The Dy. CIT(Exemp.), Circle-1, Ahmedabad V. M/s. N.H. Kapadia Education Trust, Ahmedabad

ITA 2755/AHD/2015

• Counselvise Citation: [2018] 112 COUNSELVISE.COM (IT) 5182 (ITAT-AHMEDABAD)
• Duration Of Justice: 3 year(s) 5 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 05-10-2018
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: Not Allotted
• Assessment Year: 2011-2012
• Appeal Filed On: 30-09-2015
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: S N DIVATIA
• Keywords: Capital asset; Depreciation; Charitable institution; Capital expenditure; Set aside
• Section: 80G

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD B BENCH (BEFORE SHRI MAHAVIR PRASAD, JUDICIAL MEMBER & SHRI AMARJIT SINGH, ACCOUNTANT MEMBER) ITA. NO: 2755/AHD/2015 & C.O. NO. 196/AHD/15 (ASSESSMENT YEAR: 2011-12) DEPUTY COMMISSIONER OF INCOME-TAX (EXEMPTIONS)- CIRCLE-1, AHMEDABAD N.H. KAPADIA EDUCATION TRUST, THE H.B. KAPADIA NEW HIGH SCHOOL, GURUKUL ROAD, MEMNAGAR, AHMEDABAD V/S V/S N.H. KAPADIA EDUCATION TRUST, THE H.B. KAPADIA NEW HIGH SCHOOL, GURUKUL ROAD, MEMNAGAR, AHMEDABAD DY. CIT (OSD), RANGE-1, AHMEDABAD (APPELLANT) (RESPONDENT) PAN: AAATN 1417G APPELLANT BY : SHRI MUDIT NAGPAL, SR. D. R. RESPONDENT BY : SHRI S.N. DIVATIA, A.R. ( )/ ORDER DATE OF HEARING : 03 -10-201 8 DATE OF PRONOUNCEMENT : 05 -10-2018 PER MAHAVIR PRASAD, JUDICIAL MEMBER ITA NO. 2755 /AHD/2015 & C.O. NO. 1 96/AHD/15 . A.Y. 2011-12 2 1. ITA NO. 2755/AHD/2015 & C.O. NO. 196/AHD/2015 ARE A PPEAL BY THE REVENUE AND CROSS OBJECTION OF THE ASSESSEE PREFER RED AGAINST THE ORDER OF THE LD. CIT(A)-9, AHMEDABAD DATED 10.07.2015 PERTAINING TO A.Y. 2011-12 AND FOLLOWING GROUNDS HAVE BEEN TAKEN BY THE REVENUE: I) WHETHER ON THE FACTS AND IN THE CIRCUMSTANCE S OF THE CASE THE LD.CIT(A) IS JUSTIFIED IN ALLOWING THE ASSESSEE'S APPEAL IN DELE TING THE ADDITION OF DISALLOWANCE OF DEPRECIATION MADE BY THE ASSESSING OFFICER OF RS .51,02,806/-. II) WHETHER ON THE FACTS AND IN THE CIRCUMSTAN CES OF THE CASE THE LD.CIT(A) IS JUSTIFIED IN ALLOWING THE ASSESSEE'S APPEAL IN DELE TING THE ADDITION OF CORPUS FUND NOT OFFERED AS INCOME MADE BY THE ASSESSING OFFICER OF RS.3, 05,31 ,233/-. III) ON THE FACTS AND CIRCUMSTANCES OF THE CASE, THE LD. COMMISSIONER OF INCOME-TAX (APPEALS) OUGHT TO HAVE UPHELD THE ORDER OF THE ASSESSING OFFICER. IV) IT IS, THEREFORE, PRAYED THAT THE ORDER OF TH E LD. COMMISSIONER OF INCOME-TAX (APPEALS) MAY BE SET ASIDE AND THAT OF THE ASSESSIN G OFFICER BE RESTORED. 2. THE FACTS OF THE CASE ARE THAT THE TRUST IS ENGAGED MAINLY ENGAGED IN EDUCATIONAL ACTIVITIES WITH SCHOOLS OPERATING BOTH IN ENGLISH AS WELL AS IN GUJARATI MEDIUM FROM NURSERY TO STANDARD XII. VIDE A LETTER DATED 18.12.2012 THE ASSESSEE SUBMITTED COPIES OF THE TRUST DEED, CE RTIFICATE OF THE CHARITY COMMISSIONER OF THE TRUST BEING REGISTERED WITH THA T OFFICE. REGISTRATION GRANTED U/S.12A(A) OF THE I. T. ACT VIDE AN ORDER D ATED 21.03.1990, GRANT OF APPROVAL U/S. 80G (5) OF THE I. T. ACT DATED 01.04. 2008. 