M/s Centre for Research & Industrial Staff Performance, Bhopal V. The ACIT- 2(1), Bhopal

CO 74/IND/2013

• Counselvise Citation: [2013] 122 COUNSELVISE.COM (IT) 9065 (ITAT-INDORE)
• Duration Of Justice: 3 month(s) 14 day(s)
• Appeal Type: Cross Objection
• Pronouncement Date: 31-10-2013
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: DB
• Assessment Year: 2009-2010
• Appeal Filed On: 17-07-2013
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Keywords: Depreciation; Charitable institution
• Section: 12AA; 11

Judgement Text

PAGE 1 OF 6 IN THE INCOME TAX APPELLATE TRIBUNAL , INDORE BENCH, INDORE BEFORE SHRI JOGINDER SINGH, J.M. AND SHRI R.C.SHARM A, A.M. PAN NO. : AAATC1353N I.T.A.NO. 233 /IND/201 3 A.Y. : 2009-10 ACIT, 2(1), BHOPAL VS. M/S. CENTRE FOR RESEARCH & INDUSTRIAL STAFF PERFORMANCE, BHOPAL APPELLANT RESPONDENT C.O.NO.74/IND/2013 (ARISING OUT OF I.T.A.NO. 233/IND/2013) A.Y. : 2009-10 M/S. CENTRE FOR RESEARCH & INDUSTRIAL STAFF PERFORMANCE, BHOPAL VS. ACIT, 2(1), BHOPAL CROSS OBJECTOR RESPONDENT DEPARTMENT B Y : SHRI BHEEM KUNWAR, SR. DR ASSESSEE BY : SHRI ARUN MEHROTRA, C. A. DATE OF HEARING : 29 . 10 .201 3 DATE OF PRONOUNCEMENT : 31 . 10 .201 3 CENTRE FOR RESEARCH & INDUSTRIAL STAFF PERFORMANCE, BHOPAL I.T.A.NO. 233/IND/2013 AND C.O.NO. 74/IND/2013 A.Y. 2009-10 2 PAGE 2 OF 6 O R D E R PER R. C. SHARMA, A.M. THIS IS AN APPEAL FILED BY THE REVENUE AND CROSS OBJECTION BY THE ASSESSEE AGAINST THE ORDER PASSED BY THE CIT(A), DATED 12.12.2012 FOR THE ASSESSMENT YEAR 20 09-10. 2. THE REVENUE IS AGGRIEVED FOR DELETION OF DISALLOWAN CE MADE BY THE ASSESSING OFFICER ON ACCOUNT OF DEPRECI ATION. 3. FACTS IN BRIEF ARE THAT THE ASSESSEE IS A SOCIETY REGISTERED WITH REGISTRAR OF SOCIETY, GOVERNMENT OF MADHYA PRADESH AS PER COPY OF REGISTRATION CERTIFICATE DAT ED 12.08.1997. IT WAS GRANTED REGISTRATION U/S 12AA OF THE INCOME-TAX ACT, 1961, AS PER ORDER DATED 01.10.2005 BY THE CIT, BHOPAL, VIDE ORDER NO. 53/2005-06 W.E.F. 01.04 .2005. IT IS AN AUTONOMOUS TRAINING INSTITUTE FORMED FOR THE PUR POSE OF DEVELOPING AVAILABILITY OF SKILLED MANPOWER IN THE STATE, PROMOTING ENTREPRENEURSHIP DEVELOPMENT AND ENHANCIN G THE TECHNICAL COMPETENCE OF MANPOWER AND INDUSTRIES AS MENTIONED IN THE BYE LAWS. IN THE YEAR UNDER CONSID ERATION IT HAS POSTED TOTAL GROSS RECEIPTS AT RS. 9,66,47,208/ -, REVENUE CENTRE FOR RESEARCH & INDUSTRIAL STAFF PERFORMANCE, BHOPAL I.T.A.NO. 233/IND/2013 AND C.O.NO. 74/IND/2013 A.Y. 2009-10 3 PAGE 3 OF 6 EXPENSES EXCLUDING DEPRECIATION AND CAPITAL EXPENDI TURE AT RS. 7,11,00,705/-. DEPRECIATION ALLOWANCE OF RS. 1,16,72,500/- WAS CLAIMED AGAINST THE AVAILABLE SUR PLUS. THE ASSESSING OFFICER DISALLOWED THE SAME. THE STAND OF THE ASSESSING OFFICER IS THAT SINCE THE APPELLANT BOARD HAS CLAIMED COST OF ASSETS AS AN APPLICATION OF INCOME U/S 11 O F THE ACT, FURTHER CLAIM OF DEPRECIATION ON SUCH ASSETS TANTAM OUNT TO DOUBLE DEDUCTION. THE ASSESSING OFFICER PLACED RELI ANCE UPON THE DECISION FROM THE HON'BLE APEX COURT IN THE CAS E OF ESCORTS LIMITED VS. UNION OF INDIA AND DISALLOWED T HE DEPRECIATION. 