The Dy. CIT (Exemptions), Circle-2, Ahmedabad V. The New English School Trust, Anand

ITA 2889/AHD/2016

• Counselvise Citation: [2018] 125 COUNSELVISE.COM (IT) 8267 (ITAT-AHMEDABAD)
• Duration Of Justice: 1 year(s) 6 month(s) 6 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: 04-11-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Capital asset; Depreciation; Charitable institution
• Section: 12A

Judgement Text

, - IN THE INCOME TAX APPELLATE TRIBUNAL BENCH C BEFORE SHRI RAJPAL YADAV, JUDICIAL MEMBER AND SHRI AMARJIT SINGH, ACCOUNTANT MEMBER ./ ITA NO.2889/AHD/2016 WITH CROSS OBJECTION NO.03/AHD/2017 / ASSTT. YEAR: 2013-14 DCIT (EXEMPTION), CIR.2 2 ND FLOOR, NATURE VIEW BUILDIG OPP: H.K. HOUSE ASHRAM ROAD AHMEDABAD 380 009. VS. NEW ENGLISH SCHOOL TRUST AT POST: VASAD TA: ANAND DIST: ANAND. PAN : AAATT 2113 M / (APPELLANT) / (RESPONDENT) REVENUE BY : SHRI PRASOON KABRA, SR.DR ASSESSEE BY : SHRI SAMIR PARIKH, AR ! / 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 13.9.2016 FOR THE ASST T.YEAR 2013-14. UPON RECEIPT OF NOTICE OF REVENUES APPEAL, ASSESSE E HAS ALSO FILED CROSS OBJECTION BEARING NO.3/AHD/2017. BOTH THESE APPEAL S ARE DISPOSED OF BY THIS COMMON ORDER. 2. IN THE REVENUES APPEAL SOLE ISSUE INVOLVED IS T HAT THE LD.CIT(A) IS ERRED IN DELETING ADDITION OF RS.1,39,08,306/- MADE BY THE AO ON ACCOUNT OF DEPRECIATION. ITA NO.2889 /AHD/2016 WITH CO 2 3. BRIEF FACTS OF THE CASE AS CAN BE NOTICED FROM O RDER OF REVENUE AUTHORITIES ARE THAT ASSESSEE IS A TRUST ENGAGED IN EDUCATIONAL ACTIVITIES. IT IS RUNNING A SCHOOL UNDER THE NAME OF THE NEW E NGLISH SCHOOL AND COLLEGE UNDER THE NAME SARDAR VALLABHAI PATEL INST ITUTE OF TECHNOLOGY AT VASAD. ASSESSEE-TRUST IS REGISTERED UNDER SECTI ON 12A OF THE INCOME TAX ACT. 4. ASSESSEE HAS FILED ITS RETURN OF INCOME ON 24.9. 2013 DECLARING TOTAL LOSS INCOME AT RS.(-)4,39,76,637/-. ASSESSME NT YEAR INVOLVED IS 2013-14. THE CASE OF THE ASSESSEE WAS SELECTED FOR SCRUTINY ASSESSMENT AND NOTICE UNDER SECTION 143(2) WAS ISSU ED AND SERVED UPON THE ASSESSEE. DURING THE ASSESSMENT PROCEEDING S, IT WAS NOTICED BY THE AO THAT THE ASSESSEE CLAIMED DEPRECIATION TO THE EXTENT OF RS.1,39,08,306/-. ACCORDING TO THE AO, THIS CLAIM AMOUNTS TO DOUBLE DEDUCTION IN VIEW OF THE FACT THAT COST OF ASSETS W AS ALREADY ALLOWED TO THE ASSESSEE IN THE FORM OF APPLICATION OF INCOME F OR CHARITABLE PURPOSE AND FURTHER DEDUCTION IN NAME OF DEPRECIATION WAS N OT PERMISSIBLE FOR COMPUTING THE PROFIT AVAILABLE FOR CHARITABLE ACTIV ITIES. THE AO ISSUED A SHOW CAUSE NOTICE DATED 21.9.2015 TO THIS EFFECT