The ADIT(Exemp.), Ahmedabad V. The Xavier Kelvani Mandal Pvt.Ltd., Ahmedabad

ITA 2892/AHD/2012

• Counselvise Citation: [2013] 120 COUNSELVISE.COM (IT) 0437 (ITAT-AHMEDABAD)
• Duration Of Justice: 2 month(s) 27 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 22-03-2013
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: C
• Assessment Year: 2009-2010
• Appeal Filed On: 26-12-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: D K SIGH
• Assessee Lawyers: A C SHAH
• Keywords: Depreciation; Charitable institution
• Section: 32; 11

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, C BENCH, AHMEDABAD BEFORE SHRI MUKUL KUMAR SHRAWAT, JUDICIAL MEMBER AND SHRI A. K. GARODIA, ACCOUNTANT MEMBER I.T.A. NO. 2892/ AHD/2012 (ASSESSMENT YEAR 2009-10) ADIT (EXEMPTION), AHMEDABAD VS. THE XAVIER KELVANI MANDAL PVT. LTD., PREMAL JYOTI HALL, ST. XAVIERS COLLEGE, NAVRANGPURA, AHMEDABAD PAN/GIR NO. : AACCT1067D (APPELLANT) .. (RESPONDENT) APPELLANT BY: SHRI D K SIGH, SR. DR RESPONDENT BY: SHRI A C SHAH, AR DATE OF HEARING: 22.02.2013 DATE OF PRONOUNCEMENT: 22.03.2013 O R D E R PER SHRI A. K. GARODIA, AM:- THIS IS REVENUES APPEAL, DIRECTED AGAINST THE ORD ER OF LD. CIT(A) XXI, AHMEDABAD DATED 1.10.2012 FOR THE ASSESSMENT Y EAR 2009-10. 2. THE GROUNDS RAISED BY THE REVENUE ARE AS UNDER: THE LD. CIT(A) HAS ERRED IN LAW AND ON FACTS IN AL LOWING THE APPEAL OF THE ASSESSEE. THE LD. COMMISSIONER OF INCOME-TAX (APPEALS) HAS ER RED IN LAW AND ON FACTS IN DELETING THE DISALLOWANCE OF DEPREC IATION OF RS. 36,04,792/- MADE BY THE ASSESSING OFFICER. THE LD. COMMISSIONER OF INCOME-TAX (APPEALS) HAS ER RED IN LAW AND ON FACTS IN ALLOWING DEPRECIATION ON THE ASSETS , THE COST OF WHICH HAS ALREADY BEEN ALLOWED AS A DEDUCTION ON AC COUNT OF APPLICATION OF INCOME AS THIS WOULD AMOUNT TO DOUBL E DEDUCTION IN VIEW OF THE DECISION OF THE HON'BLE SUPREME COURT I N THE CASE OF ESCORTS LTD., 199 ITR 43 AND THE DECISION OF KERALA HIGH COURT IN I.T.A.NO. 2892 /AHD/2012 2 THE CASE OF LISSIE MEDICAL INSTITUTIONS V/S. COMMIS SIONER OF INCOME-TAX, KOCHI, 348 ITR 344. WHETHER, ON THE FACTS AND IN THE CIRCUMSTANCES OF T HE CASE, DEDUCTION OF DEPRECIATION U/S.32 WHICH FALLS UNDER THE HEAD 'PROFIT AND GAINS FROM BUSINESS AND PROFESSION' OF THE INCO ME TAX ACT, 1961, WOULD BE AVAILABLE TO A CHARITABLE TRUST WHOS E INCOME IS OTHERWISE NOT ASSESSABLE UNDER THE ABOVE HEAD. IV ON THE FACTS AND CIRCUMSTANCES OF THE CAS E, THE LD. COMMISSIONER OF INCOME-TAX (APPEALS) OUGHT TO HAVE UPHELD THE ORDER OF THE ASSESSING OFFICER. V) IT IS, THEREFORE, PRAYED THAT THE ORDER O F THE LD. COMMISSIONER OF INCOME-TAX (APPEALS) MAY BE SET ASI DE AND THAT OF THE ASSESSING OFFICER BE RESTORED. 