3. DEPRECIATION: 4. DURING THE COURSE OF THE PROCEEDINGS IT WAS OBSERVE D THAT DURING THE YEAR THE TRUST IN ITS INCOME AND EXPENDITURE ACCOUNT HAS CLA IMED DEPRECIATION TO THE ITA NO. 2755 /AHD/2015 & C.O. NO. 1 96/AHD/15 . A.Y. 2011-12 3 EXTENT OF RS.51,06,979/-. FOR THE SAME, THE ASSESSE E WAS REQUESTED TO FURNISH ITS STAND IN CLAIMING THE SAME. 'WITH REGARD TO PARA-2 OF YOUR ABOVE SAID NOTICE CA LLING FOR THE JUSTIFICATION OF THE CLAIM OF DEPRECIATION ALLOWANCE, WE HAVE TO STA TE THAT DEPRECIATION IS ADMISSIBLE BECAUSE THOUGH IT MAY BE CANVASSED BY TH E REVENUE THAT THERE WOULD BE DOUBLE DEDUCTION. IT IS NOT SO IN THE PRESENT CA SE OF THE ASSESSEE DUE TO DEFICIT. EVEN OTHERWISE THIS ISSUE HAS BEEN DECIDED IN OUR F AVOR BY CIT(A)-XXI A'BAD IN THE APPEAL FOR A.Y.2004-05 & 2005-06 (COPY ENCLOSED ). RECENTLY EVEN VARIOUS TRIBUNAL HAVE TAKEN THE VIEW IN FAVOR OF THE ASSESS EE SUCH AS CIT VS SHETH MANILA! RANCHHODDAS VISHRAM BHAVAN TRUST, 198 ITR 5 98(GUJ),CIT VS MARKET COMMITTEE (45 DTR 381) (PH) AND-BLIND PEOPLES ASSOC IATION (ITA NO.2657/A/12/DT.24.1.2013 ALLOWED THE CLAIM OF DEPR ECIATION. IN ANY VIEW OF THE MATTER WE HAVE FILED OUR RETURN OF INCOME FOR A. Y. 2011-12 SHOWING EXCESS OF EXPENDITURE OVER RECEIPTS OF RS.1 ,64,19,590/- AFTER DEPRECIATION OF RS.51,06,979/-.SO THAT THE DISALLOW ANCE, IF ANY OF THE DEPRECIATION WOULD NOT MAKE ANY EFFECT TO THE DEFICIT SHOWN BY U S. IT WOULD BE ACADEMIC ISSUE SO THAT THE SAME MAY BE DROPPED' 4.1 THE SUBMISSION OF THE ASSESSEE HAS BEEN CAREFULLY C ONSIDERED. IN THE CASE OF THE TRUST THE WHOLE COST OF THE ASSETS IS TREATE D AS APPLICATION OF FUNDS FOR THE PURPOSE OF OBJECTS OF THE TRUST. THIS BASIC ALLY AMOUNTS TO 100% DEDUCTION OR DEPRECIATION. THEREFORE, ANY FURTHER A LLOWANCE OF DEPRECIATION WILL AMOUNT TO DOUBLE DEDUCTION IN VIEW OF THE DECI SION OF THE SUPREME COURT IN THE CASE OF ESCORTS LTD(199 ITR 43), WHERE IN THE SUPREME COURT HELD THAT WHEN DEDUCTION U/S.35(2)(IV) WAS ALLOWED IN RESPECT OF CAPITAL EXPENDITURE ON SCIENTIFIC RESEARCH NO DEPRECIATION WAS TO BE ALLOWED U/S.32 ON THE SAME ASSETS. THE APEX COURT FURTHER OBSERVED THAT DOUBLE DEDUCTION IS INTENDED UNLESS THERE IS CLEAR STATUTORY INDICAT ION TO THE CONTRARY. ITA NO. 2755 /AHD/2015 & C.O. NO. 1 96/AHD/15 . A.Y. 2011-12 4 'IT IS IMPOSSIBLE TO CONCEIVE OF THE LEGISLATURE HA VING ENVISAGED A DOUBLE DEDUCTION IN RESPECT OF THE SAME EXPENDITURE, EVEN THOUGH IT IS TRUE THAT THE T WO HEADS OF THE DEDUCTION (I.E., DEPRECIATION AND SCIENTIFIC RESEARCH EXPENDITURE) DO NOT COMPLETELY OVERLAP AND THERE IS SOME DIFFERENCE IN/THE RATIONA LE OF THE TWO DEDUCTIONS. NO LEGISLATURE COULD HAVE AT ALL INTENDED A DOUBLE DEDUCTION IN REGARD TO THE SAME BUSINESS OUTGOING, AND IF IT WAS INTENDED IT W OULD BE CLEARLY EXPRESSED. THEREFORE, EVEN IN THE ABSENCE OF CLEAR STATUTORY INDICATION TO THE CONTRA RY, THE STATUTE SHOULD NOT BE READ SO AS TO PERMIT AN ASSESSEE TWO DEDUCTIONS - BOTH UNDER SECTIONS 10(2) (VI) AND SECTION 10(2)(XIV) UNDER THE 1922 ACT OR UNDER SECTIONS 32(1)(II) AND 35(2)(IV) OF THE 19 61 ACT - QUA THE SAME