The DCIT,(Exemption), Circle-2, Ahmedabad V. Shree Surati Modh Vanik Sarvajanik Trust, Surat

ITA 3281/AHD/2014

• Counselvise Citation: [2017] 127 COUNSELVISE.COM (IT) 8696 (ITAT-AHMEDABAD)
• Duration Of Justice: 2 year(s) 8 month(s) 14 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 23-08-2017
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: B
• Assessment Year: 2010-2011
• Appeal Filed On: 09-12-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: O P SINGH
• Assessee Lawyers: M K PATEL
• Keywords: Capital asset; Depreciation; Charitable institution
• Section: 11

Judgement Text

, IN THE INCOME TAX APPELLATE TRIBUNAL B BENCH, AHMEDABAD BEFORE SHRI RAJPAL YADAV, JUDICIAL MEMBER AND SHRI AMARJIT SINGH, ACCOUNTANT MEMBER ./ ITA NO. 3281/AHD/2014 / ASSESSMENT YEAR: 2010-11 DEPUTY COMMISSIONER OF INCOME-TAX (EXEMPTIONS), CIRCLE-2, AHMEDABAD VS. SHREE SURATI MODH VANIK SARVAJANIK TRUST, SHREYAS BUILDING, LIMDA CHOWK, DHANTI SHERI, SURAT PAN : AABTS 2636 R / (APPELLANT) / (RESPONDENT) REVENUE BY : SHRI O.P. SINGH, CIT-DR ASSESSEE BY : SHRI M.K. PATEL, AR / DATE OF HEARING : 03/08/2017 / DATE OF PRONOUNCEMENT: 23/08/2017 / O R D E R PER RAJPAL YADAV, JUDICIAL MEMBER: THE REVENUE IS IN APPEAL BEFORE THE TRIBUNAL AGAINS T THE ORDER OF THE LD. CIT(A)-II, SURAT DATED 03.09.2014 PASSED FOR AS SESSMENT YEAR 2010-11. 2. THOUGH THE REVENUE HAS TAKEN FOUR GROUNDS OF APP EAL, BUT ITS GRIEVANCE REVOLVES AROUND A SINGLE ISSUE VIZ. WHETH ER THE ASSESSEE IS ENTITLED FOR DEPRECIATION ON THE ASSETS, WHOSE VALUE ALREADY AVAILED DEDUCTION AS APPLICATION OF INCOME UNDER SECTION 11 OF THE INCOM E-TAX ACT, 1961 (HEREINAFTER REFERRED TO AS THE THE ACT). 3. THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESSE E HAS FILED ITS RETURN OF INCOME ON 10.01.2011 DECLARING TOTAL INCOME AT RS. NIL. THE ASSESSEE IS A CHARITABLE TRUST HAVING OBJECTS TO UNDERTAKE ACTIVI TIES IN THE FIELD OF EDUCATION AND MEDICAL. IT IS RUNNING A CHILDRENS HOSPITAL AND A SARNATH EYE HOSPITAL. IT HAS CLAIMED DEPRECIATION OF RS.1 ,19,35,961/-. THE LD. ASSESSING OFFICER, AFTER PUTTING RELIANCE ON THE OR DER OF ITAT, COCHIN BENCH ITA NO. 3281/AHD/2014 DCIT(EXEMP) VS. SHREE SURATI MODH VANIK SARVAJANIK TRUST FOR AY: 2010-11 2 IN THE CASE OF DDIT(EXEMPTIONS) VS. ADI SHANKARA TR UST, REPORTED IN (2011) 46 SOT 230 (COCHIN), DISALLOWED THE CLAIM OF DEPREC IATION BY OBSERVING THAT THE ASSESSEE HAS ALREADY AVAILED DEDUCTION OF THE V ALUE OF THIS ASSET AS APPLICATION OF INCOME. THE ALLOWANCE OF DEPRECIATI ON WOULD AMOUNT TO DOUBLE TAXATION. 4. ON APPEAL, THE LD. CIT(A) HAS ALLOWED THE CLAIM OF THE ASSESSEE BY FOLLOWING THE DECISION OF HONBLE JURISDICTIONAL HI GH COURT. 