ACIT (E), JAIPUR vs. SETH RAMJI DAS MODI VIDYA NIKETAN SOCIETY, KOTA

PER SHRI KUL BHARAT, JM.

This appeal filed by the revenue is directed against the order of ld. CIT

(Appeals)-5, Jaipur dated 26.09.2016 pertaining to A.Y. 2012-13. The Revenue has

raised followings grounds of appeal.

“1. On the facts and in the circumstances of the case and in law the CIT(A) has erred in allowing claim of depreciation on fixed assets in spite of the fact that the same was allowed as application of income u/s 11 at the time of purchase. 2. On the facts in the circumstances of the case and in law the IT(A) has erred in allowing 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. 3. On the facts and in the circumstances of the case and in law the CIT(A) has erred in allowing depreciation without appreciating the fact that the assessee has not carried out the business activities but the receipts utilized for charity. As there was no business activity the claim of depreciation was not allowable, the depreciation is allowable only in

2 ITA No. 1086/JP/2016 M/s Seth Ramji Das Modi Vidya Niketan Society.

the case of business or HJMF profession or in the case of ‘income from other sources’.

assets.

scrutiny assessment and the assessment under section 143(3) of the Income Tax Act, 1961 (hereinafter referred to as the Act) was framed vide order dated 16th

March 2015, while framing the assessement, the Assessing Officer disallowed the

claim of depreciation. Against this, the assessee preferred an appeal before ld.

CIT(A), who allowed the appeal by following the judgment of the Hon’ble

Jurisdictional High Court in the case of CIT vs. Krishi Upaj Mandi Samiti Jaisalmer

(2015) 125 DTR 0281(Raj).

Departmental Representative supported the order of the Assessing Officer.

However, conceded the fact that the issue is covered in the favour of the assesse by

judgment of the Hon’ble Jurisdictional High Court in the case of Commissioner of

Income Tax vs. Krishi Upaj Mandi (supra).

4.1 The ld. Counsel for the assessee reiterated the submissions as made in the

written submissions and submitted that the issue is covered in favour of the

assessee.

4.2 We have heard the rival contentions, and perused the material available on

record and gone through the order of the authorities below. The Hon’ble High Court

in the case of CIT vs. Krishi Upaj Mandi Samiti has decided the issue by holding as

under:-

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“Assessee is a charitable institution registered u/s 12-A of the Act of 1961 and 100% capital expenditure was availed by it against the asset concerned i.e. a building. Section 32(1)of the Act of 1961 provides for depreciation in respect of building, plant and machinery owned by the assessee and used for business purposes. Income of a charitable trust like the present assessee derived from the depreciable heads is also liable to be computed on commercial basis, however, while doing so it is to be kept in mind that ultimately assessee is a charitable institution and its income for tax purposes is required to be determined by taking into consideration provisions of section 11 of the Act of 1961 after extending normal depreciation and deductions from its gross income. In computing the income of a charitable institution/trust depreciation of assets owned by such institution is a necessary deduction of commercial principles, hence, the amount of depreciation has to be deducted to arrive at the income available.”

In view of the above binding precedents, we do not see any reason to interfere into

the order of the ld. CIT(A), therefore, the same is hereby affirmed. Accordingly, this

ground of the revenue’s appeal is rejected.

Order is pronounced in the open court on Monday,the 10th day of April 2017.

Sd/- Sd/- ( HkkxpUn ½ ( dqy Hkkjr) ( BHAGCHAND) ( KUL BHARAT ) ys[kk lnL;@Accountant Member U;kf;d lnL;@Judicial Member Jaipur Dated:- 10/04/2017. Pooja/ आदेश की प्रतिलिपि अग्रेषित@ब्वचल वf जीम वतकमत वितूंतकमक जवरू

vkns'kkuqlkj@ By order,

सहायक पंजीकार@ Aेेपेजंदज. त्महपेजतंत

4 ITA No. 1086/JP/2016 M/s Seth Ramji Das Modi Vidya Niketan Society.