EXPENDITURE. THUS, EVEN BEFORE THE 1980 AMENDMENT, THE ACT DID NOT PERMIT A DEDUCTION FOR DEPRECIATION IN RESPECT OF THE COST OF A CAPITAL ASSET ACQUIRED FOR PURPOSES OF SCIENTI FIC RESEARCH TO THE EXTENT SUCH COST HAD BEEN WRITT EN OFF UNDER SECTION I0(2)(XIV)/35(1) AND (2). THE MERE FACT THAT A BASELESS CLAIM WAS RAISED BY SAME OVER-ENTHUSIASTIC ASSESSEES WHO SOUG HT A DOUBLE ALLOWANCE OR THAT SUCH CLAIMS MAY PERHAPS HAVE BEEN ACCEPTED BY SOME AUTHORITIES, WAS NOT SUFFICIENT TO ATTRIBUTE ANY AMBIGUITY OR DOUBT AS TO THE TRUE SCOPE OF THE PROVISIONS AS THEY STOOD EARLIER.' 4.2 FURTHER, IN A RECENT DECISION IN THE CASE O F LISSIE MEDICAL INSTITUTIONS V/S. COMMISSIONER OF INCOME-TAX, KO CHI, 348 ITR 344 , THE HON'BLE HIGH COURT OF KERALA HAS HELD THAT 'WHEN THE EXPENDITURE INCURRED FOR ACQUISITION OF D EPRECIABLE ASSETS ITSELF IS TREATED AS APPLICATION OF INCOME FOR CHARITABLE PUR POSES UNDER SECTION LL(L)(A), SHOULD NOT THE COST OF SUCH ASSETS TO BE TREATED AS NIL FOR THE ASSESSEE AND IN THAT SITUATION DEPRECIATION TO BE GRANTED TURNS OUT TO BE NIL. HOWEVER, IF DEPRECIATION PROVIDED IS CLAIMED ON NOTIONAL COST A FTER THE ASSESSEE CLAIMS 1 00 PER CENT OF THE COST INCURRED FOR IT AS APPLICATION OF INCOME FOR CHARIT ABLE PURPOSES, THE DEPRECIATION SO CLAIMED HAS TO B E WRITTEN BACK AS INCOME AVAILABLE. IN FACT, GOING BY THE SEVERAL DECISIONS OF THE VARIOUS HIGH COURTS, THE CHARITABLE INSTITUTIONS WILL BE GENERATING UNAC COUNTED INCOME EQUAL TO THE DEPRECIATION AMOUNT CLAIMED ON A YEAR TO YEAR BASIS WHICH IS NOTHING BU T BLACK MONEY. THE VIEWS FROM THE CENTRAL BOARD OF DIRECT TAXES HAVE BEEN OBTAINED ON THE ISSUES. [ PARA 6]. ' ITA NO. 2755 /AHD/2015 & C.O. NO. 1 96/AHD/15 . A.Y. 2011-12 5 4.3 THE HON'BLE HIGH COURT OF KERALA, IN THE SAID ORDER , HAS REFERRED TO DECISIONS OF VARIOUS HIGH COURTS INCLUDING THE DECI SION OF HON'BLE GUJARAT HIGH COURT IN THE CASE OF CIT V/S. SHETH MANILA! RANCHHODDAS VISHRAM BHAVAN TRUST, 198 ITR 598 (GUJ.) AND HELD THAT 'WE DO NOT FIND IN ANY OF THESE DECISIONS THIS ASPECT IS CONSI DERED AND DISCUSSED BY ANY OF THE HIGH COURTS.'. THE HON'BLE ITAT, COCHIN BENC H HAS ALSO SUPPORTED THE SAID VIEW WHILE DECIDING THE CASE OF DDIT(E), RANGE-II, ERNAKULAM V/S. ADI SANKARA TRUST IN FAVOUR OF THE REVENUE. 4.4 THE ASSESSEE HAS OBJECTED FOR THE DISALLOWANCE OF D EPRECIATION BY RELYING ON THE DECISION OF THE HON'BLE I.T.A.T. AHMEDABAD'S JUDGEMENT DATED 19TH JULY, 2013 IN THE CASE OF ITO (EXEMP) VS. SARD AR PUBLIC CHARITABLE TRUST, BHAVNAGAR AND ALSO ON HON'BLE GUJARAT HIGH C OURT'S DECISION IN THE CASE OF SHETH MANILAL RANCHHODDAS VISHRAM BHAVAN TR UST REPORTED IN 198 ITR 598. THE HON'BLE GUJARAT HIGH' COURT HAS ADMITT ED THE APPEAL ON THE ISSUE OF DISALLOWANCE OF DEPRECIATION IN THE FOLLOW ING CASES: I) DIT(E) VS SARDAR PATEL INSTITUTE OF PUBLIC ADMI NISTRATION (T.A. NO. 615 OF 2012) II) DIT(E) VS PARUL AROGYA SEVA MANDAL (T.A. NO.933 OF 2012) III)DIT(E) VS AHMEDABAD URBAN DEVELOPMENT AUTHORITY (T.A. NO. 913 OF2013) THEREFORE FOR THE CONSISTENCY OF THE ISSUE THE CLAI M OF