A.P.Olympic Association, Hyderabad V. ADIT(E)-I, Hyderabad

ITA 1272/HYD/2013

• Counselvise Citation: [2014] 140 COUNSELVISE.COM (IT) 74541 (ITAT-HYDERABAD)
• Duration Of Justice: 4 month(s) 20 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 07-02-2014
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Assessment Year: 2008-2009
• Appeal Filed On: 17-09-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: ADAGIRI
• Assessee Lawyers: I RAMA RAO
• Keywords: Depreciation; Charitable institution; Question of law; Difference of opinion; Change of opinion; Capital expenditure
• Section: 12A; 12AA; 32; 11

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD BENCHES A : HYDERABAD BEFORE SHRI B. RAMAKOTAIAH, ACCOUNTANT MEMBER AND SHRI SAKTIJIT DEY, JUDICIAL MEMBER ITA.NO.1272/HYD/2013 ASSESSMENT YEAR 2008-2009 A.P. OLYMPIC ASSOCIATION, HYDERABAD PAN AAJFA8654K VS. ADIT (EXEMPTION)-1 HYDERABAD (APPELLANT) (RESPONDENT) FOR ASSESSEE : MR. I. RAMA RAO FOR REVENUE : MR. B. YADAGIRI DATE OF HEARING : 06.01.2014 DATE OF PRONOUNCEMENT : 07.02.2014 ORDER PER B. RAMAKOTAIAH, A.M. THIS IS AN ASSESSEES APPEAL AGAINST THE ORDER OF THE CIT(A)-IV, HYDERABAD DATED 22.08.2013. THE ISSUE I NVOLVED IN THIS APPEAL IS WITH REFERENCE TO THE CLAIM OF DEPREC IATION OF RS.7,29,036/- DISALLOWED BY THE A.O. AND TREATED AS I NCOME, ON THE REASON THAT ASSESSEES ASSETS HAVE BEEN ALLOWED AS APPLICATION OF INCOME AND SO CLAIM OF DEPRECIATION IS A DOUBLE DEDUCTION. 2. BRIEFLY STATED, THE ASSESSEE IS A SOCIETY REGISTER ED UNDER SECTION 12AA OF THE ACT AND IS A PARENT BODY OF ST ATE SPORTS BODIES HAVING 53 DISCIPLINES IN ANDHRA PRADESH. THE ASSESSEE FILED RETURN OF INCOME ON 30.09.2008 SHOWING EXCESS OF INCOME OVER EXPENDITURE AT RS.87,760/-. ASSESSEE HAS SHOWN TOTAL VOLUNTARY CONTRIBUTIONS AS THE INCOME AT RS.2,55,92,086/- AND CLAIMED AMOUNT APPLIED TO CHARIT ABLE 2 ITA.NO.1272/HYD/2013 A.P. OLYMPIC ASSOCIATION, HYDERABAD. PURPOSE OF RS.2,55,04,326/- AS EXPENDITURE. ASSESSEE CL AIMED DEPRECIATION OF RS.7,29,036/- INTER ALIA, IN THE COMPU TATION OF INCOME-EXPENDITURE STATEMENT. 3. BEFORE THE CIT(A), THE ASSESSEE CONTENDED THAT ASSESSEE HAS NOT MADE ANY DOUBLE CLAIM AND RELIED ON THE DECISION OF THE ITAT IN ASSESSEES OWN CASE FOR THE ASSE SSMENT YEARS 2003-04 AND 2007-08 WHEREIN THE DEPRECIATION WAS ALLOWED. HOWEVER, THE LEARNED CIT(A) NOTICED THAT THE HON BLE ITAT IN A LATER CASE OF ACIT VS. SRI VENKATA SAI EDUCAT IONAL SOCIETY AND OTHERS VIDE ITA.NO.1440/HYD/2011 DATED 09.04.2012) HELD THAT WHERE THE ENTIRE COST OF THE ASS ET STANDS ALLOWED BY WAY OF APPLICATION OF INCOME UNDER SECTION 1 1(1), DEPRECIATION CLAIMED BY THE ASSESSEE UNDER SECTION 32( 1) IS NOT