ITO- E, Jaipur V. SHREE MITRA GYAN SHIKSHA SAMITI, Jaipur

ITA 67/JPR/2017

• Counselvise Citation: [2017] 128 COUNSELVISE.COM (IT) 9692 (ITAT-JAIPUR)
• Duration Of Justice: 1 month(s) 15 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 03-03-2017
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: B
• Assessment Year: 2010-2011
• Appeal Filed On: 19-01-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: PRITHVIRAJ MEENAADDL CIT DHK
• Assessee Lawyers: K L MOOLCHANDAN I
• Keywords: Capital asset; Depreciation; Charitable institution; Capital expenditure
• Section: 12A; 32; 6; 11

Judgement Text

VK;DJ VIHYH; VF/KDJ.K] T;IQJ U;K;IHB] T;IQJ IN THE INCOME TAX APPELLATE TRIBUNAL, JAIPUR BENCHE S, JAIPUR JH DQY HKKJR] U;KF;D LNL; ,OA JH FOE FLAG ;KNO] YS [KK LNL; DS LE{K BEFORE: SHRI KUL BHARAT, JM & SHRI VIKRAM SINGH YAD AV, AM VK;DJ VIHY LA-@ ITA NO.67/JP/17 FU/KZKJ.K O'K Z@ ASSESSMENT YEAR : 2010-11 THE INCOME TAX OFFICER (E), WARD -1, JAIPUR CUKE VS. SHREE MITRA GYAN SHIKSHA SAMITI, SECTOR-9, MANDIR MARG, PATEL MARG, MANSAROVER, JAIPUR LFKK;H YS[KK LA-@THVKBZVKJ LA-@ PAN NO. AAEAS 4610 Q VIHYKFKHZ@ APPELLANT IZR;FKHZ@ RESPONDENT FU/KZKFJRH DH VKSJ LS@ ASSESSEE BY : SH. K.L.MOOLCHANDANI, CA JKTLO DH VKSJ LS@ REVENUE BY : SHRI PRITHVIRAJ MEENA(ADDL. CIT ) LQUOKBZ DH RKJH[K@ DATE OF HEARING : 03.03.2017 ?KKS'K .KK DH RKJH[K @ DATE OF PRONOUNCEMENT : 03/03/2017. VKNS'K@ ORDER PER SHRI VIKRAM SINGH YADAV, A.M. THIS IS AN APPEAL FILED BY THE REVENUE AGAINST THE ORDER OF LD. CIT(A) DATED 14.10.2016 FOR ASSESSMENT YEAR 2010-11. THE G ROUNDS TAKEN BY THE REVENUE ARE AS UNDER: (1) ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE A ND IN LAW THE CIT(A) HAS ERRED IN ALLOWING CLAIM OF DEPRECIATION ON FIXE D ASSETS IN SPITE OF THE FACT THAT THE SAME WAS ALLOWED AS APPLICATION OF IN COME U/S 11 AT THE TIME OF PURCHASE. (2) ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW THE CIT(A) HAS ERRED IN ALLOWING DEPRECIATION WITHOUT APPRECIA TING THE FACT THAT THE APPLICATION OF 100% EXPENDITURE OF THE CAPITAL ASSE T IS ALREADY ALLOWED ITA NO. 67/JP/17, ITO(E), WARD-1, JAIPUR VS. SHREE MIRA GYAN SHIKSHA SAMITI, JAIPUR 2 AS CAPITAL EXPENDITURE HENCE FURTHER ALLOWANCE OF T HE DEPRECIATION ON THE SAME CAPITAL ASSET WOULD AMOUNT TO DOUBLE ALLOW ANCE. (3) ON THE FACTS AND IN THE CIRCUMSTANCES