NATIONAL TECHNICAL EDUCATION SOCIETY, Alwar V. ACIT, Alwar

ITA 733/JPR/2016

• Counselvise Citation: [2016] 131 COUNSELVISE.COM (IT) 4891 (ITAT-JAIPUR)
• Duration Of Justice: 3 month(s) 25 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 28-11-2016
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: SMC
• Assessment Year: 2010-2011
• Appeal Filed On: 03-08-2016
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: POONAM RAI D DHK
• Assessee Lawyers: K C MEHTA
• Keywords: Depreciation; Rectification of order; Capital expenditure
• Section: 154; 11

Judgement Text

VK;DJ VIHYH; VF/KDJ.K] T;IQJ U;K;IHB] T;IQJ IN THE INCOME TAX APPELLATE TRIBUNAL, JAIPUR BENCHES (SMC), JAIPUR JH HKKXPUN] YS[KK LNL; DS LE{K BEFORE: SHRI BHAGCHAND, ACCOUNTANT MEMBER VK;DJ VIHY LA-@ ITA NO. 733/JP/2016 FU/KZKJ.K O'K Z@ ASSESSMENT YEAR : 2010-11 M/S. NATIONAL TECHNICAL EDUCATION SOCIETY 40GH-30, MANU MARG, HOUSING BOARD, ALWAR CUKE VS. THE ACIT CIRCLE- 1 ALWAR LFKK;H YS[KK LA-@THVKBZVKJ LA-@ PAN/GIR NO .: AAATN 3805 G VIHYKFKHZ@ APPELLANT IZR;FKHZ@ RESPONDENT FU/KZKFJRH DH VKSJ LS@ ASSESSEE BY: SHRI K.C. MEHTA JKTLO DH VKSJ LS@ REVENUE BY :SMT. POONAM RAI, DCIT-DR LQUOKBZ DH RKJH[K@ DATE OF HEARING : 25/11/2016 ?KKS'K .KK DH RKJH[K@ DATE OF PRONOUNCEMENT : 28/11/2016 VKNS'K@ ORDER PER BHAGCHAND, AM THE ASSESSEE HAS FILED AN APPEAL AGAINST THE ORDE R OF THE LD. CIT(A), ALWAR DATED 03-05-2016 FOR THE ASSESSMENT YEAR 2010-11 RAISING THEREIN GROUNDS AS UNDER:- 1. THAT THE ACIT, CIRCLE- 1, ALWAR ERRED IN PASSING THE IMPUGNED ORDER U/S 154 OF THE ACT EVEN WHEN UNDER THE FACTS AND CIRCUMSTANCES OF THE CASE THERE WAS NO MISTAKE APPARENT ON RECORD IN THE ASSESSMENT ORDER UU143(3) DATED 15-03-2013. HENCE, THE IMPUGNED ORDER U/S 154 IS BAD IN THE EYES OF LAW AND DESERVES TO BE QUASHED. ITA NO. 733/JP/2016 NATIONAL TECHNICAL EDUCATION SOCIETY VS. ACIT, CIRC LE- 1, ALWAR . 2 2. THAT WITHOUT PREJUDICE TO THE ABOVE GROUND, EVEN ON FACTS OF THE CASE THE AO ERRED IN HOLDING T HAT THE APPLICATION OF INCOME DURING THE YEAR WAS ONLY 81.1 9% AND THE SURPLUS WAS 18.18% WHILE IN FACT THE APPLICATIO N OF INCOME WAS 124.49% WHICH WAS MORE THAN THE PRESCRIB ED UTILIZATION LIMIT OF 85.00%. ACCORDINGLY, THE ADDIT ION OF RS. 2,04,475/- MADE BY THE AO WHICH WAS REVISED TO RS. 2,41,747/- DESERVES TO BE DELETED. 