THE DY. COMMISSIONER OF INCOME TAX (EXEMPTIONS), CIRCLE-1, AHMEDABAD vs. MUDRA FOUNDATION FOR COMMUNICATION RESEARCH & EDUCATION, AHMEDABAD

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ITA 2191/AHD/2016Status: DisposedITAT Ahmedabad10 May 2018AY 2008-094 pages
AI SummaryDismissed

What did the Tribunal hold?

The Tribunal upheld the CIT(A)'s decision, stating that depreciation is allowable for charitable trusts, citing Supreme Court and High Court precedents. The Tribunal also found that the reopening of assessment was not valid as the Assessing Officer failed to demonstrate any failure on the part of the assessee to disclose material facts.

What were the facts?

The Assessing Officer reopened the assessment of a charitable trust for AY 2008-09, disallowing depreciation claimed as application of income, citing double deduction. The CIT(A) allowed the assessee's appeal, holding that depreciation is allowable for charitable trusts and that the reopening was not justified.

What were the issues?

Whether depreciation is allowable for a charitable trust and whether the reopening of assessment under Section 147 was justified.

Which sections of the Income-tax Act were involved?

Section 147,Section 143(3)

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Income Tax Appellate Tribunal, AHMEDABAD “D” BENCH

Before: Shri Rajpal Yadav & Shri Amarjit Singh

For Appellant: Shri Sanjay R. Shah, A.R
For Respondent: Shri R.P. Maurya, Sr. D.R, Shri Sanjay R. Shah, A.R

आदेश/ORDER PER : AMARJIT SINGH, ACCOUNTANT MEMBER:- This Revenue’s appeal for A.Y. 2008-09, arises from order of the CIT(A)- 9, Ahmedabad dated 08-06-216, in proceedings under section 143(3) r.w.s. 147 of the Income Tax Act, 1961; in short “the Act”.

2.

The revenue has raised following grounds of appeal:-

“1) Whether on the facts and in the circumstances of the case the Ld. CIT(A) is justified in allowing the assessee's ground regarding reopening of assessment u/s. 147 of the Act. 2) Whether on the facts and in the circumstances of the case the Ld. CIT(A) is justified in allowing the assessee's appeal in deleting the addition of disallowance of depreciation made by the Assessing Officer of Rs.5,51,186/-

I.T.A No. 2191/Ahd/2016 A.Y. 2008-09 Page No 2 DCIT vs. Mudra Foundation for Communication Research and Education

3) On the facts and circumstances of the case, the Ld. Commissioner of Income-Tax (Appeals) ought to have upheld the order of the Assessing Officer. 4) It is, therefore, prayed that the order of the Ld. Commissioner of Income-tax (Appeals) may be set aside and that of the Assessing Officer be restored.

3.

The brief facts of the case are that original assessment u/s. 143(3) was completed on 16th Nov, 2010 by accepting income at nil. Subsequently, the case was reopened u/s. 147 on the ground that assessee has claimed depreciation of Rs. 53,16,941/- as application of the income which was already allowed as an expenditure in the earlier years as application of funds, therefore, allowing depreciation would amount to double deduction. In view of the above, the assessing officer has concluded that further allowance on depreciation will amount to double deduction, therefore, in the re-assessment proceedings, he has disallowed the claim of depreciation of Rs. 53,16,941/-.

4.

Aggrieved assessee filed appeal before the ld. CIT(A). The ld. CIT(A) has allowed the appeal of the assessee by stating that the issue on allowability of depreciation in the case of charitable trust has been decided by the Hon’ble Gujarat High Court in the case of CIT vs. Sheth Manilal Ranchhoddas Vishram Bhavan Trust 198 ITR 598 (Guj). Regarding first ground of appeal of the assessee pertaining to reopening of assessment pertaining to assessment u/s. 147 of the act ,the ld. CIT(A) has allowed the appeal of the assessee stating that the original assessment u/s. 143(3) was completed in Nov, 2010 and assessing officer has nowhere provided any finding that their satisfaction regarding any failure on the part of assessee to disclose fully and truly all material facts necessary for reassessment.

5.

We have heard the rival contentions and perused the material on record carefully. The assessment u/s. 143(3) of the act was completed on 16/11/2010 by determining income at nil in the case of the assessee. In the re-assessment, the claim of depreciation of Rs. 53,16,941/- was disallowed on the ground that

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the capital expenditure incurred on the fixed assets had been allowed as an expenditure in the earlier years as appreciation of funds. The ld. CIT(A) has allowed the claim of depreciation after placing reliance on the decision of Hon’ble Gujarat High Court in the case of CIT vs. Sheth Manilal Ranchhoddas Vishram Bhavan Trust 198 ITR 598 (Guj) and the decision of the Co-ordinate Bench of the ITAT Ahmedabad in the case of Sardar Patel Institute of Public Administration assessment year 2008-09 vide ITA no. 1322/Ahd/2011. During the course of appellate proceedings before us, it was brought to our notice by the ld. counsel that Hon’ble Supreme Court in the decision of CIT-III, Pune vs. Rajasthan and Gujarat Charitable Foundation Poona vide (2018) 89 taxmann.com 127 has decided the identical issue in favour of the assessee by following the decision of Hon’ble Bombay High Court in CIT vs. Institute of Banking Personnel Selection (IBPS) (2003) 131 Taxman 386 (Bombay). It was held by the Hon’ble Bombay High Court that the income of the trust is required to be computed under section 11 on commercial principles after providing for allowance for normal depreciation and deduction thereof from gross income of the trust. In view of the above facts and judicial findings, we do not find any reason to interfere in the decision of ld. CIT(A). Therefore, the appeal of the Revenue is dismissed on this issue.

Ground No. 1

6.

This is undisputed fact that assessment for the year under consideration has been reopened after 4 year as the original assessment was completed on 1st Nov, 2010. After taking in to consideration the proviso to section 147 of the act we observe that the assessing officer has not demonstrated with any material and findings that here was any failure on the part of the assessee to disclose fully and truly all material facts necessary for reassessment. After considering the decision of Hon’ble Supreme Court in the case of ACIT Vs. ICICI Securities Primary Dealership Ltd. 348 ITR 299 as elaborated in the findings of the ld. CIT(A) that there is nothing new which has come to the notice of Revenue. we

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uphold the decision of Ld. CIT(A) and the appeal of the revenue is also dismissed on this issue.

7.

In the result, the appeal of the revenue is dismissed.

Order pronounced in the open court on 10-05-2018

Sd/- Sd/- (RAJPAL YADAV) (AMARJIT SINGH) JUDICIAL MEMBER ACCOUNTANT MEMBER Ahmedabad : Dated 10/05/2018 आदेश क� ��त�ल�प अ�े�षत / Copy of Order Forwarded to:- 1. Assessee 2. Revenue 3. Concerned CIT 4. CIT (A) 5. DR, ITAT, Ahmedabad 6. Guard file. By order/आदेश से, उप/सहायक पंजीकार आयकर अपील�य अ�धकरण, अहमदाबाद

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