OF THE C ASE AND IN LAW THE CIT(A) HAS ERRED IN ALLOWING DEPRECIATION WITHOUT APPRECIA TING THE FACT THAT THE ASSESSEE HAS NOT CARRIED OUT THE BUSINESS ACTIVITIE S BUT THE RECEIPTS UTILIZED FOR CHARITY. AS THERE WAS NO BUSINESS ACT IVITY THE CLAIM OF DEPRECIATION WAS NOT ALLOWABLE, THE DEPRECIATION IS ALLOWABLE ONLY IN THE CASE OF BUSINESS OR PROFESSION OR IN E CASE OF INCO ME FROM OTHER SOURCES. 2. BOTH THE PARTIES ARE HEARD. 3. THE SUBJECT ISSUE IS NO MORE RES INTEGRA . AS PER HONBLE KARNATAKA HIGH COURT DECISION IN CASE OF DIT VS. AL-AMEEN CHARITABLE FUND TRUST ( ITA NO. 62 AND 414 OF 2010) DATED 22.02.2016, THE PLAIN LANGUA GE OF THE AMENDMENT BY WAY OF INSERTION OF SUBSECTION 6 TO SECTION 11 ESTA BLISHES THE INTENT OF THE LEGISLATURE IN DENYING THE DEPRECIATION DEDUCTION I N COMPUTING THE INCOME OF CHARITABLE TRUST PROSPECTIVELY WITH EFFECT FROM 1.4 .2015. THIS VIEW IS FURTHER SUPPORTED BY THE NOTES ON CLAUSES IN FINANCE [NO.2] BILL, 2014, MEMO EXPLAINING PROVISIONS AND CIRCULARS ISSUED BY THE C ENTRAL BOARD OF DIRECT TAXES IN THIS REGARD. 4. FURTHER, THE HONBLE RAJASTHAN HIGH COURT IN THE CASE OF CIT VS. KRISHI UPAJ MANDI SAMITI REPORTED IN 388 ITR 605 (RAJ) HAS HELD AS UNDER: (5) THE ASSESSEE IS A CHARITABLE INSTITUTION REGIST ERED U/S 12A OF THE ACT, 1961 AND 100 PER CENT CAPITAL EXPENDITURE WAS AVAI LED BY IT AGAINST THE ASSET CONCERNED, I.E. A BUILDING. SECTION 32(1) OF THE A CT, 1961 PROVIDES FOR DEPRECATION IN RESPECT OF BUILDING, PLANT AND MACHI NERY OWNED BY THE ASSESSEE AND USED FOR BUSINESS PURPOSES. INCOME OF THE CHAR ITABLE TRUST LIKE THE PRESENT ASSESSEE DERIVES FROM THE DEPRECIABLE HEADS IS ALSO LIABLE TO BE COMPUTED ON COMMERCIAL BASIS, HOWEVER, WHILE DOING SO IT IS TO BE KEPT IN MIND THAT ITA NO. 67/JP/17, ITO(E), WARD-1, JAIPUR VS. SHREE MIRA GYAN SHIKSHA SAMITI, JAIPUR 3 ULTIMATELY THE ASSESSEE IS A CHARITABLE INSTITUTION AND ITS INCOME FOR TAX PURPOSES IS REQUIRED TO BE DETERMINED BY TAKING I NTO CONSIDERATION PROVISIONS OF SECTION 11 OF THE ACT OF 1961 AFTER EXTENDING N ORMAL DEPRECIATION AND DEDUCTIONS FROM ITS GROSS INCOME. IN COMPUTING TH E INCOME OF A CHARITABLE INSTITUTION/TRUST DEPRECIATION OF ASSETS OWNED BY S UCH INSTITUTION IS A NECESSARY DEDUCTION ON COMMERCIALS, HENCE, THE AMOUNT OF DE PRECIATION HAS TO BE DEDUCTED TO ARRIVE AT THE INCOME