The DDIT(Exemp.), Ahmedabad V. The Xaviers Kelvani Mandal Pvt.Ltd., Ahmedabad

ITA 3121/AHD/2013

• Counselvise Citation: [2016] 132 COUNSELVISE.COM (IT) 0748 (ITAT-AHMEDABAD)
• Duration Of Justice: 2 year(s) 7 month(s) 27 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 26-08-2016
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: C
• Next Hearing Date: 22-08-2016
• Assessment Year: 2011-2012
• Appeal Filed On: 30-12-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: PRAMESH DOSHI
• Keywords: Depreciation; Charitable institution; Capital expenditure
• Section: 32

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD C BENCH BEFORE: S H RI PRAMOD KUMAR , ACCOUNTANT MEMBER AND SHR I MAHAVIR PRASAD , JUDICIAL MEMBER DEPUTY DIRECTOR OF INCOME - TAX(EXEMPTION), AHMEDABAD (APPELLANT) VS THE XAVIERS KELVANI MANDAL PVT. LTD. PRIMAL JYOTI (NEWMANH HALL), PB NO. 4002, OPP ST. ZAVIER S COLLEGE, NAVRANGPURA, AHMEDABAD PAN: AACCT1067D (RESPONDENT) REVENUE BY : S H RI PRASOON KABRA , SR. D . R. ASSESSEE BY: S H RI PRAMESH DOSHI , A.R. DATE OF HEARING : 22 - 08 - 2 016 DATE OF PRONOUNCEMENT : 26 - 08 - 2 016 / ORDER P ER : MAHAVIR PRASA D , JUDICIAL MEMBER : - THESE TWO APPEAL S HAVE BEEN PREFERRED BY THE DEPARTMENT AGAINST THE ORDER OF THE COMMISSIONER OF INCOME TAX (A) AND DEPARTMENT HAS TAKEN FOLLOWING GROUNDS: - I T A NO S . 3120 & 3121 / A HD/20 1 3 A SSESSMENT YEAR 2010 - 11 & 2011 - 12 I.T.A NO. 3120 & 3121 /AHD/20 13 A.Y. 2010 - 11 & 2011 - 12 PAGE NO DEP UTY DIRECTOR OF INCOME TAX ( EXEMP) VS. THE XAVIERS KELVANI MANDAL PVT. LTD. 2 I) THE LD. COMMISSIONER OF INCOME - TAX (AP PEALS) HAS ERRED IN LAW AND ON FACTS IN DELETING THE DISALLOWANCE OF DEPRECIATION OF RS. 40,55,008/ - MADE BY THE ASSESSING OFFICER. II) THE LD. COMMISSIONER OF INCOME - TAX (APPEALS) HAS ERRED IN LAW AND ON FACTS IN ALLOWING DEPRECIATION ON THE ASSETS, THE COST OF WHICH HAS ALREADY BEEN ALLOWED AS A DEDUCTION ON ACCOUNT OF APPLICATION OF INCOME AS THIS WOULD AMOUNT TO DOUBLE DEDUCTION IN VIEW OF THE DECISION OF THE HON'BLE SUPREME COURT IN THE CASE OF ESCORTS LTD., 199 ITR 43 AND THE DECISION OF KERALA HIGH COURT IN THE CASE OF LISSIE MEDICAL INSTITUTIONS V/S. COMMISSIONER OF INCOME - TAX, KOCHI, 248 ITR 344. III) WHETHER, ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, DEDUCTION OF DEPRECIATION U/S 32 WHICH FALLS UNDER THE HEAD 'PROFIT AND GAINS FROM BUSIN ESS AND PROFESSION' OF THE INCOME TAX ACT, 1961, WOULD BE AVAILABLE TO A CHARITABLE TRUST WHOSE INCOME IS OTHERWISE NOT ASSESSABLE UNDER THE ABOVE HEAD. 2. BRIEF FACTS OF THE CASE ARE THAT CASE WAS SELECTED FOR SCRUTINY UNDER CASS AND ACCORDINGLY NOTIC E U/S. 143(1) R.W.S. 143(1) OF THE OF THE INCOME TAX ACT WAS ISSUED AND SERVED UPON THE ASSESSEE. IN RESPONSE TO THE SAME , CA OF THE ASSESSEE ATTENDED THE PROCEE DINGS FROM TIME TO TIME. ASSESSEE IS A PRIVATE LIMITED COMPANY REGISTERED UNDER SECTION 25 OF THE COMPANIES ACT . DURING THE COURSE OF SCRUTINY, IT WAS OBSERVED THAT DEPRECIATION TO THE TUNE OF RS. 40,55,008/ - IN THE INCOME AND EXPENDITURE ACCOUNT ON THE ONE HAND AND AT THE SAME TIME HAS CLAIMED CAPITAL EXPENDITURE AS APPLICATION OF INCOME . THIS PU RELY TANTAMOUNTS TO