DCIT (Exemption), New Delhi V. M/s. Prakash Educational Society, New Delhi

ITA 4284/DEL/2016

• Counselvise Citation: [2019] 117 COUNSELVISE.COM (IT) 1491 (ITAT-DELHI)
• Duration Of Justice: 2 year(s) 10 month(s) 7 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 10-06-2019
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: F
• Assessment Year: 2012-2013
• Appeal Filed On: 03-08-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SURENDER PAL
• Keywords: Capital asset; Depreciation; Capital expenditure
• Section: 12A; 32

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH: F NEW DELHI BEFORE SHRI H.S. SIDHU, JUDICIAL MEMBER & SHRI R.K. PANDA, ACCOUNTANT MEMBER ITA NO. 4284/DEL/2016 ASSESSMENT YEAR: 2012-13 DCIT(EXEMPTION) CIRCLE-2(1), ROOM NO. 2408, 24 TH FLOOR, BLOCK E-2, DR. S.P. MUKHERJEE CIVIC CENTRE NEW DELHI. VS PRAKASH EDUCATIONAL SOCIETY 620-A, FAIZ ROAD, KAROL BAGH, NEW DELHI. PAN NO. AAATP1227G APPELLANT RESPONDENT REVENUE BY SHRI SURENDER PAL. SR. DR ASSESSEE BY SHRI ANOOP SHARMA, ADV. ORDER PER SHRI R K PANDA, A.M. THIS APPEAL FILED BY THE REVENUE IS DIRECTED AGAINS T THE ORDER DATED 6 TH MAY, 2016 OF THE LD. CIT(APPEALS)-40, NEW DELHI RE LATING TO AY 2012-13. 2. THE ONLY EFFECTIVE GROUND RAISED BY THE REVENUE READS AS UNDER: 1. ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, LD. CIT(A) HAS ERRED IN ALLOWING THE APPEAL OF THE ASSESSEE BY IGNORING THE FACT THAT WHEN DEDUCTION IS ALLOWED IN DATE OF HEARING 30.05.2019 DATE OF PRONOUNCEMENT 10.06.2019 2 ITA NO . 4284/DEL/2016 RESPECT OF CAPITAL EXPENDITURE, NO DEPRECIATION IS ALLOWED ON THE SAME ASSETS AS THIS WILL TANTAMOUNT TO DOUBL E DEDUCTION. 2. THE APPELLANT CRAVES LEAVE TO ADD, TO ALTER OR AMEN D ANY GROUND OF APPEAL RAISED ABOVE AT THE TIME OF HEARIN G. 3. FACTS OF THE CASE, IN BRIEF ARE THAT THE ASSESSE E SOCIETY IS REGISTERED UNDER SOCIETYS REGISTRATION ACT, 1860 V IDE REGISTRATION CERTIFICATE NO. S-11550 DATED 24.02.1981. THE ASSE SSEE SOCIETY IS REGISTERED U/S 12A OF THE INCOME TAX ACT, 1961 VIDE ORDER NO. CIT- VI/TE(241)/81/4133 DATED 22.03.1982. THE ASSESSEE SOCIETY IS NOTIFIED U/S 10(23C)(VI) OF THE INCOME TAX ACT, 196 1 VIDE ORDER NO. F. NO. DGIT(E)/10(23C)(VI)/2008-09/1624 DATED 26.02 .2009. THE OBJECTS OF THE SOCIETY ARE TO ESTABLISH SCHOOLS, CO LLEGES AND OTHER INSTITUTIONS FOR IMPARTING EDUCATION AND/OR GRANT O F FINANCIAL ASSISTANCE AND DONATIONS ETC. TO THE EXISTING SCHOO LS COLLEGES, UNIVERSITIES AND OTHER INSTITUTIONS. IT FILED ITS RETURN OF INCOME ON 28 TH SEPTEMBER, 2012 DECLARING NIL INCOME. THE RETURN WAS