Asstt.Commissioner of Income Tax,Amravati Circle, Amaravati V. Vidarbha Youth Welfare Society, Amaravati

ITA 67/NAG/2011

• Counselvise Citation: [2019] 117 COUNSELVISE.COM (IT) 3084 (ITAT-NAGPUR)
• Duration Of Justice: 8 year(s) 15 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 16-04-2019
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: DB
• Assessment Year: 2007-2008
• Appeal Filed On: 31-03-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: M BHUSARI
• Assessee Lawyers: RITESH KUMAR ADATIYA
• Keywords: Depreciation; Capital receipt
• Section: 143(3)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL NAGPUR E-BENCH, NAGPUR (THROUGH VIDEO CONFERENCE AT MUMBAI) . . , . / BEFORE SHRI R.K. GUPTA, JUDICIAL MEMBER / AND , . . SHRI RAJENDRA, ACCOUNTANT MEMBER . / ITA NO. 67/NAG/2011 / ASSESSMENT YEAR 2007-08 ASST. COMMISSIONER OF INCOME TAX, AMRAVATI CIRCLE, AAYAKAR BHAVAN, AMBA PETH, AMRAVATI. VS. VIDARBHA YOUTH WELFARE SOCIETY, CHAITANYA, OPP. TELEPHONE OFFICE, CAMP, AMRAVATI. PAN: AAATV 5683 Q ( / APPELLANT ) ( / RESPONDENT ) REVENUE BY : SHRI M. BHUSARI (CIT DR) ASSESSEE BY : SHRI RITESH KUMAR ADATIYA ! '#$ / DATE OF HEARING : 18-12-2012 %& ! '#$ / DATE OF PRONOUNCEMENT : 18-12-2012 '( / O R D E R PER RAJENDRA, AM THIS APPEAL IS FILED AGAINST THE ORDER DT. 20-01-20 11 OF THE CIT(A)-II, NAGPUR, ASSESSING OFFICER (AO) HAS RAISED THE FOLLOWING GRO UNDS OF APPEAL: 1.THE LEARNED CIT(A), NAGPUR HAS ERRED IN DELETING THE DISALLOWANCE OF RS. 83,16,087/- MADE BY THE A.O. ON ACCOUNT OF DEPR ECIATION WHILE WORKING OUT THE APPLICATION OF INCOME BY THE ASSESSEE TOWARDS THE A IMS AND OBJECTS OF THE SOCIETY IN TERMS OF SECTION 11 OF THE I.T. ACT, 1961. 2. THE LEARNED CIT(A), NAGPUR HAS ERRED IN DELETING THE DISALLOWANCE OF RS. 19,10,150/- MADE BY THE A.O. WHILE WORKING OUT THE APPLICATION OF INCOME BY THE ASSESSEE TOWARDS THE AIMS AND OBJECTS OF THE SOCIET Y IN TERMS OF SECTION 11 OF THE I.T. ACT, 1961. 3. ANY OTHER GROUND THAT MAY BE RAISED AT THE TIME OF HEARING. ITA NO. 67/NAG/2011 VIDARBHA YOUTH WELFARE SOCIETY 2 2. ASSESSEE, EDUCATIONAL SOCIETY, A CHARITABLE INSTITU TION, FILED ITS RETURN OF INCOME ON 31-03-2008 DECLARING A TOTAL INCOME AT RS . NIL. ASSESSMENT WAS FINALISED BY THE AO ON 31-12-2009 U/S. 143(3) OF THE INCOME T AX ACT, 1961 (ACT) DETERMINING THE TOTAL INCOME OF THE ASSESSEE AT RS. 28.66 LAKHS . 3. DURING THE ASSESSMENT PROCEEDINGS, AO FOUND THAT TH E ASSESSEE HAD CLAIMED DEPRECIATION OF RS. 83.16 LAKHS THAT INCLUDED THE A MOUNT CLAIMED AS EDUCATIONAL EXPENSES INCURRED ON THE OBJECTS OF THE TRUST. HE HELD THAT THE ASSESSEE WAS A CHARITABLE SOCIETY, THAT IT WAS CLAIMING EXEMPTION U/S. 11 OF THE ACT, THAT THE CLAIM OF DEDUCTION IN THE FORM OF DEPRECIATION AMOUNTED TO D OUBLE DEDUCTION, THAT EXPENSES IN THE FORM OF DEPRECIATION COULD NOT BE TERMED AS APP LICATION OF INCOME OF THE TRUST WITHIN THE MEANING OF THE SEC. 11 OF THE ACT. AS A RESULT, HE DISALLOWED DEPRECIATION OF RS. 83.16 LAKHS. 