORD INCLUDING THE JUDG MENT CITED BY THE LD.AR, BEFORE US. IT APPEARS THAT THE LD.AO HAS MADE DISALLOWANCE OF CLAIM OF DEPRECIATION OF RS.1,91,78,218/ - FOR THE REASONS THAT THE APPELLANT HAS ALREADY CLAIMED DEDU CTION OF THE WHOLE COST OF THE ASSET TREATING AS APPLICATION OF FUND S FOR THE PURPOSE OF OBJECT OF THE TRUST AMOUNTING TO 100% DEDUCTION OF THE COST . A CCORDING TO THE LD.AO F URTHER ALLOWANCE OF DEPRECIATION OF THE SAME ITEM WOULD TANTAMOUNT TO DOUBLE DEDUC TION WHICH IS NOT PERMISSIBLE IN VIEW OF THE DECISION OF HON BLE APEX COURT JUDGMENT PASSED IN THE MATTER OF ESCORTS LIMITED VS UNION OF INDIA. 4.1 IT ALSO APPEARED THAT THE LD.CIT(A) HAS DELETED THE DISALLOWANCE OF DEPRECIATION RELYING UPON THE JUDG MENT PASSED BY THE JURISDICTIONAL HIGH COURT IN THE CASE OF CIT VS SHETH MANILAL RANCHHODDAS VISHRAM BHAVAN TRUST REPORTED IN ITR 588. ITA NO. 2720/AHD/2017 A.Y. 2014 - 2015 3 4.2 WE HAVE ALSO GONE THROUGH THE ORDER PASSED BY THE CO - ORDINATE BENCH IN ASSESSEE S OWN CASE FOR THE ASSESSMENT YEAR 2012 - 13 DEALING WITH THE SAME ISSUE; THE RELEVANT PORTION WHEREOF IS AS FOLLOWS: 2. BY WAY OF ITS GROUNDS OF APPEAL, THE REVENUE HAS IMPUGNED THE ACTION OF THE CIT( A) IN DELETING THE ADDITION OF 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 COVERED IN FAVOUR OF THE ASSESSEE BY THE JUDGMENT OF THE HON BLE SUPREME COURT IN THE CASE OF RAJASTHAN GUJARATI CHARITABLE FOUNDATION, POONA. IN THE LIGHT OF THE JUDGMENT OF HON BLE SUPREME COURT, THE CO - ORDINATE BENCH IN CASE OF DCIT(EXEMPTIONS) VS. N. H. KAPADIA EDUCAT ION TRUST ITA NO. 3090/AHD/2015 ORDER DATED 08.01.2018 HAS DEALT WITH THE ISSUE IN FAVOUR OF THE ASSESSEE AS UNDER: 8. WE HAVE CAREFULLY CONSIDERED THE RIVAL SUBMISSION. THE CORE CONTROVERSY IN THE CASE IN HAND IS WHETHER DEPRECIATION IS ALLOWABLE ON TH E EXPENDITURE INCURRED FOR CAPITAL PURPOSES WHERE SUCH EXPENDITURE HAS BEEN TREATED AS APPLICATION OF INCOME FOR THE OBJECT 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 CLAI MED AS DEDUCTION UNDER 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 DEPRECIATION ALLOWANCES AS PER COMMERCIAL PRINCIPLES FOR THE ASSESSMENT YEAR 2008 - 09 IN QUESTION SINCE SECTION 11 (6) OF THE ACT HAS BEEN I NSERTED 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 HON BLE SUPREME COURT IN THE CASE OF CIT VS. RAJASTHAN GUJARATI CHARITABLE FOUNDATION POONA IN CIVIL APPEAL NO.7186 OF 2014 JUDGEMENT DATED 13/12/2017 HELD THAT EVEN IF THE ENTIRE EXPENDITURE INCURRED FOR ACQUISITION FOR A CAPITAL ASSET IS TREATED AS APPLICATION OF INCOME FOR CHARITABLE PURPOSES UNDER S.11(1)(A) OF THE ACT, THE ASSESSEE CONTINUES TO BE ENTITLED TO DEPRECIATION UNDER S.32 OF THE ACT. THE HON BLE SUPREME COU RT OBSERVED THAT THE ARGUMENT THAT THE GRANT OF DEPRECIATION AMOUNTS TO GIVING DOUBLE BENEFIT TO THE ASSESSEE IS NOT ACCEPTABLE. THE HON BLE SUPREME COURT FURTHER HELD THAT SPECIFIC PROVISION OF SECTION 11(6) WHICH BARS CLAIM OF DEPRECIATION ON EXPENDITUR E APPLIED FOR CHARITY PURPOSES IS PROSPECTIVE AND APPLIES ONLY FROM AY 2015 - 16. IN VIEW OF THE ITA NO. 2720/AHD/2017 A.Y. 2014 - 2015 4 DECISION OF THE HON BLE SUPREME COURT, THE ASSESSEE IS ENTITLED TO DEPRECIATION ALLOWANCE NOTWITHSTANDING THE FACT THAT THE ENTIRE EXPENDITURE INCURRED FOR ACQU ISITION OF CAPITAL WAS ADMITTED AS APPLICATION 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 DISMISSED 4.3 RESPECTFULLY RELYING UPON THE JUDGMENT PASSED BY THE CO - ORDINATE BENCH, IN VIEW OF THE JUDGMENT AND ORDER PASSED BY THE HON BLE APEX COURT IN THE MATTER OF RAJASTHAN GUJARATI CHARITABLE FOUNDATION , WE DO NOT FIND ANY M ERIT IN THE APPEAL PREFERRED BY THE REVENUE. HENCE THE SAME IS DISMISSED. 5. IN THE RESULT, THE APPEAL OF THE REVENUE IS DISMISSED. ORDER PRONOUNCED IN THE COURT ON 07 /03 /2019 AT AHMEDABAD. - SD - - SD - ( AMARJIT SINGH ) ACCOUTANT MEMBER ( MS MADHUMITA ROY ) JUDICIAL MEMBER (TRUE COPY) AHMEDABAD; DATED 07 / 03 /201 9 MANISH / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT. 3. / CONCERNED CIT 4. ( ) / THE CIT(A) 5. , / DR, ITAT, 6. / GUARD FILE . / BY ORDER, / ( DY./ASSTT.REGISTRAR) , / ITAT, AHMEDABAD