The DCIT, 1(1), Bhopal V. M/s. BHOPAL SCHOOL OF SOCIAL SCIENCES, Bhopal

ITA 333/IND/2014

• Counselvise Citation: 33322714 RSA 2014
• Duration Of Justice: 1 year(s) 6 month(s) 1 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 03-11-2015
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: DB
• Assessment Year: 2009-2010
• Appeal Filed On: 02-05-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: R R MEENA
• Assessee Lawyers: AJAY K CHHAJED
• Keywords: Depreciation; Charitable institution
• Section: 12A

Judgement Text

BHOPAL SCHOOL OF SOCIAL SCIENCES ITA NO. 611/IND/2014 1 IN THE INCOME TAX APPELLATE TRIBUNAL INDORE BENCH, INDORE BEFORE SHRI D.T. GARASIA, HON'BLE JUDICIAL MEMBE R AND B.C. MEENA, HONBLE ACCOUNTANT MEMBER ITA NO. 611/IND/2014 A.Y.2010-11 DY. CIT 1(1) BHOPAL ::: APPELLANT VS THE BHOPAL SCHOOL OF SOCIAL SCIENCES BHOPAL ::: RESPONDENT APPELLANT BY SHRI R.R. MEENA RESPONDENT BY SHRI AJAY K. CHHAJED DATE OF HEARING 5 .11.2015 DATE OF PRONOUNCEMENT 1.12.2015 O R D E R PER SHRI B.C. MEENA, AM THIS APPEAL FILED BY THE REVENUE EMANATES FROM THE ORDER OF THE LEARNED CIT(A)-I, BHOPAL, DATED 1.7.2 014. 2. THE ASSESSEE IS A REGISTERED SOCIETY ENGAGED IN THE EDUCATIONAL ACTIVITIES RUNNING BHOPAL SCHOOL OF SOCIAL BHOPAL SCHOOL OF SOCIAL SCIENCES ITA NO. 611/IND/2014 2 SCIENCES. THE ASSESSEE IS ALSO REGISTERED U/S 12A OF THE ACT. FOR THE ASSESSMENT YEAR UNDER CONSIDERATION THE ASSESSEE DEBITED DEPRECIATION OF RS.56,89,465/- IN TH E INCOME AND EXPENDITURE ACCOUNT. THE ASSESSING OFFICER DENIED THIS CLAIM. THE LEARNED CIT(A) GRANTED RELIEF T O THE ASSESSEE ON THE BASIS OF VARIOUS JUDICIAL PRONOUNCEMENT S OF ITAT BENCHES AND HON'BLE HIGH COURTS. NOW THE REVENUE IS IN APPEAL TAKING THE ONLY GROUND THAT THE LEARNED CIT(A) HAS ERRED IN DELETING THE ADDITION MADE BY THE ASSESSING OFFICER ON ACCOUNT OF DEPRECIATION TO THE TUNE OF RS.56,89,465/- WHEREIN THE CLAIM OF DEPRECIATION O F RS.56,89,465/- ON THE SAME ASSETS WHOSE COST HAS BEEN CLAIMED AS APPLICATION OF INCOME WHICH WOULD AMOUNT TO DOUBLE DEDUCTION, SO DEPRECIATION CANNOT BE ALLOWED AS IT WAS HELD IN THE CASE OF LSSIE MEDICAL INSTITUTIONS VS. CIT; 24 TAXMAN.COM 9 (KERALA) BY THE HON'BLE KERALA HIGH COURT. BHOPAL SCHOOL OF SOCIAL SCIENCES ITA NO. 611/IND/2014 3 3. I HAVE HEARD BOTH THE SIDES. THIS ISSUE IS COVERED BY VARIOUS DECISIONS OF VARIOUS HIGH COURTS. IN THE CASE OF CIT VS. SHETH MANILAL RANCHHODDASVISHRAM BHAVAN TRUST (1992) 187 ITR 598 THE HON'BLE GUJRAT HIGH COURT HEL D AS UNDER :- THE INCOME FROM THE PROPERTIES HELD