5. THE LD. COUNSEL FOR THE ASSESSEE, AT THE VERY OU TSET, CONTENDED THAT THE ISSUE IN DISPUTE IS SQUARELY COVERED BY THE DECISIO N OF HONBLE GUJARAT HIGH COURT IN THE CASE OF CIT VS. SHETH MANILAL RAN CHHO DDAS VISHRAM BHAVAN TRUST, REPORTED IN 198 ITR 598 (GUJ.). HE FURTHER CONTENDED THAT IN THE CASE OF THE UDHNA ACADEMY EDUCATION TRUST IN ITA NOS.600 & 601/AHD/2014, THE TRIBUNAL HAS FOLLOWED THE DECISION OF THE HONB LE JURISDICTIONAL HIGH COURT IN THE CASE OF SHETH MANILAL RAN CHHODDAS VIS HRAM BHAVAN TRUST (SUPRA) AND UPHELD THE ALLOWANCE OF DEPRECIATION. 6. ON THE OTHER HAND, LD. DEPARTMENTAL REPRESENTATI VE RELIED UPON THE ORDER OF THE ASSESSING OFFICER. 7. THE DISCUSSIONS MADE BY THE TRIBUNAL IN THE CASE OF THE UDHNA ACADEMY EDUCATION TRUST (SUPRA) ARE AS UNDER:- 5. THE LD. COUNSEL FOR THE ASSESSEE CONTENDED THA T THE ISSUE IN QUESTION IS COVERED IN FAVOUR OF THE ASSESSEE BY THE DECISION O F TRIBUNAL IN THE CASE OF ACIT VS. INSTITUTE OF PLASMA RESEARCH IN ITA NO.150 6/AHD/2009 DATED 21.02.2011, HOLDING AS UNDER:- 5.1 IN THE CONTEXT OF ISSUE BEFORE US, HON'BLE JUR ISDICTIONAL HIGH COURT IN CIT V. SHETH MANILAL RAN CHHODDAS VISHRAM BHAVAN TRUST, 198 ITR 598(GUJ) HELD AS UNDER: WHETHER DEPRECIATION HAS TO BE ALLOWED AS A NECESSA RY DEDUCTION FOR COMPUTING THE INCOME OF A CHARITABLE INSTITUTION WA S THE QUESTION WHICH CAME UP BEFORE THE KARNATAKA HIGH COURT IN CI T V. SOCIETY OF THE SISTERS OF ST. ANNIE (1984] 146 ITR 28. NOTI CING THE DIFFERENCE BETWEEN THE WORD ' INCOME ' AND THE EXPR ESSION ' TOTAL ITA NO. 3281/AHD/2014 DCIT(EXEMP) VS. SHREE SURATI MODH VANIK SARVAJANIK TRUST FOR AY: 2010-11 3 INCOME ' AND THE NECESSITY FOR PROVIDING DEPRECIATI ON IN ORDER TO MAINTAIN CORRECT ACCOUNTS, THE HIGH COURT HELD THAT THE AMOUNT OF DEPRECIATION DEBITED TO THE ACCOUNTS OF THE CHARITA BLE INSTITUTION HAS TO BE DEDUCTED TO ARRIVE AT THE INCOME AVAILABLE FO R APPLICATION TO CHARITABLE AND RELIGIOUS PURPOSES. SAME VIEW HAS BE EN TAKEN BY THE MADHYA PRADESH HIGH COURT IN CIT V. RAIPUR PALLOTTI NE SOCIETY [1989] 180 ITR 579. IN CIT .V RAO BAHADUR CALAVALA CUNNAN CHETTY CHARIT IES [1982] 135 ITR 485, THE MADRAS HIGH COURT WAS REQUIRED TO CONSIDER WHETHER, FOR THE PURPOSE OF COMPUTING ACCUMULATION IN EXCESS OF 25 PER CENT AS LAID DOWN IN SECTION 11(1)(A) OF THE AC T, ' INCOME ' HAS TO BE COMPUTED UNDER THE VARIOUS HEADS ENUMERATED I N THE INCOME- TAX ACT. IT HELD THAT THE INCOME FROM THE PROPERTIE S HELD UNDER TRUST WOULD HAVE TO BE ARRIVED AT IN THE NORMAL COMMERCIA L MANNER WITHOUT CLASSIFICATION UNDER THE VARIOUS HEADS SET OUT IN SECTION 14. IT HELD THAT THE EXPRESSION ' INCOME HAS TO BE UNDE RSTOOD IN THE POPULAR OR GENERAL SENSE AND NOT IN THE SENSE IN WH ICH THE INCOME IS ARRIVED AT FOR THE PURPOSE OF ASSESSMENT TO TAX BY APPLICATION OF SOME ARTIFICIAL PROVISIONS EITHER GIVING OR DENYING DEDUCTION. IT OBSERVED THAT THE COMPUTATION UNDER THE DIFFERENT C ATEGORIES OR HEADS ARISES ONLY FOR THE PURPOSES OF ASCERTAINING THE TOTAL INCOME FOR THE PURPOSES OF CHARGE. THOSE PROVISIONS CANNOT BE INTRODUCED