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Income Tax Appellate Tribunal, BENCH ‘C’
Before: SHRI RAJPAL YADAV & SHRI AMARJIT SINGH
आयकर अपील�य अ�धकरण, अहमदाबाद �यायपीठ - अहमदाबाद । IN THE INCOME TAX APPELLATE TRIBUNAL BENCH ‘C’ BEFORE SHRI RAJPAL YADAV, JUDICIAL MEMBER AND SHRI AMARJIT SINGH, ACCOUNTANT MEMBER आयकर अपील सं./ ITA No.2889/Ahd/2016 With Cross Objection No.03/Ahd/2017 �नधा�रण वष�/Asstt. Year: 2013-14
DCIT (Exemption), Cir.2 Vs. New English School Trust 2nd Floor, Nature View Buildig At Post: Vasad Opp: H.K. House Ta: Anand Dist: Anand. Ashram Road Ahmedabad 380 009. PAN : AAATT 2113 M
अपीलाथ�/ (Appellant) �त् यथ�/ (Respondent)
Revenue by : Shri Prasoon Kabra, Sr.DR Assessee by : Shri Samir Parikh, AR
सुनवाई क� तार�ख/Date of Hearing : 24/04/2018 घोषणा क� तार�ख /Date of Pronouncement: 10/05/2018 आदेश/O R D E R PER RAJPAL YADAV, JUDICIAL MEMBER:
Revenue is in appeal before the Tribunal against order of ld.CIT(A)-9, Ahmedabad dated 13.9.2016 for the Asstt.Year 2013-14. Upon receipt of notice of Revenue’s appeal, assessee has also filed cross objection bearing no.3/Ahd/2017. Both these appeals are disposed of by this common order.
In the Revenue’s appeal sole issue involved is that the ld.CIT(A) is erred in deleting addition of Rs.1,39,08,306/- made by the AO on account of depreciation.
ITA No.2889 /Ahd/2016 with CO 2 3. Brief facts of the case as can be noticed from order of Revenue authorities are that assessee is a trust engaged in educational activities. It is running a school under the name of “The New English School” and college under the name “Sardar Vallabhai Patel Institute of Technology” at Vasad. Assessee-trust is registered under section 12A of the Income Tax Act.
Assessee has filed its return of income on 24.9.2013 declaring total loss income at Rs.(-)4,39,76,637/-. Assessment year involved is 2013-14. The case of the assessee was selected for scrutiny assessment and notice under section 143(2) was issued and served upon the assessee. During the assessment proceedings, it was noticed by the AO that the assessee claimed depreciation to the extent of Rs.1,39,08,306/-. According to the AO, this claim amounts to double deduction in view of the fact that cost of assets was already allowed to the assessee in the form of application of income for charitable purpose and further deduction in name of depreciation was not permissible for computing the profit available for charitable activities. The AO issued a show cause notice dated 21.9.2015 to this effect to the assessee. The assessee replied that as per scheme of the Act governing computation of income of a trust, depreciation can also be claimed as deduction over and above application of income under section 11(1) of the Act. As the statute provides these two deductions for charitable trust, which are distinct deductions, it cannot be termed as double deduction, and claim of the assessee is wholly per the law. The AO rejected this contention of the assessee and disallowed claim of the assessee. However, in the appeal before the ld.First Appellate Authority, claim of the assessee was allowed by following the judgment of Hon’ble jurisdictional High Court in the case of Sheth Manilal Ranchhoddas Vishram Bhavan Trust, 198 ITR 598 (Guj.). Aggrieved with this order of the ld.CIT(A), Department is now in appeal before us.
ITA No.2889 /Ahd/2016 with CO 3 5. The ld.DR relied upon order of the ld.AO, while ld.counsel for the assessee supported order of the ld.CIT(A). The ld.counsel for the assessee also relied upon the judgment of the Hon’ble Supreme Court in the case of CIT Vs. Rajasthan & Gujarati Charitable Foundation Poona reported in 89 taxmann.com 127 (SC). The ld.counsel has placed on record copy of this judgment of Hon’ble Supreme Court.
With the assistance of ld.representatives, we have gone through the record carefully. We find that the ld.CIT(A) while allowing claim of the assessee relied upon the decision of Hon’ble Gujarat High Court in the case of CIT Vs. Sheth Manilal Ranchhoddas Vishram Bhavan Trust, 198 ITR 598. The Hon’ble Gujarat High Court has formulated the following questions for its consideration:
"1. Whether, on the facts and in the circumstances of the case, the Tribunal was right in law in holding that, while computing income under section 11(1)(a) of the Income-tax Act, 1961, depreciation has to be allowed ?
Whether the Tribunal was right in law in holding that, having regard to the Scheme of the Act, 'income' referred to in section 11(1)(a) of the Act is to be computed not in accordance with the provisions of the Act the but in accordance with the normal rules of accountancy under which the depreciation has to be allowed while computing such income under section 11(1)(a) of the Act ?"
The Hon’ble High Court has answered both the questions in affirmative and against the Revenue. The Hon’ble High Court has observed that income from properties held under Trust has to be arrived at in normal commercial manner without classifying under various heads. Recently, Hon’ble Supreme Court in similar case in the matter of CIT Vs. Rajasthan& Gujarati Charitable Foundation Poona (supra) decided similar issue in favour of the assessee. Hon’ble Apex Court held that in case of assessee-trust registered under section 12A, even though expenditure incurred for acquisition of capital assets was treated as application of income for charitable purposes under section
ITA No.2889 /Ahd/2016 with CO 4 11(1)(a), yet depreciation would be allowed on assets so purchased for calculation of its income. Therefore, respectfully following the above two decisions of the Hon’ble Courts, we are of the view that the ld.CIT(A) has not committed any error while allowing the depreciation to the assessee. We do not find any merit in this appeal. It is rejected.
So far as CO of the assessee is concerned, the same is in support of order of the ld.CIT(A), and does not require any adjudication. It is dismissed.
In the result, appeal of the Revenue and CO of the assessee, both are dismissed.
Order pronounced in the Court on 10th May, 2018 at Ahmedabad.
Sd/- Sd/- (AMARJIT SINGH) (RAJPAL YADAV) ACCOUNTANT MEMBER JUDICIAL MEMBER