UNDER TRUST WOULD HAVE TO BE ARRIVED AT IN THE NORMAL COMMERCIAL MANNER WITHOUT CLASSIFICATION UNDER THE VARIOUS HEADS SET OUT IN SECTION 14 OF THE INCOME-TAX ACT, 1961. THE EXPRESSION 'INCOME' HAS TO BE UNDERSTOOD IN THE POPULAR OR GENERAL SENSE AND NOT IN THE SENSE IN WHICH THE INCOME IS ARRIVED AT FOR THE PURPOSE OF ASSESSMENT TO TAX BY APPLICATION OF SOME ARTIFICIAL PROVISIONS EITHER GIVING OR DENYING DEDUCTION. THE COMPUTATION UNDER THE DIFFERENT CATEGORIES OR HEADS ARISES ONLY FOR THE PURPOSES OF ASCERTAINING THE TOTAL BHOPAL SCHOOL OF SOCIAL SCIENCES ITA NO. 611/IND/2014 4 INCOME FOR THE PURPOSES OF CHARGE. THOSE PROVISIONS CANNOT BE INTRODUCED TO FIND OUT WHAT THE INCOME DERIVED FROM THE PROPERTY HELD UNDER THE TRUST TO BE EXCLUDED FROM THE TOTAL INCOME IS, FOR THE PURPOSE OF THE EXEMPTIONS UNDER CHAPTER III. THE AMOUNT OF DEPRECIATION DEBITED TO THE ACCOUNTS OF THE CHARITABLE INSTITUTION HAS TO BE DEDUCTED TO ARRIVE AT THE INCOME AVAILABLE FOR APPLICATION TO CHARITABLE AND RELIGIOUS PURPOSES. THE HON'BLE JURISDICTIONAL HIGH COURT HAS ALSO EXPRESSED SIMILAR VIEW IN THE CASE OF CIT VS. RAIPUR PALLOTTINE SOCIETY; 180 ITR 579 WHEREIN THE HON'BLE COURT OBSERVED AS UNDER :- DEPRECIATION IS THE EXHAUSTION OF THE EFFECTIVE LIFE OF A FIXED ASSET OWING TO USE OR OBSOLESCENCE. IT MAY BE COMPUTED AS THAT PART OF THE COST OF THE ASSET WHICH WILL NOT BE RECOVERED BHOPAL SCHOOL OF SOCIAL SCIENCES ITA NO. 611/IND/2014 5 WHEN THE ASSET IS FINALLY PUT OUT OF USE. THE OBJECT OF PROVIDING FOR DEPRECIATION IS TO SPREAD THE EXPENDITURE INCURRED IN ACQUIRING THE ASSET OVER ITS EFFECTIVE LIFETIME AND THE AMOUNT OF PROVISION MADE IN RESPECT OF AN ACCOUNTING PERIOD IS INTENDED TO REPRESENT THE PROPORTION OF SUCH EXPENDITURE WHICH HAS EXPIRED DURING THAT PERIOD. IF DEPRECIATION IS NOT ALLOWED AS A NECESSARY DEDUCTION IN COMPUTING THE INCOME OF A CHARITABLE TRUST, THEN THERE WOULD BE NO WAY TO PRESERVE THE CORPUS OF THE TRUST. A CHARITABLE TRUS T WOULD BE NO WAY TO PRESERVE THE CORPUS OF THE TRUST. A CHARITABLE TRUST IS, THEREFORE, ENTITLED T O DEPRECIATION IN RESPECT OF THE ASSETS OWNED BY IT. 4. CONSIDERING THE LEGAL POSITION AND THE ABOVE JUDGMENTS OF THE HON'BLE HIGH COURTS, WE FIND NO FAU LT IN THE ORDER OF THE LEARNED CIT(A) AND SUSTAIN THE SAME. BHOPAL SCHOOL OF SOCIAL SCIENCES ITA NO. 611/IND/2014 6 5. IN THE RESULT, THE APPEAL OF THE REVENUE STANDS DISMISSED. PRONOUNCED IN OPEN COURT ON IST DECEMBER, 2015 SD/- SD/- (D.T. GARASIA) (B.C. MEENA) JUDICIAL MEMBER ACCOUNTANT MEMBER IST DECEMBER, 2015 DN/-