ALLOWABLE. RELYING ON THE ABOVE DECISION, THE LEARNED CI T(A) DISMISSED THE ASSESSEES APPEAL. ASSESSEE IS AGGRIEVE D BY THE ORDER OF THE CIT(A) AND FILED APPEAL RAISING FOLLOWING GROUND S : 1. THE ORDER OF THE LEARNED CIT(A)-IV, HYDERABAD DATED 22.08.2013 IS AGAINST LAW AND FACTS OF THE CASE. 2. THE LEARNED CIT(A) OUGHT TO HAVE APPRECIATED THAT THERE WERE NO REASONS TO BELIEVE THAT INCOME GOT ESCAPED THE ASSESSMENT AND CONSEQUENTLY, THE RE- ASSESSMENT PROCEEDINGS OUGHT TO HAVE BEEN DECLARED AS NULL AND VOID. 3. THE LEARNED CIT(A) OUGHT TO HAVE APPRECIATED THAT THERE WAS NO TANGIBLE NEW MATERIAL BROUGHT ON RECORD SUGGESTING THE ESCAPEMENT OF INCOME FROM ASSESSMENT AND, THEREFORE, THE RE-ASSESSMENT PROCEEDINGS WERE PROMPTED BY MERE CHANGE OF OPINION AND THEREFORE, CIT(A) OUGHT TO HAVE DECLARED THE RE-ASSESSMENT PROCEEDINGS NULL AND VOID. 3 ITA.NO.1272/HYD/2013 A.P. OLYMPIC ASSOCIATION, HYDERABAD. 4. WITHOUT PREJUDICE TO THE ABOVE GROUNDS, THE LEAR NED CIT(A) OUGHT TO HAVE APPRECIATED THAT THE DEPRECIATION IS ALLOWABLE WHILE COMPUTING THE INCOME U/S. 11(1)(A) OF INCOME TAX ACT, 1961 WITHOUT CLASSIFICATION UNDER VARIOUS HEADS AS SET OUT IN SECTION 14 OF THE ACT AND IT DOES NOT AMOUNT TO DOUBLE DEDUCTION AS ALLEGED BY THE A.O., AND THEREFORE, THE CIT(A) OUGHT NOT TO HAVE UPHELD THE ADDITION OF RS.7,29,036/- ON ACCOUNT OF DEPRECIATION. 4. GROUNDS NO. 2 AND 3 PERTAINING TO RE-ASSESSMENT HAVE NOT BEEN ARGUED. ACCORDINGLY, THEY ARE TREATED AS NOT PRESSED AND DISMISSED. 5. GROUND NO.4 PERTAIN TO THE ISSUE OF CLAIM OF DEPRECIATION. 5.1. LEARNED COUNSEL SUBMITTED THAT THE DECISIONS OF ACIT VS. JAIPUR STOCK EXCHANGE (2007) 108 TTJ (JP) 393, MAHILA SIDH NIRMAN YOJANA VS. INSPECTING ASSISTANT COMMISSIONER 50 ITD 472 (DEL.) AND DCIT (EXEMPTION) VS. ADI SANKARA TRUST 46 SOT 230 (COCHIN) WERE NOT APPROVED BY T HE RESPECTIVE HIGH COURTS AND IN FACT, THIS ISSUE WAS C OVERED ELABORATELY BY THE HONBLE PUNJAB AND HARYANA HIGH COURT I N THE CASE OF CIT VS. MANAV MANGAL SOCIETY 328 ITR 421 (P&H) (HC) AND BROUGHT TO OUR NOTICE THAT THE SPECIAL LEAVE PE TITION FILED BY THE DEPARTMENT HAS BEEN DISMISSED BY THE H ONBLE SUPREME COURT AS REPORTED IN 328 ITR (ST) 9. IT WAS SUBMITTED THAT THE HONBLE DELHI HIGH COURT IN THE CAS E OF DIT VS. VISHWA JAGRITI MISSION ITA.NO.140/2012 DATED 29.03 .2012 HAS ANALYSED THE ENTIRE GAMUT OF CASE LAW AND HELD THA T ASSESSEE CAN CLAIM DEPRECIATION WHILE ARRIVING AT THE COMMERCIAL PROFITS. THE HONBLE DELHI HIGH COURT HAS ALSO 4 ITA.NO.1272/HYD/2013 A.P. OLYMPIC ASSOCIATION, HYDERABAD. DISTINGUISHED VARIOUS JUDGMENTS, RELIED UPON BY THE LE ARNED CIT(A) WHILE DISMISSING THE ASSESSEES APPEAL. 