Sree Narayana Dharma sangham Trust, Trivandrum V. Asstt Directorof IT, Trivandrum

CO 13/COCH/2009

• Counselvise Citation: [2012] 122 COUNSELVISE.COM (IT) 7136 (ITAT-COCHIN)
• Duration Of Justice: 3 year(s) 1 month(s) 4 day(s)
• Appeal Type: Cross Objection
• Pronouncement Date: 27-04-2012
• Appeal Filed By: Assessee
• Bench Allotted: DB
• Next Hearing Date: 18-04-2012
• Assessment Year: 2005-2006
• Appeal Filed On: 23-03-2009
• Court: TRIBUNAL
• Department Lawyers: VIJAYAPRABHA
• Assessee Lawyers: A S NARAYANAMOORTHY
• Keywords: Depreciation; Charitable institution; Opportunity of being heard; Capital expenditure

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL COCHIN BENCH, COCHIN BEFORE S/SHRI N.R.S.GANESAN, JM AND B.R.BASKAR AN, AM I.T.A. NO. 55/COCH/2009 ASSESSMENT YEAR : 2005-06 THE ASSISTANT DIRECTOR OF INCOME-TAX (EXEMPTION), R-1, TRIVANDRUM. M/S. SREE NARAYANA DHARMA SANGHOM TRUST, SIVAGIRI MUTT, VARKALA, TRIVANDRUM. [PAN: AAATT 7468B] (REVENUE-APPELLANT) (ASSESSEE - RESPONDENT) C.O. NO. 13/COCH/2009 (ARSG. OUT OF I.T.A. NO. 55/COCH/2009) ASSESSMENT YEAR : 2005-06 M/S. SREE NARAYANA DHARMA SANGHOM TRUST, SIVAGIRI MUTT, VARKALA, TRIVANDRUM. [PAN: AAATT 7468B] THE ASSISTANT DIRECTOR OF INCOME- TAX (EXEMPTION),TRIVANDRUM. (ASSESSEE -APPELLANT) (REVENUE - RESPONDENT) REVENUE BY SMT. VIJAYAPRABHA, JR. DR ASSESSEE BY SHRI A.S. NARAYANAMOORTHY, CA DATE OF HEARING 18/04/2012 DATE OF PRONOUNCEMENT 27/04/2012 O R D E R PER B.R.BASKARAN, ACCOUNTANT MEMBER: THE APPEAL OF THE REVENUE AND THE CROSS OBJECTION FILED BY THE ASSESSEE ARE DIRECTED AGAINST THE ORDER DATED 23-10-2008 PASSED BY THE LD. CIT(A)-I, TRIVANDRUM AND IT RELATES TO THE ASSESSMENT YEAR 2005-06. THE SOL ITARY ISSUE URGED IN THIS APPEAL IS WHETHER THE LD CIT(A) IS JUSTIFIED IN HOLDING THAT THE ASSESSEE IS ENTITLED TO CLAIM ITA NO. 55 & C.O. NO.13/COCH/ 2009 2 DEPRECIATION ON THE FIXED ASSETS, WHOSE COST WAS FU LLY ALLOWED AS APPLICATION OF INCOME IN THE HANDS OF THE ASSESSEE. IN THE CROSS OBJECTION , THE ASSESSEE, BESIDES SUPPORTING THE ORDER OF LD CIT(A), HAS ALSO RAISED A ADDITIONAL GR OUND WITH REGARD TO THE METHOD OF COMPUTATION OF ACCUMULATION OF 15% OF THE INCOME AS PRESCRIBED IN SEC.11(1)(A) OF THE ACT. 2. AT THE TIME OF HEARING, THE LD COUNSEL FOR THE ASSESSEE FAIRLY CONCEDED THAT THE ISSUE REGARDING THE DEPRECIATION ALLOWANCE IS COVERED AGA INST THE ASSESSEE BY THE DECISION DATED 26.10.2010 RENDERED