ACIT, Jaipur V. SANTOKBA DURLABHJI TRUST FUND, Jaipur

ITA 9/JPR/2016

• Counselvise Citation: [2016] 131 COUNSELVISE.COM (IT) 5085 (ITAT-JAIPUR)
• Duration Of Justice: 8 month(s) 21 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 23-09-2016
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: Not Allotted
• Assessment Year: 2007-2008
• Appeal Filed On: 01-01-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: MEENA CIT DHK
• Assessee Lawyers: G G MUNDRA
• Keywords: Depreciation; Maximum Marginal Rate
• Section: 148; 263; 12; 10; 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.09/JP/16,10/JP/16 FU/KZKJ.K O'K Z@ ASSESSMENT YEAR : 2007-08, 2012-13 THE ASSTT. COMMISSIONER OF INCOME TAX (EXEMPTION) CIRCLE, JAIPUR CUKE VS. M/S SANTOKBHA DURLABHJI TRUST FUND, 139 JOHARI BAZAR, JAIPUR LFKK;H YS[KK LA-@THVKBZVKJ LA-@ PAN NO. AADFS 7665 N VIHYKFKHZ@ APPELLANT IZR;FKHZ@ RESPONDENT VK;DJ VIHY LA-@ ITA NO. 1011/JP/15 FU/KZKJ.K O'K Z@ ASSESSMENT YEAR : 2012-13 M/S SANTOKBHA DURLABHJI TRUST FUND, 139 JOHARI BAZAR, JAIPUR CUKE VS. THE ASSTT. COMMISSIONER OF INCOME TAX (EXEMPTION) CIRCLE, JAIPUR LFKK;H YS[KK LA-@THVKBZVKJ LA-@ PAN NO. AADFS 7665 N VIHYKFKHZ@ APPELLANT IZR;FKHZ@ RESPONDENT FU/KZKFJRH DH VKSJ LS@ ASSESSEE BY : SHRI G.G. MUNDRA (CA) JKTLO DH VKSJ LS@ REVENUE BY : SHRI M.S. MEENA ( CIT ) LQUOKBZ DH RKJH[K@ DATE OF HEARING : 22.09.2016 ?KKS'K .KK DH RKJH[K @ DATE OF PRONOUNCEMENT : /09/2016. VKNS'K@ ORDER PER SHRI VIKRAM SINGH YADAV, A.M. THESE ARE TWO APPEALS FILED BY THE REVENUE FOR AY 2 007-08 AND AY 2012- 13 AGAINST THE ORDER OF LD CIT(A) DATED 14.10.2015 WHEREIN COMMON GROUNDS OF APPEALS HAVE BEEN TAKEN. IN ADDITION, THERE IS A CROSS APPEAL FILED BY THE ITA NOS. 09 & 10/JP/16 & ITA NO. 1011/JP/15 THE ACIT (EXEMPTION) JAIPUR VS. SANTOKBHA DURLABHJI TRUST FUND, JAIPUR 2 ASSESSEE TRUST FOR AY 2012-13. THE SAME WERE HEARD TOGETHER AND DISPOSED OFF BY THIS CONSOLIDATED ORDER. ITA NO. 09/JP/16 (1) ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE A ND IN LAW THE CIT(A) HAS ERRED IN ALLOWING ASSESSEES CLAIM OF EXEMPTION U/S 11 EVEN THOUGH PROVISIONS OF SECTION 13(1)(D)(III) ARE ATTRACTED (2) ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE A ND IN LAW THE CIT(A) HAS ERRED IN HOLDING THAT DENIAL OF EXEMPTION U/S 13(1)(D)(III) IS TO BE RESTRICTED TO ONLY THE INCOME EARNED FROM SHARES TO BE TAXED AT MAXIMUM MARGINAL RTE U/S 164(2) AND NOT THE ENTIRE INCOME OF RESPONDENT ASSESSEE. (3) ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE A ND IN LAW, THE CIT(A) HAS ERRED IN HOLDING THAT THE ASSESSEE IS ELIGIBLE TO CLAIM DEPRECIATION DESPITE THE FACT THAT THE INVESTMENT MADE AT THE TI ME OF PURCHASE HAS ALREADY BEEN ALLOWED AS APPLICATION. 