ACIT, Jaipur V. S.S. JAIN SUBODH SHIKSHA SAMITI, Jaipur

ITA 38/JPR/2014

• Counselvise Citation: [2015] 140 COUNSELVISE.COM (IT) 99436 (ITAT-JAIPUR)
• Duration Of Justice: 1 year(s) 9 month(s) 10 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 30-10-2015
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Assessment Year: 2007-2008
• Appeal Filed On: 20-01-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: RAJ MEHRA
• Assessee Lawyers: SIDDARTHA RANKA; M IQBAL ADV DH
• Keywords: Depreciation; Charitable institution; Revised return; Capital expenditure
• Section: 12AA

Judgement Text

VK;DJ VIHYH; VF/KDJ.K] T;IQJ U;K;IHB] T;IQJ IN THE INCOME TAX APPELLATE TRIBUNAL, JAIPUR BENCHES, JAIPUR JH VKJ-IH-RKSYKUH] U;KF;D LNL; ,OA JH FOE FLAG ;KN O] YS[KK LNL; DS LE{K BEFORE: SHRI R.P. TOLANI, JM & SHRI VIKRAM SINGH YA DAV, AM VK;DJ VIHY LA- @ ITA NO. 38/JP/2014 FU/KZKJ.K O'K Z @ ASSESSMENT YEARS : 2007-08 A.C.I.T., CIRCLE-5, JAIPUR CUKE VS. M/S S.S. JAIN SUBODH SHIKSHA SAMITI, SUBODH COLLEGE CAMPUS, RAMBAGH CIRCLE, JAIPUR. LFKK;H YS[KK LA-@THVKBZVKJ LA-@ PAN/GIR NO.: AAATS 3402 L VIHYKFKHZ@ APPEL LANT IZR;FKHZ@ RESPONDENT JKTLO DH VKSJ LS @ REVENUE BY : SHRI RAJ MEHRA (JCIT) FU/KZKFJRH DH VKSJ L S@ ASSESSEE BY : SHRI SIDDARTHA RANKA & SHRI M. IQBAL (ADV) LQUOKBZ DH RKJH[ K@ DATE OF HEARING : 20/10/2015 MN?KKS'K .KK DH RKJH[ K@ DATE OF PRONOUNCEMENT : 30/10/2015 VKNS'K@ ORDER PER: VIKRAM SINGH YADAV, A.M.: THIS IS AN APPEAL FILED BY THE REVENUE AGAINST THE ORDER DATED 05/11/2013 PASSED BY THE LD CIT(A), JODHPUR, CAMP A T JAIPUR FOR A.Y. 2007-08. THE SOLE GROUND OF APPEAL IS REPRODUCED AS UNDER:- ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW THE LD CIT(A) HAS ERRED IN: (I) DIRECTING TO ALLOW DEPRECIATION ON THOSE ASSETS WHICH WERE PURCHASED AS APPLICATION OF INCOME DESPITE THE FACT THAT ON ITA 38/JP/2014_ ACIT VS M/S SS JAIN SUBODH SHIKSHA SAMITI 2 THOSE ASSETS 100% DEDUCTION HAS ALREADY BEEN CLAIME D BY THE ASSESSEE. 2. THE ASSESSEE IS A SOCIETY IN THE NAME OF SHRI S.S . JAIN SUBODH SHIKSHA SAMITI REGISTERED U/S 12AA OF THE INCOME TAX ACT, 1961 (IN SHORT THE ACT). THE ASSESSEE FILED REVISED RETURN ON 29/02/2008 DECLARING NIL INCOME. THE CASE WAS SCRUTINIZED U/S 14 3(3) OF THE ACT. THE LD ASSESSING OFFICER OBSERVED THAT THE ASSESSEE SOCIETY HAS CLAIMED DEPRECIATION OF RS. 1,35,39,615/- IN THE YEAR UNDER CONSIDERATION, WHEREAS THE INVESTMENT IN THE ASSETS HAS ALREADY BEE N TAKEN AS APPLICATION OF FUNDS IN EARLIER YEARS. THIS CLEARLY SHOWS THAT THE ASSESSEE HAS CLAIMED DOUBLE DEDUCTION ON THE SAME ASSETS, ON CE AT THE TIME OF INVESTMENT IN ASSETS AND AGAIN THROUGH