ACCOMPANIED WITH THE AUDIT REPORT DATED 16 TH MAY, 2012. THE AO DURING THE COURSE OF ASSESSMENT PROCEEDINGS OBSERVE D THAT IN A CASE WHERE THE CAPITAL EXPENDITURE HAS BEEN TREATED TO HAVE BEEN APPLIED FOR THE OBJECT OF THE TRUST, ALLOWANCE OF D EDUCTION ON ACCOUNT OF DEPRECIATION WILL AMOUNT TO DOUBLE DEDUC TION. HE NOTED THAT THE ASSESSEE REGISTERED U/S 12A OF THE A CT DO NOT COMPUTE/OFFER THEIR INCOME UNDER THE HEAD PROFIT A ND GAINS OF BUSINESS OR PROFESSION. THEREFORE, NO QUESTION OF ALLOWANCE OF DEPRECIATION U/S 32 OF THE ACT ARISES IN THESE CASE S. RELYING ON 3 ITA NO . 4284/DEL/2016 VARIOUS DECISIONS AND CBDT CLARIFICATION DATED 03.0 1.2011 THE AO DISALLOWED DEPRECIATION OF RS. 1,14,59,837/-. 3.1 BEFORE CIT(A) IT WAS ARGUED THAT AO IS NOT JUST IFIED IN DISALLOWING THE DEPRECIATION AS THE ASSESSEE HAS NO T CLAIMED ANY DOUBLE DEDUCTION. IT WAS ARGUED THAT TOTAL DEPRECI ATION CLAIMED IS RS. 1,17,52,513/- WHICH INCLUDES DEPRECIATION ON BU ILDING OF RS. 59,39,744/- FOR WHICH NO DEPRECIATION HAS BEEN CLAI MED AS THE INVESTMENT IN THE BUILDING WAS EARLIER TREATED AS A PPLICATION OF INCOME U/S 11(1) OF THE ACT. IT WAS SUBMITTED THAT ASSESSEE HAS CLAIMED THE DEPRECIATION OF RS. 58,12,769/- ONLY ON VARIOUS ITEMS ON WHICH NO DEDUCTION AS APPLICATION OF INCOME HAS BEEN CLAIMED BY THE ASSESSEE. IT WAS ARGUED THAT ASSESSEE COULD HAVE CLAIMED THE ENTIRE EXPENDITURE AS APPLICATION OF INCOME BUT THE ASSESSEE IS CONSISTENTLY FOLLOWING THE PRINCIPLE OF CLAIMING TH E DEPRECIATION ON THE ASSETS OTHER THAN THE BUILDING. IT WAS SUBMITT ED THAT THE ASSESSEE HAD BEEN CLAIMING THE CAPITAL INVESTMENT I N BUILDING AS APPLICATION OF INCOME AND ALL OTHER EXPENSES ON INV ESTMENTS ARE NOT TREATED AS APPLICATION OF INCOME BUT THE ASSESS EE CLAIMED DEPRECIATION ON SUCH ITEMS OTHER THAN THE BUILDING. VARIOUS DECISIONS WERE ALSO RELIED UPON. IT WAS FURTHER SU BMITTED THAT DURING AY 2009-10 THE AO HAD DENIED DEPRECIATION BU T THE SAME WAS ALLOWED BY THE CIT(A) AND IN APPEAL BY THE REVE NUE THE TRIBUNAL DISMISSED THE APPEAL. 4 ITA NO . 4284/DEL/2016 4. BASED ON THE ARGUMENTS ADVANCED BY THE ASSESSEE THE LD. CIT(A) DELETED THE DISALLOWANCE MADE BY THE AO BY O BSERVING AS UNDER: 4.2 I HAVE CONSIDERED THE ORDER OF THE AO AND THE SUBMISSIONS OF THE ASSESSEE AND I FIND CONSIDERABLE MERIT IN THE SUBMISSIONS OF THE ASSESSEE THAT THE ASSESSE E HAS NOT CLAIMED ANY DOUBLE DEDUCTION AS DISCUSSED ABOVE THE DEPARTMENTAL APPEAL ON THE ISSUE HAS BEEN DISMISSED BY THE HONBLE TRIBUNAL DURING THE AY 2009-10 AND ACCORDINGLY THE AO IS DIRECTED TO ALLOW THE DEPRECI ATION. 