Trichur Educational Trust, Trichur V. ITO, Trichur

CO 18/COCH/2013

• Counselvise Citation: [2014] 122 COUNSELVISE.COM (IT) 9233 (ITAT-COCHIN)
• Duration Of Justice: 4 month(s) 27 day(s)
• Appeal Type: Cross Objection
• Pronouncement Date: 10-01-2014
• Appeal Filed By: Assessee
• Bench Allotted: DB
• Next Hearing Date: 18-12-2013
• Assessment Year: 2009-2010
• Appeal Filed On: 14-08-2013
• Court: TRIBUNAL
• Department Lawyers: M ANIL KUMAR; LATHA V KUMAR
• Assessee Lawyers: L KURIAKOSE
• Keywords: Depreciation; Charitable institution; Opportunity of being heard; Capital expenditure
• Section: 11

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. NOS. 364&365/COCH/2013 ASSESSMENT YEAR : 2009-10 THE I.T.O. WARD-1(1), THRISSUR. VS. 1. JUBILEE MISSION HOSPITAL, EAST FORT, THRISSUR-680 015 [PAN: AAAAJ 1080A] 2.TRICHUR EDUCATIONAL TRUST, JYOTHI ENGINEERING COLLEGE, VETTIKKATTIRI P.O., CHERUTHURUTY, THRISSUR-680 615. [PAN: AAAIT 6583F] (REVENUE -APPELLANT) (ASSESSEE-RESPONDEN T) C.O. NOS. 19 & 18/COCH/2013 (ARSG. OUT OF I.T.A. NOS. 364&365/COCH/2013 ASSESSMENT YEAR : 2009-10 1. JUBILEE MISSION HOSPITAL, EAST FORT, THRISSUR-680 015 [PAN: AAAAJ 1080A] 2.TRICHUR EDUCATIONAL TRUST, JYOTHI ENGINEERING COLLEGE, VETTIKKATTIRI P.O., CHERUTHURUTY, THRISSUR-680 615. [PAN: AAAIT 6583F] VS. THE I.T.O. WARD-1(1), THRISSUR. (ASSESSEE -APPELLANT) (REVENUE-RESPONDEN T) REVENUE BY SMT. LATHA V. KUMAR, JR. DR & SHRI M. ANIL KUMAR, CIT(DR) ASSESSEE BY SHRI L. KURIAKOSE, ADVOCATE DATE OF HEARING 18/12/2013 DATE OF PRONOUNCEMENT 10/01/2014 I.T.A. NOS. 364&365/COCH/2013 & C.O. NOS. 19&18/COCH/2013 2 O R D E R PER B.R.BASKARAN, ACCOUNTANT MEMBER: THE APPEALS FILED BY THE REVENUE AND THE CROSS OBJ ECTIONS FILED BY THE RESPECTIVE ASSESSEES ARE DIRECTED AGAINST THE ORDER S PASSED BY LD CIT(A)-V, KOCHI, IN THE RESPECTIVE HANDS OF THE ASSESSEES AND THEY RELATE TO THE ASSESSMENT YEAR 2009-10. 2. SINCE THE MAIN ISSUE URGED IN THESE APPEALS IS I DENTICAL IN NATURE, THEY WERE HEARD TOGETHER AND ARE BEING DISPOSED OF BY TH IS COMMON ORDER. 3. THE REVENUE IS AGGRIEVED BY THE DECISION OF THE LD. CIT(A) IN DIRECTING THE ASSESSING OFFICER TO ALLOW DEPRECIATION ON ASSETS W HICH WERE NOT CLAIMED AS APPLICATION OF INCOME U/S. 11(2) OF THE ACT. IN TH E APPEAL FILED IN THE CASE OF TRICHUR EDUCATIONAL TRUST, THE REVENUE HAS RAISED ON E MORE GROUND RELATING TO THE QUANTUM OF APPLICATION OF INCOME ELIGIBLE FOR D EDUCTION U/S. 11 OF THE ACT. IN THE CROSS OBJECTIONS, BOTH THE ASSESSEES ARE SUPPOR TING THE DECISION RENDERED BY LD CIT(A). 