DOUBLE COST OF WHICH THE ASSESSEE WAS SHOW CAUSED AS TO WHY SAID AMOUNT CLAIMED AS DEPRECIATION BE NOT DISALLOWED AND ADDED TO THE INCOME OF THE TRUST. IN RESPONSE TO THAT, ASSESSEE REPLIED THE DEPRECIATION IS A NECESSARY DEDUCTION TO ARRIVE I.T.A NO. 3120 & 3121 /AHD/20 13 A.Y. 2010 - 11 & 2011 - 12 PAGE NO DEP UTY DIRECTOR OF INCOME TAX ( EXEMP) VS. THE XAVIERS KELVANI MANDAL PVT. LTD. 3 AT THE MATTER OF THE CHARITABLE INSTITUTION OR INSTITUTION AVAILABLE FOR APPLICATION OF CHARITABLE PURPOSES AND THEREFORE DEPRECIATION IS ALLOWABLE EVEN IN THE INTEREST OF CHARITABLE INSTITUTE. THE AMOUNT OF DEPRECIATION DEBITED TO THE ACCOUNT S OF THE CHARITABL E INSTITUTION THA T TO DEDUCT TO ARRIVE AT THE INCOME AVAILABLE FOR APPLICATION OF CHARITABLE AND RELIGIOUS PURPOSES. THE C OPY OF THE JUDGEMENT OF THE GUJARAT HIGH COUR T WAS SUBMITTED BY THE ASSESSEE WAS CAREFULLY PERUSED AND BUT NOT CONSIDERE D. THE REASON BEING, IN THE CASE OF A TRUST INCOME IS NOT COMPU TED IN NORMAL COMMERCIAL MANNER. THE INVESTMENT IN ASSETS IS ALLOWABLE AS DED UCTION AS APPLICATION OF FUNDS. THE ALLOWANCE OF DEPRECIATION AS FURTHER APPLICATION OF RECEIPT S IN SUBSEQUENTLY Y EAR WOULD APPARENTLY BE DOUBLE DEDUCTION WHICH WOULD BE INCONSIST ENT WITH ACCOUNTING PRINCIPLES AND NOT SO AS PROVIDED IN THE LAW AND HENCE UNTENABLE. ACCORDINGLY, INCOME OF THE ASSESSEE WAS AS PER RETURN RS. ( - ) 3 , 98 , 58 , 409/ - AND DEPRECIATION IS AS DISCUS SED ABOVE RS. 40,55,008/ - . THEREAFTER , ASSESSEE PREFERRED AN FIRST STATUTORY APPEAL AND RAISED FOLLOWING GROUND THAT ASSESSING OFFICER HAS ERRED IN LAW IN NOT ALLOWING CLAIM OF DEPRECIATION OF RS. 46 , 84 , 129/ - FOR ASSESSMENT YEAR 2010 - 11 AND RS. 40 , 55 , 00 8 / - FOR ASSESSMENT YEAR 2011 - 12 AND LD. COMMISSIONER OF INCOME TAX(A) CITED SEVERAL JUDGEMENTS AND HELD THAT HE HAS CAREFULLY CONSIDERED THE ASSESSMENT ORDER AND IN SUBMISSION MADE BY THE APPELLANT IN THIS REGARD AND HON BLE ITAT IN APPELLANT S OWN CASE FOR ASSESSMENT YEAR 2009 - 10 TILL APPEAL ITA 2892/AHD/2012 DATED 22 - 03 - 2013 RELYING ON THE JUDGEMENT OF HON BLE GUJARAT HIGH COURT IN THE CASE OF SHETH MANILAL RANCHCHODDAS VISHRAM BHAVAN TRUST AND HELD DEPRECIATION I.T.A NO. 3120 & 3121 /AHD/20 13 A.Y. 2010 - 11 & 2011 - 12 PAGE NO DEP UTY DIRECTOR OF INCOME TAX ( EXEMP) VS. THE XAVIERS KELVANI MANDAL PVT. LTD. 4 IS TO BE ALLOWED IN THE CASE OF ASSESSEE APP ELLANT RESPECTFULLY FOLLOWING THE JUDGEMENT OF HON BLE HIGH COURT AND HE DELETED THE ADDITION MADE BY THE ASSESSING OFFICER. 4. WE HAVE GONE THROUGH THE RELEVANT RECORD AND HAVE HEARD BOTH THE PARTIES OBSERVATIONS AND ORDER OF ITA NO. 2892/AHD/2012 WAS C ITED BY LD. AUTHORIZED REPRESENTATIVE AND THESE TWO CASES ARE FULLY COVERED BY THIS JUDGMENT AND DO NOT FIND ANY INFIRMITY IN THE ORDER PASSED BY THE COMMISSIONER OF INCOME TAX(A). 5. IN THE RESULT, BOTH APPEAL S OF THE DEPARTMENT ARE DISMISSED. ORDER PR ONOUNCED IN THE OPEN C OURT ON 26 - 08 - 201 6 SD/ - SD/ - ( PRAMOD KUMAR ) ( MAHAVIR PRASAD ) ACCOUNTANT MEMBER JUDICIAL MEMBER AHMEDABAD : DATED 26 /08 /2016 AK / COPY OF ORDER FORWARDED TO: - 1. ASSESSEE 2. REVENUE 3. CONCERNED CIT 4. CIT (A) 5. DR, ITAT, AHMEDABAD 6. GUARD FILE. BY ORDER/ , / ,