DEPRECIATION OF RS. 51,02,806/- ( 51,00,616/- + 2,190) IS DISALLOWED AN D ADDED BACK TO THE TOTAL INCOME OF THE ASSESSEE. (ADDITION-RS.51,02,806/-) 5. ONE-TIME ADMISSION FEE :- 5.1 AS IN THE PRECEDING YEARS, THIS YEAR TOO, I.E. F.Y. 2010-11 RELEVANT TO A.Y. 2011-12 THE ASSESSEE TRUST IN IT'S AUDITED STATEMEN T OF ACCOUNTS HAS DIRECTLY ITA NO. 2755 /AHD/2015 & C.O. NO. 1 96/AHD/15 . A.Y. 2011-12 6 CREDITED AN AMOUNT OF RS.3,27,57,983/- IN IT'S BALA NCE SHEET AS AN EARMARKED FUND. ON A CLOSER LOOK, IT IS REVEALED TH AT THE SAID SUM COMPRISES OF SEVEN (7) DIFFERENT FUNDS CREATED UNDE R VARIOUS HEADS FROM BOTH THE SCHOOL LOCATED AT MEMNAGAR AND SHAHIBAUG R ESPECTIVELY. TO CLARIFY THE MATTER FURTHER, DURING THE COURSE OF ASSESSMENT PROCEEDINGS, THE ASSESSEE TRUST WAS REQUESTED TO EXPLAIN AS TO WHY T HE AFORESAID INCOME BE NOT TREATED AS AN INCOME IN THE HANDS OF THE ASSESS EE. 5.2 IN RESPONSE, THE ASSESSEE TRUST VIDE ITS REPLY DATE D 21/02/2014 SUBMITTED THE CHART SHOWING THE DETAILS OF VARIOUS FUNDS APPE ARING IN THE BALANCE SHEET SHOWING OPENING BALANCE, ADDITION, UTILIZATIO N AND CLOSING BALANCE AS PER THE FORMAT GIVEN BELOW. A.Y.2011 - 12 OPENING MEMNAGAR SHAHIB AG UTILIZATION CLOSING BUILDING FUND 2,08,63,810 44,83,260 NIL 1,25,685 2,52,21,385 EDUCATION RESEARCH FUND 3,22,85,411 45,31,260 NIL 1,25,685 3,66,90,986 EDUCATION INFRASTRUCTUR E FUND 8,68,99,913 1,76,53,983 NIL 17,60,000 10,27,93, 896 LIBRARY FUND 1,11,27,002 15,58,420 NIL 41,895 1,26,43,527 SPORTS DEVELOPMENT FUND 1,11,28,302 15,10,420 NIL 41,895 1,25,96,827 STAFF WELFARE FUND 76,54,188 15,10,320 NIL 54,795 91,09,713 STUDENTS WELFARE FUND 98,36,364 15,10,3 20 NIL 76,795 1,12,69,889 TOTAL 17,97,94,990 3,27,57,983 NIL 22,26,750 21,03,26,223 5.3 FROM THE VERIFICATION OF SUBMISSION AND ANNEXURE S UBMITTED BY THE ASSESSEE, SHOWS THAT THE ASSESSEE TRUST HAD COMPELL ED THE GUARDIANS AND ITA NO. 2755 /AHD/2015 & C.O. NO. 1 96/AHD/15 . A.Y. 2011-12 7 PARENTS OF THOSE STUDENTS WHO SOUGHT ADMISSION IN T HE SCHOOL RUN BY THE TRUST TO ADVANCE DONATIONS. THUS, THE TRUST ACCEPTE D THESE UNDER THE GUISE OF DONATION GIVEN BY THESE PARENTS WHICH THE TRUST FURTHER ROUTED IT UNDER VARIOUS FUNDS SUCH AS BUILDING FUND, EDUCATIONAL RE SEARCH FUND, EDUCATIONAL INFRASTRUCTURE FUND, LITERARY FUND, SPO RTS DEVELOPMENT FUND, STAFF WELFARE FUND, STUDENTS WELFARE FUND, ETC. AND CREDITED IT DIRECTLY TO THE BALANCE SHEET SHOWING IT AS A CORPUS FUND. THIS PROVES THAT THE ASSESSEE TRUST THOUGH IS AN EDUCATIONAL TRUST ESTAB LISHED WITH AN AIM AND OBJECTIVE TO RUN EDUCATIONAL ACTIVITIES HAS AN ULTE RIOR MOTIVE (PROFIT EARNING ). FOR THE SAID REASON, THE TRUST IS NOT ENTITLED T O EXEMPTION U/S.11 OF THE I. T. ACT. DONATIONS RECEIVED FROM THE PARENTS BY THE TRUST AT THE TIME OF SEEKING ADMISSION AND SUBSEQUENTLY ALLOCATING THE S AID SUM UNDER SEVEN (7) DIFFERENT FUNDS AND PROJECTING IT AS AN EARMARKED F UND/CORPUS FUND IS TREATED AS AN INCOME IN THE HANDS OF THE ASSESSEE T RUST AND BROUGHT TO TAX. THE ADDITION TO THE CORPUS TO THE PROCEEDING YEAR C OMES TO RS. 3,05,31,233/-.