DEPRECIATION ON THE SAME ASSETS. THEREFORE, IT CAN BE HELD THAT DEPRECIATION IS NOT A DMISSIBLE ON THOSE ASSETS AGAINST WHICH 100% DEDUCTION HAS ALREADY BEE N TAKEN BY WAY OF APPLICATIONS OF FUNDS. RELIANCE MAY BE TAKEN FROM T HE DECISION OF HON'BLE SUPREME COURT IN THE CASE OF ESCORTS LTD. V S. UNION OF INDIA (1993) 199 ITR 43. THE LD ASSESSING OFFICER FURTHER O BSERVED THAT IN THE LIGHT OF HON'BLE SUPREME COURT DECISION, THOUGH IN A DIFFERENT CONTEXT, IT CAN BE HELD THAT DEPRECIATION IS NOT ADMISSIBLE ON THOSE ASSETS AGAINST WHICH 100% DEDUCTION HAS ALREADY BEEN TAKEN. IN OTHE R WORDS, ITA 38/JP/2014_ ACIT VS M/S SS JAIN SUBODH SHIKSHA SAMITI 3 DEPRECATION IN ASSESSEES CASE CAN ONLY BE ALLOWED O N THE ASSETS IF THE SAME WERE BOUGHT OUT OF THE CORPUS FUND, WHICH IS, NO T THE CASE HERE. HENCE CONSIDERING THE ABOVE DISCUSSION AND CASE LAWS , THE CLAIM OF DEPRECATION IS NOT ALLOWABLE AS THE APPLICATION OF T HE FUNDS FOR COMPUTATION OF THE SURPLUS OF THE ASSESSEE SOCIETY AS CLAIMED IN THE BALANCE SHEET OF THE ASSESSEE. 3. AGGRIEVED, THE ASSESSEE TOOK THE MATTER BEFORE T HE LD CIT(A), WHO HAD ALLOWED THE ASSESSEES APPEAL BY FOLLOWING THE DE CISION OF HONBLE ITAT, JAIPUR BENCH, JAIPUR IN APPELLANTS OWN CASE IN ITA NO. 250/JP/2007 FOR A.Y. 2003-04, ITA NO. 81/JP/2010 FO R A.Y. 2005-06 AND ITA NO. 276/JP/2010 FOR A.Y. 2006-07. LD CIT(A) FURT HER HELD THAT SINCE THERE IS NO CHANGE IN FACTS AND CIRCUMSTANCES OF TH E CASE ON THE ISSUE DURING THE YEAR, HE FOUND NO JUSTIFIABLE REASON TO DIVERT FROM THE ABOVE FINDINGS OF THE HONBLE ITAT, THEREFORE, HE DIRECTED THE ASSESSING OFFICER TO ALLOW DEPRECATION OF RS. 1,35,39,615/-. 4. NOW THE REVENUE IS IN APPEAL BEFORE US. THE LD DR HAS VEHEMENTLY SUPPORTED THE ORDER OF THE LD ASSESSING OFFICER AND IT WAS BROUGHT TO THE NOTICE OF THE BENCH THAT THE REVENUE HAS NOT ACCEPT ED THE EARLIER ORDER OF THE ITAT AND HAS FILED APPEALS BEFORE THE HON'BL E RAJASTHAN HIGH ITA 38/JP/2014_ ACIT VS M/S SS JAIN SUBODH SHIKSHA SAMITI 4 COURT, WHICH ARE STILL PENDING. AT THE OUTSET, THE L D AR OF THE ASSESSEE HAS RELIED ON THE ORDER OF THE LD CIT(A) AS WELL AS ORDERS PASSED BY THE HONBLE ITAT IN ASSESSEES OWN CASE. 5. WE HAVE HEARD THE RIVAL CONTENTIONS OF BOTH THE PARTIES AND PERUSED THE MATERIAL AVAILABLE ON THE RECORD. THE CO ORDINATE BENCH IN ASSESSEES OWN CASE FOR A.Y. 2003-04 IN ITA NO. 250/ JP/2007 VIDE ORDER DATED 31/3/2008 HAD ALLOWED THE DEPRECIATION CLAIM O F THE ASSESSEE. THE FINDING OF THE COORDINATE BENCH IS REPRODUCED AS UNDER:- CONSIDERING THE ABOVE SUBMISSIONS IN VIEW OF THE DE CISIONS RELIED UPON, WE FIND THAT THE LD.CIT(A) WHILE DEALING