3. LD. D.R. SUPPORTED THE ASSESSMENT ORDER AND HE A LSO PLACED RELIANCE ON THE JUDGEMENT OF HONBLE KERALA HIGH CO URT RENDERED IN THE CASE OF LISSIE MEDICAL INSTITUTIONS VS CIT AS REPOR TED IN 24 TAXMAN.COM 9 (KER.). AS AGAINST THIS, LD. A.R. SUPPORTED THE ORDER OF LD. CIT(A). HE PLACED RELIANCE ON THE FOLLOWING JUDICIAL PRONOU NCEMENTS: I) DIT VS AHMEDABAD SOUTH INDIAN ASSOCIATION TRUST (TAX APPEAL NO.439 OF 2012) GUJARAT HIGH COURT, II) DIT VS AHMEDABAD SOUTH INDIAN ASSOCIATION TRUST (TAX APPEAL NO.933,934 & 926 OF 2010) GUJARAT HIGH COURT , III) ADIT(E) VS SHRI VILE PARLE KELAVANI MANDAL, IT AT, MUMBAI IV) GKR CHARITIES VS DDIT (E), ITAT, CHENNAI V) DDIT VS NORTH WESTERN KARNATAKA ROAD TRANSPORT CORPORATION, ITAT BANGALORE. 4. IN ADDITION TO THIS, HE ALSO PLACED RELIANCE ON A RECENT DECISION OF AHMEDABAD BENCH OF THE TRIBUNAL RENDERED IN THE CAS E OF ADIT(E) VS FRIENDS OF WWB INDIA IN I.T.A.NO. 2658 & C.O. NO.6/ AHD/2012 ORDER DATED 24.01.2013. HE SUBMITTED A COPY OF THIS TRIB UNAL DECISION. HE ALSO SUBMITTED THAT IN THIS TRIBUNAL ORDER, THE TRIBUNAL HAS DULY CONSIDERED THE JUDGEMENT OF HONBLE KERALA HIGH COURT RENDERED IN THE CASE OF LISSIE MEDICAL INSTITUTION (SUPRA) ON WHICH RELIANCE HAS B EEN PLACED BY THE LD. I.T.A.NO. 2892 /AHD/2012 3 D.R. AND ALSO CITED IN THE GROUNDS OF APPEAL. HE A LSO SUBMITTED THAT THE JUDGEMENT OF HONBLE APEX COURT RENDERED IN THE CAS E OF ESCORTS LTD. AS REPORTED IN 199 ITR 43, REFERRED TO IN THE GROUNDS OF APPEAL, HAS ALSO BEEN CONSIDERED BY THE TRIBUNAL AND, THEREFORE, THE ISSU E IN THE PRESENT CASE IS SQUARELY COVERED IN FAVOUR OF THE ASSESSEE BY THIS LATEST TRIBUNAL DECISION. 5. LD. D.R. OF THE REVENUE HAS MADE WRITTEN SUBMISS IONS, WHICH READ AS UNDER: BEFORE THE HON'BLE ITAT, 'C BENCH, AHMEDABAD IN IT A NO. 2892/AHD/2012 FOR A.Y. 2009-10 IN THE CASE OF DDIT, (EXEMPTION) VS. THE XAVIER KELVANI MANDAL PVT. AHMEDABAD LTD., AHMEDABAD. THE ABOVE MENTIONED APPEAL OF THE REVENUE CAME UP F OR HEARING BEFORE HON'BLE ITAT 'C BENCH, AHMEDABAD ON 22.02.20 13. BESIDES OTHER THINGS, FROM REVENUE'S SIDE RELIANCE WAS PLACED ON THE JUDGMENT OF HON'BLE KERALA HIGH COURT IN THE CA SE OF LISSIE MEDICAL INSTITUTIONS VS. OT, REPORTED IN 348 ITR 34 4 / (2012) 24 TAXMANN 9 (KER.) AND ASSESSEE HAD RELIED UPON THE J UDGEMENT OF HON'BLE GUJARAT HIGH COURT IN THE CASE OF CIT VS. S HETH MANILAL RANCHHODDAS VISHRAM BHAVAN TRUST, REPORTED IN 198 I TR 598 (GUJ.). IT WAS ALSO ARGUED ON BEHALF OF ASSESSEE TH AT ITS CASE IS COVERED BY THE DECISION OF HON'BLE ITAT 'A 1 BENCH, AHMEDABAD, IN ITA NO. 2658/AHD/2012 FOR A.Y. 2009-10 IN THE CA SE OF ADIT (EXEMPTION), AHMEDABAD VS. FRIENDS OF WWB, INDIA, AHMEDABAD. HOWEVER THE COPY OF THE JUDGMENT WAS NEI THER AVAILABLE WITH ASSESSEE NOR WITH ME (THE SAME WAS O BTAINED AFTER THE HEARING). ACCORDINGLY HON'BLE BENCH ALLOWED THE REVENUE TO FILE CLARIFICATION / OBJECTION IF ANY BY TUESDAY (2 6.02.2012). HENCE THIS SUBMISSION FOR CONSIDERATION BY THE HON'BLE IT AT, 'C' BENCH, AHMEDABAD. 