6. LEARNED D.R. HOWEVER, RELIED ON THE DECISION OF THE COORDINATE BENCH OF THE TRIBUNAL IN THE CASE OF DIT VS. AUDI SANKARA TRUST 46 SOT 230 AND ALSO DECISION OF DELHI TRIBUNA L IN THE CASE OF MAHILA SIDH NIRMAN YOJANA VS. INSPECTI NG ASSISTANT COMMISSIONER 50 ITD 472 (DEL.). HE ALSO RELIE D ON THE JUDGMENT OF THE HONBLE KERALA HIGH COURT IN THE CASE OF LISSIE MEDICAL INSTITUTIONS VS. CIT (2012) 348 ITR 34 4 (KERALA). IT WAS THE SUBMISSION THAT HAVING CLAIMED THE ENTIRE C OST OF THE ASSET AS AN APPLICATION OF INCOME, QUESTION OF ALLO WING DEPRECIATION ON THE SAME ASSET DOES NOT APPLY, IN VIEW OF THE DECISION OF THE HONBLE SUPREME COURT IN THE CASE OF ES CORTS LTD. VS. UNION OF INDIA (1993) 199 ITR 43 (SC). 7. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AND EXAMINED THE ISSUE. THERE IS NO DISPUTE WITH REGARD TO T HE FACT THAT THE ASSESSEE IS REGISTERED UNDER SECTION 12AA OF THE I.T. ACT. THERE IS ALSO NO DISPUTE THAT ASSESSEE HAS SHOWN A LL THE RECEIPTS IN INCOME-EXPENDITURE ACCOUNT AND CLAIMED VAR IOUS EXPENSES IN ITS COMPUTATION OF INCOME, WHILE DECLARING EXCESS OF INCOME OVER EXPENDITURE. IT IS ALSO NOT IN DISPUTE THA T INCOME OF THE ASSESSEE TRUST HAS TO BE COMPUTED WITH REF ERENCE TO THE PROVISIONS OF SECTION 11 AND 13. THEREFORE, THE P RINCIPLES GOVERNING COMPUTATION OF INCOME UNDER THE HEAD BUSINE SS MAY NOT APPLY TO THE COMPUTATION OF INCOME UNDER THE A BOVE PROVISIONS, SINCE THE INCOME OF A CHARITABLE INSTITUTI ON HAS TO BE COMPUTED UNDER ORDINARY PRINCIPLES OF COMMERCIAL ACCOUNTING, AND DEPRECIATION HAS TO BE ALLOWED ON DEP RECIABLE 5 ITA.NO.1272/HYD/2013 A.P. OLYMPIC ASSOCIATION, HYDERABAD. ASSETS HELD BY A CHARITABLE INSTITUTION TO ARRIVE AT T HE INCOME OF 75% (NOW 85%) WHICH IS REQUIRED TO BE APPLIED FOR CHA RITABLE PURPOSE. IN THE DECISION OF THE HONBLE SUPREME COURT IN T HE CASE OF ESCORTS LTD. (SUPRA), THE HONBLE SUPREME COURT W AS TO CONSIDER THE ISSUE WHEREIN THE DEPRECIATION WAS ALSO CLAIMED ON AN ASSET WHICH WAS CLAIMED AS A DEDUCTION WHILE USI NG FOR RESEARCH, AS CAPITAL EXPENDITURE ON SCIENTIFIC RESEARC H. ON THOSE FACTS, THE HONBLE SUPREME COURT HELD THAT DEPREC IATION WAS INADMISSIBLE SINCE THE ENTIRE COST OF THE ASSET U SED FOR RESEARCH WAS CLAIMED AS DEDUCTION. HOWEVER, THE SAME PRINCIPLE MAY NOT APPLY TO THE COMPUTATION OF INCOME UND ER SECTION 11 OF THE TRUST. 8. THE HONBLE KERALA HIGH COURT IN THE CASE OF LISSI E MEDICAL INSTITUTIONS VS. CIT (2012) 348 ITR 344 (KERAL A), TAKING INTO CONSIDERATION OF CLARIFICATION ISSUED BY THE CBDT I GNORING ITS OWN CIRCULAR 5-P (LXX-6) OF 1968 DATED 19.06.1968 , OPINED THAT THERE COULD BE LEAKAGE OF REVENUE AND GENERATION OF BLACK MONEY, IF DEPRECIATION WAS ALLOWED. THUS, THE HONBLE KERALA HIGH COURT GAVE DECISION IN FAVOUR OF REVENUE AND DIRE CTED THE ASSESSEE TO RE-DRAW THE ACCOUNTS. 