TaxTMI 
TaxTMI 
2019 (10) TMI 973
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....e over expenditure of previous year arising out of charitable activity of appellant as Income from business. Both the lower authorities have not appreciated the fact that the appellant has been granted registration u/s. 12A of the Act qualifying its income exempt from taxation as total expenditure (capital and ' revenue) incurred by the appellant is for "advancement of the object of general public utility". 2. Ld. CIT (A) has erred in law and on facts in upholding the contention of the AO that the activities carried out by the appellant are business in nature and erred further in not granting exemption benefit of of accumulation of 15% of the gross surplus. 3. The Id. CIT(A) has erred in not allowing deduction in relation to increase in the fixed assets being application of income amounting to Rs. 34,49,94,135. 4. Ld. CIT(A) ought to have worked out the deficiency and permitted the same lo be carried forward." 3. There are multiple common issues involved in all the appeals filed, therefore, for the sake of convenience, we adjudicate ITA No. 2991/Ahd/2013 for assessment year 2009-10 as lead case and its finding will be applicable to all the similar ....
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....e purpose w.e.f. 1st April, 2008 by amending the Finance Act, 2010 as the total receipt of the assessee for the year under consideration was more than Rs. 10 lacs as prescribed for eligible 'charitable purpose' under the fourth limb i.e. advancement of object of general utility. In view of the above mentioned facts and circumstances, the assessing officer has rejected the claim of deduction u/s. 11 & 12 of the act. 5. Aggrieved assessee has filed appeal before the ld. CIT(A). The ld. CIT(A) has rejected the appeal of the assessee. 6. During the course of appellate proceedings before us, the ld. counsel has contended that assessee is constituted under the Gujarat Maritime Board Act, 1981 and its management and control of the Board is with the State Government and there is no profit motive as indicated by the provision of section 73 and 74 and 75 of the Gujarat Maritime Board Act, 1981. It is submitted that income of the assessee is deployed for the development of miner ports in Gujarat. The assessee is under obligation to apply income directly and substantially for the object of the Board. The Ld. counsel has also submitted that after introduction of proviso to section 2(15) b....
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.... 75 of the Gujarat Maritime Board Act, 1981. We have also gone through the judicial pronouncements referred by the ld. counsel on the issue in the appeal. In the case of the assessee itself, the Co-ordinate Bench of the ITAT vide ITA No. 2933/Ahd/2009 for assessment year 2003-04 adjudicated on 27th April, 2016 held that assessee is a charitable trust engaged in the advancement of any other object of general public utility enumerated in section 2(15) of the Income Tax act, is not business undertaking. The relevant part of the decision of the Co-ordinate Bench of the above referred case is reproduced as under:- "7.5 From going through the above decision of the Co-ordinate Bench which is relied on the decision of Hon'ble Apex Court, that too in assessee's own case, i.e., CIT vs. Gujarat Maritime Board, reported in (2007) 295 ITR 561 (SC), wherein the Hon'ble Apex Court has observed that the appellant is established for the predominant purposes of development of minor ports within the State of Gujarat, the management and control of the Board is essentially with the State Government and there is no profit motive, as indicated by the provisions of section 73, 74 and ....
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....ration dated 28th June, 2017 wherein after following decision of Ahmedabad Urban Development Authority vide 83 taxman.com 78 it is held that claim of fees or cess is incidental to the object and purpose of the act and even the case would not fall under the second part of proviso to section 2(15) of the act. It is further held that as the activities of the assessee is for advancement of any other object of general public utilities, the same can be of or charitable purpose and therefore the asssessee corporation shall be entitled to exemption u/s. 11 of the act. In the case of the Ahmedabad Urban Development Authority vs. ACIT(E) 92017) 83 taxman.com 78, the Division Bench of the Hon'ble Jurisdictional High Court has held that the activity carried by the Ahmedabad Urban Development Authority cannot be said to be for commercial purpose and proviso to section 2(15) of the I.T. Ac shall not be applicable and that the said Ahmedabad Urban Development Authority shall be entitled to exemption u/s. 11 of the act. The Division Bench of the Hon'ble Gujarat High Court has also observed that merely because AUDA is charging fees and/or cess, the activities cannot be said to be in the nature of t....
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....ritime Board is under legal obligation to apply the income which arises directly and substantially from the business held under trust for the development of minor ports in the state of Gujarat. Further after following the decision of Hon'ble Gujarat High Court in the case of AUDA and GIDC, the fees collected by the assessee is incidental to the object and purpose of attainment of the main object for development of mining ports as enumerated in the provision of the Gujarat Maritime Board Act, 1981, therefore, we consider that activity of the assessee is for advancement of any other object of general public utility and not hit by the proviso to section 2(15) of the act, therefore, the assessee is entitled for exemption u/s. 11 of the act. Therefore, this ground of appeal of the assessee is allowed. 8. Since ground nos. 2 and 3 of the assessee are consequential of disallowing the claim of deduction u/s. 11 and 12 of the act by the assessing officer therefore these grounds of appeal of the assessee are allowed since the claim of deduction u/s. 11 and 12 as per ground no. 1 has been decided in favour of the assessee. ITA No. 91/Ahd/2014 filed by revenue 9. The revenue has raise....
