ACIT, UDAIPUR V. M/s. Vijay Shanti Educational Trust, UDAIPUR

ITA 290/JODH/2014

• Counselvise Citation: 29023314 RSA 2014
• Duration Of Justice: 3 month(s) 8 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 13-08-2014
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: DB
• Assessment Year: 2009-2010
• Appeal Filed On: 05-05-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: THIS COMM ON
• Keywords: Depreciation; Capital expenditure
• Section: 12AA; 32; 11

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL JODHPUR BENCH, JODHPUR BEFORE SHRI HARI OM MARATHA , JUDICIAL MEMBER AND SHRI N.K.SAINI, ACCOUNTANT MEMBER ITA NO. 289 / JU/ 20 1 4 ASSESSMENT YEAR: 200 9 - 10 THE A.C.I.T VS. M/S PACIFIC ACADEMY OF HIGHER CIRC LE - 2 EDUCATION & RESEARCH SOCIETY UDAIPUR . 4 , FATEHPURA, UDAIPUR PAN NO. A ABTP 2882 N ITA NO S . 290 /JU/20 14 ASSESSMENT YEAR: 200 9 - 10 THE A.C.I.T VS. VIJAY SHANTI EDUCATIONAL TRUST CIRCLE 2 RANAKPUR ROAD, VILLAGE LOYR A UDAIPUR UDAIPUR PAN NO. AAATV 3381 R (APPELLANT) (RESPONDENT) A SSESSEE B Y : SHRI ANIL BHANSALI DEPARTMENT B Y : SHRI N.A. JOSHI , DR DATE OF H EARING : 0 5 . 0 8 .201 4 DATE OF PRONOUNCEMENT : 13 . 0 8 . 201 4 2 ORDER PER HARI OM MARATHA , J .M. TH ESE ARE TWO APPEAL S FILED BY THE REVENUE PERTAINING TO DIFFERENT ASSESSEES FOR A.Y. 2009 - 10 IN WHICH ALMOST IDENTICAL ISSUES ARE INVOLVED, THEREFORE, FOR THE SAKE OF CONVENIENCE AND BREVITY, WE ARE PROCEEDING TO DISPOSE THEM OFF BY TH IS COMMON ORDER. 2. WE WILL DISCUSS AND NARRATE THE FACTS OBTAINING IN ITA NO. 290/JU/2014 IN THE CASE OF M/S VIJAY SHANTI EDUCATIONAL TRUST TO BEGIN WITH WHO IS RUNNING A DENTAL COLLEGE AND HOSPITAL. FOR A.Y. 2009 - 10, RETURN OF INCOME WAS FILED BY THE A SSESSEE ON 25.9.2009 SHOWING TOTAL INCOME AT RS. NIL. THE RETURN WAS PROCESSED U/S 143(1) OF THE INCOME - TAX ACT, 1961 ['THE ACT' FOR SHORT]. SUBSEQUENTLY, THE RETURN WAS SCRUTINIZED. THE ASSESSEE IS A TRUST REGISTERED U/S 12AA OF THE ACT BY THE DIRECTO R OF INCOME - TAX [EXEMPTIONS], CHENNAI VIDE NO. 2(148) DATED 9.9.1999. THE TRUST IS ALSO REGISTERED U/S 10(23)(VII) OF THE ACT AS AN EDUCATIONAL INSTITUTE VIDE ORDER DATED 31.5.2007. ON ITS TOTAL RECEIPTS AS PER INCOME AND EXPENDITURE ACCOUNT ARE RS. 8,13 ,17,502/ - INCLUDING FEES RECEIVED OF RS. 7,79,03,800/ - , HOSPITAL 3 INCOME RS. 6,67,740/ - , INTEREST INCOME OF RS. 13,88,158/ - AND OTHER