COMMISSIONER OF INCOME TAX EXEMPTIONS vs. M/S SETH RAMJI DAS MODI VIDHYA NIKETAN

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ITA/280/2017HC RajasthanRJHC02063412201705 December 20172 pages
AI SummaryDismissed

What did the High Court hold?

The High Court held that the amendment to Section 11(6) of the Income Tax Act, 1961, is prospective. Relying on a previous judgment of the same court in Commissioner of Income Tax (Exemptions) vs. Mahima Shiksha Samiti, the court agreed with the Tribunal's view. The court found that depreciation was rightly allowed. Both substantial questions of law were answered in favour of the assessee and against the department. The appeal filed by the department was dismissed. The specific amount in dispute, Rs. 2,68,54,602/-, was the depreciation claimed.

What were the facts?

The appeal was filed by the Commissioner of Income Tax (Exemptions) against an order of the Income Tax Appellate Tribunal (ITAT). The ITAT had dismissed the department's appeal. The assessee is M/s Seth Ramji Das Modi Vidhya Niketan Society. The assessment year(s) are not explicitly stated in the provided text. The dispute revolves around the eligibility of the assessee to claim depreciation on assets that were previously claimed as application of income under Section 11 of the Income Tax Act, 1961. The department contended that allowing depreciation would amount to a double allowance.

What were the issues?

1. Whether, on the facts and in the circumstances of the case, the Hon'ble ITAT was legally correct in holding that the assessee is eligible to claim deduction of depreciation of Rs. 2,68,54,602/- on the assets which were claimed as application u/s 11 at the time of purchase? (Question of law) 2. Whether, on the facts and in the circumstances of the case, the learned ITAT is justified in allowing the depreciation without appreciating the fact that the application of 100% expenditure of the capital asset is already allowed as capital expenditure, hence further allowance of the depreciation on the same capital asset would amount to double allowance? (Question of mixed law and fact) Assessee's contentions: Not recorded in the judgment. Revenue's contentions: The revenue argued that allowing depreciation on assets already claimed as 100% application of income under Section 11 would result in a double allowance. The revenue relied on the amendment to Section 11(6) of the Income Tax Act, 1961, though its applicability prospectively or retrospectively was a point of contention.

Which sections of the Income-tax Act were involved?

Section 11,Section 11(6)

AI-generated summary — verify with the full judgment below

HIGH COURT OF JUDICATURE FOR RAJASTHAN BENCH AT JAIPUR D.B. Income Tax Appeal No. 280 / 2017 Commissioner of Income Tax (Exemptions), 3rd Floor, Kailash Heights, Lal Kothi, Tonk Road, Jaipur. ----Appellant Versus M/s Seth Ramji Das Modi Vidhya Niketan Society, Modi House, Gumapura, Kota. ----Respondent _____________________________________________________ For Appellant(s) : Mr. Daksh Pareek for Mr. Sameer Jain For Respondent(s) : Mr. Mahendra Gargieya _____________________________________________________ HON'BLE MR. JUSTICE K.S. JHAVERI HON'BLE MR. JUSTICE VIJAY KUMAR VYAS Order 05/12/2017 1. By way of this appeal, the appellant has challenged the judgment and order of the Tribunal whereby the Tribunal has dismissed the appeal of the department. 2. This Court while admitting the appeal on 06.10.2017 framed following substantial questions of law:- “ (i) Whether on the facts and in the circumstances of the case the Hon’ble ITAT was legally correct in holding that the assessee is eligible to claim deduction of depreciation of Rs.2,68,54,602/- on the assets which were claimed as application u/s 11 at the time of purchase? (ii) Whether on the facts and in the circumstances of the case, the ld. ITAT is justified in allowing the depreciation without appreciating the fact that the application of 100% expenditure of the capital asset is already allowed as capital expenditure hence further allowance of the depreciation on the same capital asset would amount to double allowance ?”

(2 of 2) [ITA-280/2017] 3. Learned counsel for the appellant placed reliance in case of Commissioner of Income Tax (Exemptions) vs. Mahima Shiksha Samiti, Income Tax Appeal No.262/2007, decided by this court on 03.10.2017 whereby it has been observed as under:- 21. Regarding depreciation in view of the amendment Sec. 11(6) it will be prospective and in view of jurisdictional high court judgment binding on us and we are following the same. 22. In that view of the matter the depreciation is rightly allowed. On the question of foreign trip after taking into consideration the student exchange programme the Tribunal has come to the conclusion that it is covered under the purpose of the trust object and are done for the educational institution and benefit of the students, in our considered opinion, the expenses of foreign trip are also rightly allowed.” 4. In that view of the matter, we are in complete agreement with the view taken by the Tribunal. Both the issues are answered in favour of assessee and against the department. 5. The appeal stands dismissed. (VIJAY KUMAR VYAS), J. (K.S. JHAVERI), J. Chouhan/52

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