2.1 THE FACTS AS TO THE ISSUE IN QUESTION EMERGES F ROM THE ORDER OF THE LD. CIT(A) IS REPRODUCED AS UNDER:- 4.3 I HAVE PERUSED THE RECTIFICATION ORDER AS WEL L AS THE SUBMISSIONS MADE BY THE APPELLANT AND FIND THAT RECTIFIED ASSESSED INCOME OF THE TRUST HAS BEEN TAKEN BY THE AO AT RS. 2,04,475/- AFTER HOLDING THAT SURPLUS SHOWN IN THE ACCOUNTS EXCEEDS 15% OF THE TOTAL RECEIPTS. THE CLAIM OF DEP RECIATION WAS DISALLOWED BY THE AO ON THE GROUND THAT CAPITAL EXPENDITURE HAS ALREADY BEEN ALLOWED AS AN APPLICAT ION OF INCOME AND FURTHER ALLOWING DEPRECIATION WOULD AMOU NT TO CLAIMING DOUBLE DEDUCTION AGAINST THE RECEIPTS/ INC OME OF THE TRUST. 4.4 THE APPELLANT HAS STATED THAT SURPLUS INCOME OF THE ASSESSEE TRUST DOES NOT EXCEED THE THRESHOLD LI MIT OF 15% OF TOTAL RECEIPTS. THE AO WAS WRONG IN ADOPTING THE TOTAL INCOME OF RS. 53,71,573/- AND EXPENSES OF RS. 49,89 ,565/- .THESE FIGURES OF RECEIPTS AND EXPENSES MENTIONED I N THE SHOW CAUSE NOTICE ARE NOT CORRECT. THE TOTAL INCOME AND EXPENSES OF THE HEAD OFFICE AND BRANCH ARE TO BE TA KEN AS PER THE CONSOLIDATED INCOME AND EXPENDITURE ACCOUNT. IT IS FURTHER SUBMITTED THAT EVEN IF THE CLAIM OF DEPRECI ATION OF RS. 6,28,203/- IS NOT ALLOWED AS EXPENDITURE STILL THE APPLICATION OF INCOME WOULD BE MORE THAN THE TOTAL RECEIPTS. ITA NO. 733/JP/2016 NATIONAL TECHNICAL EDUCATION SOCIETY VS. ACIT, CIRC LE- 1, ALWAR . 3 4.5 I HAVE CAREFULLY CONSIDERED THE SUBMISSIONS MADE AND FIND THAT THE ONLY ISSUE INVOLVED IN THE C ASE IS AS TO WHETHER THE TRUST HAS INCURRED EXPENSES TO THE EXTE NT OF 85% OF THE RECEIPTS/INCOME OF THE TRUST. FURTHER, AS RE GARDS THE ISSUE OF CLAIM OF DEPRECIATION AS AN APPLICATION OF INCOME IS CONCERNED, I FIND THAT AMENDMENT WAS MADE TO THE PROVISIONS OF SECTION 11 OF THE I.T. ACT W.E.F. A.Y . 2005- 16,WHEREIN IT HAS BEEN CLARIFIED THAT THE CLAIM OF DEDUCTION FOR DEPRECIATION WILL NOT BE ALLOWABLE IN A CASE WH ERE ANY DEDUCTION OR ALLOWANCE HAS BEEN CLAIMED FOR ACQUISI TION OF SUCH ASSET. THE APPLICATION HAS ALSO IN THE WRITTEN SUBMISSIONS FILED ACCEPTED THAT THE CLAIM OF DEPREC IATION MAY NOT BE ALLOWED AS AN APPLICATION OF INCOME AND HAS STATED THAT DESPITE THIS, THERE IS AN EXCESS EXPEND ITURE. 4.6 AS PER THE PROVISIONS OF SECTION 11 OF THE I.T. ACT, A TRUST IS REQUIRED TO ACCUMULATE NOT MORE THA N 15% OF THE TOTAL RECEIPTS/INCOME IN A YEAR. I FIND THAT AP PELLANT HAS DECLARED INCOME AND EXPENSES FOR THE TRUST ON ACCOU NT OF HEAD OFFICE AND BRANCH SEPARATELY. ON CONSOLIDATION OF ACCOUNTS OF THE HEAD OFFICE AND BRANCH, THE TOTAL I NCOME OF THE TRUST WOULD COME TO RS. 51,23,233/- AND TOTAL E XPENSES WOULD COME TO RS. 41,13,021/- WHICH RESULT IN A SUR PLUS OF RS. 10,10,212/- WHICH CLEARLY REFLECTS A SURPLUS OF MORE THAN 15% OF THE TOTAL INCOME WHICH IS NOT PERMISSIBLE UN DER THE PROVISIONS OF THE ACT. I FIND THAT 15% OF THE TOTAL INCOME COMES TO RS. 7,68,485/- AND AS AGAINST THIS THE SUR PLUS GENERATED BY THE TRUST IN THE PERIOD UNDER CONSIDER ATION IS RS. 10,10,212/-. 