2. REGARDING GROUND NO. 1 & 2, THE FACTS OF THE CAS E ARE THAT THE ASSESSING OFFICER ISSUED NOTICE U/S 148 FOR A.Y. 2007-08 ON 14.03.2014 AND THEREAFTER HELD THAT THE HOLDING OF SHARES OF TISCO BY ASSESSE E TRUST IS IN VIOLATION OF PROVISIONS OF SECTION 13(1)(D) OF IT ACT, 1961 AND DISALLOWED THE BENEFIT OF SECTION 11 & 12 CLAIMED BY THE ASSESSEE TRUST. THE AO DETERMINED SURPLUS OF RS.6,53,34,941/-, DISALLOWED DEPRECIATION CLAIMED O F RS. 2,37,95,168/- AND FURTHER MAKING CERTAIN OTHER ADDITIONS OF RS. 67,94 ,513/-, COMPUTED TAXABLE INCOME OF ASSESSEE TRUST AT RS.9,59,74,620/- AND S UBJECT IT TO TAX AT MAXIMUM MARGINAL RATE PRESCRIBED. THE MATTER WAS CARRIED IN APPEAL BY THE ASSESSEE TRUST BEFORE THE LD CIT(A) WHO ALLOWED THE APPEAL F OLLOWING THE ORDER OF THE TRIBUNAL IN AY 2008-09. HENCE, THE PRESENT APPEAL B Y THE REVENUE BEFORE US. 2.1 THE LD AR AT THE OUTSET SUBMITTED THAT ISSUE IS COVERED IN FAVOUR OF ASSESEE FROM THE APPEAL ORDERS OF ITAT FOR A.Y. 200 4-05, 2008-09, 2009-10, ITA NOS. 09 & 10/JP/16 & ITA NO. 1011/JP/15 THE ACIT (EXEMPTION) JAIPUR VS. SANTOKBHA DURLABHJI TRUST FUND, JAIPUR 3 2011-12 AND APPEAL ORDER FOR A.Y. 2005-06 & 2010-11 CANCELLING ORDER OF CIT U/S 263 OF IT ACT, 1961 WHEREIN IT IS HELD THAT BY HOLDING SHARES OF TISCO IN VIOLATION OF SECTION 13(1)(D) OF IT ACT DOES NOT RE SULT IN DENIAL OF EXEMPTION U/S 11 & 12 OF IT ACT, 1961 IN RESPECT TO TOTAL INCOME OF ASSESSEE TRUST BUT ONLY RESULT IN DENIAL OF EXEMPTION IN RESPECT OF INCOME DERIVED FROM SUCH SHARES AND EVEN THAT INCOME IS SUBJECT TO OTHER PROVISIONS OF IT ACT, 1961 SUCH AS SECTION 10 OF THE ACT. THE ASSESSEE TRUST RECEIV ED DIVIDENDS AND GAINS ON SALE OF SHARES BY IT WHICH ARE EXEMPT U/S 10(34) & 10(3 8) OF IT ACT, 1961 WHICH WILL RESULT IN NIL TAXABLE INCOME AS DECLARED BY THE ASS ESSEE TRUST. 3. IN RESPECT OF GROUND NO.3 WHICH RELATES TO CLAIM OF DEPRECIATION, THE LD AR SUBMITTED THAT THE SAID ISSUED IS ALSO COVERED F ROM THE APPEAL ORDER IN CASE OF ASSESSEE PASSED BY HONBLE BENCH FOR A.Y. 2004-0 5 & 2009-10 (ITA NO.254 &255/JP/2014 ORDER DATED 13.03.2015. 4. THE FINDINGS OF THE COORDINATE BENCH VIDE ORDER DATED 13.03.2015 IN APPEAL ITA NO. 241 & 242/JP/2014 AND 254 & 255/JP/ 2014 ARE REPRODUCED AS UNDER: (2.7) WE HAVE HEARD THE RIVAL CONTENTIONS AND PERU SED THE MATERIAL AVAILABLE ON RECORD. AS FAR AS THE ASSESSEES APPEAL IS CONC ERNED THIS BENCH OF ITAT IN ASSESSEES OWN CASE FOR ASSESSMENT YEAR 2008-09 HA S HELD THAT THE ASSESSEE CANNOT BE DENIED EXEMPTION U/S 11 & 12 OF THE ACT B ECAUSE OF ITS INVESTMENT IN CONTINUING IN TISCO SHARES. IT HAS BEEN FURTHER HE LD THAT DIVIDEND INCOME FROM TISCO