Eklavya Education Foundation, Ahmedabad V. The Dy. Commissioner of Income Tax, Circle-1, Ahmedabad

ITA 315/AHD/2020

• Counselvise Citation: [2022] 103 COUNSELVISE.COM (IT) 9514 (ITAT-AHMEDABAD)
• Duration Of Justice: 2 year(s) 4 month(s) 20 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 30-10-2022
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Next Hearing Date: 13-10-2022
• Assessment Year: 2016-2017
• Appeal Filed On: 09-06-2020
• Result in Favour of: Matter Remanded
• Court: TRIBUNAL
• Keywords: Depreciation; Charitable institution; Capital receipt; Capital expenditure
• Section: 11; 143(3); 143(2)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL “A” BENCH, AHMEDABAD BEFORE SHRI PRAMOD M. JAGTAP, VICE PRESIDENT & Ms. MADHUMITA ROY, JUDICIAL MEMBER आयकर अपील सं./ I.T.A. No. 315/Ahd/2020 (िनधार्रण वषर् / Assessment Year : 2016-17) Eklavya Education Foundation Core House, Off. C. G. Road, Nr. Parimal Garden, Ellisbridge, Ahmedabad – 380006 (Gujarat) बनाम/ Vs. The Deputy Commissioner of Income- tax Circle–1, Exemptions, Ahmedabad èथायी लेखा सं./जीआइआर सं./PAN/GIR No. : AAACE7987R (अपीलाथीर् /Appellant) .. (प्र×यथीर् / Respondent) अपीलाथीर् ओर से /Appellant by : Shri M. K. Patel, A.R. प्र×यथीर् की ओर से/Respondent by : Shri Shramdeep Sinha, Sr. D.R. स ु नवाई की तारीख / Date of Hearing 14/10/2022 घोषणा की तारीख /Date of Pronouncement 31/10/2022 O R D E R PER Ms. MADHUMITA ROY - JM: The instant appeal filed by the assessee is directed against the order dated 06.02.2020 passed by the Ld. Commissioner of Income Tax (Appeals) – 9, Ahmedabad arising out of the order dated 22.12.2018 passed by the DCIT, ITA No. 315/Ahd/2020 (Eklavya Education Foundation vs. DCIT) A.Y.– 2016-17 - 2 - Circle-1, Exemptions, Ahmedabad under section 143(3) of the Income Tax Act, 1961 (hereinafter referred as to ‘the Act’) for Assessment Year 2016-17. 2. There is a delay of 37 days in preferring the instant appeal before us. The delay arises out of the Covid pandemic followed by prolonged lock down in all over the country which made appellant unable to file the appeal before us in due time. Keeping in view the judgment passed by the Hon’ble Apex Court we find it fit and proper to condone the delay. We, thus, condone the delay. 3. The assessee has come up in appeal mainly on following ground: “1. The learned Assessing Officer and Commissioner of Income Tax (Appeals) have erred in law and on facts in wrongly applying section 11(6) of Income Tax Act, 1961 and not allowing our claim of depreciation of Rs.85,10,192/- comprising of depreciation of Rs.7,39,302/- of assets acquired in earlier years and Rs.77,71,610/- pertaining to assets acquired during the current year where in current year there is no claim of application of income qua the amount of assets acquired.” 4. The assessee, a charitable trust registered under Section 12A(a) of the Act engaged in charitable activity of running educational institution, submitted its return of income declaring total income at Rs.Nil. The case was selected for scrutiny and notice under Section 143(2) r.w.s. 129 of the Act was issued whereupon the assessee submitted the details called for during the assessment proceedings. The assessment was finalized with the following additions: i. One Time Admission Fees Rs.1,06,00,000/- ii. Depreciation Rs.85,10,912/- iii. Standard Deduction 2,44,800/- iv. Assessed Income 1,87,84,512/- ITA No. 315/Ahd/2020 (Eklavya Education Foundation vs. DCIT) A.Y.– 2016-17 - 3 - 5. We have heard the parties and perused the materials available on record. 5.1 The case made out of the assessee is this that the assessee received one time admission at the time of initial admission made to the school. The said admission fee was credited in the balance sheet treating as capital receipt. According to the Ld.AO, for the purpose of Section 11 of the Act, the income cannot be regarded as capital or revenue. Only voluntary contribution received with specific directions can be considered as corpus and be allowed exemption under Section 11D of the Act. In fact, total depreciation debited during the year was Rs.85,10,912/- which comprises of depreciation of Rs.7,39,302/- vis-a-vis additions made during the year and remaining depreciation of Rs.77,71,610/- pertains to previous year. Assessee has not claimed any capital expenditure incurred during the year. The Learned AO had disallowed the depreciation of Rs.85,10,912/- claimed during the year stating that in pursuance of Section 11(6) of the Act, if assets are acquired during the year, and if the acquisition is claimed as application of income in the same or any previous year, the deduction vis-a-vis depreciation will not be allowed, without verifying whether in past years capital expenditure has been claimed and allowed as Application of Income. 5.2 Having regard to the facts and circumstances of the case, we find the AO needs to verify from the statement of earlier year and from current year as well whether capital expenditure has been claimed. If the same is found not being claimed, the depreciation is directed to be allowed by the Ld.AO. However, while doing so, the Ld.AO should give a reasonable opportunity of ITA No. 315/Ahd/2020 (Eklavya Education Foundation vs. DCIT) A.Y.– 2016-17 - 4 - being heard to the assessee and to consider evidence on record and any other evidence which the assessee may choose to file at the time of hearing of the matter and to pass a reasoned order. 6. In the result, assessee’s appeal is allowed for statistical purposes. This Order pronounced on 31/10/2022 Sd/- Sd/- ( P. M. JAGTAP) (MADHUMITA ROY) VICE PRESIDENT JUDICIAL MEMBER Ahmedabad; Dated 31/10/2022 True Copy S. K. SINHA आदेश की प्रितिलिप अग्रेिषत/Copy of the Order forwarded to : 1. अपीलाथीर् / The Appellant 2. प्र×यथीर् / The Respondent. 3. संबंिधत आयकर आय ु क्त / Concerned CIT 4. आयकर आय ु क्त(अपील) / The CIT(A)- 5. िवभागीय प्रितिनिध, आयकर अपीलीय अिधकरण, अहमदाबाद / DR, ITAT, Ahmedabad 6. गाडर् फाईल / Guard file. आदेशान ु सार/ BY ORDER, उप/सहायक पंजीकार (Dy./Asstt. Registrar) आयकर अपीलीय अिधकरण, अहमदाबाद / ITAT, Ahmedabad