WITH THE ISSUE HAS RIGHTLY OBSERVED THAT DECISION OF HONBLE SUPREME COURT IN THE CASE OF ESCORTS LTD. V/S UOI (SUPRA) WA S GIVEN IN THE CONTEXT OF S.32 AND S.35 (1)(IV) OF THE ACT AGA INST DOUBLE DEDUCTION IN RESPECT OF THE SAME EXPENDITURE UNDER THOSE SECTIONS, WHEREAS THE ISSUE IN THE CASE OF CHARITABL E INSTITUTIONS IS RELATING TO THE ALLOWABILITY OF DEPR ECIATION ON THE ASSETS ACQUIRED OUT OF THE CAPITAL EXPENDITURE, WHIC H WAS TREATED AS APPLICATION OF INCOME. IN THE CASE OF CI T V/S INSTITUTE OF BANKING (SUPRA) IT WAS HELD THAT THE PR OVISIONS OF S.32 WERE NOT RELEVANT FOR THE CHARITABLE ORGANIZATI ONS, THEREFORE, THE CONDITIONS SPECIFIED IN S.34 WERE ALS O NOT APPLICABLE AND THE ASSESSEE WAS ENTITLED TO DEPRECIA TION, WHICH COULD BE CONSIDERED AS LEGITIMATE IN ORDER TO COMPUTE ITA 38/JP/2014_ ACIT VS M/S SS JAIN SUBODH SHIKSHA SAMITI 5 THE REAL INCOME OF THE ASSESSEE ON COMMERCIAL PRINC IPLES. THE HONBLE HIGH COURT HELD DEPRECIATION AS DEDUCTIBLE EVEN WHEN THE COST OF THE ASSET WAS ALREADY FULLY ALLOWED AS AP PLICATION. UNDER THESE CIRCUMSTANCES, WE ARE OF THE VIEW THAT TH E LD.CIT(A) HAS RIGHTLY FOLLOWED THE DECISIONS RELIED U PON BY THE LD. A.R. ON THE ISSUE WHILE DECIDING THE QUESTION RA ISED IN THIS REGARD IN FAVOUR OF THE ASSESSEE. THE SAME IS UPHEL D. IN THE CASE OF CIT V/S SETH MANILAL RANCHOD DAS VISHRAM BHA WAN TRUST (SUPRA), THE HONBLE HIGH COURT WAS OF THE SAME VIEW THAT THE AMOUNT OF DEPRECIATION DEBITED TO THE ACCO UNTS OF THE CHARITABLE INSTITUTIONS HAS TO BE DEDUCTED TO ARRIV E AT THE INCOME AVAILABLE FOR APPLICATION TO CHARITABLE AND RELIGIOUS PURPOSES. THE GROUND NO.2 IS THEREFORE, REJECTED. SINCE THERE IS NO CHANGE IN FACTS, BY RESPECTFULLY FOLLOWING THE ORDER OF THE COORDINATE BENCH IN ASSESSEES OWN CASE FOR A.Y. 2003-04, 2005-06 AND 2006-07, THE ORDER OF THE LD CIT(A) IS UPHELD. 6. IN THE RESULT, THE APPEAL OF THE REVENUE IS DISM ISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 30/10/2015. SD/- SD/- VKJ-IH-RKSYKUH FOE FLAG ;KNO (R.P.TOLANI) (VIKRAM SINGH YADAV) U;KF;D LNL;@ JUDICIAL MEMBER YS[KK LNL;@ ACCOUNTANT MEMBER TK;IQJ@ JAIPUR FNUKAD@ DATED:- 30 TH OCTOBER, 2015 ITA 38/JP/2014_ ACIT VS M/S SS JAIN SUBODH SHIKSHA SAMITI 6 * RANJAN VKNS'K DH IZFRFYFI VXZSFKR@ COPY OF THE ORDER FORWARDED TO: 1. VIHYKFKHZ@ THE APPELLANT- THE A.C.I.T., CIRCLE-5, JAIPUR 2. IZR;FKHZ@ THE RESPONDENT- M/S S.S. JAIN SUBODH SHIKSHA SAMITI, JAIPUR. 3. VK;DJ VK;QDR@ CIT 4. VK;DJ VK;QDR@ CIT(A) 5. FOHKKXH; IZFRFUF/K] VK;DJ VIHYH; VF/KDJ.K] T;IQJ@ DR, ITAT, JAIPUR 6. XKMZ QKBZY@ GUARD FILE (ITA NO. 38/JP/2014) VKNS'KKUQLKJ@ BY ORDER, LGK;D IATHDKJ@ ASST. REGISTRAR