(TOTAL RECEIPTS 3,27,57,983/- - RS. R S. 22,26,750/-) (ADDITION RS. 3,05,31,233/-) 6. AGAINST THE ABOVE SAID ADDITION, ASSESSEE PREFERRED FIRST STATUTORY APPEAL BEFORE THE LD. CIT(A) WHO PARTLY ALLOWED THE APPEAL OF THE ASSESSEE. 7. WE HAVE GONE THROUGH THE RELEVANT RECORD AND IMPUGN ED ORDER. AT THE OUTSET, LD. A.R. CITED AN ORDER OF CO-ORDINATE BENCH IN ASS ESSEES OWN CASE FOR ASSESSMENT YEAR 2010-11 WHERE BOTH THE ABOVE SAID I SSUES ARE DECIDED BY THE TRIBUNAL IN FAVOUR OF THE ASSESSEE AND RELEVANT FIN DING OF THE TRIBUNAL IS REPRODUCED: ITA NO. 2755 /AHD/2015 & C.O. NO. 1 96/AHD/15 . A.Y. 2011-12 8 2. THE REVENUES FIRST SUBSTANTIVE GROUND PLEADS TH AT THE CIT(A) HAS ERRED IN LAW AND ON FACTS IN DELETING DEPRECIATION DISALLOWA NCE OF RS.54,38,051/- AS MADE IN THE COURSE OF THE IMPUGNED REGULAR ASSESSMENT FR AMED ON 25.03.2013. IT IS EVIDENT THAT THE CIT(A)S FINDINGS UNDER CHALLENGE DULY DISCUSSED ASSESSING OFFICERS CONCLUSION AND ASSESSEES SUBMISSIONS CHA LLENGING CORRECTNESS THEREOF AS UNDER: 6. GROUND OF APPEAL NO.2 IS AGAINST DISALLOWANCE OF DEPRECIATION OF RS.54,38,051/- ON THE GROUND THAT THE DEPRECIATION IN THE CASE OF TRUST WOULD AMOUNT TO DOUBLE DEDUCTION. THE ASSESSING OFF ICER, IN THE ASSESSMENT ORDER, HAS OBSERVED AS UNDER: 'THE INVESTMENT IN ASSETS IS ALLOWED AS DEDUCTION A S APPLICATION OF FUNDS. THE ALLOWANCE OF DEPRECIATION AS FURTHER APP LICATION OF RECEIPTS IN SUBSEQUENT YEAR WOULD APPARENTLY BE DOU BLE DEDUCTION WHICH WOULD BE APPARENTLY INCONSISTENT WITH ACCOUNT ING PRINCIPLES AND NOT O AS PROVIDED IN LAW AND HENCE UNTENABLE. T HE DECISION OF THE SUPREME COURT IN THE CASE OF ESCORTS LTD. 199 I TR 43 IS APPLICABLE TO THE CASE OF THE ASSESSEE. AS IN THIS CASE, THE SUPREME COURT HELD THAT WHEN DEDUCTION U/S.35(2)(IV) WAS AL LOWED IN RESPECT OF CAPITAL EXPENDITURE ON SCIENTIFIC RESEAR CH, NO DEPRECIATION HAS TO BE ALLOWED U/S.32 ON THE ASSET. FOR THE SAID REASON THE AMOUNT SO CLAIMED AS DEPRECIATION TO THE TUNE OF RS.54,38,057/- IS ADDED BACK TO THE INCOME OF THE T RUST.' 6.1 DURING THE COURSE OF APPELLATE PROCEEDINGS, THE APPELLANT HAS MADE THE FOLLOWING SUBMISSIONS: 'THE APPELLANT BEGS TO SUBMIT THAT URING THE COURSE OF ASSESSMENT PROCEEDINGS, THE AO OBSERVED , THAT THE ASSESSEE HA D CLAIMED DEPRECIATION OF RS. 54,38,057/-. HE WAS OF THE VIEW THAT SINCE THE ASSESSEE HAD CLAIMED CAPITAL EXPENDITURE IN THE STA TEMENT OF TOTAL INCOME UNDER THE HEAD 'ASSET ACQUIRED DURING THE YE AR' AND CLIMED DEPRECIATION OF RS. 54,38,057/- IN THE STATEMENT OF TOTAL INCOME, ASSESSEE WAS NOT ELIGIBLE FOR ITS CLAIM OF DEPRECIA TION AS THE CLAIM OF CAPITAL EXPENDITURE AND DEPRECIATION AMOUNTS TO DOUBLE DEDUCTION. HE ACCORDINGLY DISALLOWED ASSESSEE'S CLA IM. THE AO AS OF THE VIEW THAT THE APPELLANT WAS NOT ENTITLED TO DEDUCTION OF DEPRECIATION IN VIEW OF THE DECISION IN THE CASE OF ESCORTS LTD. VS. UNION OF INDIA (199 ITR 43) (SC). FIRSTLY, THE AO HAS FAILED TO APPRECIATE THAT THE I DENTICAL ISSUE WAS RAISED BY AO IN THE ASST. FOR A.Y.2009-10 IN CASE O F JANVIKASH TRUST (ITA NO. 2656/AHD/2012 DATED 26.04.2013] BY A HMEDABAD ITA NO. 2755 /AHD/2015 & C.O. NO. 1 96/AHD/15 . A.Y. 2011-12 9 BENCH OF ITAT AND AFTER CONSIDERING THE ENTIRE CASE LAW ON THE SUBJECT INCLUDING DECISIONS OF HON'BLE GUJARAT HIGH COURT AND KERALA HIGH COURT, THE SAME WAS DECIDED IN FAVOUR O F THE ASSESSEE. ACCORDINGLY, THE AO SHOULD BE DIRECTED TO ALLOW DEPRECIATION.' 