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TMI Blog2016 (1) TMI 1082X X X X Extracts X X X X X X X X Extracts X X X X ..... the assessee is squarely applicable. A change in the method of accounting should not be rejected for reasons that it would result in bringing into accounts in one year the losses of several years as held in the case of CIT Vs. Eastern Bengal Jute Trading Co. Ltd. (1978 (1) TMI 72 - CALCUTTA High Court ) Accordingly change of the accounting policy is allowed. The assessee has claimed depreciation on fixed assets which is also allowable as held by the various courts in case of Trust where the assessee first made income for application of acquiring of assets and thereafter claiming depreciation on it. - Decided in favour of assessee - ITA No. 427/JP/2013, ITA No. 447/JP/2013 - - - Dated:- 4-1-2016 - SHRI T.R.MEENA, AM SHRI LALIET KUMAR, JM For The Assessee : Shri Shyam Lal Agarwal and Shri Tarun Agarwal For The Revenue : Mrs. Rolee Agarwal (DR) ORDER PER T.R. MEENA, A.M. These are cross appeals one by the assessee and the another by the revenue arise against the order dated 28/02/2013 passed by the ld CIT(A)-II, Jaipur for A.Y. 2009-10. The effective grounds of both the appeal are as under:- Grounds of assessee s appeal:- 1. The ld. CIT(A ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... U/s 143(3) of the Income Tax Act, 1961 (in short the Act). All the grounds of appeal are interlinked. The ld Assessing Officer observed that the assessee had claimed exemption U/s 11,12 and 13 of the Act considering it to be a charitable organization. From A.Y. 2009-10 w.e.f. 01/4/2009, the definition of charitable purposes has been changed by indicating the provisions of Section 2(15) of the Act. The ld CIT-II, Jaipur vide order No. 1264 dated 29/12/2011 had withdrawn the registration granted U/s 12AA of the Act, therefore, from A.Y. 2009-10, there was no registration U/s 12AA of the Act and the assessee is not entitled exemption U/s 11,12 and 13 of the Act. Therefore, the ld Assessing Officer calculated the assessee s income as per the normal provisions of the Act. The auditor of the assessee company had made 15 qualification on method of accounting adopted by the assessee one of the qualification is as under:- The authority has maintained the accounts on cash basis and has carried various notes in schedule X to the balance sheet, has not followed the applicable accounting standards and has also not ascertained the figures to be reported for necessary disclosures, therefore ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ₹ 20,000/- cash amounting to ₹ 1,26,000/- which has also been disallowed U/s 40(a)(3) of the Act. The assessee had claimed depreciation amounting to ₹ 1,98,41,604/-. Since the expenditure in respect of addition to fixed assets is already allowed in earlier years as application of income, assessee is not entitled for double deduction on those additions to fixed assets in the shape of deprecation. Accordingly, depreciation was not allowed by the Assessing Officer. Similarly, the cost of tree guards/wire fencing of ₹ 1,74,22,857/- claimed as amortization was disallowed. This expense had been allowed as development expenses in earlier years. Action as mentioned in case of depreciation would be taken after submission of full details and justification for amortization at rate of 30%. The appropriate depreciation would be allowed. As per note 27 of the Auditor Report the assessee had paid an amount of ₹ 5 crores each to Amber Development Authority and Deen Dayal Charitable Trust. No doubt these expenses would be admissible as application of income but in regular computation of income, these expenditures are not allowable. The ld Assessing Officer finally asse ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... road, sewerage and other facilities provided to improve the urban area. In A.Y. 2006-07, the Additional CIT stated that all the development expenditure are of revenue nature and which was allowed by him but the assessee had treated the development receipt and expenditure as per past. Only change was made in the A.Y. 2009-10. All the development activities in the Jaipur region is carried out by the assessee itself or through local authority or private operators but on control from initial production given to completion of project always under the watch of the assessee. The norms of the JDA has to be followed by them. They further argued that the Hon ble ITAT has granted registration U/s 12AA, therefore, even due to change of accounting policy as such there is no surplus if calculated will be adjusted against either carry forwarded loss of the assessee or applied for the charitable purpose. The ld CIT(A) emphasized the amendment made in Section 2(15) of the Act for charitable activities and availability of exemption u/s 11. The ld CIT(A) has held that there is no deficit because opening balance available of development fund of ₹ 334,68,94,540/-, which has not been added in sch ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the appellant is making available to the public such as road, sewerage, developing of societies, water facilities, gardens and no revenue has been charged from the public on using these facilities. Therefore, there is no benefit to the assessee but being their activities are charitable, it has to be debited in full in the P L account. It is further submitted that even after completion of these development activities, the assessee has to be maintained them and incurred the expenses on it. Therefore, the ld AR has prayed to allow the accounting system changed by the assessee. He further prayed that the matter may be set aside to the Assessing Officer to give the benefit of Section 11 and 12 of the Act. He relied on the decision of Hon ble Gujarat High Court at Ahmedabad (Tax Appeal No. 902 of 2013) in the case of CIT Vs Mapin Publishing Pvt. Ltd. 5. At the outset, the ld CIT DR vehemently supported the order of the ld CIT(A) and argued that the assessee s registration has been withdrawn by the CIT. However, the Hon ble ITAT has allowed registration U/s 12AA of the Act, therefore, she fairly accepted the arguments made by the ld counsel for the assessee. Accordingly benefit of Sect ..... X X X X Extracts X X X X X X X X Extracts X X X X
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