Sardar Dastur Schools Trust, Pune V. Income-tax Officer, (Exemptions) HQ, Pune

ITA 398/PUN/2019

• Counselvise Citation: [2019] 115 COUNSELVISE.COM (IT) 6292 (ITAT-PUNE)
• Duration Of Justice: 7 month(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 11-10-2019
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Next Hearing Date: 07-06-2019
• Assessment Year: 2009-2010
• Appeal Filed On: 11-03-2019
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: VISHWAS MUNDHE
• Assessee Lawyers: A T HOZDAR
• Keywords: Capital asset; Depreciation; Charitable institution
• Section: 143(3); 12A; 148

Judgement Text

] IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCH SMC, PUNE BEFORE SHRI ANIL CHATURVEDI, ACCOUNTANT MEMBER . / ITA NO.398/PUN/2019 / ASSESSMENT YEAR : 2009-10 SARDAR DASTUR SCHOOLS TRUST, 2, COL, TARAPORE ROAD, PUNE 411 001. PAN : AAATS4768F. . / APPELLANT V/S THE INCOME TAX OFFICER, EXEMPTIONS HQ., PUNE. . / RESPONDENT ASSESSEE BY : SHRI A.T. HOZDAR. REVENUE BY : SHRI VISHWAS MUNDHE. / ORDER PER ANIL CHATURVEDI, AM : 1. THIS APPEAL FILED BY ASSESSEE IS EMANATING OUT OF THE ORDER OF COMMISSIONER OF INCOME TAX (APPEALS) 10, PUNE DATED 20.0 1.2019 FOR A.Y. 2009-10. 2. THE RELEVANT FACTS AS CULLED OUT FROM THE MATERIAL ON RE CORD ARE AS UNDER :- ASSESSEE IS AN EDUCATIONAL TRUST AND IS ENGAGED IN RUNN ING SCHOOLS FOR STUDENTS FROM PRE-PRIMARY TO SSC AND JUNIOR COLLEGE A FFILIATED TO PUNE UNIVERSITY. IT HAS ALSO BEEN GRANTED REGISTRATION U /S 12A OF THE ACT VIDE ORDER DATED 27.11.1973. THE ASSESSEE FILED ITS RETU RN OF INCOME FOR A.Y. 2009-10 ON 05.10.2009 DECLARING TOTAL INCOME OF RS.72,50,8 10/-. / DATE OF HEARING : 06.08.2019 / DATE OF PRONOUNCEMENT: 11.10.2019 2 THE CASE WAS SELECTED FOR SCRUTINY AND THEREAFTER ASSES SMENT WAS COMPLETED U/S 143(3) OF THE ACT VIDE ORDER DATED 05.12.20 11. SUBSEQUENTLY, THE CASE WAS RE-OPENED BY ISSUING NOTICE U/S 148 OF THE ACT. THEREAFTER, THE ASSESSMENT WAS FRAMED U/S 143(3) R .W.S. 147 OF THE ACT VIDE ORDER DT.30.03.2015 AND THE TOTAL INCOME BEFORE A CCUMULATION U/S 11(1)(A) WAS DETERMINED AT RS.1,09,80,355/- AND AFTER ALLO WING ACCUMULATION U/S 11(1)(A) OF RS.99,48,253/-, THE TOTAL INCOME WAS DETERMINED AT RS.10,32,102/-. AGGRIEVED BY THE ORDER OF AO, ASSESSEE CARRIED THE MATTER BEFORE LD.CIT(A), WHO VIDE ORDER DATED 20.01.2019 (IN APPEAL NO.PN/CIT(A)10/ITO EXMP/72/15-16) DISMISSED THE APP EAL OF THE ASSESSEE. AGGRIEVED BY THE ORDER OF LD.CIT(A), ASSESSEE IS NOW IN APPEAL AND HAS RAISED THE FOLLOWING GROUNDS : 1. THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS )-10 HAS ERRED IN CONFIRMING THE TOTAL DISALLOWANCE OF DEPRECIATION O F THE ASSESSMENT YEAR 2009-10. THE SAME SHOULD BE ALLOWED AS DEDUCTION I N COMPUTATION OF NET TAXABLE INCOME. 2. THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) HAS ERRED IN NOT APPRECIATING THE REQUIREMENT OF LAW THAT VALUE OF DEPRECIATION ON ASSETS WHOSE EXPENDITURE WAS TREATED AS REVENUE ONLY SHOUL D BE ADDED BACK TO TAXABLE INCOME IN SUBSEQUENT YEARS. 