6.2 I HAVE CONSIDERED THE ASSESSMENT ORDER AND THE SUBMISSIONS MADE BY THE APPELLANT. THE ISSUE WHETHER DEPRECIATION IS TO BE ALLOWED ON THE ASSET ON WHICH ASSESSEE HAS ALREADY BEEN ALLOWED 10 0% DEDUCTION AS APPLICATION TOWARDS OBJECTS OF THE TRUST IN THE PRE CEDING YEAR HAS BEEN DECIDED BY JURISDICTIONAL HIGH COURT IN THE CASE OF CIT VS. SHETH RANCHOODDAS 198 ITR 588. THE HON'BLE GUJARAT HIGH C OURT IN THE ORDER DATED 09.08.2012 IN THE CASE OF DIT (EXEMPTION) VS. AHMEDABAD SOUTH INDIAN CHARITABLE TRUST HAS CONSIDERED THE DERISION OF HON'BLE SUPREME COURT IN THE CASE OF ESCORTS LTD. 199 ITR 43 RELIED UPON BY THE AO AND HAS CONFIRMED THAT DEPRECIATION WILL BE ALLOWED IN THE CASE OF TRUST. THE HON'BLE ITAT, AHMEDABAD IN THE CASE OF JANVIKAS TRU ST FOR ASST. YEAR 2009-10 IN ITA NO. 2656/AHD/2012 DATED 26.04.2013, RELYING ON THE DECISION OF HON'BLE GUJARAT HIGH COURT IN THE CASE OF DIT (E) VS. AHMEDABAD SOUTH INDIAN CHARITABLE TRUST (TAX APPEAL NO. 439 OF 2012); ADIT (EXEMPTION) VS. FRIENDS OF WWB INDIA IN ITA NO . 2658/AHD/2012 & C.O. NO. 6/AHD/2012 ORDER DATED 31.01.2013 AND AL SO IN CASE OF ADIT (EXEMPTION) VS. THE XAVIER KELVANI MANDAL PVT. LTD. , DECIDED THE ISSUE IN FAVOUR OF THE APPELLANT. RESPECTFULLY FOLLOWING THE ORDER OF JURISDICTIONAL HIGH COURT, DISALLOWANCE OF DEPRECIATION MADE BY TH E ASSESSING OFFICER IS DELETED . 3. WE HAVE HEARD RIVAL SUBMISSIONS. LEARNED DEPART MENTAL REPRESENTATIVES ONLY ARGUMENT IS THAT THE ASSESSEE HAS ALREADY ALLOWED COST OF THE ASSETS IN QUESTION FOR THE PURPOSE OF SEEKING B ENEFIT OF APPLICATION OF INCOME TOWARDS ACTIVITIES PERFORMED IN FURTHERANCE TO ITS SUBJECT. HE THEREFORE SUBMITS THAT THE ASSESSEE CANNOT GET DOUBLE DEDUCTION BY CL AIMING THE IMPUGNED DEPRECIATION. HE HOWEVER FAILS TO DISPUTE THE FACT THAT HONBLE JURISDICTIONAL HIGH COURTS DECISION IN CASE OF AHMEDABAD SOUTH INDIAN CHARITABLE TRUST HAS ALREADY REJECTED REVENUES IDENTICAL CONTENTION AS FOLLOWED BY A CATINA OF CASE LAW HEREINABOVE. WE THUS SEE NO REASON TO INTERFERE WI TH THE LOWER APPELLATE AUTHORITYS FINDINGS UNDER CHALLENGE. THIS FORMER SUBSTANTIVE GROUND FAILS. 4. THE REVENUES SECOND AND LAST SUBSTANTIVE GROUND AVERS THAT THE LOWER APPELLATE AUTHORITY HAS WRONGLY DELETED ADDITION OF RS. 2,68,20,708/- AFTER ITA NO. 2755 /AHD/2015 & C.O. NO. 1 96/AHD/15 . A.Y. 2011-12 10 IGNORING THE FACT THAT ASSESSEES RECEIPTS COLLECTE D FROM STUDENTS AT THE TIME OF ADMISSION WERE NOT SPECIFICALLY DIRECTED TOWARDS IT S CORPUS BUT MEANT FOR VARIOUS SERVICES RENDERED BY THE SCHOOL. ITS CONTENTION TH EREFORE IS THAT THE ASSESSING OFFICER HAD RIGHTLY TREATED THE SAME AS ITS INCOME. WE NOTICE THAT THE