BY THE HONBLE JURISDICTIONAL K ERALA HIGH COURT IN THE CASE OF LISSIE MEDICAL INSTITUTIONS IN ITA NO.42 OF 2011. IN THAT CASE, THE ASSESSING OFFICER HAD DISALLOWED THE CLAIM OF DEPRECIATION BY HOLDING THA T THE ASSESSEE IS NOT ENTITLED TO CLAIM DEPRECIATION ON THOSE ASSETS WHOSE COST OF ACQUISIT ION IS CLAIMED AS APPLICATION OF INCOME OF THE CHARITABLE TRUST FOR CHARITABLE PURPOSES, AS IT WOULD RESULT IN DOUBLE DEDUCTION OF CAPITAL EXPENDITURE. THE VIEW OF THE AO WAS UPHELD BY THE TRIBUNAL BY FOLLOWING THE DECISION OF HONBLE SUPREME COURT IN THE CASE OF ES CORTS LTD & OTHERS VS. UNION OF INDIA, REPORTED IN 199 ITR 43. THE ASSESSEE CHALLE NGED THE ORDER OF THE TRIBUNAL AND THE HONBLE HIGH COURT UPHELD THE ORDER OF THE TRIBUNAL WITH THE FOLLOWING OBSERVATIONS:- FOR THE FOREGOING REASONS, WE DISPOSE OF THE APPE AL BY CONFIRMING THE ORDER OF THE TRIBUNAL. HOWEVER, AS RIGHTLY POINTED OUT B Y THE COUNSEL FOR THE ASSESSEE THE SYSTEM OF ALLOWING DEPRECIATION WAS FOLLOWED BY THE ASSESSEE FOR SEVERAL YEARS AND IT WAS CONSISTENT WITH THE VIEW TAKEN BY SEVERAL HIGH COURTS IN INDIA IN THE DECISIONS ABOVE CITED. WE F IND FORCE IN THIS CONTENTION BECAUSE ASSESSEE CANNOT BE TAKEN BY SURPRISE BY D ISALLOWING DEPRECIATION WHICH WAS BEING ALLOWED FOR SEVERAL YEARS AND TO D EMAND TAX FOR ONE YEAR AFTER MAKING DIS-ALLOWANCE. WE FEEL ASSESSEE SHOU LD BE ALLOWED TO WRITE BACK DEPRECIATION AND IF DONE THE ASSESSING OFFICER WIL L MODIFY THE ASSESSMENT DETERMINING HIGHER INCOME AND ALLOW RECOMPUTED INC OME WITH THE DEPRECIATION WRITTEN BACK BY THE ASSESSEE TO BE CA RRIED FORWARD FOR SUBSEQUENT YEARS FOR APPLICATION FOR CHARITABLE PU RPOSES. 3. IN THE ABOVE CITED CASE, THE HONBLE HIGH CO URT HAS GIVEN RELIEF WITH REGARD TO THE WRITE BACK OF THE DEPRECIATION. THE LD COUNSEL FOR THE ASSESSEE REQUESTED THE TRIBUNAL TO GIVE SIMILAR DIRECTIONS AS GIVEN BY THE HONBLE HIG H COURT FOR WRITING BACK OF THE ITA NO. 55 & C.O. NO.13/COCH/ 2009 3 DEPRECIATION IN THE INSTANT CASES ALSO. HOWEVER, W E ARE DOUBTFUL WHETHER THE TRIBUNAL IS EMPOWERED TO GIVE ANY SUCH DIRECTION. THE ACCUMULAT ION OF INCOME, AS SUBMITTED BY LD D.R, IS GOVERNED BY THE PROVISIONS OF EXPLANATION 2 TO SEC. 11(1) AND ALSO BY SEC. 11(2) OF THE ACT. IN THE ABOVE CITED CASE, IT IS PERTINE NT TO NOTE THAT THE HONBLE HIGH COURT HAS NOT MODIFIED THE ABOVE SAID PROVISIONS. INSTEAD, I T HAS GIVEN CONCESSION TO THE ASSESSEE, WHICH IN OUR VIEW, IS