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of <h1>Court Upholds Pension Fund Contribution, Asset Depreciation, and Exemption for Public Utility Activities.</h1> <h3>The Commissioner Of Income Tax (Exemptions) Versus Gujarat Maritime Board</h3> The Commissioner Of Income Tax (Exemptions) Versus Gujarat Maritime Board - [2020] 428 ITR 177 (Guj) Issues Involved:1. Disallowance under Section 36(1)(vii) of the Income Tax Act.2. Claim of depreciation on assets when their purchase was claimed as an application of funds.3. Eligibility to claim the benefit under Section 2(15) of the Income Tax Act.Detailed Analysis:First Issue: Disallowance under Section 36(1)(vii)- During the assessment proceedings, the assessing officer noticed that the assessee had claimed Rs. 47,50,00,000 as a contribution to the pension fund. The officer disallowed 75% of the claim, allowing only 25%, citing non-fulfillment of conditions laid down in Section 80CCD.- The CIT(A) reversed this finding, noting that the Gujarat Maritime Board Employees Pension Trust Fund was duly approved and contributions were in compliance with terms of appointment.- The Tribunal affirmed CIT(A)’s view, stating that the Revenue failed to provide evidence to dispute these findings.- The court concluded that the issue of contribution to the pension fund under Section 36(1)(iv) read with Rule 87 and 88 is a factual issue and not a substantial question of law.Second Issue: Claim of Depreciation on Assets- The Revenue contended that the assessee could not claim depreciation on assets whose purchase was already claimed as an application of funds.- The CIT(A) ruled against the Revenue, and the Tribunal upheld this decision, referencing the Supreme Court judgment in Commissioner of Income Tax – III, Pune v. Rajasthani and Gujarati Charitable Foundation.- The court highlighted that the income of the trust should be computed on commercial principles, allowing for normal depreciation deductions from the gross income of the trust.Third Issue: Eligibility to Claim Benefit under Section 2(15)- The assessee, constituted under the Gujarat Maritime Board Act, 1981, argued that its activities were for the advancement of public utility without profit intention.- The ITAT observed that the assessee’s activities were not in the nature of trade, commerce, or business, referencing the Gujarat Maritime Board Act and relevant case laws such as CIT v. Gujarat Industrial Development Corporation and Ahmedabad Urban Development Authority.- The court noted that fees collected were incidental to the main objective of developing minor ports in Gujarat, and such activities did not constitute trade or business.- The court reiterated its previous decision in favor of the assessee, confirming that the assessee’s activities were for public utility and entitled to exemption under Section 11.Conclusion:The court answered the substantial questions of law against the Revenue and in favor of the assessee, leading to the dismissal of the appeals.
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