4. THE FACTS RELATING TO THE ISSUE ARE STATED IN BR IEF. DURING THE COURSE OF ASSESSMENT PROCEEDINGS, THE ASSESSING OFFICER NOTIC ED THAT BOTH THE ASSESSEES HAVE CLAIMED DEPRECIATION AS DEDUCTION WHILE COMPUT ING THE INCOME UNDER SECTION 11 OF THE INCOME TAX ACT. THE AO, BY PLACI NG RELIANCE ON THE DECISION OF THE CO-ORDINATE BENCH OF THE TRIBUNAL RENDERED IN T HE CASE OF LISSIE MEDICAL INSTITUTIONS (I.T.A. NO. 1010/COCH/2008 AND C.O. NO . 06/COCH/2009), HELD THAT BOTH THE ASSESSEES ARE NOT ENTITLED FOR DEDUCTION O F DEPRECIATION ON THE COST OF ASSETS, WHICH HAVE ALREADY BEEN ALLOWED AS DEDUCTIO N AS APPLICATION OF INCOME. ACCORDINGLY, THE ASSESSING OFFICER DISALLOWED THE D EPRECIATION CLAIMED BY BOTH THE ASSESSEES. IN THE APPELLATE PROCEEDINGS, THE L D. CIT(A) NOTICED THAT THE DECISION RENDERED IN THE CASE OF LISSIE MEDICAL INS TITUTIONS, HAS BEEN UPHELD BY I.T.A. NOS. 364&365/COCH/2013 & C.O. NOS. 19&18/COCH/2013 3 THE HONBLE JURISDICTIONAL KERALA HIGH COURT. THE LD. CIT(A) HAS EXTRACTED THE FOLLOWING OBSERVATIONS MADE BY THE HONBLE HIGH COU RT IN THE ABOVE SAID CASE: HOWEVER, AS RIGHTLY POINTED OUT BY 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 T AKEN BY SEVERAL HIGH COURTS IN INDIA IN THE DECISIONS ABOVE CITED. WE F IND FORCE IN THE CONTENTION BECAUSE ASSESSEE CANNOT BE TAKEN BY SURP RISE BY DISALLOWING DEPRECIATION WHICH WAS BEING ALLOWED FO R SEVERAL YEARS AND TO DEMAND TAX FOR ONE YEAR AFTER MAKING DISALLOWANC E. WE FEEL ASSESSEE SHOULD BE ALLOWED TO WRITE BACK THE DEPREC IATION FOR THIS YEAR AND EVEN FOR PREVIOUS AND THEN ALLOW THE SAME TO BE CARRIED FORWARD FOR APPLICATION FOR SUBSEQUENT YEARS. IT IS FOR TH E ASSESSEE TO WRITE BACK DEPRECIATION AND IF DONE THE ASSESSING OFFICER WILL MODIFY THE ASSESSMENT DETERMINING HIGHER INCOME AND ALLOW RECO MPUTED INCOME WITH THE DEPRECIATION WRITTEN BACK BY THE ASSESSEE TO BE CARRIED FORWARD FOR SUBSEQUENT YEARS FOR APPLICATION FOR CH ARITABLE PURPOSES. 