APPLICABLE TO THAT PARTICULAR ASSESSEE ONLY. THE ITAT, BEING A CREATURE OF STATUTE, IN OUR VIEW, CANNOT ARM ITSELF WITH ANY SUCH POWER, WHICH ARE VESTED WITH THE HIGH COURT. ACCORDINGLY, WE ARE OF THE VI EW THAT THE TRIBUNAL IS NOT ENTITLED TO GIVE ANY SUCH RELIEF AS GIVEN BY THE HIGH COURT, SI NCE THE TRIBUNAL HAS TO ACT WITHIN THE AUTHORITY OF THE PROVISIONS OF THE ACT. ACCORDINGL Y, WE DECLINE TO GIVE ANY SUCH DIRECTION AS GIVEN BY THE HONBLE HIGH COURT. ACCORDINGLY, W E ARE UNABLE TO UPHOLD THE ORDERS OF LD CIT(A) ON THIS ISSUE. 4. IN THE ADDITIONAL GROUND RAISED IN THE CROSS OBJECTION, THE ASSESSEE HAS SUBMITTED THAT THE AO WAS NOT CORRECT IN GRANTING ACCUMULATIO N OF 15% ON THE NET SURPLUS, INSTEAD OF GRANTING THE SAME ON GROSS INCOME. IN SUPPORT O F THIS GROUND, THE LD A.R PLACED HIS RELIANCE ON THE CIRCULAR NO.5P(LXX-6) DATED 19-05-1 968 ISSUED BY THE CENTRAL BOARD OF DIRECT TAXES AND ALSO ON THE DECISION OF HONBLE SU PREME COURT IN THE CASE OF CIT VS. PROGRAMME FOR COMMUNITY ORGANISATION (248 ITR 1). THE LD D.R, HOWEVER, SUBMITTED THAT THE INSTANT ISSUE WAS NOT RAISED BEFORE THE TA X AUTHORITIES. 5. THE SAID ISSUE, IN OUR VIEW, IS A LEGAL ISSUE AND HENCE THE ASSESSEE IS ENTITLED TO RAISE THE SAME BEFORE THE TRIBUNAL FOR THE FIRST TIME. H OWEVER, AS SUBMITTED BY LD D.R, THIS ISSUE WAS NOT EXAMINED BOTH BY THE AO AND LD CIT(A) . THIS TRIBUNAL IS OF THE VIEW THAT THE VIEWS OF THE ABOVE SAID TAX AUTHORITIES ON THIS ISSUE ARE VERY MUCH REQUIRED TO ADJUDICATE THE SAME. ACCORDINGLY, WE SET ASIDE THI S ISSUE TO THE FILE OF THE AO WITH THE DIRECTION TO EXAMINE THE CLAIM OF THE ASSESSEE IN A CCORDANCE WITH LAW, AFTER AFFORDING NECESSARY OPPORTUNITY OF BEING HEARD. ITA NO. 55 & C.O. NO.13/COCH/ 2009 4 6. IN THE RESULT, THE APPEAL OF THE REVENUE IS ALLOWED AND THE CROSS OBJECTION FILED BY THE ASSESSEE IS TREATED AS PARTLY ALLOWED. PRONOUNCED ACCOR DINGLY ON 27-04-2012 SD/- SD/- (N.R.S.GANESAN) (B.R.BASKARAN) JUDICIAL MEMBER ACCOUNTANT MEMBER PLACE: KOCHI DATED: 27TH APRIL, 2012 GJ COPY TO: 1. M/S. SREE NARAYANA DHARMA SANGHOM TRUST, SIVAGIR I MUTT, VARKALA, TRIVANDRUM. 2. THE ASSISTANT DIRECTOR OF INCOME-TAX(EXEMPTION), R-1, TRIVANDRUM. 3. THE COMMISSIONER OF INCOME-TAX (APPEALS)-I, TRIV ANDRUM. 4. THE COMMISSIONER OF INCOME-TAX, TRIVANDRUM. 5. D.R., I.T.A.T., COCHIN BENCH, COCHIN. 6. GUARD FILE . BY ORDER (ASSISTANT REGISTRAR) I.T.A.T, COCHIN ITA NO. 55 & C.O. NO.13/COCH/ 2009 5