The ITO, Ward-5(4), Baroda V. M/s. Sigma Institute Of Technology and Engineering, Vadodara

ITA 762/AHD/2016

• Counselvise Citation: [2018] 125 COUNSELVISE.COM (IT) 5094 (ITAT-AHMEDABAD)
• Duration Of Justice: 2 year(s) 4 month(s) 3 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 01-08-2018
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: Not Allotted
• Assessment Year: 2011-2012
• Appeal Filed On: 29-03-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Capital asset; Depreciation; Charitable institution; Capital expenditure
• Section: 12A; 32; 11

Judgement Text

, - IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD - BENCH B BEFORE SHRI RAJPAL YADAV, JUDICIAL MEMBER AND SHRI WASEEM AHMED, ACCOUNTANT MEMBER ./ ITA NO.762/AHD/2016 / ASSTT. YEAR: 2011-2012 DCIT, CENT.CIR.2 BARODA. VS. M/S.SIGMA INSTITUTE OF TECHNOLOGY & ENGINEERING BAKROL, NR. MADHAVNAGAR AJWA NIMETA ROAD TAL. WAGHODIA DIST. VADODARA 390 019. PAN : AAJTS 7182 G / (APPELLANT) / (RESPONDENT) REVENUE BY : SHRI MUDIT NAGPAL, SR.DR ASSESSEE BY : NONE ! / DATE OF HEARING : 23/07/2018 '#$ ! / DATE OF PRONOUNCEMENT: 01/08/2018 %& / O R D E R PER RAJPAL YADAV, JUDICIAL MEMBER: REVENUE IS IN APPEAL BEFORE THE TRIBUNAL AGAINST OR DER OF THE LD.CIT(A)-5, BARODA DATED 14.12.2015 PASSED FOR THE ASSESSMENT YEAR 2011-12. 2. NONE APPEARED ON BEHALF OF THE ASSESSEE. THEREF ORE, WE PROCEED TO DISPOSE OF APPEAL EXPARTE QUA ASSESSEE-RESPONDENT AFTER HEARING THE ITA NO.762 /AHD/2016 2 LD.DR AND CONSIDERING THE MATERIAL AVAILABLE ON REC ORD. 3. SOLE ISSUE RAISED IN THE GROUNDS OF APPEAL IS AG AINST ORDER OF LD.CIT(A) IN DELETING DISALLOWANCE OF DEPRECIATION OF RS.2,19,24,996/- MADE BY THE AO. 4. BRIEF FACTS OF THE CASE ARE THAT ASSESSEE IS A P UBLIC CHARITABLE TRUST REGISTERED UNDER THE BOMBAY PUBLIC CHARITABLE TRUST AND ENGAGED IN EDUCATIONAL ACTIVITIES. IT HAS ALSO REGISTERED UND ER SECTION 12A(A) OF THE INCOME TAX ACT, 1961 ON 4.3.2005. ASSESSEE HAS FIL ED ITS RETURN OF INCOME ON 30.9.2011 DECLARING TOTAL LOSS AT (-)78,6 0,830/-. ASSESSMENT YEAR INVOLVED IS 2011-12. THE CASE OF TH E ASSESSEE WAS SELECTED FOR SCRUTINY ASSESSMENT AND NOTICE UNDER S ECTION 143(2) OF THE ACT WAS ISSUED AND SERVED UPON THE ASSESSEE. DURING THE ASSESSMENT PROCEEDINGS, THE AO NOTICED THAT THE ASSESSEE HAS S HOWN GROSS TOTAL INCOME AT RS.13,44,83,078/- TOWARDS OBJECTS OF THE TRUST AND GROSS RECEIPTS TO THE TUNE OF RS.12,66,22,248/-. THE AO N OTICED THAT THE ASSESSEE HAS CLAIMED DEPRECIATION AMOUNTING TO RS.2 ,19,24,966/- AS DEDUCTION UNDER SECTION 11 OF THE ACT, IN ADDITION TO CLAIM OF CAPITAL EXPENDITURE FOR ACQUISITION OF FIXED ASSETS AS APPL ICATION OF INCOME. THE AO WAS OF THE VIEW THAT SINCE ALL THE EXPENDITURE O F CAPITAL NATURE HAS BEEN TREATED AS APPLICATION OF INCOME FOR THE OBJEC TS OF THE TRUST AND GOT FULL DEDUCTION THEREOF, ANY FURTHER