9. THE DECISION OF THE COORDINATE BENCH, WHICH THE LEARNED CIT(A) RELIED ON, I.E., IN THE CASE OF SRI VEN KATA SAI EDUCATIONAL SOCIETY (SUPRA), HOWEVER, DID NOT DECIDE THE ISSUE BUT RESTORED THE MATTER TO THE FILE OF THE A.O. TO EXA MINE; WHETHER ASSETS HAVE BEEN CLAIMED AS EXEMPTION IN EARL IER YEARS ON WHICH DEPRECIATION WAS CLAIMED. HOWEVER, IN A L ATER ORDER BY THE COORDINATE BENCH OF ITAT, HYDERABAD IN THE CAS E OF ADIT (EXEMPTION)-I VS. ROYAL EDUCATIONAL SOCIETY IN ITA.NO. 6 ITA.NO.1272/HYD/2013 A.P. OLYMPIC ASSOCIATION, HYDERABAD. 1378/HYD/2011 DATED 28.06.2012 HOWEVER, ALLOWED THE CL AIM OF DEPRECIATION AND DISMISSED THE REVENUES APPEAL. T HE COORDINATE BENCH RELIED ON THE DECISION OF HONBLE PUNJA B AND HARYANA HIGH COURT IN THE CASE OF CIT VS. MANAV MANGAL SOCIETY 328 ITR 421 (P&H) (HC) AND CIT VS. MARKET COMMIT TEE, PIPLI (2011) 330 ITR 16, IN ARRIVING AT THAT DECISION. THUS, THERE WAS A DIFFERENCE OF OPINION ON THE ABOVE ISSUE AT THAT POINT OF TIME. 10. THE HONBLE PUNJAB AND HARYANA HIGH COURT IN THE CASE OF CIT VS. MANAV MANGAL SOCIETY 328 ITR 421 (P&H) (HC) HAS CONSIDERED AND ALLOWED THE CLAIM OF DEPRECIAT ION. THE AMOUNT SPENT ON CONSTRUCTION OF SCHOOL BUILDING AT PANCHKULA IS A CAPITAL EXPENDITURE BUT FOR THE PURP OSE OF SECTION 11 IT IS AN OUTGOING EXPENDITURE WHICH IS APPLICATION OF INCOME OF THE APPELLANT TRUST FOR CHAR ITABLE PURPOSE. THE APPELLANT SHALL ALSO BE ENTITLED TO CLAIM DEPRECIATION ON THE SCHOOL BUILDING. 11. THIS DECISION WAS FOLLOWED IN THE CASE OF CIT VS. TINY TOTS EDUCATION SOCIETY (2011) 330 ITR 21 BY TH E HONBLE PUNJAB & HARYANA HIGH COURT. 12. THIS ISSUE HAS ELABORATELY BEEN DISCUSSED BY THE HONBLE DELHI HIGH COURT IN THE CASE OF DIT VS. VISHWA J AGRITI MISSION IN ITA.NO. 140/2012 DATED 29.03.2012 AND TOOK A OVER VIEW OF THE EXISTING DECISIONS ON THE ISSUE WHILE H OLDING AS UNDER : 11. THE REVENUE IS IN APPEAL AGAINST THE AFORESAID O RDER OF THE TRIBUNAL. WE ARE NOT INCLINED TO ADMIT THE APPE AL 7 ITA.NO.1272/HYD/2013 A.P. OLYMPIC ASSOCIATION, HYDERABAD. AND FRAME ANY SUBSTANTIAL QUESTION OF LAW SINCE NONE ARISES FROM THE ORDER OF THE TRIBUNAL. THERE IS NO D ISPUTE THAT THE ASSESSEE HAS BEEN GRANTED REGISTRATION UND ER SECTION 12AA VIDE ORDER DATED 11TH SEPTEMBER, 2009 AND, THEREFORE, IT WAS ENTITLED TO EXEMPTION OF ITS INCOM E UNDER SECTION 11. THE ONLY QUESTION IS WHETHER THE INCOME O F THE ASSESSEE SHOULD BE COMPUTED ON COMMERCIAL PRINCIPLE S AND IN DOING SO WHETHER DEPRECIATION ON FIXED ASSETS UTILISED FOR THE CHARITABLE PURPOSES SHOULD BE ALLOWE D. ON THIS ISSUE, THERE SEEMS TO BE A CONSENSUS OF JUDICI AL