The ITO, (Exemptions), Ward-2, Ahmedabad V. Platinum Foundation, Ahmedabad

ITA 2885/AHD/2016

• Counselvise Citation: [2018] 125 COUNSELVISE.COM (IT) 8264 (ITAT-AHMEDABAD)
• Duration Of Justice: 1 year(s) 6 month(s) 7 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 10-05-2018
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: Not Allotted
• Assessment Year: 2013-2014
• Appeal Filed On: 03-11-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: P B PARMAR
• Keywords: Capital asset; Depreciation; Charitable institution
• Section: 12AA

Judgement Text

, - IN THE INCOME TAX APPELLATE TRIBUNAL BENCH C BEFORE SHRI RAJPAL YADAV, JUDICIAL MEMBER AND SHRI AMARJIT SINGH, ACCOUNTANT MEMBER ./ ITA NO.2885/AHD/2016 / ASSTT. YEAR: 2013-14 ITO (EXEMPTIONS) WARD-2, AHMEDABAD. VS. PLATINUM FOUNDATION A/201-202, ISCON PARK OPP: OM TOWER SATELLITE AHMEDABAD 380 015. PAN : AABTP 1113 G. / (APPELLANT) / (RESPONDENT) REVENUE BY : SHRI PRASOON KABRA, SR.DR ASSESSEE BY : SHRI P.B. PARMAR ! / DATE OF HEARING : 24/04/2018 '#$ ! / DATE OF PRONOUNCEMENT: 10/05/2018 %& / O R D E R PER RAJPAL YADAV, JUDICIAL MEMBER: REVENUE IS IN APPEAL BEFORE THE TRIBUNAL AGAINST OR DER OF LD.CIT(A)-9, AHMEDABAD DATED 02.9.2016 FOR THE ASST T.YEAR 2013-14. 2. IN THE REVENUES APPEAL SOLE ISSUE INVOLVED IS T HE LD.CIT(A) HAS ERRED IN DELETING ADDITION OF RS.1,22,90,105/- MADE BY THE AO ON ACCOUNT OF DEPRECIATION. 3. BRIEF FACTS OF THE CASE ARE THAT ASSESSEE IS A T RUST RUNNING EDUCATIONAL INSTITUTIONS AND IMPARTING ENGINEERING AND MANAGEMENT COURSES. TRUST HAS REGISTERED UNDER SECTION 12AA A ND ALSO GRANTED ITA NO.2885 /AHD/2016 2 CERTIFICATE UNDER SECTION 80G(5) OF THE ACT. ASSES SEE-TRUST HAS FILED RETURN OF INCOME FOR THE ASSESSMENT YEAR 2013-14 DE CALRING NIL INCOME. THE CASE OF THE ASSESSEE WAS SELECTED FOR SCRUTINY ASSESSMENT AND NOTICE UNDER SECTION 143(2) OF THE ACT WAS ISSU ED AND SERVED UPON THE ASSESSEE. IN THE ASSESSMENT PROCEEDINGS, IT WA S NOTICED BY THE AO THAT THE ASSESSEE HAS CLAIMED DEPRECIATION OF RS.1, 22,90,105/- IN THE INCOME AND EXPENDITURE ACCOUNT. A SHOW CAUSE NOTIC E DATED 8.7.2015 WAS ISSUED TO THE ASSESSEE TO EXPLAIN AS TO WHY DEP RECIATION SHOULD NOT BE DISALLOWED ON THE GROUND THAT COST OF ASSETS WAS ALLOWED AS APPLICATION OF FUND AND FURTHER ALLOWANCE OF DEPREC IATION WOULD BE AMOUNTED TO DOUBLE DEDUCTION. ASSESSEE EXPLAINED T HAT AS PER SCHEME OF THE ACT GOVERNING COMPUTATION OF INCOME OF A TRU ST, DEPRECIATION CAN ALSO BE CLAIMED AS DEDUCTION OVER AND ABOVE APPLICA TION OF FUND UNDER SECTION 11(1) OF THE ACT. AS THE STATUTE PROVIDES THESE TWO DEDUCTIONS FOR CHARITABLE TRUST, WHICH ARE DISTINCT DEDUCTIONS , IT CANNOT BE TERMED AS DOUBLE DEDUCTION, AND CLAIM OF THE ASSESSEE IS W HOLLY PER THE LAW. THE AO REJECTED