The ACIT,, Indore v. M/s. Shri Gujrati Samaj (Regd.),, Indore

ITA 171/IND/2010 | 2004-2005
Pronouncement Date: 31-01-2011 | Result: Dismissed

Appeal Details

RSA Number 17122714 RSA 2010
Assessee PAN AABTS7736G
Bench Indore
Appeal Number ITA 171/IND/2010
Duration Of Justice 9 month(s) 24 day(s)
Appellant The ACIT,, Indore
Respondent M/s. Shri Gujrati Samaj (Regd.),, Indore
Appeal Type Income Tax Appeal
Pronouncement Date 31-01-2011
Appeal Filed By Department
Order Result Dismissed
Bench Allotted DB
Tribunal Order Date 31-01-2011
Date Of Final Hearing 20-12-2010
Next Hearing Date 20-12-2010
Assessment Year 2004-2005
Appeal Filed On 06-04-2010
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL INDORE BENCH : INDORE BEFORE SHRI JOGINDER SINGH JUDICIAL MEMBER AND SHRI R.C.SHARMA ACCOUNTANT MEMBER PAN NO. : AABTS7736G I.T.A.NO.160/IND/2010 A.Y. : 2004-05 SHRI GUJRATI SAMAJ ( REGD.) ACIT 1(2) 1 NASIA ROAD VS INDORE. INDORE. (APPELLANT) (RESPONDENT) PAN NO. : AABTS7736G I.T.A.NO.171 TO 173/IND/2010 A.Y. : 2004-05 TO 2006-07 ACIT 1(2) SHRI GUJRATI SAMAJ ( REGD.) INDORE. VS 1 NASIA ROAD INDORE. (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI H.P.VERMA ADV. AND SHRI ASHISH GOYAL C.A. RESPONDENT BY : SHRI PRADEEP KUMAR MITRA SR. DR O R D E R -: 2: - 2 PER R. C. SHARMA A.M. I.T.A.NOS. 171 TO 173/IND/2010 (REVENUES APPEAL) : THESE ARE THE APPEALS FILED BY THE ASSESSEE AND THE REVENUE AGAINST THE ORDER OF LD. CIT(A) DATED 4.1.2 010 FOR THE ASSESSMENT YEARS 2004-05 2005-06 AND 2006-07. 2. THERE ARE COMMON ISSUES IN ALL THE APPEALS THEREFO RE ALL WERE HEARD TOGETHER AND ARE NOW BEING DECIDED B Y THE CONSOLIDATED ORDER. 3. GRIEVANCE OF REVENUE RELATES TO DELETING DISALLOWAN CE OF CLAIM FOR DEPRECIATION WHILE COMPUTING THE INCOME OF CHARITABLE TRUST. 4. THE FACTS IN BRIEF ARE THAT THE ASSESSEE IS A CHA RITABLE TRUST. IN THE COURSE OF ASSESSMENT U/S 143(3) THE AO DISALLOWED ASSESSEES CLAIM FOR DEPRECIATION ON THE FIXED ASSTS. BY THE IMPUGNED ORDER THE LD. CIT(A) DELETED THE D ISALLOWANCE BY FOLLOWING THE DECISION OF THE TRIBUNAL IN THE CA SE OF M.P. MADHYAM & OTHERS 13 ITJ 103. REVENUE IS IN APPEAL BEFORE US AGAINST THE SAID DELETION OF DISALLOWANCE OF DE PRECIATION. 5. WE HAVE GONE THROUGH THE ORDER OF I.T.A.T. IN THE C ASE OF M.P. MADHYAM & OTHERS (SUPRA) WHEREIN AFTER CON SIDERING -: 3: - 3 THE DECISION OF JURISDICTIONAL HIGH COURT IN THE CA SE OF CIT VS. RAIPUR PALLOTINE SOCIETY 180 ITR 579 (MP) ISSUE W AS DECIDED IN ASSESSEES FAVOUR. PRECISE OBSERVATION OF HON'BL E HIGH COURT WAS AS UNDER :- DEPRECIATION IS THE EXHAUSTION OF THE EFFECTIVE LI FE OF A FIXED ASSET OWING TO USE OR OBSOLESCENCE. IT MA Y BE COMPUTED AS THAT PART OF THE COST OF THE ASSET WHICH WILL NOT BE RECOVERED WHEN THE ASSET IS FINAL LY PUT OUT OF USE. THE