5. BEFORE THE LD. CIT(A), THE ASSESSEES SUBMITTED T HAT THEY HAVE RE-WORKED THE DEPRECIATION CLAIM FOR THE ASSESSMENT YEARS 200 5-06 TO 2009-10 IN TERMS OF THE DECISION RENDERED BY THE HONBLE HIGH COURT IN THE CASE OF LISSIE MEDICAL INSTITUTIONS (SUPRA) AND ACCORDINGLY FILED A REVISE D COMPUTATION STATEMENT FOR THE INSTANT YEAR BEFORE THE ASSESSING OFFICER. IT WAS FURTHER SUBMITTED THAT THE AO DID NOT CONSIDER THE REVISED STATEMENTS AND HAS DIS ALLOWED THE CLAIM OF DEPRECIATION. THE LD. CIT(A) WAS CONVINCED WITH TH E EXPLANATIONS OF THE ASSESSEES AND ACCORDINGLY, DIRECTED THE ASSESSING O FFICER TO ALLOW DEPRECIATION ON ASSETS WHICH ARE NOT CLAIMED AS APPLICATION OF INCO ME U/S. 11(2) OF THE ACT. THE OBSERVATIONS MADE BY THE LD. CIT(A) IN THE CASE OF TRICHUR EDUCATIONAL TRUST ARE EXTRACTED BELOW FOR THE SAKE OF CONVENIENCE: 12, ON A READING OF THE ASSESSMENT ORDER, I FIND T HAT THE ASSESSING OFFICER HAS NOT AT ALL CONSIDERED THE REVISED COMPUTATION O F TOTAL INCOME AND REVISED STATEMENT OF DEPRECIATION AND COMPLETED THE ASSESSMENT AS SUCH. SIMILARLY, THROUGH THE JURISDICTIONAL HIGH COURT HA S CONFIRMED THE ORDER OF THE TRIBUNAL, AS OBSERVED IN PARA 8 AT PAGE 10 OF T HE JUDGMENT, WHICH HAS BEEN REPRODUCED IN THE PRECEDING PARAGRAPHS OF THIS ORDER, THE ASSESSING OFFICER HAS NOT DEALT WITH THAT OBSERVATION TOO. A CCORDING TO THE APPELLANT, I.T.A. NOS. 364&365/COCH/2013 & C.O. NOS. 19&18/COCH/2013 4 THOSE MATERIALS WERE VERY MUCH AVAILABLE BEFORE THE ASSESSING OFFICER. IN THIS CASE ALSO, THE ASSESSEE HAS CONSISTENTLY FOLLO WING THE SAME METHOD OF ACCOUNTING. THERE IS NO CHANGE, FOR THE YEAR UNDER APPEAL. IT HAS REVISED ITS TOTAL INCOME AND WRITTEN BACK THE DEPRECIATION FOR THIS YEAR AND EVEN FOR THE PREVIOUS ASSESSMENT YEARS RIGHT FROM A.Y. 2005- 06. THAT BEING THE CASE, THE ASSESSING OFFICER SHOULD HAVE GONE THROUG H THE SAME AND VERIFIED THE VERACITY OF THAT COMPUTATION AND THEN ARRIVED A T A REASONABLE CONCLUSION. THIS HAS NOT BEEN DONE. THE CONTENTIO N OF THE APPELLANT IS THAT IT HAS PREPARED THE REVISED COMPUTATION OF TOTAL IN COME AND REVISED STATEMENT OF DEPRECIATION IN ACCORDANCE WITH THE DI RECTION OF THE JURISDICTIONAL HIGH COURT, VIZ. IT IS FOR THE ASSESSEE TO WRITE BACK DEPRECIATION AND IF DONE THE ASSESSING OFFICER WILL MODIFY THE ASSESSMENT DETERMINING HIGH ER INCOME AND ALLOW RECOMPUTED INCOME WITH THE DEPRECIATION WRITTEN BAC K BY THE ASSESSEE TO BE CARRIED FORWARD FOR SUBSEQUENT YEARS FOR APPLICA TION FOR CHARITABLE PURPOSES. 