MASJID-E-MOAZZAN & MAZAR-E-SAIFEE,,SURAT vs. THE ACIT, CIRCLE-2,, SURAT
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Income Tax Appellate Tribunal, -SURAT-BENCH-SURAT
Before: SHRI SANDEEP GOSAIN & SHRI O.P.MEENA, ACCOUTANT MEMBER
Masjid-E-Moazzan & Mazar-E-Saifee/I.T.A.No. 451/AHD/2015 A.Y. 11-12 Page 1 of 6
आयकर अपीलीय अिधकरण,सुरत �यायपीठ, सुरत IN THE INCOME TAX APPELLATE TRIBUNAL-SURAT-BENCH-SURAT BEFORE SHRI SANDEEP GOSAIN, JUDICIAL MEMBER AND SHRI O.P.MEENA, ACCOUTANT MEMBER आ.अ.सं/.I.T.A No.451/AHD/2015 िनधा�रण वष�/Assessment Year:2011-12 Masjid-E-Moazzan & Mazar-E- Assistant Commissioner Saifee, of Income Tax, 3/873, Devdi Mubarak, Circle-2, Surat Zampa Bazar, Surat 395002 PAN:AATMB 8182 R अपीलाथ� Appellant ��यथ�/Respondent
Shri Sapnesh Sheth, CA िनधा�रती क� ओर से /Assessee by Mrs. Anupama Singla, Sr.D.R. राज�व क� ओर से /Revenue by 06.02.2020 सुनवाई क� तारीख/ Date of hearing: 06.02.2020 उ�ोषणा क� तारीख/Pronouncement on आदेश /O R D E R PER O. P. MEENA, AM: 1. This appeal by the Assessee is directed against the order of learned Commissioner of Income tax (Appeals)-3, Surat(in short “the CIT (A)”) dated 18.1.22014 pertaining to Assessment Year 2011-12. 2. Ground No.1 relates to not fully allowing accumulation of income of Rs.15,35,563 under section 11(1)(a) as claimed by the assessee. 3. Ground No. 2 states the CIT (A) has erred in confirming disallowance of depreciation of Rs.1,39,85,616.
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Both ground are interconnected hence, being dealt with together. Succinct facts are that the AO found that in the Income and Expenditure Account, the assessee has claimed an amount of Rs. 2,39,017 being 15% of the income set apart for accumulation. Accordingly, the assessee trust has shown deficit of Rs.1,41,66,751 by claiming depreciation of Rs.1,39,85,615. Therefore, the assessee was show caused as to why depreciation should not be disallowed, when the assessee has availed deduction under section 11, hence, it results in double deduction. The AO considered the submissions of the assessee and held that if the capital expenditure is made out of the income of property held under the trust or donations and other income received during the year, the claim of said assets will result in double benefit of the assessee. In other words, when cost of assets is fully claimed as capital expenditure forming part of the application of income, there remains no WDV as per provision of Income Tax Act, 1961. Therefore, the claim of depreciation of Rs.1,39,85,615 was disallowed. 5. The AO further noted that the assessee has claimed deduction under section 11(1) (a) of Rs.2,39,017 being 15% of income set apart for specific purpose. During the year under consideration, the assessee trust has shown income at Rs.15,93,455 before claiming of
Masjid-E-Moazzan & Mazar-E-Saifee/I.T.A.No. 451/AHD/2015 A.Y. 11-12 Page 3 of 6
expenditure on the object of the trust as well as deduction under section 11(1)(a) of the Act. The AO observed that the assessee trust has shown income at Rs.15,93,455 and has applied amount of Rs.15,35,564 towards the object of the trust and claimed depreciation at Rs.1,39,85,615. Thus, if expenditure on object of trust is deducted then there remains only balance of Rs.57,881 so as to enable the trust to claim deduction under section 11(1)(a) of the Act. This shows that the assessee has availed the benefit before deducting the expenditure incurred for the object of the trust. 6. Being, aggrieved, the assessee filed an appeal before the Ld. CIT (A). The CIT (A) following his order in the case of Dawat Properties has allowed depreciation to the extent pertaining to properties for which, the income of rental income of Rs.42,499 has been derived. For which also, the assessee has not furnished quantum of depreciation. However, same was allowed subject to verification by the AO. It was further clarified, that depreciation on entire cost of property (including cost of land), only 50% of depreciation claimed would be allowed and remaining depreciation was not allowed. With regard accumulation under section 11(1) (a), the CIT (A) observed that it would be allowed if there is residual income after application of income.
Masjid-E-Moazzan & Mazar-E-Saifee/I.T.A.No. 451/AHD/2015 A.Y. 11-12 Page 4 of 6
Being, aggrieved the assessee filed this appeal before the Tribunal. The learned counsel for the assessee submitted that, the issue stands squarely covered by the judgement of Hon`ble Supreme Court in the case of CIT-III, Pune v. Rajasthan and Gujarat Charitable Foundation , Poona [Civil Appeal No. 7186 of 2014 dated 13.12.2017] and Hon’ble Gujarat High Court in the case of Director of Income-tax (Exemption) v. Ahmedabad South Indian Charitable Trust [Tax Appeal No. 439 of 2012 dated 09.08.2012] and decision of Tribunal in the case of ADIT( E) Ahmedabad v. Friends of WWB India [I.T.A.No. 2658/Ahd/2012 dated 31.01.2013] of Ahmedabad Tribunal. 8. The Ld. CIT (D.R.) relied on the order of the Ld. AO. 9. We have heard the rival submissions and perused the relevant material on record. We find that the issue of depreciation is squarely covered by the decision of Hon`ble Supreme Court in the case of Commissioner of Income-Tax-III Pune v. Rajasthan And Gujarat Charitable Foundation Poona [ Civil Appeal No. 7168 of 2014 dated 13.12.2017] (supra) wherein the Hon`ble Supreme Court held as under: “After hearing learned counsel for the parties, we are of the opinion that the previously mentioned view taken by the
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Bombay High Court correctly states the principles of the law and there is no need to interfere with the same. It may be mentioned that must of the High Courts have taken the aforesaid view with only exception thereto by the High Court of Kerala in Lissie Medical Institution v. Commissioner of Income-Tax’ It may also be mentioned at this stage that the legislature, realising that there was no specific provision in the behalf in the Income Tax Act, has made amendment in Section 11(6) of the Act vide Finance Act No. 2/2014 which became effective from the Assessment Year 2015-2016. The Delhi High Court has taken the view and rightly, so, that that said amendment is perspective in nature. It also follows that once assessee is allowed depreciation; he shall be entitled to carry forward the depreciation as well. For the aforesaid reasons, we a affirm the view taken by the High Court in these cases and dismissed these matters.
In the light of above judgement of Hon`ble Supreme Court and Hon`ble Jurisdictional High Court, respectfully following the same, we allow the appeal of the assessee. Consequential, the assessee will be entitled to den under section 11(1)(a) of the Act.
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In the result, the appeal of the assessee is allowed. 12. The order pronounced in open court on 06.02.2020.
Sd/- Sd/- (SANDEEP GOSAIN) (O.P.MEENA) JUDICIAL MEMBER ACCOUNTANT MEMBER Surat: Dated: February 6th, 2020/opm Copy of order sent to- Assessee/AO/Pr. CIT/ CIT (A)/ ITAT (DR)/ Guard file of ITAT. By order / / TRUE COPY / / Assistant Registrar, Surat