THINKING AS IS SEEN FROM THE AUTHORITIES RELIED UPO N BY THE CIT(APPEALS) AS WELL AS THE TRIBUNAL. IN CIT VS. THE SOCIETY OF THE SISTERS OF ST. ANME (SUPRA), AN IDEN TICAL QUESTION AROSE BEFORE THE KARNATAKA HIGH COURT. THERE THE SOCIETY WAS RUNNING A SCHOOL IN BANGALORE AND WAS ALLOWED EXEMPTION UNDER SECTION 11. THE QUESTION AROS E AS TO HOW THE INCOME AVAILABLE FOR APPLICATION TO CHARITABLE AND RELIGIOUS PURPOSES SHOULD BE COMPUTED . JAGANNATHA SETTY, J. SPEAKING FOR THE DIVISION BENCH OF THE COURT HELD THAT INCOME DERIVED FROM PROPERTY HE LD UNDER TRUST CANNOT BE THE 'TOTAL INCOME' AS DEFINED IN SECTION 2(45) OF THE ACT AND THAT THE WORD 'INCOME' IS A WIDER TERM THAN THE EXPRESSION 'PROFITS AND GAINS O F BUSINESS OR PROFESSION'. REFERENCE WAS MADE TO THE NATURE OF DEPRECIATION AND IT WAS POINTED OUT THAT DEPRECIATION WAS NOTHING BUT DECREASE IN THE VALUE OF PROPERTY THROUGH WEAR, DETERIORATION OR OBSOLESCENCE. IT WAS OBSERVED THAT DEPRECIATION, IF NOT ALLOWED AS A NECESSARY DEDUCTION FOR COMPUTING THE INCOME OF CHARITABLE INSTITUTIONS, THEN THERE IS NO WAY TO PR ESERVE THE CORPUS OF THE TRUST FOR DERIVING THE INCOME. THE CIRCULAR NO.5-P (LXX-6) OF 1968, DATED JULY 19,1968 WAS REPRODUCED IN THE JUDGMENT IN WHICH THE BOARD HAS T AKEN 8 ITA.NO.1272/HYD/2013 A.P. OLYMPIC ASSOCIATION, HYDERABAD. THE VIEW THAT THE INCOME OF THE TRUST SHOULD BE UNDE RSTOOD IN ITS COMMERCIAL SENSE. THE CIRCULAR IS AS UNDER:- 'WHERE THE TRUST DERIVES INCOME FROM HOUSE PROPERTY , INTEREST ON SECURITIES, CAPITAL GAINS, OR OTHER SOU RCES, THE WORD 'INCOME' SHOULD BE UNDERSTOOD IN ITS COMMERCIA L SENSE, I.E., BOOK INCOME, AFTER ADDING BACK ANY APPROPRIATIONS OR APPLICATIONS THEREOF TOWARDS THE PURPOSE OF THE TRUST OR OTHERWISE, AND ALSO AFTER A DDING BACK ANY DEBITS MADE FOR CAPITAL EXPENDITURE INCURRE D FOR THE PURPOSES OF THE TRUST OR OTHERWISE. IT SHOULD B E NOTED, IN THIS CONNECTION, THAT THE AMOUNTS SO ADDED BACK WILL BECOME CHARGEABLE TO TAX U/S. 11(3) TO THE EXTENT TH AT THEY REPRESENT OUTGOINGS FOR PURPOSES OTHER THAN THOSE O F THE TRUST. THE AMOUNTS SPENT OR APPLIED FOR THE PURPOSES OF THE TRUST FROM OUT OF THE INCOME COMPUTED IN THE AF ORESAID MANNER, SHOULD BE NOT LESS THAN 75 PER CENT. OF THE LATTER, IF THE TRUST IS TO GET THE FULL BENEFIT OF THE EXEMPTI ON U/S. 11(1).' 