13. IN VIEW OF THE AFORESAID DISCUSSION, I DIRECT T HE ASSESSING OFFICER TO VERIFY THE CORRECTNESS OF THE REVISED COMPUTATION O F TOTAL INCOME AND REVISED COMPUTATION OF DEPRECIATION PREPARED BY THE ASSESSEE CLAIMING DEPRECIATION AT RS. 1,45,11,936/- AND ALLOW RECOMPU TED INCOME WITH THE DEPRECIATION WRITTEN BACK BY THE ASSESSEE TO BE CAR RIED FORWARD FOR SUBSEQUENT YEARS FOR APPLICATION FOR CHARITABLE PUR POSES. DEPRECIATION SHALL BE ALLOWED ON ASSETS WHICH ARE NOT CLAIMED AS APPLICATION OF INCOME U/S. 11(2). AGGRIEVED, THE REVENUE HAS FILED THESE APPEALS BEFO RE US. 6. THE LD D.R SUBMITTED THAT THE LD CIT(A) HAS GIVEN DIRECTIONS TO THE ASSESSING OFFICER AFTER EXTRACTING THE DECISION REN DERED BY M/S LISSIE MEDICAL INSTITUTIONS. BEFORE LD CIT(A), THE ASSESSEE HAS A LSO CONTENDED THAT IT HAS REVISED THE DEPRECIATION STATEMENTS SINCE THE ASSES SMENT YEAR 2005-06 ONWARDS. THE LD D.R SUBMITTED THAT THE CONCESSION GIVEN BY T HE HONBLE HIGH COURT IN THE CASE OF M/S LISSIE MEDICAL INSTITUTIONS (SUPRA) CAN NOT BE AVAILED BY THE ASSESSEE, SINCE THE SAID CONCESSION IS AVAILABLE TO THAT ASSE SSEE ONLY AND THE HONBLE HIGH COURT HAS NOT EXTENDED IT TO ALL THE ASSESSEES. AC CORDINGLY, THE LD D.R SUBMITTED THAT THE ASSESSEE CAN AVAIL THE BENEFITS AS PROVIDED UNDER THE ACT. THE LD D.R FURTHER SUBMITTED THAT THE DIRECTION GIV EN BY THE LD CIT(A) GIVES A I.T.A. NOS. 364&365/COCH/2013 & C.O. NOS. 19&18/COCH/2013 5 MEANING THAT HE IS EXTENDING THOSE CONCESSIONS TO T HE ASSESSEE ALSO. THE LD D.R SUBMITTED THAT THE ASSESSEE IS NOT ENTITLED TO CLAIM DEPRECIATION ON THE COST OF ASSETS, WHICH HAVE ALREADY BEEN ALLOWED DEDUCTIO N AS APPLICATION OF INCOME. 7. ON THE CONTRARY, THE LD A.R SUBMITTED THAT T HE ASSESSEE HAS, DURING THE YEAR UNDER CONSIDERATION, HAS CLAIMED DEDUCTION ONL Y ON THOSE ASSETS, THE COST OF WHICH WERE NOT CLAIMED AS DEDUCTION AS APPLICATI ON OF INCOME. ACCORDINGLY HE SUBMITTED THAT THE AO WAS NOT JUSTIFIED IN REJECTIN G THAT DEPRECIATION CLAIM ALSO. 8. WE HAVE HEARD THE RIVAL CONTENTIONS AND CARE FULLY PERUSED THE RECORD. THE DECISION RENDERED BY THE HONBLE KERALA HIGH COURT IN THE CASE OF M/S LISSIE MEDICAL INSTITUTIONS WAS CONSIDERED BY THIS BENCH O F TRIBUNAL, VIDE ITS ORDER DATED 07-12-2012, IN THE CASE OF SHANTI SADAN SOCIE TY IN ITA NO. 74/COCH/2012. FOR THE SAKE OF CONVENIENCE, WE EXTRACT BELOW THE R ELEVANT OBSERVATIONS MADE BY THE BENCH IN THE ABOVE CITED CASE. 6. HOWEVER, DURING THE