RECEIPTS OF RS. 3,57,804/ - . DURING ASSESSMENT PROCEEDINGS, ON PERUSAL OF PROFIT AND LOSS ACCOUNT, IT WAS SEEN THAT THE ASS ESSEE HAS CLAIMED DEPRECIATION TO THE TUNE OF RS. 1,04,05,698/ - ON THE ASSETS ACQUIRED THROUGH APPLICATION OF INCOME IN EARLIER YEARS. THE ASSESSEE WAS ASKED TO EXPLAIN THIS POSITION AS TO WHY DEPRECIATION ON A SSETS ACQUIRED THROUGH APPLICATION OF MONEY M AY NO T BE DISALLOWED AS IT WOULD RESULT INTO DOUBLE DEDUCTION. IT WAS REPLIED BY THE ASSESSEE THAT DEPRECIATION ON ASSETS OF A TRUST IS TO BE DEDUCTED FOR THE PURPOSE OF CALCULATING INCOME OF A TRUST. THIS IS BECAUSE OF THE FACT THAT THE CONCEPT OF COM MERCIAL INCOME NECESSARILY ENVISAGES DEDUCTION OF DEPRECIATION ON ASSETS OF THE TRUST. IT HAS BEEN DECIDED BY THE HONBLE HIGH COURTS IN SEVERAL CASES THAT DEPRECIATION IS AN ALLOWABLE EXPENDITURE FOR THE PURPOSE OF CALCULATING INCOME OF THE TRUST/SOCIETY. THE LD. A.R HAS RELIED ON THE FOLLOWING JUDGMENTS: A . CIT V S FRAMJEE CAWASJEE INSTITUTE (1993) 109CTR 463. B . CIT V S SETH MANI LAL RANCHHODDAS VISHRAM BHAVAN T RUST (1992) 105 CTR (GUJ) 303. 4 C . BOMBAY HIGH C OURT IN THE CASE OF CIT VS INSTITUT E OF BANKING PERSONNEL SELECTION (2003) 185 CTR 492 HELD AS UNDER: DEPRECIATION IS ALLOWABLE ON THE ASSETS, EVEN THOUGH, THE COST OF WHICH HAS BEEN FULLY ALLOWED AS APPLICATION OF INCOME U/S 11 IN PAST YEARS. IN VIEW OF THE SAME THE LD. A.R REQUESTED THAT WHILE CALCULATING INCOME OF THE TRUST THE DEPRECIATION CLAIMED BY THE SOCIETY IS TO BE CONSIDERED. I HAVE CONSIDERED THE FACTS OF THE CASE AND DETAILED SUBMISSION AND THE ARGUMENTS OF THE ASSESSEE. ACCORDING THE ASSESSEE HAS CLAIMED DEPRECIATION ON THOSE ASSETS, IN SUBSEQUENT YEARS, AGAINST WHICH 100% DEDUCTION HAS BEEN TAKEN IN THE YEAR OF PURCHASE, IN OTHER WORDS THE ASSESSEE HAS CLAIMED DOUBLE DEDUCTION. HOWEVER, W ITH REFERENCE TO THE JUDGMENT OF THE HON'BLE SUPREME HIGH COURT RENDERED IN THE CASE OF ESCORTS V/S UNION OF INDIA (1993) 199 ITR 43, IT HAS BEEN HELD THAT WHEN DEDUCTION UNDER SECTION 35(2) (IV) WAS ALLOWED IN RESPECT OF CAPITAL EXPENDITURE ON SCIENTIFIC RESEARCH, NO DEPRECIATION WAS TO BE ALLOWED UNDER SECTION 32 ON THE SAME ASSETS. THERE I S A FUNDAMENTAL AXIOM THAT DOUBLE DEDUCTION IS NOT INTENDED UNLESS THERE IS A CLEAR STATUTORY INDICATION TO THE CONTRARY. IN APPEAL , ASSESSEE WAS SUCCESSFUL IN GETTING IMPUGNED 5 ADDITION DELETED. THE LD. CIT(A) HAS FOLLOWED THE JUDGMENT OF THE JODHPUR BEN CH OF THE ITAT RENDERED IN THIS VERY ASSESSEES TRUST CASE FOR A.Y. 2007 - 08 AND 2008 - 09 AND HAS DELETED THE IMPUGNED ADDITION. 