Deputy Director of Income-tax(Exemptions), Bangalore V. M/s Podar Education Trust, Bangalore

ITA 1052/BANG/2014

• Counselvise Citation: [2014] 120 COUNSELVISE.COM (IT) 7027 (ITAT-BANGALORE)
• Duration Of Justice: 4 month(s) 24 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 31-12-2014
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Assessment Year: 2010-2011
• Appeal Filed On: 07-08-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: P DHIVAHAR J
• Keywords: Capital asset; Depreciation; Capital expenditure
• Section: 143(3)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL A BENCH : BANGALORE BEFORE SMT. P. MADHAVI DEVI, JUDICIAL MEMBER AND SHRI ABRAHAM P GEORGE , ACCOUNTANT MEMBER ITA NO. 1052 / BANG/20 1 4 (ASSESSMENT YEAR: 20 1 0 - 11 ) DEPUTY DIRECTOR OF INCOME - TAX(EXEMPTION), CI RCLE 17(2), BANGALORE. APPELLANT VS. M/S.PODAR EDUCATION TRUST, NO.103/1, BASAVANAPUR, OFF. BANNERGHATTA ROAD, BANGALORE . RESPONDENT PAN:A AATP9243N APPELLANT BY: SHRI P.DHIVAHAR , JCIT(DR) . RESPONDENT BY: NONE. DA TE OF HEARING : 15 / 1 2 /2014 . DATE OF PRONOUNCEMENT: 30 /1 2 /2014. O R D E R PER SMT. P.MADHAVI DEVI, JM : THIS IS AN APPEAL FILED BY THE REVENUE AGAINST THE ORDER OF THE CIT(A) - V , BANGALORE, DATED 0 6 / 0 1/201 4 FOR THE ASSESSMENT YEAR 20 10 - 11. 2 . THE REVENUE IS AGGRIEVED BY THE ORDER OF THE CIT(A) IN DIRECTING THE AO TO ALLOW DEPRECIATION ON THE OPENING WDV OF THE ITA NO . 1052/BANG/2014 PODAR EDUCATION TRUST . PAGE 2 OF 4 DEPRECIABLE ASSETS EVEN THOUGH THE ASSESSEE HAS ALREADY CLAIMED INVESTMENT MADE ON SUCH ASSETS IN THE EARLIER FINANCIAL YEAR AS A PPLICATION OF INCOME UNDER CAPITAL EXPENDITURE IN THE RESPECTIVE ASSESSMENT YEAR AND THEREFORE THE ALLOWANCE OF DEPRECIATION ON SUCH ASSET WOULD LEAD TO DOUBLE DEDUCTION. THE REVENUE HAS RELIED UPON THE JUDGMENT OF THE HON BLE KERALA HIGH COURT IN THE CAS E OF LISSIE MEDICAL INSTITUTION VS. CIT (348 ITR 344) WHEREIN IT WAS HELD THAT DEPRECIATION CANNOT BE ALLOWED ON ASSETS THE COST OF WHICH HAS ALREADY BEEN ALLOWED AS APPLICATION OF INCOME IN THE YEAR OF ACQUISITION/PURCHASE OF ASSET. 3 . BRIEF FACTS OF T HE CASE ARE THAT THE ASSESSEE IS A CHARITABLE EDUCATIONAL TRUST RUNNING EDUCATIONAL INSTITUTIONS. DURING THE COURSE OF ASSESSMENT PROCEEDINGS U/S 143(3) OF THE INCOME - TAX ACT, 1961[HEREINAFTER REFERRED TO AS 'THE ACT'], THE ASSESSING OFFICER (AO) DISALLOW ED THE CLAIM OF DEPRECIATION ON WDV OF DEPRECIABLE ASSETS HOLDING THAT INVESTMENT IN THE SAID ASSETS HAS ALREADY BEEN ALLOWED AS APPLICATION OF INCOME IN THE RESPECTIVE ASSESSMENT YEAR S OF INVESTMENT . 