DEDUCTION B Y WAY OF DEPRECIATION WOULD BE AMOUNTED TO DOUBLE DEDUCTION. TO THE SHOW CAUSE NOTICE, THE ASSESSEE CONTENDED THAT THE CLAIM OF THE ASSESSEE A S PER THE LAW AND IN TERMS OF VARIOUS JUDICIAL DECISIONS. HOWEVER, THE LD.AO DID NOT AGREE TO THE SUBMISSIONS OF THE ASSESSEE, AND REJECTED CLAIM OF DEPRECIATION OF RS.2,19,24,966/- AND ADDED TO THE TOTAL INCOME OF T HE ASSESSEE. THE ASSESSEE CONTESTED THE ISSUE BEFORE THE LD.FIRST AP PELLATE AUTHORITY, WHO AFTER CONSIDERING VARIOUS CASES LAWS AND AMENDMENT MADE IN FINANCE ITA NO.762 /AHD/2016 3 BILL 2014, DIRECTED THE AO TO ALLOW FULL DEPRECIATI ON TO THE ASSESSEE. AGGRIEVED REVENUE IS NOW BEFORE THE TRIBUNAL. 5. AFTER GOING THROUGH THE RECORD AND IMPUGNED ORDE RS OF THE REVENUE AUTHORITIES, WE FIND THAT ONLY CONTROVERSY IN THE PRESENT CASE IS, WHETHER DEPRECIATION ALLOWABLE ON EXPENDITURE I NCURRED FOR CAPITAL PURPOSE WHERE THE EXPENDITURE WAS ALREADY TREATED A S APPLICATION OF INCOME FOR THE OBJECTS OF THE ASSESSEE-TRUST IN TER MS OF SECTION 11(1)(A) OF THE ACT. THE ASSESSEE IS A CHARITABLE INSTITUTI ON REGISTERED UNDER SECTION 12A OF THE INCOME TAX ACT AND ASSESSED ACCO RDINGLY. IT IS THE CASE OF THE REVENUE THAT ONCE THE CAPITAL EXPENDITU RE HAS BEEN CLAIMED AS DEDUCTION UNDER SECTION 11(1)(A) AS APPLICATION OF INCOME FOR THE OBJECTS OF THE TRUST, DEPRECIATION CLAIMED ON THE S AME ASSETS AMOUNTS TO DOUBLE DEDUCTION WHICH IS NOT PERMISSIBLE IN LAW HAVING REGARD TO THE PROVISIONS OF SECTION 11(6) OF THE ACT WHICH PROHIB ITS SUCH DEDUCTION. WE FIND THAT THE HONBLE SUPREME COURT IN THE CASE OF RAJASTHAN AND GUJARATI CHARITABLE FOUNDATION POONA, 89 TAXMANN.CO M 127 (SC) HAS HELD THAT EVEN IF THE ENTIRE EXPENDITURE INCURRED F OR ACQUISITION OF CAPITAL ASSETS IS TREATED AS APPLICATION OF INCOME FOR CHARITABLE PURPOSE UNDER SECTION 11(1)(A) OF THE ACT, THE ASSESSEE WOU LD CONTINUE ENJOY ALSO THE BENEFIT DEPRECIATION UNDER SECTION 32 OF T HE ACT. HONBLE SUPREME COURT OBSERVED THAT THE ARGUMENT THAT THE G RANT 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 O F EXPENDITURE INCURRED FOR CHARITABLE PURPOSES IS PROSPECTIVE AND APPLIES ONLY FROM THE ASSESSMENT YEAR 2015-16. IN VIEW OF THE DECISION O F HONBLE SUPREME COURT, THE ASSESSEE IS ENTITLED TO DEPRECIATION ALL OWANCE NOTWITHSTANDING FACT THAT ENTIRE EXPENDITURE INCURR ED FOR ACQUISITION OF CAPITAL ASSETS WERE ADMITTED AS APPLICATION OF INCO ME FOR CHARITABLE PURPOSE UNDER SECTION 11(1)(A) OF THE ACT. WE DO N OT FIND ANY INFIRMITY ITA NO.762 /AHD/2016 4 IN THE IMPUGNED ORDER OF THE LD.CIT(A), WHICH IS CO NFIRMED AND THE GROUNDS OF APPEAL OF THE REVENUE ARE REJECTED. 6. IN THE RESULT, THE APPEAL OF THE REVENUE IS DISM ISSED. ORDER PRONOUNCED IN THE COURT ON 1 ST AUGUST, 2018 AT AHMEDABAD. SD/- SD/- (WASEEM AHMED) ACCOUNTANT MEMBER (RAJPAL YADAV) JUDICIAL MEMBER AHMEDABAD; DATED 01/08/2018