COURSE OF HEARING, BOTH THE PARTIES AGREED THAT THE IMPUGNED ISSUE IS COVERED AGAINST THE ASSESSEE BY THE LATER DECISION DATED 26.10.2010 RENDERED BY THE HONBLE JURISDICTI ONAL KERALA HIGH COURT IN THE CASE OF LISSIE MEDICAL INSTITUTIONS IN ITA N O.42 OF 2011. IN THE ABOVE SAID CASE, THE ASSESSING OFFICER HAD DISALLOW ED THE CLAIM OF DEPRECIATION BY HOLDING THAT THE ASSESSEE IS NOT EN TITLED TO CLAIM DEPRECIATION ON THOSE ASSETS WHOSE COST OF ACQUISIT ION WAS CLAIMED AS APPLICATION OF INCOME OF THE CHARITABLE TRUST FOR C HARITABLE PURPOSES, AS IT WOULD RESULT IN DOUBLE DEDUCTION OF CAPITAL EXPENDI TURE. THE VIEW OF THE AO WAS UPHELD BY THE TRIBUNAL BY FOLLOWING THE DECI SION OF HONBLE SUPREME COURT IN THE CASE OF ESCORTS LTD & OTHERS VS . UNION OF INDIA, REPORTED IN 199 ITR 43. THE ASSESSEE CHALLENGED TH E ORDER OF THE TRIBUNAL AND THE HONBLE HIGH COURT UPHELD THE ORDE R OF THE TRIBUNAL WITH THE FOLLOWING OBSERVATIONS:- FOR THE FOREGOING REASONS, WE DISPOSE OF THE APPEA L BY CONFIRMING THE ORDER OF THE TRIBUNAL. HOWEVER, AS R IGHTLY POINTED OUT BY THE COUNSEL FOR THE ASSESSEE THE SY STEM OF ALLOWING DEPRECIATION WAS FOLLOWED BY THE ASSESSEE FOR SEVERAL YEARS AND IT WAS CONSISTENT WITH THE VIEW T AKEN BY SEVERAL HIGH COURTS IN INDIA IN THE DECISIONS ABOVE CITED. WE FIND FORCE IN THIS CONTENTION BECAUSE ASSESSEE C ANNOT I.T.A. NOS. 364&365/COCH/2013 & C.O. NOS. 19&18/COCH/2013 6 BE TAKEN BY SURPRISE BY DISALLOWING DEPRECIATION WH ICH WAS BEING ALLOWED FOR SEVERAL YEARS AND TO DEMAND TAX F OR ONE YEAR AFTER MAKING DISALLOWANCE. WE FEEL ASSESSEE S HOULD BE ALLOWED TO WRITE BACK DEPRECIATION AND IF DONE T HE ASSESSING OFFICER WILL MODIFY THE ASSESSMENT DETERM INING HIGHER INCOME AND ALLOW RECOMPUTED INCOME WITH THE DEPRECIATION WRITTEN BACK BY THE ASSESSEE TO BE CAR RIED FORWARD FOR SUBSEQUENT YEARS FOR APPLICATION FOR CH ARITABLE PURPOSES. SINCE THE DECISION RENDERED IN THE CASE OF LISSIE M EDICAL INSTITUTIONS IS A LATER ONE, THE SAME IS BINDING ON THE PARTIES HEREI N. ACCORDINGLY, WE DO NOT FIND ANY INFIRMITY IN THE DECISION OF LD CIT(A) . 