CIT(A) HAS FOLLOWED TRIBUNALS ORDER PASSED IN ASSESSMENT YEAR 2004-05 IN ASSESSEES CASE ITSELF. HIS FINDINGS UNDER CHALLENGE READ AS UNDER : 7. GROUND OF APPEAL NO. 3 IS AGAINST OF CORPUS DONATION OF RS.2,68,20,708/-. THE ASSESSING OFFICER HAS MADE TH E ADDITION ON THE CORPUS DONATION AS PER PARA 3.2 AND 3.3 OF THE ASSE SSMENT ORDER. THE RELEVANT PORTION OF THE ORDER IS REPRODUCED AS UNDE R: 'FROM THE VERIFICATION OF SUBMISSION AND ANNEXURE S UBMITTED BY THE ASSESSEE, SHOWS THAT THE ASSESSES TRUST HAD COM PELLED THE GUARDIANS AND PARENTS OF THOSE STUDENTS WHO SOUGHT ADMISSION IN THE SCHOOL RUN BY THE TRUST TO ADVANCE DONATIONS. T HUS, THE TRUST ACCEPTED THESE UNDER THE GUISE OF DONATION GIVEN BY THESE PARENTS WHIH THE TRUST FURTHER ROUTED IT UNDER VARIOUS FUND S SUCH AS BUILDING FUND, EDUCATIONAL RESEARCH FUND, EDUCATION AL INFRASTRUCTURE FUND, LITERARY FUND, SPORTS DEVELOPM ENT FUND, STAFF WELFARE FUND, STUDENTS WELFARE FUND, ETC. AND CREDI TED IT DIRECTLY TO THE BALANCE SHEET SHOWING IT AS A CORPUS FUND. T HIS PROVES THAT THE ASSESSEE TRUST THOUGH IS AN EDUCATIONAL TRUST E STABLISHED WITH AN AIM AND OBJECTIVE TO RUN EDUCATIONAL ACTIVITIES HAS AN ULTERIOR MOTIVE (PROFIT EARNING). FOR THE SAID REASON, THE T RUST IS NOT ENTITLED TO EXEMPTION U/S.11 OF THE I.T. ACT. DONAT IONS RECEIVED FROM THE PARENTS BY THE TRUST AT THE TIME OF SEEKIN G ADMISSION AND SUBSEQUENTLY ALLOCATING THE SAID SUM UNDER SEVEN (7 ) DIFFERENT FUNDS AND PROJECTING IT AS AN EARNMARKED FUND/ CORP US FUND IS TREATED AS AN INCOME IN THE HANDS OF THE ASSESSEE T RUST AND BROUGHT TO TAX. THE ADDITION TO THE CORPUS TO THE PROCEEDIN G YEAR COMES TO RS.2,68,20,708/-.' 7.1 DURING THE COURSE OF APPELLATE PROCEEDINGS , THE APPELLANT HAS MADE THE FOLLOWING SUBMISSIONS: 'THE NEXT GROUND OF APPEAL RELATES TO THE CORPUS DO NATION OF RS.2,68,20,708/- (NET) TREATED AS REVENUE RECEIPT A ND LIABLE TO TAX. THE BRIEF FACTS RELATING TO THIS GROUND ARE THAT TH E APPELLANT HAD CREDITED RS. 17,97,94,990/- AS EARMARKED FUNDS AND TAKEN TO BALANCE SHEET. SINCE THE APPELLANT INSTITUTION, WHI LE RUNNING THE SCHOOLS, CARRY ON DIFFERENT ACTIVITIES, IT HAS TO C REATE AN INFRASTRUCTURE SUCH AS BUILDING, LIBRARY, SPORTS, S TAFF & STUDENT ITA NO. 2755 /AHD/2015 & C.O. NO. 1 96/AHD/15 . A.Y. 2011-12 11 WELFARE ETC. THE AO HAS OBSERVED THAT THE APPELLANT HAD COMPELLED THE GUARDIANS/ PARENTS OF THE STUDENTS DESIRING ADM ISSION TO GIVE DONATIONS WHICH SHOWS THAT IT WAS ESTABLISHED WITH AN AIM AND OBJECTIVE OF PROFIT EARNING. THE APPELLANT SUBMITS THAT IDENTICAL ISSUE WAS RAIS ED BY AO IN THE ASST FOR A.Y.2004-05,2005-06, 2008-09 AND 2009-10 B UT ON APPEAL, HON'BLE TRIBUNAL HAS HELD IN FAVOUR OF THE ASSESSEE THAT THE CONTRIBUTIONS TOWARDS DIFFERENT CORPUS FUNDS WAS NO T LIABLE TO TAX. THE COPY OF APPELLATE ORDERS ARE FILED AT PAGE 54-1 06 AND 107-116. SINCE THE FACTS OF THE PRESENT APPEAL ARE IDENTICAL TO THE FACTS OF THE SAID YEARS, THE IMPUGNED ADDITION MAY PLEASE BE DEL ETED FOLLOWING THE SAID APPELLATE ORDERS. THE APPELLANT HAS EXPLAI NED THE NATURE AND PURPOSE OF RECEIPT IN DETAIL IN REPLY DATED 17. 