The Krishi Upaj Mandi Samiti, Sehore V. M/s ITO 2(3), Bhopal

CO 59/IND/2013

• Counselvise Citation: [2013] 122 COUNSELVISE.COM (IT) 8758 (ITAT-INDORE)
• Duration Of Justice: 2 month(s) 2 day(s)
• Appeal Type: Cross Objection
• Pronouncement Date: 31-07-2013
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: DB
• Assessment Year: 2006-2007
• Appeal Filed On: 28-05-2013
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: S N AGRAWAL
• Assessee Lawyers: R A VERMA
• Keywords: Depreciation; Charitable institution
• Section: 12A; 32

Judgement Text

1 INCOME TAX APPELLATE TRIBUNAL INDORE BENCH, INDORE BEFORE SHRI JOGINDER SINGH, JUDICIAL MEMBER AND SHRI R.C. SHARMA, ACCOUNTANT MEMBER ITA NO. 163/IND/2013 A.Y. 2006-07 ITO 2(3), BHOPAL :: APPELLANT VS KRISHI UPAJ MANDI SAMITI ASTHA PAN AAALK 0229K :: RESPONDENT CO NO. 59/IND/2013 ARISING OUT OF ITA NO. 163/IND/2013 KRISHI UPAJ MANDI SAMITI ASTHA :: OBJECTOR VS ITO 2(3), BHOPAL :: RESPONDENT APPELLANT BY SHRI R.A. VERMA RESPONDENT BY SHRI S.N. AGRAWAL DATE OF HEARING 24.07.2013 DATE OF PRONOUNCEMENT 24.07.2013 2 O R D E R PER JOGINDER SINGH, JUDICIAL MEMBER THE REVENUE IS AGGRIEVED BY THE IMPUGNED ORDER DA TED 6.12.2012 PASSED BY THE LEARNED FIRST APPELLATE AUT HORITY AND THE ASSESSEE HAS ALSO PREFERRED CROSS OBJECTIONS. FIRST WE SHALL TAKE UP APPEAL OF THE REVENUE WHEREIN THE ONLY GROUND RAISE D PERTAINS TO DELETING THE ADDITION OF RS.22,96,308/- MADE ON ACC OUNT OF DISALLOWANCE OF DEPRECIATION OF ASSET. 2. DURING HEARING, WE HAVE HEARD SHRI R.A. VERMA, L EARNED SENIOR DR, AND SHRI S.N. AGRAWAL, LEARNED COUNSEL F OR THE ASSESSEE. THE CRUX OF ARGUMENTS ON BEHALF OF THE ASSESSEE IS IN SUPPORT TO THE ASSESSMENT ORDER WHEREAS MR. AGRAWAL DEFENDED THE I MPUGNED ORDER. 3. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AND PER USED THE MATERIAL AVAILABLE ON RECORD. THE FACTS, IN BRIEF, ARE THAT THE ASSESSEE SOCIETY PROVIDES BASIC AMENITY TO ITS MEMB ERS/FARMERS AND ALSO PROVIDE A COMMON PLATE FORM FOR DISPOSAL O F THEIR PRODUCE SO THAT THEIR INTEREST COULD BE PROTECTED AND MAY N OT BE EXPLOITED BY MEDIATORS OR BY THE TRADERS, GOT REGISTRATION U/ S 12A OF THE ACT. 3 IT WAS OBSERVED BY THE LEARNED ASSESSING OFFICER TH AT AN AMOUNT OF RS.55,80,574/- WAS CLAIMED ON ACCOUNT OF DEPRECIATI ON BY THE ASSESSEE IN HIS INCOME AND EXPENDITURE ACCOUNT. TH E ASSESSING OFFICER WAS OF THE VIEW THAT AS PER THE PROVISIONS OF SECTION 32 READ WITH SECTION 43(1) OF THE ACT, ALLOWANCE OF DEPRECI ATION ON THE ASSET, THE ENTIRE COST OF WHICH HAS ALREADY BEEN ALLOWED A S DEPRECIATION, IS NOT PERMISSIBLE. THE ASSESSEE CLAIMED THAT OUT OF T OTAL RECEIPT OF RS.4,70,21,443/- THE AMOUNT OF RS.3,76,71,919/- WAS EXPENDED. THE CLAIM OF DEPRECIATION WAS NOT ALLOWED BY THE LE ARNED ASSESSING OFFICER. ON APPEAL, THE LEARNED CIT(A) FOLLOWED THE DECISION OF THE HONBLE JURISDICTIONAL HIGH COURT IN CIT VS. GUJARA TI SAMAJ; 64 DTR (MP) 76, CIT VS. RAIPUR PALLOTTINE SOCIETY; 80CTR ( MP) 127 AND ANOTHER DECISION FROM HONBLE KARNATAKA HIGH COURT IN CIT VS. SOCIETY OF SISTERS OF ST. ANNE (1984) 39 CTR (KARN. ) 9 WHEREIN IT WAS HELD THAT DEPRECIATION IS NOTHING BUT DECREASE IN V ALUE OF PROPERTY THROUGH WEAR, DETERIORATION OR OBSOLESCENCE......IF DEPRECIATION IS NOT ALLOWED AS A NECESSARY DEDUCTION IN COMPUTING THE I NCOME OF A CHARITABLE TRUST THEN THERE WOULD BE NO WAY TO PRES ERVE THE CORPUS OF THE TRUST. A CHARITABLE TRUST IS, THEREFORE, ENT ITLED TO DEPRECIATION IN RESPECT OF ASSET OWNED BY IT AND ALLOWED THE APP EAL OF THE 4 ASSESSEE. THE DECISION FROM HONBLE PUNJAB & HARYAN A HIGH COURT IN CIT VS. TINY TOTS EDUCATION SOCIETY; 330 ITR 21 (P&H) ALSO SUPPORTS THE CASE OF THE ASSESSEE. THE LEARNED CIT( A) HAS MENTIONED VARIOUS DECISIONS IN PARA 8 OF THE IMPUGN ED ORDER WHICH FAVOURS THE CASE OF THE ASSESSEE AND ARE NOT BEING REPEATED FOR THE SAKE OF BREVITY. IN THE ABSENCE OF ANY CONTRARY DE CISION, WE ARE OF THE VIEW THAT DEPRECIATION IS ALLOWABLE ON THE CAPI TAL ASSET FROM THE INCOME OF A CHARITABLE TRUST FOR DETERMINING THE QU ANTUM OF FUNDS WHICH HAVE TO BE APPLIED FOR THE PURPOSES OF THE TR UST IN TERMS OF SECTION 11, THEREFORE, WE ARE NOT IN AGREEMENT WITH THE CONTENTION OF THE REVENUE THAT DOUBLE BENEFIT HAS BEEN GRANTED TO THE ASSESSEE WHILE ALLOWING DEPRECIATION FOR COMPUTING INCOME. T HE STAND OF THE LEARNED CIT(A) IS AFFIRMED RESULTING INTO DISMISSAL OF APPEAL OF THE REVENUE. 4. NOW WE SHALL TAKE UP THE CROSS OBJECTION OF THE ASSESSEE. THE FIRST CROSS OBJECTION REGARDING REOPENING OF COMPLE TED ASSESSMENT WAS NOT PRESSED BY THE ASSESSEE, THEREFORE, DISMISS ED AS SUCH. 5. THE NEXT GROUND PERTAINS TO ENTITLEMENT OF DEPRE CIATION. SINCE WE HAVE UPHELD THE ORDER OF THE CIT(A) AND DISMISSE D THE APPEAL OF 5 THE REVENUE ON THIS ISSUE, THEREFORE, THIS CROSS OB JECTION HAS BECOME INFRUCTUOUS. 6. THE LAST GROUND PERTAINS TO NOT DECIDING THE GRO UND REGARDING ALLOWABILITY OF DEDUCTION IN RESPECT OF INCOME TAX OF RS.57,97,012/- CLAIMED AS APPLICATION OF FUNDS IN THE COMPUTATION OF INCOME FOR WHICH OUR ATTENTION WAS INVITED TO GROUND NO. 2 (FO RM NO. 35) RAISED BEFORE THE LEARNED CIT(A). WE FIND THAT VIDE GROUND NO. 2 BEFORE THE CIT(A) THE ASSESSEE HAS CHALLENGED NOT T REATING INCOME TAX DEPOSIT AND DEDUCTION OF INCOME TAX ON INTEREST BY BANK AS APPLICATION OF FUNDS. HOWEVER, BEFORE US THE GROUND RAISED IN THE CROSS OBJECTION ONLY PERTAINS TO INCOME TAX DEPOSIT ED AMOUNTING TO RS.57,97,012/- AS APPLICATION OF FUNDS WHICH HAS NO T BEEN DISPOSED OF BY THE LEARNED CIT(A), THEREFORE, IT IS REMANDED BACK FOR FRESH ADJUDICATION IN ACCORDANCE WITH LAW FOR WHICH DUE OPPORTUNITY BE PROVIDED TO THE ASSESSEE. THIS GROUN D OF CROSS OBJECTION IS ALLOWED FOR STATISTICAL PURPOSES ONLY. FINALLY, THE APPEAL OF THE REVENUE IS DISMISSED AN D THE CROSS OBJECTION OF THE ASSESSEE ARE PARTLY ALLOWED FOR ST ATISTICAL PURPOSES. 6 THIS ORDER WAS PRONOUNCED IN THE OPEN COURT IN THE PRESENCE OF LD. REPRESENTATIVES FROM BOTH SIDES AT THE CONCL USION OF THE HEARING ON 24.7.2013. SD SD (R.C.SHARMA) (JOGINDER SINGH ) ACCOUNTANT MEMBER JUDICIAL ME MBER DATED: 31.7.2013 COPY TO: APPELLANT, RESPONDENT, CIT, CIT(A), DR, GU ARD FILE DN/-