12. A SIMILAR VIEW WAS EARLIER EXPRESSED BY THE ANDH RA PRADESH HIGH COURT IN COMMISSIONER OF INCOME-TAX. V . NIZAM'S SUPPL. RELIGIOUS ENDOWMENT TRUST (1981) 127 ITR 378 AND BY THE MADRAS HIGH COURT IN COMMISSIONER OF INCOME-TAX VS RAO BAHADUR CALAVALA CUNNAN CHETTY CHARITIES (1982) 135 ITR 485. THE MADHYA PRADESH HI GH COURT IN CIT VS. RAIPUR PALLOTTINE SOCIETY (SUPRA) HA S HELD, FOLLOWING THE JUDGMENT OF THE KARNATAKA HIGH COURT CI TED ABOVE, THAT IN COMPUTING THE INCOME OF A CHARITABLE INSTITUTION/TRUST, DEPRECIATION OF ASSETS OWNED BY THE TRUST/INSTITUTION IS A NECESSARY DEDUCTION ON COMME RCIAL PRINCIPLES. THE GUJARAT HIGH COURT, AFTER REFERRING T O THE JUDGMENTS OF THE KARNATAKA, MAHARASHTRA AND MADHYA PRADESH HIGH COURTS CITED ABOVE, ALSO CAME TO THE S AME 9 ITA.NO.1272/HYD/2013 A.P. OLYMPIC ASSOCIATION, HYDERABAD. CONCLUSION AND HELD THAT THE AMOUNT OF DEPRECIATION DEBITED TO THE ACCOUNTS OF THE CHARITABLE INSTITUTI ON HAS TO BE DEDUCTED TO ARRIVE AT THE INCOME AVAILABLE FOR APPLICATION TO CHARITABLE AND RELIGIOUS PURPOSES. 13. THE JUDGMENT OF THE SUPREME COURT IN ESCORTS LIM ITED VS. UNION OF INDIA (SUPRA) HAS BEEN RIGHTLY HELD TO B E INAPPLICABLE TO THE PRESENT CASE. THERE ARE TWO REASO NS AS TO WHY THE JUDGMENT CANNOT BE APPLIED TO THE PRESEN T CASE. FIRSTLY, THE SUPREME COURT WAS NOT CONCERNED W ITH THE CASE OF A CHARITABLE TRUST/INSTITUTION INVOLVING T HE QUESTION AS TO WHETHER ITS INCOME SHOULD BE COMPUTED ON COMMERCIAL PRINCIPLES IN ORDER TO DETERMINE THE AMO UNT OF INCOME AVAILABLE FOR APPLICATION TO CHARITABLE PURPO SES. IT WAS A CASE WHERE THE ASSESSEE WAS CARRYING ON BUSINE SS AND THE STATUTORY COMPUTATION PROVISIONS OF CHAPTER IV-D OF THE ACT WERE APPLICABLE. IN THE PRESENT CASE, WE ARE NOT CONCERNED WITH THE APPLICABILITY OF THESE PROVISION S. WE ARE CONCERNED ONLY WITH THE CONCEPT OF COMMERCIAL INC OME AS UNDERSTOOD FROM THE ACCOUNTING POINT OF VIEW. EV EN UNDER NORMAL COMMERCIAL ACCOUNTING PRINCIPLES, THERE IS AUTHORITY FOR THE PROPOSITION THAT DEPRECIATION IS A NECESSARY CHARGE IN COMPUTING THE NET INCOME. SECOND LY, THE SUPREME COURT WAS CONCERNED WITH THE CASE WHERE THE ASSESSEE HAD CLAIMED DEDUCTION OF THE COST OF T HE ASSET UNDER SECTION 35(1) OF THE ACT, WHICH ALLOWED DEDUCTION FOR CAPITAL EXPENDITURE INCURRED ON SCIENT IFIC RESEARCH. THE QUESTION WAS WHETHER AFTER CLAIMING DEDUCTION IN RESPECT OF THE COST OF THE ASSET UNDER SECTION 35(1), CAN THE ASSESSEE AGAIN CLAIM DEDUCTION ON ACC OUNT OF DEPRECIATION IN RESPECT OF THE SAME ASSET. THE SU PREME COURT RULED THAT, UNDER GENERAL PRINCIPLES OF TAXATIO N, DOUBLE DEDUCTION IN REGARD TO THE SAME BUSINESS OUT GOING IS NOT INTENDED UNLESS CLEARLY EXPRESSED. THE PRESENT C ASE 10 ITA.NO.1272/HYD/2013 A.P. OLYMPIC ASSOCIATION, HYDERABAD. IS NOT ONE OF THIS TYPE, AS RIGHTLY DISTINGUISHED BY THE CIT(APPEALS). 