01.2013 AND FILED ON 23.01.2013 WITH AO ALONGWITH A CHART SHOWING NAM E AND ADDRESS, PAN OF THE DONORS AND SAMPLE OF THE RECEIP TS ISSUED TO THEM (PAGE-40-49). THEREFORE, THE IMPUGNED ADDITION MADE BY AO MAY PLEASE BE DELETED.' 7.2 I HAVE CONSIDERED THE ASSESSMENT ORDER AND THE SUBMISSIONS MADE BY THE APPELLANT. THE HON'BLE ITAT IN APPELLANT'S OWN CASE FOR ASST. YEARS 2004-05 IN ITA NO. 279, 280 & 281/AHD/2013 ON IDENTICAL FACTS, HAS HELD THAT CONTRIBUTION TOWARDS DIFFERENT CORPUS FUNDS WERE IN THE NATURE OF CORPUS FUND AND AS SUCH EXEMPT U/S. 12 OF THE I.T. ACT. THE RELEVANT OBSERVATION IS REPRODUCED AS UNDER: 'TAKING INTO ACCOUNT ALL THE FACTS AS DISCUSSED IN THE FOREGOING PARAGRAPHS, WE ARE OF THE CONSIDERED VIEW THAT THE STAND OF THE AO WAS RATHER MISCONCEIVED IN HOLDING THAT THE CONTRIB UTION TOWARDS DIFFERENT CORPUS FUNDS AGGREGATING TO RS.1.9 CRORES AS CURRENT INCOME OF THE ASSESSEE LIABLE TO BE TAXED WHEREAS T HE CIT(A) WAS JUSTIFIED IN HER FINDING THAT THE SAID CONTRIBUTION S WERE IN THE NATURE OF CORPUS FUNDS AND AS SUCH EXEMPT U/S. 12 O F THE ACT. THEREFORE, THE ORDER OF THE ID. CIT(A) IS CONFIRMED WITH RESPECT TO THIS ISSUE.' 7.3 RESPECTFULLY FOLLOWING THE ORDER OF THE HO N'BLE ITAT, THE ADDITION MADE BY THE ASSESSING OFFICER ON THIS ACCOUNT IS DELETED. 5. WE HAVE GIVEN THOUGHTFUL CONSIDERATION TO REVENU ES VEHEMENT CONTENTIONS SEEKING TO RESTORE THE ADDITION IN QUES TION. WE SOUGHT TO KNOW ABOUT ANY EVIDENCE FORMING PART OF THE PAPER BOOK WHICH C OULD INDICATE THAT THE RECEIPTS IN QUESTION WERE MEANT FOR THE SO CALLED O THER SERVICES INSTEAD OF ASSESSEES CORPUS. LEARNED DEPARTMENTAL REPRESENTA TIVE FAILS TO PINPOINT ANY ITA NO. 2755 /AHD/2015 & C.O. NO. 1 96/AHD/15 . A.Y. 2011-12 12 SUCH EVIDENCE. SHRI DIVATIA SUBMITS IN THE COURSE OF HEARING THAT THE ASSESSEE HAS ALREADY SUCCEEDED ON THE VERY ISSUE BEFORE THIS TRI BUNAL IN ASSESSMENT YEARS 2004-05, 2005-06, 2008-09 & 2009-10 WHEREIN VARIOUS CO-ORDINATE BENCHES HAVE CONCLUDED THAT SIMILAR CONTRIBUTIONS MADE TO CORPUS FUNDS ARE NOT TAXABLE AS INCUR. THE SAID ORDERS ALSO FORM PART OF THE CASE FILE FROM PAGE 54 ONWARDS. THE REVENUE IS UNABLE TO POINT OUT ANY DISTINCTION ON F ACTS INVOLVED THEREIN. WE ACCORDINGLY AFFIRM CIT(A)S FINDINGS QUA THE LATTER ISSUE AS WELL. 6. THIS REVENUES APPEAL IS DISMISSED. 8. THEREFORE, RESPECTFULLY FOLLOWING THE CO-ORDINATE B ENCH DECISION IN ASSESSEES OWN CASE, WE DECLINE TO INTERFERE IN THE ORDER PASS ED BY THE LD. CIT(A) AND IN OUR CONSIDERED OPINION, LD. CIT(A) HAS PASSED DETAI LED AND REASONED ORDER. 9. IN THE RESULT, APPEAL FILED BY THE REVENUE IS DISMI SSED. 10. SO FAR C.O. NO. 196/AHD/2015 IS CONCERNED, SAME IS SUPPORTIVE AND ASSESSEE DOES NOT WISH TO PRESS THE SAME, THEREFORE, C.O. IS DISMISSED AS NOT PRESSED. ORDER PRONOUNCED IN OPEN COURT ON 05- 10- 2018 SD/- SD/- (AMARJIT SINGH) (MAHAVIR PRASAD) ACCOUNTANT MEMBER TRUE COPY JUDICIAL MEMBER AHMEDABAD: DATED 05/10/2018 RAJESH COPY OF THE ORDER FORWARDED TO: - 1. THE APPELLANT.