THIS CONTENTION OF THE ASSESSEE AND DISALLOWED CLAIM OF THE ASSESSEE. HOWEVER, THE LD.FIRST APPELLATE AUTH ORITY ALLOWED THE CLAIM OF THE ASSESSEE BY FOLLOWING THE JUDGMENT OF HONBLE JURISDICTIONAL HIGH COURT IN THE CASE OF SHETH MANILAL RANCHHODDAS VISHRAM BHAVAN TRUST, 198 ITR 598 (GUJ.). AGGRIEVED WITH THIS OR DER OF THE LD.CIT(A), REVENUE IS NOW BEFORE US. 4. THE LD.DR RELIED UPON ORDER OF THE LD.AO, WHILE LD.COUNSEL FOR THE ASSESSEE SUPPORTED ORDER OF THE LD.CIT(A). 5. WITH THE ASSISTANCE OF LD.REPRESENTATIVES, WE HA VE GONE THROUGH THE RECORD CAREFULLY. WE FIND THAT THE LD.CIT(A) W HILE ALLOWING CLAIM OF THE ASSESSEE RELIED UPON THE DECISION OF HONBLE GU JARAT HIGH COURT IN THE CASE OF CIT VS. SHETH MANILAL RANCHHODDAS VISHR AM BHAVAN TRUST, 198 ITR 598. THE HONBLE GUJARAT HIGH COURT HAS FO RMULATED THE FOLLOWING QUESTIONS FOR ITS CONSIDERATION: ITA NO.2885 /AHD/2016 3 '1. WHETHER, ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE TRIBUNAL WAS RIGHT IN LAW IN HOLDING THAT, WHIL E COMPUTING INCOME UNDER SECTION 11(1)(A) OF THE INCOME-TAX ACT , 1961, DEPRECIATION HAS TO BE ALLOWED ? 2. WHETHER THE TRIBUNAL WAS RIGHT IN LAW IN HOLDING THAT, HAVING REGARD TO THE SCHEME OF THE ACT, 'INCOME' REFERRED TO IN SECTION 11(1)(A) OF THE ACT IS TO BE COMPUTED NOT IN ACCORD ANCE WITH THE PROVISIONS OF THE ACT THE BUT IN ACCORDANCE WITH TH E NORMAL RULES OF ACCOUNTANCY UNDER WHICH THE DEPRECIATION HAS TO BE ALLOWED WHILE COMPUTING SUCH INCOME UNDER SECTION 11(1)(A) OF THE ACT ?' 6. THE HONBLE HIGH COURT HAS ANSWERED BOTH THE QUE STIONS IN AFFIRMATIVE AND AGAINST THE REVENUE. THE HONBLE H IGH COURT HAS OBSERVED THAT INCOME FROM PROPERTIES HELD UNDER TRU ST HAS TO BE ARRIVED AT IN NORMAL COMMERCIAL MANNER WITHOUT CLAS SIFYING UNDER VARIOUS HEADS. RECENTLY, HONBLE SUPREME COURT IN THE CASE OF CIT VS. RAJASTHAN& GUJARATI CHARITABLE FOUNDATION POONA, RE PORTED IN 89 TAXMANN.COM 127 (SC) DECIDED SIMILAR ISSUE IN FAVOU R OF THE ASSESSEE. HONBLE APEX COURT HELD THAT IN CASE OF ASSESSEE-TR UST REGISTERED UNDER SECTION 12A, EVEN THOUGH EXPENDITURE INCURRED FOR A CQUISITION OF CAPITAL ASSETS WAS TREATED AS APPLICATION OF INCOME FOR CHA RITABLE PURPOSES UNDER SECTION 11(1)(A), YET DEPRECIATION WOULD BE A LLOWED ON ASSETS SO PURCHASED FOR CALCULATION OF ITS INCOME. THEREFORE, RESPECTFULLY FOLLOWING THE ABOVE TWO DECISIONS OF THE HONBLE COURTS, WE A RE OF THE VIEW THAT THE LD.CIT(A) HAS NOT COMMITTED ANY ERROR WHILE ALL OWING THE DEPRECIATION TO THE ASSESSEE. WE DO NOT FIND ANY M ERIT IN THIS APPEAL. IT IS REJECTED. 7. IN THE RESULT, APPEAL OF THE REVENUE IS DISMISSE D. ORDER PRONOUNCED IN THE COURT ON 10 TH MAY, 2018 AT AHMEDABAD. SD/- SD/- (AMARJIT SINGH) ACCOUNTANT MEMBER (RAJPAL YADAV) JUDICIAL MEMBER AHMEDABAD; DATED 10/05/2018