14. HAVING REGARD TO THE CONSENSUS OF JUDICIAL OPIN ION ON THE PRECISE QUESTION THAT HAS ARISEN IN THE PRESENT APPEAL, WE ARE NOT INCLINED TO ADMIT THE APPEAL AND FRAME AN Y SUBSTANTIAL QUESTION OF LAW. THERE DOES NOT APPEAR T O BE ANY CONTRARY VIEW PLAUSIBLE ON THE QUESTION RAISED B EFORE US AND AT ANY RATE NO JUDGMENT TAKING A CONTRARY VI EW HAS BEEN BROUGHT TO OUR NOTICE. IN THE CIRCUMSTANCE S, WE DECLINE TO ADMIT THE PRESENT APPEAL AND DISMISS THE SAME WITH NO ORDER AS TO COSTS. 13. SIMILAR VIEW WAS ALSO TAKEN BY THE COORDINATE BENCH OF THE ITAT, BANGALORE IN THE CASE OF ACIT VS. ADICHUNCHANAGIRI SHIKSHANA TRUST (2013) 31 TAXMANN.COM 157 (BANGALORE TRIB.) WHEREIN IT WAS HELD THAT CHARITAB LE OR RELIGIOUS TRUST REGISTERED UNDER SECTION 12A CAN CLAIM BENEFIT UNDER SECTION 11 IN THE FORM OF APPLICATION OF FUNDS A S WELL AS DEPRECIATION UNDER SECTION 32 IN RESPECT OF PROPERTY HELD UNDER THE TRUST. THE SAME OPINION WAS FOLLOWED BY THE ITAT, BANGALORE TRIBUNAL IN THE CASE OF DDIT(E), BANGALORE VS. CUTCHI MEMON UNION (2013) 38 TAXMAN.COM 276 (BANGALORE- TRIB.) WHEREIN ALSO SIMILAR OPINION WAS EXPRESSED. 14. THUS, ON THIS ISSUE, THERE ARE DECISIONS OF HONB LE GUJARAT HIGH COURT, MADHYA PRADESH HIGH COURT, KERALA HI GH COURT, BOMBAY HIGH COURT, PUNJAB AND HARYANA HIGH COURT AND DELHI HIGH COURT IN FAVOUR OF THE ASSESSEE, WHER EAS, THERE IS ONLY A LONE JUDGMENT OF HONBLE KERALA HIGH COURT AG AINST THE ABOVE OPINION CONFIRMING THE REVENUES CONTENTION. I N VIEW OF THE MAJORITY OPINION OF VARIOUS HIGH COURTS, WE ARE OF T HE 11 ITA.NO.1272/HYD/2013 A.P. OLYMPIC ASSOCIATION, HYDERABAD. OPINION THAT AMOUNT OF DEPRECIATION DEBITED TO THE ACCOUN T OF CHARITABLE INSTITUTION HAS TO BE ALLOWED IN ORDER TO ARRIV E AT THE INCOME AVAILABLE FOR APPLICATION TO THE CHARITABLE PURPO SE. 15. SINCE THE HONBLE DELHI HIGH COURT IN THE CASE OF DIT VS. VISHWA JAGRUTI MISSION (SUPRA) HAS DISTINGUISHE D VARIOUS JUDGMENTS ON THE ISSUE, WE DO NOT INTEND TO DI SCUSS THE SAME AGAIN. HOWEVER, WE RESPECTFULLY AGREE WITH THE PRINCIPLES LAID DOWN BY THE HONBLE DELHI HIGH COURT, WH ICH WERE IN FAVOUR OF THE ASSESSEE ALLOWING THE CLAIM OF DEPRECIATION. 16. THIS ISSUE CAN ALSO BE LOOKED INTO IN AN OTHER MANNER. NOT ONLY THE BOARD CIRCULAR 5-P (LXX-6) OF 1968 D ATED 19.06.1968 BUT ALSO THE INSTITUTE OF CHARTERED ACCOUNT ANTS OF INDIA HAS GIVEN GUIDELINES ABOUT THE CLAIM OF DEPRE CIATION. EVEN, AS SEEN FROM THE DECISION OF THE KERALA HIGH COU RT IN THE CASE OF LISSIE MEDICAL INSTITUTIONS VS. CIT (2012) 348 ITR 344 (KERALA), THERE THE ASSESSEE WAS HAVING ACTIVITY OF RUNNING HOSPITAL AND THE ISSUE AROSE, WHILE CLAIMING DEPRECIAT ION ON THE ASSETS WHILE COMPUTING THE INCOME. THE HOSPITAL WAS R UN BY THE TRUST. HOWEVER, IN THE PRESENT CASE, THERE IS NO SUCH BUSINESS ACTIVITY. AS SEEN FROM THE COMPUTATION OF IN COME PLACED ON RECORD, ASSESSEE HAS NOT CLAIMED ANY APPLICA TION OF INCOME TOWARDS PURCHASE OF ASSETS IN THIS YEAR. A.O. H AS NOT BROUGHT OUT ANYTHING ON RECORD THAT ASSETS PURCHASED BY ASSESSEE HAVE BEEN CLAIMED AS DEDUCTION IN EARLIER YEARS AND WITHOUT EXAMINING THE ISSUE A.O. CANNOT DISALLOW THE AM OUNT, SIMPLY BECAUSE THERE WAS A CASE LAW ESTABLISHING THE PRINCIPLE THAT DOUBLE DEDUCTION IS NOT ALLOWABLE. 