4. ASSESSEE PREFERRED AN APPEAL BEFORE THE FIRST APPEL LATE AUTHORITY (FAA). AFTER CONSIDERING THE SUBMISSION OF THE ASSESSEE AND RELY ING UPON THE ORDER OF THE HONBLE JURISDICTIONAL HIGH COURT DELIVERED IN THE CASE OF CIT VS. INSTITUTE OF BANKING PERSONNEL SELECTION (264 ITR 110) HE ALLOWED THE APPEAL FILED BY THE ASSESSEE. 5. BEFORE US, DEPARTMENTAL REPRESENTATIVE (DR) CONCED ED THAT THE ISSUE WAS DECIDED IN FAVOUR OF THE ASSESSEE BY THE ORDERS OF THE HONBLE HIGH COURT OF BOMBAY (SUPRA) AUTHORISED REPRESENTATIVE (AR) RELIED UPON THE ORDER OF THE FIRST APPELLATE AUTHORITY (FAA). AFTER CONSIDERING THE RIVAL SUBMI SSIONS, WE ARE OF THE OPINION THAT APPEAL FILED BY THE AO SHOULD BE DISMISSED IN LIGHT OF THE DECISION OF INSTITUTE OF BANKING PERSONNEL SELECTION (SUPRA). WE FIND THAT THE HONBLE BOMBAY HIGH COUR T HAS DECIDED THE ISSUE AGAINST THE REVENUE. SO, RESPECTFULLY FOLLOWING THE ORDER OF THE HONBL E JURISDICTIONAL HIGH COURT (SUPRA), WE DECIDED GROUND NO.1 AGAINST THE AO. 6. NEXT GROUND OF APPEAL IS ABOUT ADDITION OF RS. 19. 10 LAKHS ON ACCOUNT OF AMOUNTS TRANSFERRED TO RESERVE FUND. DURING THE AS SESSMENT PROCEEDINGS, AO FOUND THAT ASSESSEE HAD DEBITED RS. 19.10 LAKHS AS AMOUNT S TRANSFERRED TO SPECIFIC/RESERVE ACCOUNT. AFTER OBTAINING SUBMISSION OF THE ASSESSE E IN THIS REGARD, HE HELD THE AMOUNT-IN-QUESTION WAS RESERVE FUND, THAT SAME WAS NOT AN ACTUAL EXPENSE, THAT IT COULD NOT BE TREATED AS APPLICATION OF INCOME OF TH E TRUST FOR THE PURPOSES OF SECTION 11 OF THE ACT. IN THE APPELLATE PROCEEDINGS, FAA HELD THAT AMOUNT UNDER CONSIDERATION WAS ONLY A CONTRA ENTRY, THAT AMOUNT DISPUTE WAS INCLUDED IN THE SOCIETY FEES, THAT SAME WAS A CAPITAL RECEIPT AND HAD TO BE CREDITED TO DEVELOPMENT FEES ACCOUNT, THAT DEBIT IN THE DEVELOPMENT FUND A/C WAS MADE BECAUSE IT WAS WRONGLY CREDITED, THAT AO SHOULD HAVE DEDUCTED THE CORRESPO NDING AMOUNTS CREDITED IN THE RECEIPT AND PAYMENT A/C. FINALLY, HE DELETED THE A DDITION MADE BY THE AO. 7. BEFORE US, DR SUBMITTED THAT FAA HAD DEALT THE ISSU E AS PER THE PROVISIONS OF LAW, THAT GROUNDS OF APPEAL MIGHT BE DECIDED ON MER ITS OF THE CASE. AR RELIED UPON THE ORDER OF THE FAA. 8. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL PUT BEFORE US. AFTER CONSIDERING THE FACTUAL MATRIX OF THE CASE, W E ARE OF THE OPINION THAT NO ADDITION WAS REQUIRED AS THE AMOUNT IN QUESTION WAS ONLY A C ONTRA ENTRY. FAA HAS GIVEN A ITA NO. 67/NAG/2011 VIDARBHA YOUTH WELFARE SOCIETY 3 CATEGORICAL FINDING OF FACT WITH REGARD TO THE ADDI TION MADE BY THE AO. IN OUR OPINION, HIS ORDER DOES NOT NEED ANY INTERFERENCE F ROM OUR SIDE, AS IT IS NOT SUFFERING FROM ANY LEGAL INFIRMITY. UPHOLDING THE ORDER OF T HE FAA, WE DECIDE GROUND NO.2 AGAINST THE AO. AS A RESULT, APPEAL FILED BY THE AO STANDS DISMISS ED. 9. WE WANT TO PUT OUR APPRECIATION ON RECORD FOR THE F AIR APPROACH ADOPTED BY THE LD. DR. ORDER PRONOUNCED BY E-BENCH AT MUMBAI ON THIS 18 TH DAY OF DECEMBER, 2012. SD/- SD/- ( . . / R.K. GUPTA ) ( / RAJENDRA ) ') / JUDICIAL MEMBER $ ') / ACCOUNTANT MEMBER *+ MUMBAI, ,' DATE: 18 TH DECEMBER, 2012 TNMM COPY TO: 1. APPELLANT 2. RESPONDENT 3. THE CONCERNED CIT (A) 4. THE CONCERNED CIT 5. DR, ITAT, NAGPUR 6. GUARD FILE -' ' //TRUE COPY// BY ORDER, ASST. REGISTRAR, ITAT