2. AT THE OUTSET IT IS HUMBLY SUBMITTED THAT DECISI ON BY HON'BLE GUJARAT HIGH COURT WAS GIVEN ON 26 TH FEBRUARY, 1992 AND IT PERTAINED TO A.Y. 1971-72, 1972-73, WHEREAS DECISIO N OF HON'BLE KERALA HIGH COURT IS A RECENT DECISION GIVEN ON FEB RUARY 17, 2012 AND PERTAINS TO A.Y. 2005-06. 3. IN THE CASE DECIDED BY HON'BLE GUJARAT HIGH COUR T, THE ITO HAD REJECTED CLAIM FOR DEPRECIATION BY ASSESSEE ON THE GROUND THAT INCOME FROM HOUSE PROPERTY WAS TO BE CALCULATED ACC ORDINGLY TO SS. 22 TO 27 AND HENCE DEPRECIATION WAS NOT ADMISSIBLE ON SUCH ASSET I.T.A.NO. 2892 /AHD/2012 4 [PARA 2 OF JUDGMENT OF HON'BLE GUJARAT HIGH COURT ( SUPRA)]. ON THE OTHER SIDE HON'BLE KERALA HIGH COURT OBSERVED T HAT IF THE ASSESSEE TREATS EXPENDITURE ON ACQUISITION OF ASSET S AS APPLICATION OF INCOME FOR CHARITABLE PURPOSES UNDER SECTION LL( L)(A) AND IF THE ASSESSEE CLAIMS DEPRECIATION ON THE VALUE OF SUCH A SSETS, THEN IN ORDER TO REFLECT THE TRUE INCOME AVAILABLE FOR APPL ICATION FOR CHARITABLE PURPOSES, THE ASSESSEE SHOULD WRITE BACK IN THE ACCOUNTS THE DEPRECIATION AMOUNT TO FORM PART OF THE INCOME TO BE ACCOUNTED FOR APPLICATION FOR CHARITABLE PURPOSES. THUS HON'B LE GUJARAT HIGH COURT DECIDED THE ISSUE THAT DEPRECIATION CAN BE CL AIMED ON IMMOVABLE PROPERTY EVEN IF IT IS INCOME FROM HOUSE PROPERTY, WHEREAS THE HON'BLE KERALA HIGH COURT DECIDED THAT DOUBLE EXEMPTION / DEDUCTION, ONCE BY WAY OF APPLICATION O F THE INCOME FOR ACQUISITION OF THE ASSET AND AGAIN BY WAY OF DE PRECIATION ON THE SAME ASSET CANNOT BE CLAIMED. THUS TWO JUDGMENTS AR E ON TWO DIFFERENT LEGAL ISSUES. THE LEGAL ISSUE INVOLVED IN PRESENT CASE IS THE ONE RELATING TO DOUBLE DEDUCTION (REFERENCE GRO UND (II) OF THE REVENUE'S APPEAL). 4. THE HON'BLE GUJARAT HIGH COURT ANSWERED THE FOLL OWING TWO QUESTIONS OF LAW IN THE AFFIRMATIVE AND AGAINST THE REVENUE. '1. WHETHER, ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE TRIBUNAL WAS RIGHT IN LAW IN HOLDING THAT, WHILE CO MPUTING INCOME UNDER S. LL(L)(A) OF THE IT 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 S. LL(L)(A) OF THE ACT IS TO BE COMPUTED NOT IN ACCORDANCE WITH TH E PROVISIONS OF THE ACT BUT IN ACCORDANCE WITH THE NORMAL RULES OF ACCOUNTANCY UNDER WHICH THE DEPRECIATION HAS TO BE ALLOWED WHIL E COMPUTING SUCH INCOME UNDER S. LL(L)(A) OF THE ACT ?' 5. IN THE PRESENT CASE GRIEVANCE OF THE REVENUE IS NOT REGARDING, PRINCIPLE THAT ASSESSEE HAS BEEN ALLOWED DEPRECIATI ON ON THE ASSET BUT GRIEVANCE IS WHY IT HAS BEEN ALLOWED ON AN ASSE T WHOLE COST OF WHICH HAD BEEN ALREADY WRITTEN OFF AS APPLICATION O F ASSESSEE'S INCOME AND THIS IS PRECISELY THE ISSUE DECIDED BY H ON'BLE KERALA HIGH COURT, BY FURTHER HOLDING THAT IF THE ASSESSEE CLAIMS DEPRECIATION THEN IN ORDER TO REFLECT THE TRUE INCO ME TO BE AVAILABLE FOR CHARITABLE PURPOSES, THE ASSESSEE SHOULD WRITE BACK IN ACCOUNTS THE DEPRECIATION AMOUNT TO FORM PART OF THE INCOME TO BE ACCOUNTED