4. AGGRIEVED, THE ASSESSEE PREFERRED AN APPEAL BE FORE THE CIT(A) WHO, AFTER CONSIDERING THE VARIOUS JUDICIAL PRECEDENTS ON THE ISSUE, INCLUDING THE DECISION OF THE HON BLE HIGH COURT OF KARNATAKA IN THE CASE OF CIT VS. SOCIETY OF SISTERS OF ST.ANNE ITA NO . 1052/BANG/2014 PODAR EDUCATION TRUST . PAGE 3 OF 4 (146 ITR 28) HAS HELD THAT DEPRECIATION ON CAPITAL ASSET S COULD BE CLAIMED AND ALLOWED IN CASE OF A TRUST RUNNING EDUCATIONAL INSTITUTIONS, AS THE INCOME HAS TO BE COMPUTED ON COMMERCIAL PRINCIPLE S . AGGRIEVED, THE REVENUE IS IN APPEAL BEFORE US. 5. THE LEARNED DEPARTMENTAL REPRESENTATIVE WAS HEARD. NONE WAS PRESENT ON BEHALF OF THE RESPONDENT - ASSESSEE. IT IS THE CASE OF THE REVENUE THAT T HE CIT(A) HAS NOT CONSIDERED THE APPLICABILITY OF THE DECISION OF THE HON BLE SUPREME COURT IN THE CASE OF ESCORTS LTD. & ANOTHER VS. UNION OF INDIA & OTHERS (199 ITR 43) BEFORE GRANTING RELIEF TO THE ASSESSEE. 6. HAVING REGARD TO THE CONTENTIONS AND THE MATERIAL ON RECORD, WE FIND THAT THE ASSESSEE HAD MADE ELABORATE SUBMISSIONS AND ALSO RELIED UPON VARIOUS CASE LAWS INCLUDING THE DECISION OF THE HON BLE DELHI HIG H COURT IN THE CASE OF VISHWAS JAGRITI MISSION (76 DTR 1995) WHEREIN THE JUDGMENT OF THE HON BLE SUPREME COURT IN THE CASE OF ESCORTS LTD. (SUPRA) HAS BEEN DISTINGUISHED AND THE CIT(A) HAS CONSIDERED THE ISSUE AT LENGTH AND HAS F OLLOWED THE DECISION OF THE JURISDICTIONAL HIGH COURT IN THE CASE OF SOCIETY OF SISTERS OF ST.ANNE (SUPRA) BEFORE GRANTING RELIEF TO THE ASSESSEE. IT IS SETTLED PRINCIPLE THAT WHERE THERE ARE TWO DECISIONS OF VARIOUS HIGH COURTS AT VA R IANCE WITH EACH OTHER, THE DECISION IN FAVOUR O F THE ASSESSEE SHOULD BE FOLLOWED AND PARTICULARLY WHERE THE DECISION IS IN FAVOUR OF THE ITA NO . 1052/BANG/2014 PODAR EDUCATION TRUST . PAGE 4 OF 4 ASSESSEE BY THE DECISION OF THE JURISDICTIONAL HIGH COURT, IT HAS A BINDING EFFECT ON THE SUBORDINATE COURTS AND TRIBUNALS. THE CIT(A) HAS ONLY FOLLOWED THE DECISION OF THE JURISDICTIONAL HIGH COURT ON THE ISSUE AND THEREFORE, WE DO NOT SEE ANY REASON TO INTERFERE WITH THE SAME. 6 . IN THE RESULT, THE REVENUE S APPEAL IS DISMISSED. PRONOUNCED IN THE OPEN COURT ON 30 TH OF DECEMBER , 2014. SD/ - SD/ - (ABRAHAM P GEORGE) (SMT. P.MADHAVI DEVI) ACCOUNTANT MEMBER JUDICIAL MEMBER EKSRINIVASULU COPY TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(A) 5. DR, ITAT, BANGALORE. 6. G UARD FILE BY ORDER ASSISTANT REGISTRAR INCOME - TAX APPELLATE T RIBUNAL BANGALORE