Asstt. Commissioner of Income Tax-1, Kanpur V. M/s Saraswati Gyan Mandir Shiksha Sansthan, Kanpur

ITA 117/LKW/2014

• Counselvise Citation: [2014] 140 COUNSELVISE.COM (IT) 78508 (ITAT-LUCKNOW)
• Duration Of Justice: 2 month(s) 16 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 13-05-2014
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: B
• Assessment Year: 2010-2011
• Appeal Filed On: 26-02-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: R K RAM
• Assessee Lawyers: SWARAN SINGH F
• Keywords: Capital asset; Depreciation; Charitable institution; Capital expenditure
• Section: 143(3)

Judgement Text

1 IN THE INCOME TAX APPELLATE TRIBUNAL LUCKNOW BENCH B, LUCKNOW BEFORE SHRI SUNIL KUMAR YADAV, JUDICIAL MEMBER AND SHRI A.K. GARODIA, ACCOUNTANT MEMBER ITA NO.117/LKW/2014 ASSESSMENT YEAR:2010 - 11 A.C.I.T. - 1, KANPUR. VS. M/S SARASWATI GYAN MANDIR SHIKSHA SANSTHAN, C1/198, INDIRA NAGAR, KANPUR. PAN:AADTS7908L (APPELLANT) (RESPONDENT) APPELLANT BY SHRI R. K. RAM, D.R. RESPONDENT BY SHRI SWARAN SINGH, F.C.A. DATE OF HEARING 21/04/2014 DATE OF PRONOUNCEMENT 1 3 /05/2014 O R D E R PER A. K. GARODIA, A.M. THIS IS REVENUES APPEAL DIRECTED AGAINST THE ORDER PASSED BY LEARNED CIT (A) - II, KANPUR DATED 25/11/2013 FOR ASSESSMENT YEAR 2010 - 2011. 2. THE GROUNDS RAISED BY THE REVENUE ARE AS UNDER: 1. LEARNED COMMISSIONER OF INCOME TAX (APPEAL) - II, KANPUR HAS ERRED IN LAW AND ON FACTS IN DIRECTING THE AO TO ALLOW DEPRECIATION OF RS.17,31,125/ - TO THE ASSESSEE WITHOUT APPRECIATING THE FACT THAT ALLOWING DEPRECIATION ON AN ASSET WHOSE ENTIRE COST HAS BEEN ALLOWED AS DEDUCTION BY WAY OF EXEMPTION U/S 11 OF THE INCOME TAX ACT, 1961, AMOUNT TO DOUBLE DEDUCTION AND THEREFORE, NOT ADMISSIBLE. 2 2. LD. COMMISSIONER OF INCOME TAX (APPEAL) - II, KANPUR HAS ERRED IN LAW AND ON FACTS IN NOT APPRECIATING THE RATIO OF JUDGMENT OF HON'BLE SUPREME COURT IN THE CASE OF ESCORTS LTD., VS. UNION OF INDIA (1993) 199 ITR 43 WHEREIN IT WAS HELD THAT WHEN DEDUCTION IN RESPECT OF CAPITAL EXPENDITURE IS ALLOWED, NO FURTHER DEPRECIATION IS ALLOWABLE ON THE SAME ASSET. 3. THE ORDER OF THE LD. COMMISSIONER OF INCOME TAX(APPEAL) - II, KANPUR DATED 25.11.2013 BEING ERRONEOUS IN LAW AND ON FACTS, BE VACATED AND THE ORDER DATED 31.12.2012 PASSED UNDER SECTION 143(3) OF INCOME TAX ACT, 1961 BY THE ASSESSING OFFICER BE RESTORED. 4. THAT THE APPELLANT CRAVES LEAVE TO MODIFY ANY OF THE GROUNDS OF APPEAL MENTIONED ABOVE AND/OR TO ADD ANY FRESH GROUNDS AS AND WHEN IT IS REQUIRED TO DO SO. 3. LEARNED D.R. OF THE REVENUE SUPPORTED THE ASSESSMENT ORDER. HE ALSO PLACED RELIANCE ON THE JUDGMENT OF HON'BLE APEX COURT RENDERED IN T HE CASE OF ESCORTS LTD. VS UNION OF INDIA [1993] 199 ITR 43 (SC) . 