7. IN THE CASE OF LISSIE MEDICAL INSTITUTION, TH E HONBLE HIGH COURT HAS GIVEN RELIEF WITH REGARD TO THE WRITE BACK OF THE D EPRECIATION. THE LD COUNSEL FOR THE ASSESSEE REQUESTED THE TRIBUNAL TO GIVE SIMILAR DIRECTIONS AS GIVEN BY THE HONBLE HIGH COURT FOR WRITING BACK OF THE DEPRECIATION IN THE INSTANT CASES ALSO. HOWEVER, WE ARE DOUBTFUL W HETHER 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 T HE ABOVE CITED CASE, IT IS PERTINENT TO NOTE THAT THE HONBLE HIGH COURT HAS N OT MODIFIED THE ABOVE SAID PROVISIONS. INSTEAD, IT 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 IS VESTED WITH THE HIGH COURT. ACCORDINGLY, WE ARE OF THE VIEW THAT THE TRIBUNAL IS NOT ENTITLED TO GIVE ANY SUCH RELIE F AS GIVEN BY THE HIGH COURT, SINCE THE TRIBUNAL HAS TO ACT WITHIN THE AUT HORITY OF THE PROVISIONS OF THE ACT. ACCORDINGLY, WE DECLINE TO GIVE ANY SU CH DIRECTION AS GIVEN BY THE HONBLE HIGH COURT. WE HAVE ALREADY NOTICED THAT THE LD CIT(A), WHILE G IVING DIRECTION, HAS REFERRED TO THE PROVISIONS OF SEC. 11(2), WHICH PRESCRIBES T HE PROCEDURES TO BE FOLLOWED FOR ACCUMULATION OF INCOME, WHEN THE AMOUNT APPLIED IN THE CURRENT YEAR FALLS SHORT OF 85% OF THE CURRENT YEARS INCOME. WE HAVE ALREADY NOTICED THAT THE HONBLE HIGH COURT HAS ALLOWED M/S LISSIE MEDICAL I NSTITUTION TO ACCUMULATE U/S 11(2) OF THE ACT, THE AMOUNT OF DEPRECIATION RELATI NG TO EARLIER YEARS, WHICH BECAME DISALLOWABLE IN VIEW OF THE ORDER OF THE HON BLE HIGH COURT. SINCE THE LD CIT(A) HAS MENTIONED SEC. 11(2) IN THE INSTANT CASE AFTER QUOTING THE RELEVANT I.T.A. NOS. 364&365/COCH/2013 & C.O. NOS. 19&18/COCH/2013 7 OBSERVATIONS OF HONBLE HIGH COURT, IT IS POSSIBLE TO INTERPRET THAT THE LD CIT(A) HAS ALSO GIVEN DIRECTIONS SIMILAR TO THAT GIVEN BY THE HONBLE HIGH COURT IN THE CASE OF LISSIE MEDICAL INSTITUTIONS. 9. HOWEVER, IN THE CASE OF SHANTI SADAN SOCIETY (SUPRA), THIS BENCH OF TRIBUNAL HAS ALREADY TAKEN A VIEW THAT THE TRIBUNAL IS NOT E MPOWERED TO GIVE ANY SIMILAR DIRECTIONS AS THAT GIVEN BY THE HONBLE HIGH COURT IN THE CASE OF M/S LISSIE MEDICAL INSTITUTIONS. ACCORDINGLY, IN OUR VIEW, TH E LD CIT(A) IS ALSO NOT EMPOWERED TO GIVE IDENTICAL DIRECTIONS. ACCORDINGL Y, WE SET ASIDE THE ORDER OF LD CIT(A) TO THE EXTENT IT RELATES TO ALLOWING OF ACCU MULATION U/S 11(2) OF THE DEPRECIATION OF EARLIER YEARS THAT BECAME DISALLOWA BLE. 10. WE NOTICE THAT THE ASSESSEES HAVE REVISED DE PRECIATION WORKINGS SINCE ASSESSMENT YEAR 2005-06 ONWARDS. IT IS PERTINENT T O NOTE THAT THE ASSESSEE HAS NOT REVISED THE RETURN OF INCOME FILED BY IT FOR TH OSE YEARS. THE LD A.R FAIRLY CONCEDED THAT THE RETURN OF INCOME SHALL PREVAIL OV ER THE REVISED WORKINGS. ACCORDINGLY, IN OUR VIEW, THE AO CAN IGNORE THE REV ISED WORKINGS FURNISHED BY THE ASSESSEE FOR ASSESSMENT YEARS 2005-06 TO ASST. YEAR 20008-09, SINCE THEY HAVE BEEN FILED WITHOUT FILING CORRESPONDING REVISE D RETURNS OF INCOME. 