FOR APPLICATION FOR CHARITABLE PURPOSE [REFERENCE P ARA 2 OF THE JUDGEMENT]. MOREOVER THE HON'BLE KERALA HIGH COURT HAS CONSIDERED THE JUDGMENT OF HON'BLE GUJARAT HIGH COU RT, RELIED I.T.A.NO. 2892 /AHD/2012 5 UPON BY ASSESSEE, AND OBSERVED THAT THIS ASPECT IS NOT CONSIDERED IN ANY OF THOSE DECISIONS [REFERENCE PARA 3 & 4 OF THE JUDGMENT OF HON'BLE KERALA HIGH COURT]. IT MAY BE FURTHER MENTI ONED HERE THAT HON'BLE KERALA HIGH COURT HAD ALSO SOUGHT THE OPINI ON OF CBDT AND THAT VIEW OF THE CBDT WAS FOUND TO BE IN AGREEM ENT WITH THE FINDING OF HON'BLE KERALA HIGH COURT [REFERENCE PAR A 6 & 7 OF THE JUDGMENT]. 6. THE HON'BLE KERALA HIGH COURT HAS ALSO NOTED WIT H APPROVAL THE OBSERVATION, THOUGH NOT IN SAME CONTEXT, MADE BY HO N'BLE SUPREME COURT IN THE DECISION IN ESCORTS LTD. (199 ITR 43) AND FOUND IT APPROPRIATE TO MENTION IN PARA 7 AS UNDER: 'THE MERE FACT THAT A BASELESS CLAIM WAS RAISED BY SOME EVER ENTHUSIASTIC ASSESSEES WHO SOUGHT A DOUBLE ALLOWANC E OR THAT SUCH CLAIM MAY PERHAPS HAVE BEEN ACCEPTED BY SOME AUTHOR ITIES IS NOT SUFFICIENT TO ATTRIBUTE ANY AMBIGUITY OR DOUBT AS T O TRUE SCOPE OF THE PROVISIONS AS THEY STOOD EARLIER.' 7. THE HON'BLE ITAT 'A' BENCH, AHMEDABAD IN THEIR D ECISION IN ITA NO. 2658/AHD/2012 IN THE CASE OF FRIENDS OF WWB , INDIA, HAVE MADE THEIR OBSERVATIONS IN PARA 5 AND SUBSEQUE NT PARAS. IN THIS DECISION, HON'BLE ITAT 'A 1 BENCH, AHMEDABAD HAS OBSERVED THAT THIS JUDGMENT OF HON'BLE KERALA HIGH COURT) IS NOT APPLICABLE TO THE ISSUE, BY POINTING THE DIFFERENCE BETWEEN AL LOWING DEDUCTION IN COMPUTATION OF INCOME AND ALLOWING EXEMPTION U/S . 11. IT HAS BEEN FURTHER HELD BY HON'BLE BENCH THAT THE ISSUE I S SQUARELY COVERED BY THE JUDGMENT OF HON'BLE GUJARAT HIGH COU RT RENDERED IN THE CASE OF CIT V. SETH MANIKLAL RANCHODDAS VISH RAM BHAVAN AND BY FOLLOWING THE SAME HON'BLE BENCH GAVE THEIR DECISION IN THAT CASE I.E. IN THE CASE OF FRIENDS OF WWB, INDIA . HOWEVER IT IS HUMBLY SUBMITTED THAT AS IS EVIDENT FROM THE QUESTI ONS (MENTION IN PARA 4 OF THIS SUBMISSION) ANSWERED BY HON'BLE GUJA RAT HIGH COURT, THE ISSUE IN CASE OF PRESENT ASSESSEE IS DIF FERENT IN AS MUCH AS HERE THE ASSESSEE IS CLAIMING DOUBLE DEDUCTION F OR THE COST OF ITS ASSET, ONCE BY WAY OF APPLICATION OF THE INCOME AND AGAIN BY WAY OF DEPRECIATION [THE ISSUE DELVED AND DECIDED BY TH E HON'BLE KERALA HIGH COURT]. IN PARA 6 OF ITS DECISION, ALSO THE HON'BLE ITAT 'A 1 BENCH, AHMEDABAD HAS DEALT WITH THE PRINCIPLE THAT INCOME FROM PROPERTY HELD UNDER TRUST WOULD HAVE TO BE ARRIVED AT IN COMMERCIAL MANNER AND NOT UNDER THE VARIOUS HEAD S SET OUT IN SECTION 14. REVENUE IS NOT CHALLENGING THIS PRINCIP LE LAID BY HON'BLE GUJARAT HIGH COURT. 