4.7 THUS IN VIEW OF THE ABOVE DISCUSSION, THE EXCES S OVER 15% OF THE INCOME (MAXIMUM, WHICH CAN BE ACCUMULATED) COMES TO RS. 2,41,727/- AS AGAINST WHI CH THE AO HAS COMPUTED THE SAME AT RS. 2,04,475/-. THE MIS TAKE BEING APPARENT FROM RECORD IS PRIMA FACIE RECTIFIAB LE HOWEVER, AO IS BEING DIRECTED TO RE-CHECK THE COMPU TATION, WHILE GIVING EFFECT TO THIS ORDER. ITA NO. 733/JP/2016 NATIONAL TECHNICAL EDUCATION SOCIETY VS. ACIT, CIRC LE- 1, ALWAR . 4 2.2 AFTER PERUSING THE SUBMISSIONS OF THE BOTH THE PARTIES AND MATERIALS AVAILABLE ON RECORD, IT IS NOTICED THAT THE LD. CIT (A) HAS DIRECTED THE AO TO RE-CHECK THE COMPUTATION IN GIVING EFFECT TO HIS ORDER. THE RELEVANT PARA OF LD. CIT(A)S ORDER IS REPRODUCED AS UNDER: - 4.7 THUS IN VIEW OF THE ABOVE DISCUSSION, THE EXC ESS OVER 15% OF THE INCOME (MAXIMUM, WHICH CAN BE ACCUMULATED) COMES TO RS. 2,41,727/- AS AGAINST WHI CH THE AO HAS COMPUTED THE SAME AT RS. 2,04,475/-. THE MIS TAKE BEING APPARENT FROM RECORD IS PRIMA FACIE RECTIFIAB LE HOWEVER, AO IS BEING DIRECTED TO RE-CHECK THE COMPU TATION, WHILE GIVING EFFECT TO THIS ORDER. IT IS FURTHER OBSERVED FROM THE ARGUMENTS OF THE LD . AR OF THE ASSESSEE THAT THE MAIN GRIEVANCE OF THE ASSESSEE IS REGARDIN G ARITHMETICAL CALCULATIONS TOWARDS SURPLUS AND APPLICATION OF INC OME WHICH IS CLEAR FROM THE GROUNDS TAKEN BY THE ASSESSEE. THEREFORE, I CONFIRM THE DIRECTION OF THE LD. CIT(A) TO RE-CHECK THE SURPLUS AND COMP UTATION OF APPLICATION OF INCOME AND THEN THE NET EFFECT WILL BE GIVEN BY THE AO. IN THIS VIEW OF THE MATTER, THE APPEAL OF THE ASSESSEE IS RESTORED TO THE FILE OF THE AO TO DECIDE IN VIEW OF THE ABOVE DIRECTIONS. THUS THE AP PEAL OF THE ASSESSEE IS ALLOWED FOR STATISTICAL PURPOSES. ITA NO. 733/JP/2016 NATIONAL TECHNICAL EDUCATION SOCIETY VS. ACIT, CIRC LE- 1, ALWAR . 5 3.0 IN THE RESULT, THE APPEAL OF THE ASSESSEE IS A LLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON 28 /11/ 2016 SD/- HKKXPUN ( BHAGCHAND) YS[KK LNL;@ ACCOUNTANT MEMBER TK;IQJ@ JAIPUR FNUKAD@ DATED:- 28/11/ 2016 *MISHRA VKNS'K DH IZFRFYFI VXZSF'KR@ COPY OF THE ORDER FORWARDED TO: 1. VIHYKFKHZ@ THE APPELLANT- M/S. NATIONAL TECHNICAL EDUCATION SOCIETY, ALWAR 2. IZR;FKHZ@ THE RESPONDENT- THE ACIT, CIRCLE- 1, ALWAR 3. VK;DJ VK;QDRVIHY@ CIT(A). 4. VK;DJ VK;QDR@ CIT, 5. FOHKKXH; IZFRFUF/K] VK;DJ VIHYH; VF/KDJ.K] T;IQJ@ DR, ITAT, JAIPUR 6. XKMZ QKBZY@ GUARD FILE (ITA NO. 733/JP/2016) VKNS'KKUQLKJ@ BY ORDER, LGK;D IATHDKJ @ ASSISTANT. REGISTRAR