ADIT (E), New Delhi V. Prakash Educational Society, New Delhi

ITA 4232/DEL/2014

• Counselvise Citation: [2017] 127 COUNSELVISE.COM (IT) 3769 (ITAT-DELHI)
• Duration Of Justice: 3 year(s) 2 month(s) 30 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 31-10-2017
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: F
• Next Hearing Date: 15-06-2017
• Assessment Year: 2010-2011
• Appeal Filed On: 01-08-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Depreciation; Charitable institution; Cost of acquisition; Capital expenditure
• Section: 12A; 6

Judgement Text

INCOME TAX APPELLATE TRIBUNAL DELHI BENCH F : NEW DELHI BEFORE SHRI AMIT SHUKLA , JUDICIAL MEMBER AND SHRI PRASHANT MAHARISHI, ACCOUNTANT MEMBER ITA NO. 4232/DEL/2014 (ASSESSMENT YEAR: 2010 - 11 ) ASSTT. DIRECTOR OF INCOME TAX (E), INV. CIRCLE - II, NEW DELHI VS. PRAKASH EDUCATIONAL SOCIETY, 620A , FAIRZ ROAD, KAROL BAGH, NEW DELHI PAN:AAATP1227G (APPELLANT) (RESPONDENT) REVENUE BY : SHRI ATIQ AHMAD, SR. DR ASSESSEE BY: NONE DATE OF HEARING 30/10/ 2017 DATE OF PRONOUNCEMENT 31 / 10 / 2017 O R D E R PER PRASHANT MAHARISHI , A. M. 1. THIS IS AN APPEAL FILED BY THE REVENUE AGAINST THE ORDER OF THE LD CIT(A) - XXI, NEW DELHI DATED 29.05.2014 FOR ASSESSMENT YEAR 2010 - 11 RAISING TWO GROUNDS OF APPEALS AS UNDER: - 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD CIT(A) HAS ERRED IN ALLOWING DEPRECIATION OF RS. 6651434/ - IGNORING THE FACT THAT WHERE THE CAPITAL EXPENDITURE HAS BEEN TREATED TO HAVE BEEN APPLIED FOR THE OBJECT OF THE TRUST, ALLOWABL E OF DEDUCTION ON ACCOUNT OF DEPRECIATION WILL AMOUNT TO DOUBLE DEDUCTION. 2. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD CIT(A) HAS ERRED IN IGNORING THE RECENT JUDGMENT OF THE JURISDICTIONAL HIGH COURT IN THE CASE OF CHARANJIV C HARITABLE TRUST VS. DIT(E) IN ITA NO. 321, 322 AND 323/2013 DATED 18.03.2014 WHEREIN THE HON'BLE HIGH COURT HAS HELD THE TRIBUNAL WAS NOT JUSTIFIED IN DIRECTING THE ALLOWANCE OF DEPRECIATION IN RESPECT OF SUCH ASSETS. 2. BRIEF FACTS OF THE CASE IS THAT TH E ASSESSEE IS A CHARITABLE TRUST WHO FILED ITS RETURN OF INCOME ON 13.10.2010 SHOWING NIL INCOME. THE ASSESSEE IS A SOCIETY REGISTERED U/S 12A OF THE ACT AND IS CARRYING ON THE CHARITABLE OBJECT OF RUNNING OF SCHOOL AND COLLEGES. FOR THE ASSESSMENT YEAR TH E INCOME OF THE ASSESSEE WAS ASSESSED AT A DEFICIT OF RS. 42710715/ - . THE MAIN REASON FOR THE ADDITION MADE BY THE LD ASSESSING OFFICER IS THAT ASSESSEE HAS CLAIMED DEPRECIATION OF RS. 6651434/ - ON ASSETS WHICH HAVE BEEN ALREADY GRANTED TO THE ASSESSEE AS DEDUCTION AS APPLICATION OF INCOME IN THE YEAR THEY WERE ACQUIRED. THEREFORE, THE LD AO WAS OF THE VIEW THAT IT AMOUNTS TO DOUBLE DEDUCTION HENCE, HE DISALLOWED THE DEPRECIATION. THE ASSESSEE PREFERRED AN APPEAL BEFORE THE LD CIT(A), WHO VIDE ORDER DATED 2 2.03.2013 