4. BY THE IMPUGNED ORDER, THE LD. CIT(A) DELETED THE DISALLOWANCE AFTER HAVING THE FOLLOWING OBSERVATION S :- THE APPELLANT IS REGISTERED U/S 12AA OF THE INCOME- TAX ACT, 1961, AS PER ORDER NO. 53/2005-06 W.E.F. 1.10.2005 BY THE CIT, BHOPAL. AS PER THE INCOME AND EXPENDITURE ACCOUNT OF THE YEAR, THE APPELLANT HAD GROSS RECEIPTS OF RS. 9,66,47,208/-. THUS, 85% OF T HE ABOVE RECEIPTS TO BE APPLIED FOR THE OBJECTS OF SOC IETY IS RS. 8,21,50,127/-. THE APPELLANT APPLIED RS. 7,11,00,705/- FOR OBJECTS OF THE SOCIETY AND ON CAP ITAL ASSETS. THE SURPLUS OF RS. 1,10,49,422/- SET OFF CENTRE FOR RESEARCH & INDUSTRIAL STAFF PERFORMANCE, BHOPAL I.T.A.NO. 233/IND/2013 AND C.O.NO. 74/IND/2013 A.Y. 2009-10 4 PAGE 4 OF 6 AGAINST DEPRECIATION ALLOWANCE CLAIMED AT RS. 1,16,72,5400/- AND RETURN OF INCOME WAS FILED AT NIL. THE ASSESSING OFFICER DISALLOWED THE DEPRECIATION AND ASSESSED THE SAME BY PLACING RELIANCE IN DECISION OF THE APEX COURT IN ESCORTS I NDIA LIMITED VS. UNION OF INDIA REPORTED IN 199 ITR 43. THE DEPRECIATION HAS BEEN CLAIMED BY THE APPELLANT TO COVER UP THE APPLICATION OF INCOME AS SPECIFIED UND ER THE ACT. THE HON'BLE TRIBUNAL, INDORE, CONSIDERED THE DECISION OF THE APEX COURT RELIED ON BY THE ASSESSI NG OFFICER IN THE CASE OF M.P. MADHYAM & OTHERS VS. CIT, REPORTED IN 13 ITJ 103 AND AFTER CONSIDERING T HE DECISION OF THE JURISDICTIONAL HIGH COURT OF MADHYA PRADESH IN THE CASE OF CIT VS. RAIPUR PALLOTINE SOCIETY, (1989) 180 ITR 579 (MP) (1989) 80 CTR 27: (1990) 50 TAXMAN 233, DECIDED THE ISSUE IN FAVOUR O F THE ASSESSEE. PRECISE OBSERVATION OF THE HON'BLE HI GH COURT WAS AS UNDER :- DEPRECIATION IS THE EXHAUSTION OF THE EFFECTIVE LIFE OF A FIXED ASSET OWING TO USE OR OBSOLESCENCE. IT MA Y BE COMPUTED AS THAT PART OF THE COST OF THE ASSET WHICH WILL NOT BE RECOVERED WHEN THE ASSET IS FINAL LY PUT OUT OF USE. THE OBJECT OF PROVIDING FOR DEPRECI ATION IS TO SPREAD THE EXPENDITURE INCURRED IN ACQUIRING THE ASSET OVER ITS EFFECTIVE LIFETIME AND THE AMOUNT OF CENTRE FOR RESEARCH & INDUSTRIAL STAFF PERFORMANCE, BHOPAL I.T.A.NO. 233/IND/2013 AND C.O.NO. 74/IND/2013 A.Y. 2009-10 5 PAGE 5 OF 6 PROVISION MADE IN RESPECT OF AN ACCOUNTING PERIOD I S INTENDED TO REPRESENT THE PROPORTION OF SUCH EXPENDITURE WHICH HAS EXPIRED DURING THAT PERIOD. I F DEPRECIATION IS NOT ALLOWED AS A NECESSARY DEDUCTIO N IN COMPUTING THE INCOME OF A CHARITABLE TRUST, THEN THERE WOULD BE NO WAY TO PRESERVE THE CORPUS OF THE TRUST. A CHARITABLE TRUST IS, THEREFORE, ENTITLED T O DEPRECIATION IN RESPECT OF THE ASSETS OWNED BY ITS. SIMILAR VIEW WAS TAKEN BY HON'BLE M.P. HIGH COURT IN CIT VS. GUJRATI SAMAJ (2012) 349 ITR 559. THE DECISION RELIED ON BY THE LD. AUTHORIZED REPRESENTATIVE SQUARELY APPLIED TO THE FACTS AND CIRCUMSTANCES OF THE CASE IN HAND. RESPECTFULLY FOLLOWING THE DECISION OF JURISDICTIONAL HIGH COURT AND TRIBUNAL, THE ADDITION MADE OUT OF DISALLOWANCE OF DEPRECIATION ALLOWANCE IS DELETED AND THE GROUND OF APPEAL IS ALLOWED. 5. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AND FOUND FROM RECORD THAT THAT ISSUE IS SQUARELY COVERED BY THE DECISION OF JURISDICTIONAL HIGH COURT IN THE CASE OF GUJRATI SAMAJ, 349 ITR 59. THE LD. CIT(A) HAS REPRODUCED THE RELEVANT PORTION OF THE DECISION BY FOLLOWING WHICH THE LD. CIT(A) HAS DELETED THE DISALLOWANCE. WE DO NOT FIND ANY INFIRMITY IN THE O RDER OF CIT(A). AS WE HAVE ALREADY DISMISSED THE APPEAL OF THE CENTRE FOR RESEARCH & INDUSTRIAL STAFF PERFORMANCE, BHOPAL I.T.A.NO. 233/IND/2013 AND C.O.NO. 74/IND/2013 A.Y. 2009-10 6 PAGE 6 OF 6 REVENUE, THE CROSS OBJECTION FILED BY THE ASSESSEE HAS BECOME INFRUCTUOUS. 6. IN THE RESULT, THE APPEAL OF THE REVENUE AND CROSS OBJECTIONS ARE DISMISSED. THIS ORDER HAS BEEN PRONOUNCED IN THE OPEN COURT ON 31 ST OCTOBER, 2013. SD/- SD/- (JOGINDER SINGH) (R. C. SHARMA) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED : 31 ST OCTOBER, 2013. CPU* 303110