12 ITA.NO.1272/HYD/2013 A.P. OLYMPIC ASSOCIATION, HYDERABAD. 17. NOT ONLY THAT, EVEN COMPUTATION MADE BY THE A.O. IS NOT ACCORDING TO THE PROVISIONS OF LAW. IN CASE ANY DISALLOWANCE OF THE EXPENDITURE CLAIMED IN THE INCOME- EXPENDITURE STATEMENT, THE INCOME GETS INCREASED AND THEN, THE A.O. IS BOUND TO EXAMINE THE APPLICATION OF THAT IN COME FOR CHARITABLE PURPOSE. NOTHING OF THAT SORT HAS BEEN DONE B Y THE A.O. IN THE ASSESSMENT ORDER. HE HAS SIMPLY TREATED T HE AMOUNT DISALLOWED (OF DEPRECIATION) AS INCOME OF THE TRU ST AND RAISED DEMAND. THIS SORT OF ASSESSMENT WILL ONLY LEAD TO RAISING OF DEMAND UNNECESSARILY AND HARASSING THE AS SESSEES, PARTICULARLY, THE ASSESSEE WHO ARE IN CHARITABLE ACTIVIT Y. THE ASSESSING OFFICER IS ADVISED TO FOLLOW THE PROVISIONS OF THE ACT, WHILE COMPUTING THE INCOMES OF THE ASSESSEE-TRUST, WHICH IN THIS CASE HAS NOT BEEN FOLLOWED, AS NOTICED FROM THE ASSESSMENT ORDER. 18. EVEN THE LEARNED CIT(A) HAS ALSO ERRED IN NOT FOLLOWING THE BINDING ORDER OF THE ITAT IN ASSESSEE S OWN CAS E IN EARLIER YEARS WHICH WAS BROUGHT TO THE NOTICE OF THE L EARNED CIT(A). WE WERE INFORMED THAT REVENUE HAS ACCEPTED THE ORDER OF THE ITAT IN THOSE YEARS. IT IS ALL THE MORE BINDING ON THE CIT(A) AS NO APPEAL IS PENDING IN ANY HIGHER JUDICI AL FORUM, ATLEAST IN ASSESSEES OWN CASE. THEREFORE, CIT(A) SHOULD HAVE FOLLOWED THE ITAT ORDERS ON THE SAME ISSUE IN EARLIER YEARS A ND SHOULD NOT HAVE DEFERRED FROM THE BINDING ORDERS OF THE ITAT. 19. WITH THESE OBSERVATIONS, SINCE THE PRINCIPLES OF LAW ARE IN FAVOUR OF THE ASSESSEE AND THE COORDINATE BENC H DECISION IN ASSESSEES OWN CASE BEING ALREADY IN FAVOUR OF THE ASSESSEE, WE HAVE NO HESITATION IN REVERSING THE ORDERS OF THE 13 ITA.NO.1272/HYD/2013 A.P. OLYMPIC ASSOCIATION, HYDERABAD. A.O. AND CIT(A) AND ALLOW THE CLAIM OF DEPRECIATION TO THE ASSESSEE. ACCORDINGLY, GROUND NO.4 OF THE ASSESSEE IS AL LOWED. 20. IN THE RESULT, APPEAL OF THE ASSESSEE IS CONSIDER ED AS ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 07.02.2014. SD/- SD/- (SAKTIJIT DEY) (B. RAMAKOTAIAH) ACOUNTANT MEMBER JUDICIAL MEMBER HYDERABAD, DATE 07 TH FEBRUARY, 2014 VBP/- COPY TO : 1. A.P. OLYMPIC ASSOCIATION, 1 ST FLOOR, OLYMPIC BHAVAN, L.B. STADIUM, HYDERABAD. 2. THE ADIT (EXEMPTION)-1, AAYAKAR BHAVAN, BASHEER BAGH , HYDERABAD. 3. CIT(A)-IV, HYDERABAD 4. DIT-(E), HYDERABAD 5. D.R. ITAT, A BENCH, HYDERABAD.