OBJECT OF PROVIDING FOR DEPRECIATION IS TO SPREAD THE EXPENDITURE INCURRED IN ACQUIRING THE ASSET OVER ITS EFFECTIVE LIFETIME AND THE AMOUNT OF PROVISION MADE IN RESPECT OF AN ACCOUNTING PERIOD IS INTENDED TO REPRESENT THE PROPORTION OF SUCH EXPENDITURE WHICH HAS EXPIRED DURING THAT PERIOD. IF DEPRECIATION IS NOT ALLOWED AS A NECESSARY DEDUCTION IN COMPUTING THE INCOME OF A CHARITABLE TRUST THEN THERE WOULD BE NO WAY TO PRESERVE THE CORPUS OF THE TRUST. A CHARITABLE TRUS T IS THEREFORE ENTITLED TO DEPRECIATION IN RESPECT OF THE ASSETS OWNED BY ITS. -: 4: - 4 6. IN VIEW OF THE ABOVE DECISION OF THE JURISDICTIONA L HIGH COURT WE RESPECTFULLY FOLLOW THE DECISION OF THE TRIBUNAL RELIED ON BY THE LD. CIT(A) AND DO NOT FIND ANY INF IRMITY IN HIS ORDER FOR DELETING THE DISALLOWANCE OF DEPRECIATION . 7. IN THE RESULT THE APPEALS OF THE REVENUE FOR ASSESSMENT YEARS 2004-05 AND 2005-06 ARE DISMISSED. 8. GRIEVANCE OF THE ASSESSEE IN ALL THE YEARS RELATE T O AOS DENIAL TO CARRY FORWARD DEFICIT IN THE APPLICATION OF FUNDS. 9. AT THE OUT-SET THE LD. AUTHORIZED REPRESENTATIVE SUBMITTED AND RELIED ON THE DECISION OF THE I.T.A.T . IN THE CASE OF SARVAJANIK JANKALYAN PARMARTHIK NYAS VS. ACIT ( 2010) 15 ITJ 642 (TRIB) WHEREIN AFTER CONSIDERING VARIOUS D ECISIONS OF THE HIGH COURT IT WAS HELD THAT EXCESS EXPENDITURE INCURRED FOR CHARITABLE PURPOSES IN THE YEAR UNDER CONSIDERA TION IS LIABLE TO BE ADJUSTED AGAINST THE INCOME OF THE SUC CEEDING YEAR WHILE COMPUTING TAXABLE INCOME OF SUCCEEDING YEAR. WE ALSO FOUND THAT SIMILAR ISSUE HAS BEEN DECIDED BY THE HO N'BLE RAJASTHAN HIGH COURT IN THE CASE OF MAHARAJA OF MEW AR CHARITABLE FOUNDATION 164 ITR 439 WHEREIN IT WAS HELD THAT IT IS NOT NECESSARY THAT CHARITABLE TRUST SHOULD AP PLY ITS ENTIRE -: 5: - 5 INCOME IN THE YEAR IN WHICH IT HAS ARISEN. IF THE E XPENDITURE OF A CHARITABLE TRUST EXCEEDS INCOME IN A PARTICULAR Y EAR ADJUSTMENT OF EXCESS EXPENDITURE AGAINST INCOME OF FOLLOWING YEAR WOULD AMOUNT TO APPLICATION OF INCOME FOR CHAR ITABLE PURPOSES. ACCORDINGLY THE ASSESSEE WAS HELD TO BE ENTITLED FOR EXEMPTION U/S 11(1)(A) OF THE INCOME-TAX ACT 1961. 10. RESPECTFULLY FOLLOWING THE DECISION OF COORDINATE BENCH DISCUSSED ABOVE AS WELL AS DECISION OF HON'BL E RAJASTHAN HIGH COURT (SUPRA) WE DO NOT FIND ANY ME RIT IN THE OBSERVATION OF THE LOWER AUTHORITIES TO THE EFFECT THAT THE ASSESSEE IS NOT ENTITLED FOR CARRY FORWARD AND SET OFF EXCESS OF THE EXPENDITURE INCURRED DURING THE YEAR OVER ITS INCOME. 11. IN THE RESULT THE APPEAL OF ASSESSEE IS ALLOWED WHEREAS THE APPEALS OF THE REVENUE ARE DISMISSED. THIS ORDER HAS BEEN PRONOUNCED IN THE OPEN COURT ON 31 ST JANUARY 2011. SD/- SD/- (JOGINDER SINGH) ( R.C.SHARMA) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED :31 ST JANUARY 2011. CPU* 311