8. IN PARA 7 OF THEIR DECISION (IN CASE OF FRIENDS OF WWB, INDIA) THE HON'BLE ITAT 'A' BENCH HAS EXPRESSED THAT DECIS ION OF HON'BLE I.T.A.NO. 2892 /AHD/2012 6 GUJARAT HIGH COURT IS BINDING UPON THEM. IT HAS BEE N FURTHER OBSERVED THAT IN THAT CASE A.O. HAD NOT ALLEGED THA T ANY CASH HAD GONE OUTSIDE THE BOOKS OF ASSESSEE AND FACTS HAD NO T BEEN BROUGHT TO THEIR NOTICE ON THE BASIS OF WHICH IT WAS OBSERV ED BY HON'BLE KERALA HIGH COURT THAT CASH SURPLUS HAS GONE OUTSID E THE BOOKS. 9. IT MAY BE MENTIONED IN THIS REGARD THAT THE PRIN CIPLE ITSELF, AS ELABORATED BY HON'BLE KERALA HIGH COURT AND SUPPORT ED BY CBDT VIEW, THAT IN SUCH A SITUATION WHERE ASSESSEE ACQUI RES AN ASSET BY APPLICATION OF ITS INCOME AND THEN ALSO CLAIMS DEPR ECIATION ON SUCH ASSET, IF PROPER ACCOUNTING IS MADE, CASH OR EQUIVA LENT WORTH GOES OUT OF BOOKS. TO FURTHER ELABORATE, WHEN THE ASSET IS ACQUIRED AS EXPENDITURE OUT OF INCOME, THE ASSET DOES NOT APPEA R IN BALANCE SHEET. WHEN THE ASSET IS ACQUIRED ENTRIES IN BOOKS WILL BE (1) DEBIT INCOME & EXPENDITURE ACCOUNT. (2) CREDIT CASH BOOK (SUPPOSING ASSET IS PURCHASED IN CASH) AT THE TIME OF CLAIMING DEPRECIATION BOOK ENTRIES W ILL BE (1) DEBIT INCOME & EXPENDITURE ACCOUNT. (2) CREDIT ASSET ACCOUNT 10. AT THE TIME OF ACQUISITION OF ASSET, SINCE APPL ICATION OF INCOME IS AN EXPENDITURE (FOR THE PURPOSE OF SECTION 11) A SSETS DOES NOT APPEAR IN BALANCE SHEET AKIN TO ANY OTHER EXPENDITU RE LIKE SALARY, DIESEL ETC. BUT AT THE TIME OF CLAIMING DEPRECIATIO N ASSET REAPPEARS IN NEGATIVE FORM HAVING CREDIT BALANCE IN ASSESSEE' S BOOKS. OBVIOUSLY THIS ASSET WILL APPEAR ON LIABILITIES SID E AS IT IS HAVING CREDIT BALANCE. THIS GIVES RISE TO SOME ABSURDITY W HEN THE ASSET IS OF THE NATURE OF IMMOVABLE PROPERTY. EITHER THIS BA LANCE SHEET MAY BE ALLOWED TO CONTINUE WITH THIS ABSURD FEATURE OR IF IT IS TO BE GIVEN A REASONABLE SHAPE AND ALSO KEEP THE BALANCE SHEET BALANCED, THIS ENTRY IS TO BE REMOVED FROM THE BALANCE SHEET WITH CORRESPONDING WITH DRAWL FROM CASH IN HAND [THEREBY CASH GOING OUT OF BOOKS]. BY NOT CLAIMING DEPRECIATION IN BOOK S AND CLAIMING IT DIRECTLY WHILE MAKING COMPUTATION OF INCOME, SOM E ASSESSEES DO THE SAME THING IN A MORE SUBTLE WAY. 11. LOOKING AT THE BOOK TREATMENT (SUPRA) AT THE TI ME OF ACQUISITION OF THE ASSET AND AT THE TIME OF CLAIMING DEPRECIATI ON, DOUBLE DEDUCTION FOR SAME EXPENDITURE IS EVIDENT AS ON BOT H OCCASIONS INCOME AND EXPENDITURE ACCOUNT HAS RECEIVED DEBIT E NTRY FOR THE SAME EXPENDITURE. 12. IN VIEW OF THE ABOVE MENTIONED REASONS AND THE RATIO OF HON'BLE KERALA HIGH COURT IN THE CASE OF LISSIE MED ICAL I.T.A.NO. 2892 /AHD/2012 7 INSTITUTIONS (SUPRA), REVENUE'S APPEAL IN THE PRESE NT CASE MAY BE ALLOWED BY SETTING ASIDE THE ORDER OF LD. CIT(A) AN D RESTORING THE ORDER OF DDIT (EXEMPTION). SINCE THIS ISSUE IS NOT COVERED IN FAVOUR OF ASSESSEE AS DISCUSSED EARLIER, THE SAME S HOULD NOT BE TREATED AS COVERED. IF AFORESAID SUBMISSION DOES NO T CLARIFY THE ISSUE, THEN THE CASE SHOULD BE REFIXED AND REVENUE SHOULD BE GIVEN OPPORTUNITY TO ARGUE THE CASE IN COURT SUCH AN IMPO RTANT ISSUE SHOULD NOT BE TREATED AS COVERED IN ASSESSEE'S FAVO UR WHICH IS NOT THE CASE. SD./- SENIOR DEPARTMENTAL REPRESENTATIVE, (ITAT)-III, AHMEDABAD. 6. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS, PERUSE D THE MATERIAL ON RECORD AND HAVE GONE THROUGH THE ORDERS OF AUTHORIT IES BELOW AND THE JUDGEMENTS CITED BY BOTH THE SIDES. WE FIND THAT B OTH THE JUDGEMENTS WHICH ARE REFERRED TO BY THE REVENUE IN THE GROUNDS OF APPEAL WHICH INCLUDE THE JUDGEMENT OF HONBLE KERALA HIGH COURT CITED BY THE LD. D.R., HAVE BEEN DULY CONSIDERED BY THE TRIBUNAL IN THE CASE OF ADIT (E) VS FRIENDS OF WWB INDIA (SUPRA) AND AFTER CONSIDERI NG BOTH THESE JUDGEMENTS AND VARIOUS ARGUMENTS WHICH WERE RAISED BY THE LD. D.R. IN THAT CASE, THE TRIBUNAL IN THAT CASE HAS DECIDED TH E ISSUE IN FAVOUR OF THE ASSESSEE. THE RELEVANT PORTION OF THAT TRIBUNAL DE CISION IS AS PER PARA 5-7 AND FOR THE SAKE OF READY REFERENCE, THE SAME ARE R EPRODUCED BELOW: 5. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS, PERUS ED THE MATERIAL ON RECORD AND HAVE GONE THROUGH THE ORDERS OF AUTHORITIES BELOW AND THE JUDGEMENTS CITED BY BOTH THE SIDES. WE FIND THAT THE ASSESSMENT ORDER IS ALSO BASED ON THIS JUDGEMENT O HONBLE APEX COURT RENDERED IN THE CASE OF ESCORTS LTD. (SUPRA) AND BEFORE US ALSO, RELIANCE HAS BEEN PLACED BY THE LD. D.R. ON T HIS JUDGEMENT AND HENCE, WE FIRST EXAMINE THE APPLICABILITY OF TH IS JUDGEMENT IN THE PRESENT CASE. - WE FIND THAT ON PAGE 5 OF HIS ORDER, LD. CIT(A) H AS OBSERVED THAT THIS JUDGEMENT OF HONBLE APEX COURT RENDERED IN THE CASE OF ESCORTS LTD. (SUPRA) HAS ALREADY BEEN D ISTINGUISHED BY HONBLE PUNJAB & HARYANA HIGH COURT IN THE JUDGEMEN T RENDERED I.T.A.NO. 2892 /AHD/2012 8 IN THE CASE OF CIT VS TINY TOTS EDUCATION SOCIETY A S REPORTED IN 330 ITR 21 (P&H). WE ALSO FIND THAT SINCE THERE IS SPECIFIC PROVISION IN SECTION 35(2) FOR NOT ALLOWING DEPRECI ATION ON THOSE ASSETS FOR WHICH DEDUCTION IS ALLOWED U/S 35(2), TH IS JUDGEMENT CANNOT BE APPLIED IN THE PRESENT CASE BECAUSE IN TH E PRESENT CASE, THE CLAIM OF THE ASSESSEE IS NOT FOR DOUBLE DEDUCTI ON. AT THE TIME OF PURCHASE OF THE ASSET IN QUESTION, CLAIM IS ALLO WED TO THE ASSESSEE U/S 11, IF SUCH PURCHASE OF ASSET IS CONSI DERED TO BE FOR THE PURPOSE OR FOR THE OBJECTS OF THE TRUST I.E. AN EXE MPTION ALLOWABLE TO THE ASSESSEE FOR THE INCOME EARNED BY THE ASSESS EE. FOR ALLOWABILITY OF DEPRECIATION, WHILE COMPUTING THE I NCOME OF THE ASSESSEE TRUST, IT HAS BEEN HELD BY VARIOUS HIGH CO URTS IN THE JUDGEMENTS CITED BY THE LD. A.R. INCLUDING HONBLE GUJARAT HIGH COURT THAT THE INCOME OF THE ASSESSEE TRUST HAS TO BE COMPUTED ON THE BASIS OF COMMERCIAL PRINCIPLES. MOREOVER, DEDU CTION IS ALLOWED ONLY ONCE FOR COMPUTATION OF INCOME BY WAY OF ALLOWING DEPRECIATION AND ALLOWING EXEMPTION U/S 11 IS NOT E QUIVALENT TO ALLOWING THE