TO THE ASSESSEE. THE ASSESSEE REPLIED THAT AS PER SCHEME OF THE ACT GOVE RNING COMPUTATION OF INCOME OF A TRUST, DEPRECIATION CAN ALSO BE CLAI MED AS DEDUCTION OVER AND ABOVE APPLICATION OF INCOME UNDER SECTION 11(1) OF THE ACT. AS THE STATUTE PROVIDES THESE TWO DEDUCTIONS FOR CHARITABL E TRUST, WHICH ARE DISTINCT DEDUCTIONS, IT CANNOT BE TERMED AS DOUBLE DEDUCTION, AND CLAIM OF THE ASSESSEE IS WHOLLY PER THE LAW. THE AO REJE CTED THIS CONTENTION OF THE ASSESSEE AND DISALLOWED CLAIM OF THE ASSESSE E. HOWEVER, IN THE APPEAL BEFORE THE LD.FIRST APPELLATE AUTHORITY, CLA IM OF THE ASSESSEE WAS ALLOWED BY FOLLOWING THE JUDGMENT OF HONBLE JURISD ICTIONAL HIGH COURT IN THE CASE OF SHETH MANILAL RANCHHODDAS VISHRAM BHAVA N TRUST, 198 ITR 598 (GUJ.). AGGRIEVED WITH THIS ORDER OF THE LD.C IT(A), DEPARTMENT IS NOW IN APPEAL BEFORE US. ITA NO.2889 /AHD/2016 WITH CO 3 5. THE LD.DR RELIED UPON ORDER OF THE LD.AO, WHILE LD.COUNSEL FOR THE ASSESSEE SUPPORTED ORDER OF THE LD.CIT(A). THE LD. COUNSEL FOR THE ASSESSEE ALSO RELIED UPON THE JUDGMENT OF THE HONB LE SUPREME COURT IN THE CASE OF CIT VS. RAJASTHAN & GUJARATI CHARITABLE FOUNDATION POONA REPORTED IN 89 TAXMANN.COM 127 (SC). THE LD.COUNSEL HAS PLACED ON RECORD COPY OF THIS JUDGMENT OF HONBLE SUPREME COU RT. 6. 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: '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 ?' 7. 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 SIMILAR CASE IN THE MATTER OF CIT VS. RAJASTHAN& GUJARATI CHARITABLE FO UNDATION POONA (SUPRA) DECIDED SIMILAR ISSUE IN FAVOUR OF THE ASSE SSEE. HONBLE APEX COURT HELD THAT IN CASE OF ASSESSEE-TRUST REGISTERE D UNDER SECTION 12A, EVEN THOUGH EXPENDITURE INCURRED FOR ACQUISITION OF CAPITAL ASSETS WAS TREATED AS APPLICATION OF INCOME FOR CHARITABLE PUR POSES UNDER SECTION ITA NO.2889 /AHD/2016 WITH CO 4 11(1)(A), YET DEPRECIATION WOULD BE ALLOWED ON ASSE TS SO PURCHASED FOR CALCULATION OF ITS INCOME. THEREFORE, RESPECTFULLY FOLLOWING THE ABOVE TWO DECISIONS OF THE HONBLE COURTS, WE ARE OF THE VIEW THAT THE LD.CIT(A) HAS NOT COMMITTED ANY ERROR WHILE ALLOWING THE DEPR ECIATION TO THE ASSESSEE. WE DO NOT FIND ANY MERIT IN THIS APPEAL. IT IS REJECTED. 8. SO FAR AS CO OF THE ASSESSEE IS CONCERNED, THE S AME IS IN SUPPORT OF ORDER OF THE LD.CIT(A), AND DOES NOT REQUIRE ANY ADJUDICATION. IT IS DISMISSED. 9. IN THE RESULT, APPEAL OF THE REVENUE AND CO OF T HE ASSESSEE, BOTH ARE DISMISSED. ORDER PRONOUNCED IN THE COURT ON 10 TH MAY, 2018 AT AHMEDABAD. SD/- SD/- (AMARJIT SINGH) ACCOUNTANT MEMBER (RAJPAL YADAV) JUDICIAL MEMBER