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Income Tax Appellate Tribunal, AHMEDABAD “A” BENCH AHMEDABAD
IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD “A” BENCH AHMEDABAD
BEFORE, SHRI S. S. GODARA, JUDICIAL MEMBER AND SHRI PRADIP KUMAR KEDIA, ACCOUNTANT MEMBER
ITA No. 1627/Ahd/2015 (Assessment Year: 2011-12)
Income Tax Officer (Exemptions), Ward – 1, Ahmedabad Appellant Vs. Nirma University, Sarkhej Gandhinagar Highway, P.O. Chandlodia, Ahmedabad Respondent
PAN: AAATT6829N
राज�व क� ओर से/By Revenue : Aditya Shukla, D.R. आवेदक क� ओर से/By Assessee : H. C. Shah, A.R. सुनवाई क� तार�ख/Date of Hearing : 10.11.2017 घोषणा क� तार�ख/Date of Pronouncement : 29.11.2017
ORDER PER S. S. GODARA, JUDICIAL MEMBER
This Revenue’s appeal for assessment year 2011-12 emanates from the CIT(A)-9, Ahmedabad’s order dated 13.03.2015 in case no. CIT(A)-9/267/JDITO Exem/2014-15, reversing Assessing Officer’s action disallowing depreciation claim of Rs.5,77,27,323/- in assessment order dated 18.03.2014 by terming the same to be a case of double deduction in view of hon’ble apex court’s judgment in Escorts
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Ltd. case 199 ITR 43 (SC), in proceedings u/s. 143(3) of the Income Tax Act, 1961; in short “the Act”. Heard both the parties. Case file perused.
A perusal of Revenue’s pleadings raising the above sole issue of depreciation disallowance involves a very narrow conspectus of facts. This assessee is admittedly assessed as a charitable trust. It runs educational institutions in various academic levels. The assessee enjoys Section 12AA registration as well since 17.10.2003. It raised the above depreciation claim amounting to Rs.5,77,27,323/-. The Assessing Officer noticed it to have claimed an amount of Rs.10,59,74,849/- as capital expenditure incurred towards carrying its above educational activity. He was of the view that the above depreciation claim therefore amounted to a case of double deduction i.e. both towards capital expenditure as well as whilst computing income of the relevant previous year. He therefore quoted hon’ble apex court’s decision hereinabove as well as hon’ble Kerala high court’s decision in Lissie Medical Institutions vs. CIT 348 ITR 344 (Kerla) to conclude that the depreciation claim in question would not be admissible to assessee. All this reasoning resulted in the impugned disallowance of Rs.5,77,27,323/- being made in assessee’s hands in assessment order dated 18.03.2014.
The CIT(A) reverses Assessing Officer’s action as under:
“3.2 I have carefully considered the above submission and case laws relied upon by the appellant. Regarding allowance of depreciation, as categorically mentioned in the case of CIT(A) v/s. Tiny Tots Education Society) (2011) 330 ITR 21 the Hon. Punjab & Haryana has distinguished the judgment of Hon. Supreme Court in the case of Escorts Ltd. v/s. UOI (199 ITR 43). The appellant also relied on the following decisions in support of its contentions. (i) CIT v/s. Shri Plot Swetamber MurtiPujak Jain Mandal (1989) 211 ITR 293(Guj.). (ii) CIT v/s Sheth Manilal Ranchhoddas Vishram Bhavan Trust (198ITR598)(Guj.) (iii) CIT v/s. Tiny Tots Education Society (330 ITR 21)(P&H) (iv) CIT v/s. Market Committee, Pipll 330 ITR 16 (P&H)
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(v) CIT v/s. Maharaja Aggarsain Medical Education & Scientific Research Society ITA No.750 of 2010 dtd.06.01.11 (vi) CIT vs. Manav Mangal Society 328 ITR 421 (P & H) (vii) CIT(A)-XXI, Ahmedabad passed appeal order No.ClT(A)-XXI/888/10-11 dtd.17-09-2012 in the case of Nirma Education & Research Foundation for A.Y. 2008-09. (viii) Ahmedabad Tribunal order vide ITA No.1216/Ahd/2011 dtd.29-01-2015 in the case of appellant for A.Y. 2008-09
Hon'ble Gujarat High Court order dtd. 09-08-2012 in the case of DIT (Exemption) v/s. Ahmedabad South Indian Charitable Trust has considered the decision of Hon. Supreme Court in the case of Escorts Ltd. 199 ITR 43 relied upon by the A.O. and has confirmed that depreciation will be allowed in the case of trust. Ld.ClT(A)-XXI, Ahmedabad in the case of Nagri Municipal Research Foundation Trust vide appeal No. ClT(A)-XXI/395/11-12 dtd. 27-05-2014 for A.Y. 2010-11 following the decision of Jurisdictional High Court in the case of CIT v/s. Sheth Manilal Rachhoddas Vishram BhavanTrust198 ITR 598 allowed the claim of depreciation. The Ld.CIT(A)-XX, Ahmedabad allowed the claim of depreciation in the case of Banaskantha District Kelvani Mandal for A.Y.2006-07 & 2008-09 vide appeal No. CIT(A)-XXI/744 & 747/ITO(Exm)/13-14 dtd. 13-11-2014 following the various judgments/decisions of Jurisdictional High Court/lTAT including the decision of Hon. IT AT 'D' Bench, Ahmedabad in the case of ITO (Exemption) Bhavnagar v/s. Sardar Public Charitable trust, Botad. The appellant also brought to my notice the order passed by Hon. ITAT, Ahmedabad in its ease for A.Y. 2008-09 vide ITA No.1216/Ahd/20l1 dtd.29/01/2015 wherein the claim of depreciation was allowed to the appellant. Following the above orders of Id. ClT(A), Hon. ITAT & Jurisdictional High Court I hold that appellant is entitled for claim of depreciation. Accordingly, this ground of appeal raised by the appellant is allowed.”