DEDUCTION FOR COMPUTATION OF INCOME BE CAUSE EXEMPTION IS ALLOWED ON THE INCOME FROM TAX AND IT IS NOT AKIN TO REDUCING THE INCOME ITSELF. HENCE, THIS ARGUMENT O F THE REVENUE IS DEVOID OF ANY MERIT THAT ALLOWING DEPRECIATION IN T HE PRESENT CASE WILL RESULT INTO ALLOWING DOUBLE DEDUCTION TO THE A SSESSEE. MOREOVER, THIS ISSUE IS SQUARELY COVERED IN FAVOUR OF THE ASSESSEE BY THE JUDGEMENT OF HONBLE GUJARAT HIGH COURT REND ERED IN THE CASE OF CIT VS SETH MANIKLAL RANCHODDAS VISHRAM BHA VAN TRUST (SUPRA) AND HENCE, BY RESPECTFULLY FOLLOWING THIS J UDGEMENT, WE DECLINE TO INTERFERE IN THE ORDER OF LD. CIT(A). 6. REGARDING GROUND NO.3 OF THE REVENUES APPEAL, A S PER WHICH, THE CLAIM OF THE REVENUE THAT DEDUCTION U/S 32 IS ALLOWABLE WHILE COMPUTING PROFIT AND GAINS FROM BUSINESS AND SINCE THE CHARITABLE TRUST IS NOT ENGAGED IN ANY BUSINESS, TH E INCOME IS NOT ASSESSABLE UNDER THIS HEAD AND HENCE, DEPRECIATION IS NOT ALLOWABLE FOR THIS REASON ALSO. IN HIS REGARD, WE WOULD LIKE TO OBSERVE THAT IT WAS HELD BY HONBLE GUJARAT HIGH COURT AND HONBLE BOMBAY HIGH COURT THAT ALTHOUGH, THE INCOME OF THE ASSESSE E TRUST DOES NOT FALL UNDER THE HEAD INCOME FROM BUSINESS BUT STILL SUCH INCOME HAS TO BE COMPUTED ON THE BASIS OF COMMERCIAL PRINCIPLE S AND THEREFORE, DEPRECIATION HAS TO BE ALLOWED. IN THE CASE OF CIT VS SETH MANIKLAL RANCHODDAS VISHRAM BHAVAN TRUST (SUPR A), HONBLE GUJARAT HIGH COURT HAS APPROVED THE VIEW TAKEN BY H ONBLE MADRAS HIGH COURT ON THIS ISSUE. HONBLE MADRAS HI GH COURT HAS TAKEN THIS VIEW IN THE CASE OF CIT VS RAO BAHADUR C ALAVALA I.T.A.NO. 2892 /AHD/2012 9 CUNNAN CHETTY CHARITIES AS REPORTED IN 135 ITR 485 THAT THE INCOME FROM THE PROPERTY HELD UNDER TRUST WOULD HAV E TO BE ARRIVED AT IN THE COMMERCIAL MANNER AND NOT UNDER THE VARIO US HEADS SET OUT IN SECTION 14. IN OUR CONSIDERED OPINION, THIS JUDGEMENT OF HONBLE GUJARAT HIGH COURT ALONG WITH THIS JUDGEMEN T OF HONBLE MADRAS HIGH COURT AGREED TO BY HONBLE GUJARAT HIGH COURT COVERS THIS ASPECT ALSO AGAINST THE REVENUE AND HEN CE, THIS GROUND OF THE REVENUE IS ALSO LIABLE TO BE REJECTED. WE O RDER ACCORDINGLY. 7. IN THE RESULT, APPEAL OF THE REVENUE IS DISMISSE D. 7. NOW, WE CONSIDER THE WRITTEN SUBMISSIONS FILED B Y THE LD. D.R. AS REPRODUCED ABOVE. FROM THE SAME, WE FIND THAT UP T O PARA 8 OF THE WRITTEN SUBMISSIONS, THERE IS NO NEW SUBMISSION AND THE SAME WERE ALSO MADE BEFORE THE TRIBUNAL IN THE CASE OF FRIENDS OF WWB INDIA (SUPRA) AND WERE ALREADY CONSIDERED. IN PARA 9-12 OF THESE WRITTEN SUBMISSIONS, LD. D.R. HAS TRIED TO MAKE OUT A CASE TO ESTABLISH THAT THE CASH HAS GONE OUTSIDE THE BOOKS. IN THESE PARAS ALSO, WE DO NOT FIND ANY MERIT BECAUSE THE VERY BASIS OF THESE PARAS IS NOT CORRECT. IT I S SUBMITTED BY THE LD. D.R. THAT WHEN THE ASSET IS ACQUIRED, AS PER ENTRIES IN THE BOOKS, DEBIT WILL GO TO INCOME AND EXPENDITURE ACCOUNT AND CREDIT