4.3 I WOULD LIKE TO PLACE ON RECORD THE APPRECIATIO N THAT THE ASSESSEE IS AT LEAST FOLLOWING THE ETHICAL PRIN CIPLE BY NOT CLAIMING DOUBLE DEDUCTIONS FIRST BY CLAIMING TH E CAPITAL INVESTMENT AS APPLICATION OF INCOME AND THEN CLAIMI NG DEPRECIATION ON THE SAME CAPITAL ASSETS ON WHICH TH E ASSESSEE HAD GOT THE FULL DEDUCTION WHICH IS DONE B Y MANY OF THE OTHER ASSESSEES AND THE SAME IS BEING ALLOWED BY MANY OF THE HONBLE HIGH COURTS. 4.4 HOWEVER, THE AO IS DIRECTED TO VERIFY THE FACTS AND ALLOW THE DEPRECIATION AND AS SUCH THE APPEAL OF TH E ASSESSEE IS ALLOWED. 5. AGGRIEVED WITH SUCH ORDER OF THE LD. CIT(A), THE REVENUE IS IN APPEAL BEFORE THE TRIBUNAL. 5.1 WE HAVE CONSIDERED THE RIVAL ARGUMENTS MADE BY BOTH THE SIDES AND PERUSED THE ORDERS OF THE AUTHORITIES BEL OW. THE FACTUAL FINDING GIVEN BY THE CIT(A) THAT ASSESSEE HAS NOT C LAIMED ANY DOUBLE DEDUCTION COULD NOT BE CONTROVERTED BY THE L D. DR. FURTHER, THE LD. CIT(A) HAS GIVEN A DIRECTION TO TH E AO TO VERIFY THE FACTS AND ALLOW THE DEPRECIATION, THEREFORE, THE RE VENUE SHOULD NOT HAVE ANY GRIEVANCE. IN VIEW OF THE FINDING GIV EN BY THE CIT(A) 5 ITA NO . 4284/DEL/2016 AND IN ABSENCE OF ANY CONTRARY MATERIAL BROUGHT TO OUR NOTICE BY THE CIT(A) THAT ASSESSEE HAS CLAIMED DOUBLE DEDUCTI ON, WE FIND NO INFIRMITY IN THE ORDER OF THE CIT(A) DIRECTING THE AO TO DELETE THE DISALLOWANCE. ACCORDINGLY, THE SAME IS UPHELD AND THE GROUND RAISED BY THE REVENUE IS DISMISSED. 6. IN THE RESULT, THE APPEAL FILED BY THE REVENUE I S DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 10/06/2019 SD/- SD/- (H.S. SIDHU) (R.K. PANDA) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED: 10/06/2019 *KAVITA ARORA COPY FORWARDED TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(APPEALS) 5. DR: ITAT TRUE COPY ASSISTANT REGISTRAR ITAT NEW DELHI 6 ITA NO . 4284/DEL/2016 DATE OF DICTATION 10.06.2019 DATE ON WHICH THE TYPED DRAFT IS PLACED BEFORE THE DICTATING MEMBER 10.06.2019 DATE ON WHICH THE TYPED DRAFT IS PLACED BEFORE THE OTHER MEMBER 10.6.2019 DATE ON WHICH THE APPROVED DRAFT COMES TO THE SR. P S/PS 10.6.2019 DATE ON WHICH THE FAIR ORDER IS PLACED BEFORE THE D ICTATING MEMBER FOR PRONOUNCEMENT 10.6.2019 DATE ON WHICH THE FAIR ORDER COMES BACK TO THE SR. PS/PS 10.6.2019 DATE ON WHICH THE FINAL ORDER IS UPLOADED ON THE WE BSITE OF ITAT 11.6.2019 DATE ON WHICH THE FILE GOES TO THE BENCH CLERK 11.6 .2019 DATE ON WHICH THE FILE GOES TO THE HEAD CLERK THE DATE ON WHICH THE FILE GOES TO THE ASSISTANT RE GISTRAR FOR SIGNATURE ON THE ORDER DATE OF DISPATCH OF THE ORDER