11. HOWEVER, THE CONTENTION OF THE ASSESSEES IS THAT THE AO WAS NOT JUSTIFIED IN DISALLOWING THE ENTIRE AMOUNT OF DEPRECIATION CL AIMED BY IT DURING THE INSTANT YEAR. ACCORDING TO THE ASSESSEES, IT HAS FILED REV ISED DEPRECIATION WORKINGS AND REVISED MEMO OF TOTAL INCOME, WHEREIN THEY HAVE CLA IMED DEPRECIATION ONLY ON THOSE ASSETS, THE COST OF WHICH WERE NOT CLAIMED AS DEDUCTION AS APPLICATION OF INCOME. WE NOTICE THAT THE ASSESSING OFFICER HAS N OT EXAMINED THE ABOVE SAID SUBMISSIONS MADE BY THE ASSESSEES. THERE IS MERIT IN THE ABOVE SAID SUBMISSIONS. IN OUR VIEW, ACCORDING TO THE DECISIO N OF HONBLE KERALA HIGH COURT IN THE CASE OF M/S LISSIE MEDICAL INSITUTION (SUPRA ), THE DEPRECIATION IS ADMISSIBLE ON THOSE ASSETS, THE COST OF WHICH WAS NOT CLAIMED AS DEDUCTION AS APPLICATION OF I.T.A. NOS. 364&365/COCH/2013 & C.O. NOS. 19&18/COCH/2013 8 INCOME. HOWEVER, SINCE THE AO HAS NOT EXAMINED THE CLAIM OF THE ASSESSEE, IN OUR VIEW, THE DEPRECIATION CLAIMED BY THE ASSESSEE REQUIRES EXAMINATION AT THE END OF THE ASSESSING OFFICER. ACCORDINGLY, WE MODI FY THE ORDER OF LD CIT(A) ON THIS ISSUE AND DIRECT THE AO TO EXAMINE THE DEPRECI ATION CLAIM OF THE ASSESSEE IN THE LIGHT OF DISCUSSIONS MADE SUPRA. 12. THE REVENUE HAS RAISED ONE MORE ISSUE IN THE CASE OF TRICHUR EDUCATIONAL SOCIETY, I.E., ABOUT THE QUANTUM OF APPLICATION OF INCOME. THE ASSESSEE INITIALLY CLAIMED A SUM OF RS.1,34,36,732/- AS APPL ICATION OF INCOME IN THE WORKINGS FURNISHED ALONG WITH THE RETURN OF INCOME. THE AMOUNT SO CLAIMED CONSISTED OF PAYMENTS MADE TOWARDS SCHOLARSHIP AND CHARITY RS.27,80,774/- AND OTHER PAYMENTS MADE TOWARDS ACQUISITION OF FIXE D ASSETS. HOWEVER, THE AO NOTICED THAT THE ASSESSEE HAD AVAILED LOANS TO THE TUNE OF RS.1,80,00,000/- FOR INCURRING CAPITAL EXPENDITURE. ACCORDINGLY THE AO ALLOWED DEDUCTION OF RS.27,80,774/- RELATING TO SCHOLARSHIP AND CHARITY AND DID NOT ALLOW THE CLAIM FOR DEDUCTION OF COST OF FIXED ASSETS. IT IS PERT INENT TO NOTE THAT THE ASSESSEE HAD CLAIMED A SUM OF RS.1,50,20,996/- (INCLUDING SC HOLARSHIP AND CHARITY OF RS.27,80,774/-) AS APPLICATION OF INCOME IN THE REV ISED COMPUTATION. THE AO DID NOT CONSIDER THE REVISED WORKINGS FURNISHED BY THE ASSESSEE. THE LD CIT(A), HOWEVER, DIRECTED THE ASSESSING OFFICER TO ALLOW TH E CLAIM OF THE ASSESSEE AS PER REVISED COMPUTATION. 