The DCIT, (Exeptions), Circle-1, Ahmedabad V. The Stock Exchange of Ahmedabad, Ahmedabad

ITA 595/AHD/2015

• Counselvise Citation: [2018] 125 COUNSELVISE.COM (IT) 8359 (ITAT-AHMEDABAD)
• Duration Of Justice: 3 year(s) 1 month(s) 23 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 09-05-2018
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: D
• Assessment Year: 2005-2006
• Appeal Filed On: 17-03-2015
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: S K DEV
• Keywords: Capital asset; Depreciation; Charitable institution; Capital expenditure
• Section: 143(3); 12A; 32

Judgement Text

, IN THE INCOME TAX APPELLATE TRIBUNAL, D BENCH, AHMEDABAD BEFORE SHRI PRADIP KUMAR KEDIA, ACCOUNTANT MEMBER AND MS.MADHUMITA ROY, JUDICIAL MEMBER ./ ITA.NO.595/AHD/2015 / ASSTT. YEAR: 2005-06 DCIT (EXEMPTIONS), CIR.1 AHMEDABAD. VS. THE STOCK EXCHANGE AHMEDABAD. KAMDHENU COMLEX OPP: SAHJANAND COLELGE AHEMDABAD 380 015. PAN : AAAAT 4934 B ( APPLICANT ) ( RESPONENT ) REVENUE BY : SHRI S.K. DEV, SR.DR ASSESSEE BY : SMT. ARTI N. SHAH, AR / DATE OF HEARING : 03/05/2018 / DATE OF PRONOUNCEMENT: 09 /05/2018 +,/ O R D E R PER PRADIP KUMAR KEDIA, ACCOUNTANT MEMBER: THE CAPTIONED APPEAL HAS BEEN FILED AT THE INSTANCE OF THE REVENUE AGAINST ORDER OF THE CIT(A)-9, AHMEDABAD DATED 29.1 2.2014 ARISING IN THE ASSESSMENT ORDER DATED 15.2.2013 PASSED BY THE ASSE SSING OFFICER UNDER SECTION 143(3) R.W.S. 147 OF THE INCOME TAX ACT CON CERNING ASSESSMENT YEAR 2005-06. 2. IN THE PRESENT APPEAL REVENUE IS IMPUGNING ORDER OF THE CIT(A) GRANTING RELIEF TO THE ASSESSEE TOWARDS DISALLOWANC E OF DEPRECIATION OF RS.82,57,084/- MADE BY THE AO. ITA NO.595/AHD/2015 2 3. IT IS THE CASE OF THE AO THAT THE LD.CIT(A) COMM ITTED ERROR IN ALLOWING DEPRECIATION ON ASSETS, THE COST OF WHICH HAS ALREA DY BEEN ALLOWED AS A DEDUCTION ON ACCOUNT OF APPLICATION OF INCOME AS IT AMOUNTED TO DOUBLE DEDUCTION. 4. WHEN THE MATTER WAS CALLED FOR HEARING, THE LD.A O FOR THE ASSESSEE AT THE OUTSET SUBMITTED THAT THE ISSUE IS COVERED IN F AVOUR OF THE ASSESSEE AND AGAINST THE REVENUE BY RECENT DECISION OF THE HONB LE SUPREME COURT IN THE CASE OF CIT VS. RAJASTHAN AND GUJARATI CHARITABLE F OUNDATION POONA IN CIVIL APPEAL NO.7186 OF 2014 ORDER DATED 13.12.2017. THE LD.DR SIMPLY PLACED RELIANCE ON THE ORDER OF THE AO. 5. WE HAVE CAREFULLY CONSIDERED RIVAL SUBMISSIONS. CORE CONTROVERSY IN THE CASE IN HAND IS WHETHER DEPRECIATION IS ALLOWAB LE ON EXPENDITURE INCURRED FOR CAPITAL PURPOSE WHERE THE EXPENDITURE