4. AS AGAINST THIS, LEARNED A.R. OF THE ASSESSEE SUPPORTED THE ORDER OF CIT(A). HE ALSO PLACED RELIANCE ON VARIOUS JUDICIAL PRONOUNCEMENTS AS NOTED UNDER: ( I ) CIT VS. INSTITUTE OF BANKING PERSONNEL SELECTION (IBPS) [2003] 131 TAXMAN 386 (BOM) ( II ) CIT VS. SOCIETY OF SISTERS OF ST. ANNE [1984] 146 ITR 28 (KAR.) ( III ) CIT VS. RAIPUR PALLORINA SOCIETY [1989] 180 ITR 579 (MP) ( IV ) CIT VS. SHETH MANILAAL RANCHHODDAS VISHRAM BHAVAN TRUST [1992] 198 ITR 598 (GUJ) ( V ) CIT VS. MANAV MANGAL SOCIETY [2010] 328 ITR 421 (P&H) ( VI ) CIT VS. MARKET COMMITTEE PIPLI [2011] 330 ITR 16 (P&H) ( VII ) CIT VS. TINY TOTS EDUCATION SOCIETY [2011] 330 ITR 21 (P&H) 3 ( VIII ) SAHARA ARTS MANAGEMENT ACADEMY VS INCOME TAX OFFICER [I.T.A. NO.16/LKW/2012] ( IX ) ACIT - 1, K ANPUR VS. SETH ANANDRAM JAIPURIA EDUCATION SOCIETY [I.T.A. NO.423/LKW/2009] ( X ) THE DIRECTOR OF INCOME TAX, NEW DELHI VS. ALL INDIA MANAGEMENT ASSOCIATION, NEW DELHI, INCOME TAX REFERENCE NO. 36 OF 1994 ( XI ) CIT VS. BHERUKA PUBLIC WELFARE TRUST [1999] 240 ITR 513 ( XII ) D Y.DIRECTOR OF INCOME TAX (EXEMPTION) VS. M/S G.K.R. CHARITIES [2013] 32 TAXMAN 208 (BOMBAY) ( XIII ) DY. DIRECTOR OF INCOME - TAX - 11(1), MUMBAI VS. G.K.R. CHARITIES [I.T.A. NO.8210?MUM/2010] ( XIV ) ITO (EXEMPTION) VS. SARDAR PUBLIC CHARITABLE TRUST [I.T.A. NO.285 & 286/AHD/ 2913] ( XV ) DIRECTOR OF INCOME - TAX (EXEMPTION) VS. FRAMJEE CAWASJEE INSTITUTE [1993] 109 CTR (BOM) 463 5. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS. WE FIND THAT THE CASE OF THE REVENUE IS THAT AS PER THE JUDGMENT OF HON'BLE APEX COURT RENDERED IN THE CASE OF E SCORTS LTD. VS UNION OF INDIA (SUPRA) , DOUBLE DEDUCTION IS NOT ALLOWABLE AND AS PER REVENUE , SINCE EXEMPTION IS ALLOWED TO THE ASSESSEE IN RESPECT OF INVESTMENT IN CAPITAL ASSETS U/S 11 BY HOLDING THAT THE SAME IS APPLICATION OF INCOME FOR CHARITABLE PURPOSES, ALLOWING DEPRECIATION ON THOSE ASSETS AMOUNTS TO DOUBLE DEDUCTION. IN OUR CONSIDERED O PINION, THE STAND OF THE REVENUE IS NOT CORRECT BECAUSE ALLOWING EXEMPTION U/S 11 IS NOT EQUAL TO ALLOWING DEDUCTION. ALLOWING EXEMPTION MEANS THAT THE INCOME IS NOT LIABLE TO TAX BUT THE INCOME REMAINS THE SAME AND IT DOES NOT GET REDUCE D, A LTHOUGH SUCH INCOME IS NOT TAXABLE BECAUSE OF THE OPERATION OF SECTION 11(1) OF THE ACT. SINCE IN THE PRESENT CASE , EXEMPTION IS ALLOWED AT THE TIME OF ACQUISITION OF ASSETS AND DEPRECIATION IS ALLOWED AT THE TIME OF USER OF ASSETS , IT DOES NOT AMOUNT TO DOUBLE DEDUC TION. VARIOUS JUDGMENTS CITED BY LEARNED A.R. OF THE ASSESSEE ARE SUPPORTING THE CASE OF THE ASSESSEE BECAUSE IT WAS HELD IN THESE 4 JUDGMENTS THAT INCOME OF THE ASSESSEE TRUST HAS TO BE COMPUTED ON COMMERCIAL PRINCIPLE AFTER ALLOWING ALL DEDUCTIONS INCLUDI NG DEPRECIATION. WE, THEREFORE, DECLINE TO INTERFERE IN THE ORDER OF CIT(A). 6. IN THE RESULT, THE APPEAL OF THE REVENUE IS DISMISSED. (ORDER WAS PRONOUNCED IN THE OPEN COURT ON THE DATE MENTIONED ON THE CAPTION PAGE) SD/. SD/. (SUNIL KUMAR YADAV) ( A. K. GARODIA ) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED: 1 3 /05/2014. *C.L.SINGH COPY OF THE ORDER FORWARDED TO : 1. THE APPELLANT 2. THE RESPONDENT. 3. CONCERNED CIT 4. THE CIT(A) 5. D.R., I.T.A.T., LUCKNOW ASSTT. REGISTRAR