SHARES IS EXEMPT U/S 10(34) OF THE IT ACT. T HEREFORE, THE TRUST IS ELIGIBLE FOR BENEFIT OF SECTION 11 AND 12 OF THE IT ACT AND THERE WILL BE NO ADDITION IN TAXABLE INCOME AS DIVIDEND INCOME IS EXEMPT. THUS R ESPECTFULLY FOLLOWING OUR ITA NOS. 09 & 10/JP/16 & ITA NO. 1011/JP/15 THE ACIT (EXEMPTION) JAIPUR VS. SANTOKBHA DURLABHJI TRUST FUND, JAIPUR 4 OWN DECISION IN THE CASE OF THE ASSESSEE, THE GROUN DS RAISED BY THE ASSESSEES APPEALS ARE ALLOWED. (2.8) APROPOS REVENUES APPEALS ALSO, WE FIND MERIT IN THE ARGUMENTS OF THE LD. COUNSEL FOR THE ASSESSEE THAT THE CHANGE IN LAW HAS BEEN SPECIFICALLY BROUGHT WITH PROSPECTIVE EFFECT FROM 01.04.2015 AN D IS NOT RETROSPECTIVE. THUS THE OLD POSITION SETTLED BY JUDGEMENT CITED (SUPRA) IN THIS BEHALF I.E. DEPRECIATION REMAINS INTACT. IN VIEW THEREOF, WE F IND NO INFIRMITY IN THE ORDER OF THE LD. CIT(A) ON THIS ISSUE ALLOWING DEPRECIATION . HENCE, THE APPEALS OF THE REVENUE ARE DISMISSED. 5. GIVEN THAT THERE IS NO CHANGE IN FACTS AND CIRCU MSTANCES OF THE CASE AS WELL AS THE LAW APPLICABLE FOR THE YEAR UNDER CONSI DERATION, FOLLOWING THE DECISION OF COORDINATE BENCH REFERRED SUPRA, CLAIM OF EXEMPTION UNDER SECTION 11 AND 12 AS WELL AS DEPRECIATION CLAIM IS ALLOWED TO THE ASSESSEE TRUST. HENCE, GROUNDS OF APPEAL TAKEN BY THE REVENUE ARE D ISMISSED. ITA NO. 10/JP/16 6. IN ITA NO. 10/JP/16 FOR ASSESSMENT YEAR 2012-13, THE REVENUE HAS TAKEN SIMILAR GROUNDS OF APPEAL AS TAKEN IN A.Y. 2007-08. ON PARITY OF REASONING, OUR DECISION TAKEN IN ITA NO. 09/JP/16 SHALL APPLY MUTA TIS- MUTANDIS TO SUBJECT APPEAL. HENCE, GROUNDS OF APPEAL TAKEN BY THE REVE NUE ARE DISMISSED. ITA NO. 1011/JP/15 7. THE ASSESSEE TRUST HAS MOVED AN APPLICATION DATE D 22.09.2016 REQUESTING FOR WITHDRAWAL OF ITS APPEAL. ON THE BA SIS OF THE SAID REQUEST, THE APPEAL FILED IS DISMISSED. ITA NOS. 09 & 10/JP/16 & ITA NO. 1011/JP/15 THE ACIT (EXEMPTION) JAIPUR VS. SANTOKBHA DURLABHJI TRUST FUND, JAIPUR 5 IN THE RESULT THE APPEALS FILED BY THE REVENUE AS W ELL AS THE ASSESSEE ARE DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON /09/ 2016. ( KUL BHARAT ) (VIKRAM SINGH YADAV) U;KF;D LNL;@ JUDICIAL MEMBER YS[KK LNL;@ ACCOUNTANT MEMBER JAIPUR DATED:- / 09/2016 PILLAI VKNS'K DH IZFRFYFI VXZSF'KR@ COPY OF THE ORDER FORWARDED TO: 1. VIHYKFKHZ@ THE APPELLANT- THE ACIT (EXEMPTION), JAIPUR 2. IZR;FKHZ@ THE RESPONDENT- M/S SANTOKBHA DURLABJI TRUST FUND, JAIPUR 3. VK;DJ VK;QDR@ CIT (EXEMPTION) JAIPUR 4. VK;DJ VK;QDRVIHY@ THE PR. CCIT, JAIPUR 5. FOHKKXH; IZFRFUF/K] VK;DJ VIHYH; VF/KDJ.K] T;IQJ@ DR, ITAT, JAIPUR 6. XKMZ QKBZY@ GUARD FILE (ITA NO.09& 10 /JP/2016 & 1011/JP/15) VKNS'KKUQLKJ@ BY ORDER, LGK;D IATHDKJ@ ASSISTANT. REGISTRAR