IS TREATE D AS APPLICATION OF INCOME FOR THE OBJECTS OF THE ASSESSEE-TRUST IN TERMS OF S ECTION 11(1)(A) OF THE ACT. IT IS NOTICED THAT THE ASSESSEE IS A CHARITABLE INSTIT UTION REGISTERED UNDER SECTION 12A OF THE INCOME TAX ACT AND ASSESSED ACCORDINGLY. IT IS THE CASE OF THE REVENUE THAT ONCE THE CAPITAL EXPENDITURE HAS BEEN INCURRED AS DEDUCTION UNDER SECTION 11(1)(A) AS APPLICATION OF INCOME FOR THE OBJECTS OF THE TRUST, DEPRECIATION CLAIMED ON THE SAME ASSETS AMOUNTS TO DOUBLE DEDUCTION WHICH IS NOT PERMISSIBLE IN LAW HAVING REGARD TO THE PROV ISIONS OF SECTION 11(6) OF THE ACT WHICH PROHIBITS SUCH DEDUCTION. 6. THE ASSESSEE, ON THE OTHER HAND, CONTENDS THAT T HERE IS NO BAR IN MAKING CLAIM OF DEPRECIATION ALLOWANCE AS PER COMMERCIAL P RINCIPLES FOR THE ASSESSMENT YEAR 2005-06 IN QUESTION, SINCE SECTION 11(6) OF THE ACT HAS BEEN INSERTED PROSPECTIVELY AND OPERATES FROM THE ASSESS MENT YEAR 2015-16 ONWARDS. IT IS THE CASE OF THE ASSESSEE THAT COST INCURRED TOWARDS CAPITAL ASSETS ITA NO.595/AHD/2015 3 IS ELIGIBLE FOR DEPRECIATION ALLOWANCE NOTWITHSTAND ING PARALLEL EXEMPTION PROVIDED IN SECTION 11(1)(A) OF THE ACT. WE FIND T HAT THE ISSUE IS SET TO REST AND IS NO LONGER RES INTEGRA . HONBLE SUPREME COURT IN THE CASE OF RAJASTHAN AND GUJARATI CHARITABLE FOUNDATION POONA (SUPRA) HA S HELD THAT EVEN IF THE ENTIRE EXPENDITURE INCURRED FOR ACQUISITION OF CAPI TAL ASSETS IS TREATED AS APPLICATION OF INCOME FOR CHARITABLE PURPOSE UNDER SECTION 11(1)(A) OF THE ACT, THE ASSESSEE CONTINUOUS TO BE ENTITLED TO DEPRECIAT ION UNDER SECTION 32 OF THE ACT. HONBLE SUPREME COURT OBSERVED THAT THE ARGUM ENT THAT THE GRANT OF DEPRECIATION AMOUNTS TO GIVING DOUBLE BENEFIT TO TH E ASSESSEE IS NOT ACCEPTABLE. HONBLE SUPREME COURT FURTHER HELD THA T SPECIFIC PROVISIONS OF SECTION 11(6) WHICH BARS CLAIM OF DEPRECIATION OF E XPENDITURE INCURRED FOR CHARITABLE PURPOSES IS PROSPECTIVE AND APPLIES ONLY FROM THE ASSESSMENT YEAR 2015-16. IN VIEW OF THE DECISION OF HONBLE SUPREM E COURT, THE ASSESSEE IS ENTITLED TO DEPRECIATION ALLOWANCE NOTWITHSTANDING FACT THAT ENTIRE EXPENDITURE INCURRED FOR ACQUISITION OF CAPITAL ASSETS WERE ADM ITTED AS APPLICATION OF INCOME FOR CHARITABLE PURPOSE UNDER SECTION 11(1)(A ) OF THE ACT. 7. IN THE RESULT, THE APPEAL OF THE REVENUE FAILS, AND ACCORDINGLY GETS DISMISSED. ORDER PRONOUNCED IN THE COURT ON 9 TH MAY, 2018 AT AHMEDABAD. SD/- SD/- ( MADHUMITA ROY ) JUDICIAL MEMBER ( PRADIP KUMAR KEDIA ) ACCOUNTANT MEMBER AHMEDABAD; DATED 09/05/2018