Learned Departmental Representative strongly argues in favour of the impugned disallowance. His case is that the Assessing Officer had rightly held assessee’s claim to be an instance of double deductions. We sought to know about the finality of CIT(A)’s order in preceding assessment year on the very issue. The assessee files before us copy of a co-ordinate bench order in this regard dated 29.01.2015 rejecting Revenue’s identical substantive ground as under:
“2. Assessee trust is a Charitable Trust registered with Income-tax Department. Assessing Officer rejected the claim of depreciation. He relied on decision of Hon'ble Supreme Court in case of Escorts Ltd. vs. Union of India (1993) 199 ITR 43 (SC). However, facts of Escorts Ltd. are not applicable to assessee. Escorts Ltd is not a Charitable Trust. In view of above, CIT(A) allowed depreciation. Same has been opposed before us. In this regard, learned Authorized Representative relied on the decision of Hon’ble Gujarat High Court in Tax Appeal No. 933 of 2010 with 934 to
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936 of 2010 in case of Director of Income Tax (Exemption) vs. Ahmedabad South Indian Association Charitable Trust, wherein Assessing Officer disallowed the depreciation. Matter travelled up to Tribunal, wherein following decision of Hon’ble Gujarat High Court in case of Commissioner of Income-Tax vs. Sheth Manilal Ranchhoddas Vishram Bhavan Trust reported in (1992) 198 ITR 598 (Guj.) decided the issue in favour of assessee. We find that in Sheth Manilal Ranchhoddas Vishram Bhavan Trust (supra) in which Court had followed earlier decision of Karnataka and Madhya Pradesh High Courts in case of CIT vs. Society of the Sisters of St. Anne (1984) 146 ITR 28 (Kar.) and CIT vs. Raipur Pallottine Society (1989) 180 ITR 579 (MP) have decided the issue in favour of assessee by observing as under: "Whether depreciation has to be allowed as a necessary deduction for computing the income of a charitable institution was the question which came up before the Karnataka High Court in CIT v. Society of the Sisters of St. Anne (1984) 146 ITR 28. Noticing the difference between the word "income" and the expression "total income" and the necessity for providing depreciation in order to maintain correct accounts, the High Court held that the amount of depreciation debited to the accounts of the charitable institution has to be deducted to arrive at the income available for application to charitable and religious purposes. Same view has been taken by the Madhya Pradesh High Court in CIT v Raipur Pallottine Society (1989) 180 ITR 579. "In CIT v. Rao Bahadur Calavala Cunnan Chetty Chanties (1982) 135 ITR 485, the Madras High Court was required to consider whether, for the purpose of computing accumulation in excess of 25 per cent as laid down in section 11(1)(a) of the Act, "income" has to be computed under the various heads enumerated in the Income-tax Act. It held that the income from the properties held under trust would have to be arrived at in the normal commercial manner without classification under the various heads set out in section 14. It held that the expression "income" has to be understood in the popular or general sense and not in the sense in which the income is arrived at for the purpose of assessment to tax by application of some artificial provisions either giving or denying deduction. It observed that the computation under the different categories or heads arises only for the purposes of ascertaining the total income for the purposes of charge. Those provisions cannot be introduced to find out what the income derived from the property held under trust to be excluded from the total income is, for the purpose of the exemptions under Chapter III. "We are in respectful agreement with the view taken by the Karnataka, Madhya Pradesh and Madras High Courts. We, therefore, answer both the questions referred to us in the affirmative and against the Revenue. No order as to costs. " Following the same Hon’ble Gujarat High Court in Ahmedabad South Indian Association Charitable Trust (supra) has decided the issue in favour of assessee. Thus, the issue before us i.e. allowability of depreciation of Rs.6,47,32,014/- is decided in favour of assessee.”
Coupled with this, it is brought to our notice that the legislature has also inserted amendment in Section 11(6) of the Act vide Finance Act (No.2) of 2014 w.e.f. 01.04.2014 to the effect that such a claim would not be admissible from
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prospective effect only. Learned counsel then quotes hon’ble Karnataka high court’s decision in DIT(E) vs. Al-Ameen Charitable Fund Trust holding the above amendment not to be having retrospective effect. We reiterate that we are dealing with assessment year 2011-12. We therefore take into account the above legal and factual position to affirm the CIT(A)’s findings under challenge.
This Revenue’s appeal is dismissed.
[Pronounced in the open Court on the 29th day of November, 2017.]
Sd/- Sd/- (PRADIP KUMAR KEDIA) (S. S. GODARA) ACCOUNTANT MEMBER JUDICIAL MEMBER Ahmedabad: Dated 29/11/2017