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.... depreciation on the ground that roads were not included in the list of building. 14. In the appeal the ld. CIT(A) has allowed the claim of the assessee after following the decision of his predecessor for assessment year 2008-09 stating that "building" include road, bridges, culverts, tubewells. During the course of appellate proceedings before us, the revenue has raised the issue that the department reserves the right to raise the issue of depreciation in case income of the assessee is treated as income otherwise than business income u/s. 11 and 12 of the act. In that case, the assessee cannot claim deprecation on such assets where 100% of cost of assets was allowed as application of income. 15. We have heard the rival contentions on this issue and perused the material on record. The Ld. CIT(A) has referred the decision of Hon'ble Supreme Court in the case of CIT vs. Gwalior Rayon Silk Manufacturing Co. Ltd. 1961 ITR 149 stating that the definition of building would include Road. Therefore, we consider that Ld. CIT(A) has rightly held that capital expenditure incurred thereon is admissible to depreciation on written down value. Regarding other alternative of the Revenue, we ....
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....fore, following the above referred findings the appeal of the assessee on grounds of appeal 1 to 4 are allowed. ITA No. 330/Ahd/2014 filed by revenue 18. The revenue is has raised following substantive grounds of appeal:- "1. The learned CIT(Appeals) has erred in law and facts in directing the AO to allow depreciation of Rs. 104950198/- without considering that depreciation is not allowable on assets which have already claimed as application of income. 2. The learned CIT(Appeals) has erred in law and on facts in not including profit in sale of assets of Rs. 19004722/- in computing income. 3. The learned CIT(Appeals) has erred in law and on facts in allowing pension Trust Fund of Rs. 35,62,50,000/- by ignoring section 36(iv) read with Rules 87 and 88." 19. Ground No. 1 is pertained to the issue of claim of depreciation stating that depreciation is not allowable on assets which have already claimed as application of income. On the identical issue on similar facts, we have adjudicated the ground no. 2 in the appeal of the revenue vide ITA 91/Ahd/2014 for assessment year 2009-10 as referred above in this order wherein the identical issue on similar f....
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.... after taking into consideration the fact that Gujarat Maritime Board employees Pension Trust fund was duly approved by CIT, Gandhinagar w.e.f. 28th March, 2003 and taken into consideration that contribution has been paid in compliance of the terms of appointment on respective erstwhile state government employees and in earlier years also the same contribution was allowed constantly by the department. Relevant par of the finding of ld. CIT(A) is reproduced as under:- "10.3 I have considered the facts of the case, issue in hand and the submission made by the appellant. The AO on perusal of Income & Expenditure account noticed that the appellant has claimed salary expenses of Rs. 49.81 crores which is almost equal to the amount of salary, which is claimed as contribution to the Pension fund. After considering the reply made by the appellant before the AO, the AO has disallowed the claim of Pension Trust Fund of Rs. 35,62,50,000/-. It is submitted by the appellant that in all earlier years also, since getting registration as a charitable entity w.e.f. 1/4/2002, the appellant has been consistently contributing to its "GMB Employees Pension Trust Fund" after b....
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....neral public utility". 2. Learned CIT (A) has erred in law and on facts in upholding the contention of the AO that the activities carried out by the appellant are business in nature and erred further in not granting exemption benefit of 15% of its gross receipts. 3. Learned CIT (A) has erred in law and on facts in upholding the contention of the AO that the activities carried out by the appellant are business in nature and erred further in not granting deduction of "addition to assets" Rs. 10,27,34,707 as application of income. 4. Learned CIT(A) has erred in law and on facts in upholding the contention of the AO that since addition of assets was claimed as deduction u/s. 11 of the Act as application of income, no depreciation can be allowed thereon in view of the decision in case of Lissie Medical Institutions 348ITR 344 (Ker)." 26. The identical issues on similar facts have been decided in favour of the assessee vide ITA No. 2991/Ahd/2013 Assessment Year 2009-10 as above in this order, therefore, following the above referred findings the appeal of the assessee on grounds of appeal 1 to 4 are allowed. ITA No. 2283/Ahd/2014 filed by revenue 27. Th....
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....e identical issues on similar facts have been decided in favour of the assessee vide ITA No. 2991/Ahd/2013 Assessment Year 2009-10 as above in this order, therefore, following the above referred findings the appeal of the assessee on grounds of appeal 1 to 4 are allowed. 31. Ground No. 5: Since the assessee has been allowed exemption u/s. 11 and 12 of the act therefore the disallowance made under Rule 8D(ii) made by the assessing officer by treating the assessee as AOP is deleted. ITA No. 752/Ahd/2017 filed by revenue 32. The revenue is has raised following substantive grounds of appeal:- "I. Whether on the facts and in the circumstances of the case is the Ld. CIT (A) justified in allowing the disallowance of depreciation. II. Whether on the facts and in the circumstances is the Ld. CIT(A) justified in allowing disallowance of profit on sale of assets." 33. The identical issue on similar facts, the appeal of the Revenue was dismissed vide ITA No. 330/Ahd/2014. Therefore, applying the finding of the same, this ground of appeal of the assessee is dismissed. ITA No. 830/Ahd/2017 34. The assessee is has raised following grounds of appeal:- "....
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.... 11 and 12 of the act therefore the disallowance made under Rule 8D(ii) made by the assessing officer by treating the assessee as AOP is deleted. Ground No. 6 36. During the course of assessment, the assessing officer has noticed that assessee has been issued income tax refund on 17th August, 2012 with interest on refund of Rs. 1,10,97,838/-. However, the assessee has not included interest amount in total income in the return of income. Therefore, the assessing officer has added the amount of interest of IT refund to the amount of Rs. 1,10,97,838/- to the total income of the assessee. The assessee has field appeal before the ld. CIT(A). The ld. CIT(A) has directed the assessing officer to verify from record the financial year in which the said refund has been credited in the account of the assessee, in case the financial year is 12-13 then only it would be the income of the assessee for assessment year 2013-14. 37. We have heard rival contentions on this issue and perused the material on record. In the light of the above facts and finding of ld. CIT(A), we direct the assessing officer to decide this issue afresh after verification from the record the date of credit of the ....