13. ACCORDING TO LD D.R, THE ASSESSEE HAD AVAILE D A LOAN OF RS.1,80,00,000/- FOR ACQUIRING FIXED ASSETS AND HAS UTILIZED THE SAM E FOR ACQUIRING THE ASSETS. HOWEVER, THE ASSESSEE HAS CLAIMED COST OF THOSE ASS ETS AS APPLICATION OF INCOME. ACCORDING TO LD D.R, THE ASSESSEE HAS ONLY USED THE LOAN AMOUNT AND NOT ITS INCOME FOR ACQUIRING THOSE ASSETS AND HENCE THE AO WAS JUSTIFIED IN REJECTING THE CLAIM OF THE ASSESSEE. I.T.A. NOS. 364&365/COCH/2013 & C.O. NOS. 19&18/COCH/2013 9 14. HOWEVER, WE DO NOT FIND ANY DISCUSSION ABOU T THIS ISSUE IN THE ASSESSMENT ORDER. THE AO HAS SIMPLY ALLOWED THE DEDUCTION OF RS.27,80,774/- AND DID NOT DISCUSS ANYTHING ABOUT THE REASONS FOR REJECTING TH E CLAIM OF THE ASSESSEE IN RESPECT OF THE BALANCE AMOUNT. FURTHER THE AO HAS NOT CONSIDERED THE REVISED COMPUTATION FILED BY THE ASSESSEE. HENCE, IN OUR V IEW, THIS ISSUE ALSO REQUIRES FRESH EXAMINATION AT THE END OF THE ASSESSING OFFIC ER. ACCORDINGLY, WE SET ASIDE THE ORDER OF LD CIT(A) ON THIS ISSUE AND RESTORE TH E SAME TO THE FILE OF THE AO WITH THE DIRECTION TO EXAMINE THIS ISSUE AFRESH AFT ER AFFORDING NECESSARY OPPORTUNITY OF BEING HEARD TO THE ASSESSEE AND TAKE APPROPRIATE DECISION IN ACCORDANCE WITH LAW. 15. THE CROSS OBJECTIONS WERE FILED BY THE ASSESSEE S ONLY TO SUPPORT THE ORDER OF THE LD. CIT(A). ACCORDINGLY, WE DISMISS T HEM. 16. IN THE RESULT, BOTH THE APPEALS FILED BY TH E REVENUE ARE TREATED AS ALLOWED FOR STATISTICAL PURPOSES. THE CROSS OBJECTIONS FIL ED BY THE ASSESSEES ARE DISMISSED. PRONOUNCED ACCORDINGLY ON 10-01 -2014 SD/- SD/- (N.R.S.GANESAN) (B.R.BASKARAN) JUDICIAL MEMBER ACCOUNTANT MEMBER PLACE: KOCHI DATED: 10TH JANUARY, 2014 GJ COPY TO: 1. JUBILEE MISSION HOSPITAL, EAST FORT, THRISSUR-680 015. 2. TRICHUR EDUCATIONAL TRUST, JYOTHI ENGINEERING COLL EGE, VETTIKKATTIRI P.O., CHERUTHURUTY, THRISSUR-680 615. 3. THE I.T.O. , WARD-1(1), TRICHUR. 4. THE COMMISSIONER OF INCOME-TAX(APPEALS)-V, KOCHI . 5. THE COMMISSIONER OF INCOME-TAX, TRICHUR. 6. D.R., I.T.A.T., COCHIN BENCH, COCHIN. I.T.A. NOS. 364&365/COCH/2013 & C.O. NOS. 19&18/COCH/2013 10 7. GUARD FILE. BY ORDER (ASSISTANT REGISTRAR) I.T.A.T, COCHIN