AVAILABLE. (6) IN VIEW OF THE DISCUSSIONS MADE ABOVE, WE FIND OUR SELVES IN AGREEMENT WITH THE VIEW TAKEN BY THE BOMBAY HIGH COURT IN DI T (EXEMPTIONS) VS. FRAMJEE CAWASJEE INSTITUTE (SUPRA) AND THE CIT VS. INSTITU TE OF BANKING (SUPRA). THE SUBSTANTIAL QUESTION FRAMED IN THE INSTANT MATTER , THUS IS ANSWERED IN THE TERMS THAT THE INCOME TAX APPELLATE TRIBUNAL RIGHTL Y ALLOWED DEPRECIATION CLAIMED BY THE ASSESSEE SOCIETY ON CAPITAL ASSETS F OR WHICH CAPITAL EXPENDITURE WAS ALREADY GIVEN IN THE YEAR UNDER CONSIDERATION. 5. THE LD DR SUBMITTED THAT THE REVENUE HAS NOT ACC EPTED THE SAID ABOVE DECISION OF THE HONBLE RAJASTHAN HIGH COURT AND A PRAYER FOR SPECIAL LEAVE PETITION AGAINST THE SAID ORDER HAS SINCE BEEN ADMI TTED BY THE HONBLE SUPREME COURT. IN HIS REJOINDER, THE LD AR SUBMITTE D THAT THE ADMITTING OF AN SLP AGAINST THE ORDER OF HONBLE RAJASTAHN HIGH COU RT IS NO BAR FOR THE TRIBUNAL AND ANY OF THE LOWER AUTHORITIES TO FOLLOW SUCH BIN DING DECISION OF THE JURISDICTIONAL HIGH COURT UNLESS THE OPERATION OF S UCH ORDER HAS BEEN STAYED BY THE HONBLE SUPREME COURT. 6. RESPECTFULLY FOLLOWING THE DECISION OF HONBLE K ARNATAKA HIGH COURT WHEREIN THE AMENDMENT TO SECTION 11 (6) HAS BEEN HE LD PROSPECTIVE IN NATURE WITH EFFECT FROM 01-04-2015 AND THE HONBLE RAJASTH AN HIGH COURT DECISION ITA NO. 67/JP/17, ITO(E), WARD-1, JAIPUR VS. SHREE MIRA GYAN SHIKSHA SAMITI, JAIPUR 4 (SUPRA), THE DEPRECIATION IS HELD ADMISSIBLE TO THE ASSESSEE UNDER THE PROVISIONS OF SECTION 32 OF THE ACT IN RESPECT OF A SSETS ON WHICH EXEMPTION HAS BEEN ALLOWED UNDER SECTION 11 OF THE ACT. THE GROU NDS TAKEN BY THE REVENUE ARE THUS DISMISSED. IN THE RESULT, THE APPEAL OF THE REVENUE IS DISMISS ED. ORDER PRONOUNCED IN THE OPEN COURT ON 03/03/ 2017. SD/- SD/- (KUL BHARAT ) (VIKRAM SINGH YADAV) U;KF;D LNL;@ JUDICIAL MEMBER YS[KK LNL;@ ACCOUNTANT MEMBER JAIPUR DATED:- 03/03/2017 VKNS'K DH IZFRFYFI VXZSF'KR@ COPY OF THE ORDER FORWARDED TO: 1. VIHYKFKHZ@ THE APPELLANT- THE ITO (E), WAD-1, JAIPUR 2. IZR;FKHZ@ THE RESPONDENT- M/S SHREE MITRA GYAN SHIKSHA SAMIT I, JAIPUR 3. VK;DJ VK;QDR@ CIT (E), JAIPUR 4. VK;DJ VK;QDRVIHY@ THE CIT(A) ALIGARH 5. FOHKKXH; IZFRFUF/K] VK;DJ VIHYH; VF/KDJ.K] T;IQJ@ DR, ITAT, JAIPUR 6. XKMZ QKBZY@ GUARD FILE (ITA NO. 67/JP/2017) VKNS'KKUQLKJ@ BY ORDER, LGK;D IATHDKJ@ ASSISTANT. REGISTRAR.