TO FIND OUT WHAT THE INCOME DERIVED FROM THE PROPERTY HELD UNDER TRUST TO BE EXCLUDED FROM THE TOTAL INCOME IS, FOR THE PURPOSE OF THE EXEMPTIONS UNDER CHAPTER III. WE ARE IN RESPECTFUL AGREEMENT WITH THE VIEW TAKEN BY THE KARNATAKA, MADHYA PRADESH AND MADRAS HIGH COURTS. W E, THEREFORE, ANSWER BOTH THE QUESTIONS REFERRED TO US IN THE AFFIRMATIVE AND AGAINST THE REVENUE. NO ORDER AS TO COSTS 5.2 SIMILAR VIEW HAS BEEN TAKEN BY HON'BLE PUNJAB A ND HARYANA HIGH COURT IN CIT VS. MARKET COMMITTEE, PIPLI [2010 ] 45 DTR (P&H) 381 WHEN IT WAS HELD THAT DEPRECIATION IS ALL OWABLE ON CAPITAL ASSETS FROM THE INCOME OF CHARITABLE TRUST FOR DETE RMINING THE QUANTUM OF FUND WHICH HAVE TO BE APPLIED FOR THE PU RPOSES OF THE TRUST IN TERMS OF SECTION 11. 5.3 IN THE LIGHT OF VIEW TAKEN IN THE AFORECITED DE CISIONS, ESPECIALLY WHEN THE REVENUE HAVE NOT PLACED BEFORE US EITHER A NY CONTRARY DECISION NOR ANY OTHER MATERIAL SO AS TO ENABLE US TO TAKE A DIFFERENT VIEW IN THE MATTER, WE ARE NOT INCLINED TO INTERFER E. THEREFORE, GROUND NO.1 IN THE APPEAL IS DISMISSED. 5.1. IT IS FURTHER CONTENDED THAT THIS POSITION HAS BEEN ACCEPTED BY LEGISLATURE AND WITH EFFECT FROM 01.04.2015 BY AMEN DMENT U/S 11(6) BY ITA NO. 3281/AHD/2014 DCIT(EXEMP) VS. SHREE SURATI MODH VANIK SARVAJANIK TRUST FOR AY: 2010-11 4 FINANCE ACT, 2015, THE DOUBLE CLAIM OF DEPRECIATION HAS BEEN BARRED WITH EFFECT FROM 01.04.2015. THUS, UP TO 31.03.2014, TH E ASSETS OF THE TRUST, ACQUIRED BY APPLICATION OF INCOME, ARE ELIGIBLE FOR CLAIM OF DEPRECIATION. 6. WE HAVE HEARD BOTH THE PARTIES, PERUSED THE MATE RIAL PLACED BEFORE US AND GONE THROUGH THE ORDERS OF THE AUTHORITIES BELO W. RESPECTFULLY FOLLOWING THE ITAT JUDGMENT IN THE CASE OF INSTITUTE OF PLASM A RESEARCH (SUPRA), RELYING ON JUDGMENT OF HONBLE JURISDICTIONAL HIGH COURT IN THE CASE OF SHETH MANILAL RAN CHHODDAS VISHRAM BHAVAN TRUST (SU PRA) AND THE AMENDMENT U/S 11(6) BY FINANCE ACT, 2015 WITH EFFEC T FROM 01.04.2015, WE UPHOLD THE ORDER OF LD. CIT(A). THUS, BOTH THE REV ENUES APPEALS ARE DISMISSED. 8. RESPECTFULLY FOLLOWING THE ORDER OF THE TRIBUNAL IN THE CASE OF THE UDHNA ACADEMY EDUCATION TRUST (SUPRA), WHICH IS BAS ED UPON THE DECISION OF HONBLE GUJARAT HIGH COURT IN THE CASE OF SHETH MANILAL RAN CHHODDAS VISHRAM BHAVAN TRUST (SUPRA), WE DO NOT FIND ANY ER ROR IN THE ORDER OF THE LD. CIT(A). ACCORDINGLY THE APPEAL OF THE REVENUE IS DISMISSED. 9. IN THE RESULT, APPEAL FILED BY THE REVENUE IS DI SMISSED. ORDER PRONOUNCED IN THE COURT ON 23 RD AUGUST, 2017 AT AHMEDABAD. SD/- SD/- (AMARJIT SINGH) ACCOUNTANT MEMBER (RAJPAL YADAV) JUDICIAL MEMBER AHMEDABAD; DATED 23/08/2017 BIJU T., SR.PS ! / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT. 3. ! # / CONCERNED CIT 4. # ( ) / THE CIT(A) 5. & ! , ! , / DR, ITAT, AHMEDABAD 6. / GUARD FILE . / BY ORDER, TRUE COPY / ( DY./ASSTT.REGISTRAR) ', / ITAT, AHMEDABAD