3. AGGRIEVED, THE REVENUE HAS COME IN APPEAL BY RAISING THE FOLLOWING GROUND: ON THE FACTS AND IN THE PRESENT CIRCUMSTANCES O F THE CASE, THE ID. CIT(A) HAS ERRED IN ALLOWING CLAIM OF DEPRECIATION OF RS. 1,04,05,698/ - ON THE ASSETS AGAINST WHICH 100% DEDUCTION HAS ALREADY BEEN CLAIMED IN THE YEAR OF PURCHASE BY DEDUCTING THE EXPENDITURE IN ACQUIRING THE ASSET OUT OF THE INCOME/RE CEIPT. 4. WE HAVE HEARD THE RIVAL SUBMISSIONS AND HAVE CAREFULLY PERUSED THE RELEVANT MATERIAL ON RECORD. WE HAVE FOUND THAT THE ISSUE INVOLVED IN THIS APPEAL STANDS SQUARELY COVERED BY THE DECISION OF THIS VERY BENCH R ENDERED IN THE ASSESSEES OWN CASE FOR A.Y. 2008 - 09 WHEREIN IT HAS BEEN HELD AS UNDER: 5. AFTER HEARING THE LD. COUNSEL FOR THE DEPARTMENT SHRI G.R. KOKANI AND GOING THROUGH THE RECORDS, WE ARE CONVINCED THAT THERE IS NO ERROR IN 6 THE FINDING OF THE LD. CIT(A) AND HIS FINDING DESERVES TO B E UPHELD. WE UPHOLD THE ACTION OF THE LD. CIT(A) AND DISMISS BOTH THE APPEALS OF THE REVENUE. APART FROM THE ABOVE DECISIONS REFERRED TO AND RELIED UPON BY THE ASSESSEE BEFORE THE LD. CIT(A) AND BEFORE US. ACCORDINGLY, BY FOLLOWING OUR OWN ORDER, WE CAN NOT ALLOW THIS APPEAL. ITA NO. 289/JU/2014 5. THE REVENUE HAS RAISED THE FOLLOWING GROUND: ON THE FACTS AND IN THE PRESENT CIRCUMSTANCES OF THE CASE, THE ID. CIT(A) HAS ERRED IN ALLOWING CLAIM OF DEPRECIATION OF RS. 1,04,05,698/ - ON THE ASSETS AGAINST WHICH 100% DEDUCTION HAS ALREADY BEEN CLAIMED IN THE YEAR OF PURCHASE BY DEDUCTING THE EXPENDITURE IN ACQUIRING THE ASSET OUT OF THE INCOME/RECEIPT. 6. FACTS AND ARGUMENTS OF BOTH THE SIDES IN THIS APPEAL ARE SIMILAR AS WERE IN THE CASE OF M/S VIJAY SHAN TI EDUCATIONAL TRUST. THEREFORE, WITH THE SAME REASONING AND AS WE HAVE ALREADY UPHELD THE IMPUGNED 7 DELETION, WE CANNOT ALLOW THIS APPEAL OF THE REVENUE. 7. IN THE RESU LT, BOTH THE APPEAL S OF THE REVENUE STAND DISMISSED. ORDER PRON OUNCED IN THE COURT O N 13 TH AUGUST , 2014. SD/ - SD/ - (N.K.SAINI) [HARI OM MARATHA] ACCOUNTANT MEMBER JUDICIAL MEM B ER DATED : 13 TH AUGUST , 201 4 VL/ - COPY TO: 1. THE APPELLANT 2. THE RESPO NDENT 3. THE CIT BY ORDER 4. THE CIT(A) 5. THE DR SENIOR PRIVATE SECRETARY ITAT, JODHPUR