ALLOWED THE CLAIM ADIT (E) VS. PRAKASH EDUCATIONAL SOCIETY, ITA NO. 4232/DEL/2014 (ASSESSMENT YEAR: 2010 - 11 PAGE | 2 OF THE ASSESSEE RELYING ON THE DECISIONS OF MANY HON'BLE HIGH COURTS INCLUDING THE HON'BLE DELHI HIGH COURT. THEREFORE, THE REVENUE IS IN APPEAL BEFORE US. 3. THE LD SR. DR VEHEMENTLY SUPPORTED THE ORDER OF THE LD AO. DESPITE NOTI CE NONE APPEARED ON BEHALF OF THE ASSESSEE. THEREFORE, THE ISSUE IS DECIDED ON THE MERITS OF THE CASE AND ON THE BASIS OF MATERIAL AVAILABLE ON THE RECORD. 4. WE HAVE CAREFULLY CONSIDERED THE CONTENTIONS OF THE REVENUE AS WELL AS THE ORDERS OF THE LOWER A UTHORITIES. THE MAIN CONTROVERSY INVOLVED IN THIS APPEAL IS THAT ON THE ASSETS COST OF ACQUISITION OF WHICH IS ALLOWED TO THE ASSESSEE AS APPLICATION OF THE INCOME OF THE CHARITABLE TRUST, ON THOSE ASSETS WHETHER DEPRECIATION IS ALLOWABLE WHILE COMPUTING THE INCOME OF THE TRUST ON COMMERCIAL PRINCIP LE . NOW THIS ISSUE HAS BEEN DECIDED BY HON'BLE DELHI HIGH COURT IN THE CASE OF DIT (E) VS. INDRAPRASTHA CANCER SOCIETY ITA NO. 240/2014 DATED 18.11.2014 WHEREIN, PARA NO. 9 ON IDENTICAL FACTS AND CIRCUMSTANCES H AS ALLOWED THE CLAIM OF THE ASSESSEE OF THE DEPRECIATION ON THE ASSETS , COST OF WHICH HAS ALREADY BEEN ALLOWED AS APPLICATION OF INCOME. FURTHER, IN PARAGRAPH NO. 1 1 OF THE ORDER THE HON'BLE HIGH COURT HAS ALSO CONSIDERED THE ANOTHER DECISION OF THE HON'BLE DELHI HIGH COURT IN CASE OF CHARANJ I V CHARITABLE TRUST VS. DIT DATED 18.03.2014 HOLDING THAT IN THAT PARTICULAR CASE DEDUCTION AS EXPENDITURE AND DEPRECIATION WAS BEING CLAIMED SIMULTANEOUSLY WHILE COMPUTING THE TAXABLE INCOME UNDER THE HEADS PROF ITS AND GAINS OF THE BUSINESS. IT WAS FURTHER HELD THAT DECISION IN CASE OF INDIA TRADE PROMOTION ORGANIZATION AND VISWA JAGRUTI MISSION BEING PRIOR IN POINT OF TIME WOULD ACT AS A BINDING PRECEDENT. FURTHER, THE HON'BLE HIGH COURT IN PARA NO. 11 ALSO C ONSIDERED THE AMENDMENT MADE BY THE FINANCE ACT (NO. 2) OF 2014 WHERE SUB - SECTION 6 TO SECTION 11 HAS BEEN INSERTED W.E.F. 01.04.2015 TO PROHIBIT THE ALLOWANCE OF DEPRECIATION ON THOSE ASSETS. PRESENT CASE IS PERTAINING TO AY 2010 - 11 THEREFORE, THIS AMENDM ENT DO NOT APPLY TO THE PRESENT APPEAL. THEREFORE, RESPECTFULLY FOLLOWING THE DECISION OF THE HON'BLE DELHI HIGH COURT IN DIT (E) VS. INDRAPRASTHA CANCER SOCIETY WE DISMISS GROUND NO. 1 AND 2 OF THE APPEAL OF REVENUE. 5. IN THE RESULT APPEAL OF THE REVENUE IS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 3 1 / 10 / 2017 . - S D / - - S D / - ( AMIT SHUKLA ) (PRASHANT MAHARISHI) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED: 3 1 / 10 / 2017 A K KEOT COPY FORWARDED TO ADIT (E) VS. PRAKASH EDUCATIONAL SOCIETY, ITA NO. 4232/DEL/2014 (ASSESSMENT YEAR: 2010 - 11 PAGE | 3 1. APPLICANT 2. RESPONDENT 3. CIT 4. CIT (A) 5. DR:ITAT ASSISTANT REGISTRAR ITAT, NEW DELHI