WILL G O TO CASH. BUT THIS IS NOT CORRECT. AS PER THE NORMAL ACCOUNTING PRINCIPL ES, WHENEVER AN ASSET IS PURCHASED, THE DEBIT GOES TO ASSET ACCOUNT AND C REDIT WILL GO TO CASH ACCOUNT WHEN THE ASSET IS PURCHASED BY CASH. LD. D .R. HAS FORMED THIS OPINION THAT DEBIT WILL GO TO EXPENDITURE ACCOUNT P ERHAPS DUE TO THE REASON THAT AS PER THE PROVISIONS OF SECTION 11, IF THE PURCHASE OF ASSET IS FOR THE PURPOSE OF THE TRUST THEN THE INCOME OF THE ASSESSEE TRUST TO THAT EXTENT IS CONSIDERED AS EXEMPT. THE TRIBUNAL HAS A LREADY EXPLAINED IN THE EARLIER TRIBUNAL ORDER RENDERED IN THE CASE OF FRIE NDS OF WWB INDIA (SUPRA) THAT GRANTING EXEMPTION U/S 11 TO AN INCOME IN THAT SITUATION WHERE THE FUNDS ARE UTILIZED FOR THE PURPOSE OF THE TRUST OR TO THE EXTENT OF ACCUMULATION OF FUNDS UP TO THE PERMISSIBLE LIMIT, IS NOT AKIN TO REDUCING I.T.A.NO. 2892 /AHD/2012 10 THE INCOME BUT INCOME REMAINS THE SAME BUT TO THAT EXTENT, INCOME IS CONSIDERED AS EXEMPT AND, THEREFORE, THE VERY BASIS OF LD. D.R. THAT DEBIT WILL GO TO INCOME AND EXPENDITURE ACCOUNT IS FACTUA LLY NOT CORRECT AND, THEREFORE, HIS FURTHER SUBMISSION ON THE BASIS OF T HIS INCORRECT PREMISE IS ALSO BASELESS AND DEVOID OF ANY MERIT. HENCE, EVEN AFTER CONSIDERING THESE WRITTEN SUBMISSIONS OF THE LD. D.R., WE DO NO T FIND ANY REASON TO TAKE A CONTRARY VIEW IN THE PRESENT CASE AS COMPARE D TO THE VIEW TAKEN BY THE TRIBUNAL IN THE CASE OF FRIENDS OF WWB INDIA (S UPRA) 8. HENCE, WE FIND THAT IN THE PRESENT CASE, ISSUE I N DISPUTE IS SQUARELY COVERED IN FAVOUR OF THE ASSESSEE BY THIS TRIBUNAL DECISION WHICH HAS DULY CONSIDERED THE JUDGEMENT CITED BY THE REVENUE AND H ENCE, WE DO NOT FIND ANY REASON TO TAKE A CONTRARY VIEW IN THE PRESENT C ASE AND, THEREFORE, RESPECTFULLY FOLLOWING THIS TRIBUNAL DECISION, WE D ECLINE TO INTERFERE IN THE ORDER OF LD. CIT(A). 9. IN THE RESULT, THE APPEAL OF THE REVENUE IS DISM ISSED. 10. ORDER PRONOUNCED IN THE OPEN COURT ON THE DATE MENTIONED HEREINABOVE. SD./- SD./- (MUKUL KUMAR SHRAWAT) (A. K. GARODIA) JUDICIAL MEMBER ACCOUNTANT MEMBER SP COPY OF THE ORDER FORWARDED TO: 1. THE APPLICANT 2. THE RESPONDENT 3. THE CIT CONCERNED 4. THE LD. CIT (APPEALS) 5. THE DR, AHMEDABAD BY ORDER 6. THE GUARD FILE AR,ITAT,AHMEDABAD I.T.A.NO. 2892 /AHD/2012 11 1. DATE OF DICTATION 22/02/2013 2. DATE ON WHICH THE TYPED DRAFT IS PLACED BEFORE THE DICTATING MEMBER 26.02/06.03.2013.OTHER MEMBER 3. DATE ON WHICH THE APPROVED DRAFT COMES TO THE SR. P .S./P.S. 4. DATE ON WHICH THE FAIR ORDER IS PLACED BEFORE THE D ICTATING MEMBER FOR PRONOUNCEMENT 22/03/2013 5. DATE ON WHICH THE FAIR ORDER COMES BACK TO THE SR. P.S./P.S.1/4 6. DATE ON WHICH THE FILE GOES TO THE BENCH CLERK 1/4/13 7. DATE ON WHICH THE FILE GOES TO THE HEAD CLERK .. 8. THE DATE ON WHICH THE FILE GOES TO THE ASSISTANT RE GISTRAR FOR SIGNATURE ON THE ORDER . 9. DATE OF DESPATCH OF THE ORDER. .