3. BOTH THE GROUNDS BEING INTER-CONNECTED ARE CONSIDERED TOGE THER. 4. DURING THE COURSE OF ASSESSMENT, AO NOTED THAT ASSE SSEE HAD CLAIMED DEPRECIATION ON FIXED ASSETS AMOUNTING TO RS.37,25,9 54/-. AO NOTED THAT WHILE FRAMING THE ASSESSMENT U/S 143(3) OF THE ACT, THE CLAIM OF DEPRECIATION WAS ALLOWED TO THE ASSESSEE. AO WAS OF T HE VIEW THAT SINCE THE ASSESSEE HAD ACQUIRED THE ASSETS AND THE SA ME WAS ALLOWED AS APPLICATION OF INCOME, CLAIM OF DEPRECIATION ON SUCH ASSETS IS NOT ALLOWABLE. HE ACCORDINGLY DENIED THE CLAIM OF DEPRECIATION A MOUNTING TO RS.37,25,954/-. AGGRIEVED BY THE ORDER OF AO, ASSESSEE C ARRIED THE 3 MATTER BEFORE LD.CIT(A), WHO FOLLOWING THE DECISION OF HONBLE K ERALA HIGH COURT IN THE CASE OF LISSIE MEDICAL INSTITUTION VS. CIT DIS MISSED THE APPEAL OF ASSESSEE. AGGRIEVED BY THE ORDER OF LD.CIT(A) ASSESSEE IS NOW IN APPEAL. 5. BEFORE ME, LD.A.R. REITERATED THE SUBMISSIONS MADE BEFORE AO AND LD.CIT(A) AND FURTHER SUBMITTED THAT INCOME OF TRUST IS RE QUIRED TO BE COMPUTED U/S 11(1) OF THE ACT ON COMMERCIAL PRINCIPLES AFTER PROVIDING FOR ALLOWANCE FOR NORMAL DEPRECIATION AND DEDUCTION THEREO F FROM GROSS INCOME OF THE TRUST. HE SUBMITTED THAT WHEN THE AMOU NT HAS BEEN SPENT ON ACQUIRING THE ASSETS AND HAS BEEN TREATED AS APPLICA TION OF INCOME OF THE TRUST IN THE YEAR IN WHICH THE INCOME WAS SPENT IN A CQUIRING THESE ASSETS DOES NOT MEAN THAT IN COMPUTING THE INCOME FROM THESE ASSETS IN SUBSEQUENT YEARS, DEPRECIATION IN RESPECT OF THOSE ASSET S CANNOT BE TAKEN INTO ACCOUNT. HE SUBMITTED THAT THERE ARE VARIOUS DECIS IONS TO THIS EFFECT. HE THEREFORE SUBMITTED THAT AO WAS NOT JUSTIFIED IN DENYIN G THE CLAIM OF DEPRECIATION. LD. D.R. ON THE OTHER HAND, SUPPORTED THE ORDER OF AO AND LD.CIT(A). 6. I HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE M ATERIAL ON RECORD. THE ISSUE IN THE PRESENT GROUND IS WITH RESPECT TO DENIAL OF CLAIM OF DEPRECIATION ON THE ASSETS WHICH WERE ACQUIRED AND WHICH WE RE ALLOWED AS APPLICATION OF INCOME. I FIND THAT THE IDENTICAL ISSUE WAS SETTLED IN FAVOUR OF THE ASSESSEE BY THE HONBLE SUPREME COURT IN THE CASE OF CIT VS. RAJASTHAN AND GUJARATI CHARITABLE FOUNDATION POONA R EPORTED IN (2018) 402 ITR 441 (SC), WHEREIN THE HONBLE APEX COURT HAS HELD THAT IN CASE OF ASSESSEE WHICH IS A CHARITABLE INSTITUTION REGISTE RED U/S 12A OF 4 THE ACT, EVEN THOUGH EXPENDITURE INCURRED FOR ACQUISITION OF CAPITAL ASSETS WAS TREATED AS APPLICATION OF INCOME FOR CHARITABLE PURPO SES U/S 11(1)(A) OF THE ACT, YET DEPRECIATION WOULD BE ALLOWED ON ASSETS S O PURCHASED. IT HAD FURTHER HELD THAT AMENDMENT TO SECTION 11(6) OF THE ACT WHICH WAS BROUGHT BY THE FINANCE ACT NO.2/2014 IS EFFECTIVE FROM A.Y. 2015-16 AND IS PROSPECTIVE IN NATURE. FOLLOWING THE RATIO OF THE AFORES AID DECISION OF HONBLE APEX COURT, I AM OF THE VIEW THAT AO WAS NOT JUSTIFIED IN DENYING THE CLAIM OF DEPRECIATION. I ACCORDINGLY DIRECT THE AO TO ALLOW THE CLAIM OF DEPRECIATION. THUS, THE GROUNDS OF THE ASSESSEE ARE ALLOWED. 7. IN THE RESULT, THE APPEAL OF ASSESSEE IS ALLOWED. ORDER PRONOUNCED ON 11 TH DAY OF OCTOBER, 2019. SD/-- ( ANIL CHATURVEDI ) ' / ACCOUNTANT MEMBER PUNE; DATED : 11 TH OCTOBER, 2019. YAMINI #$%&'(' % / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT 3. 4. 5 6. CIT(A)-10, PUNE. PR. CIT-(EXEMPTIONS), PUNE. '#$ %%&',) &', *+ / DR, ITAT, SMC PUNE; $-.// GUARD FILE. / BY ORDER // TRUE COPY // / 012%3&4 / SR. PRIVATE SECRETARY ) &' , / ITAT, PUNE.