Market Committee, Fatehabad V. ITO, Fatehabad

ITA 1336/DEL/2010

• Counselvise Citation: [2010] 136 COUNSELVISE.COM (IT) 3723 (ITAT-DELHI)
• Duration Of Justice: 2 month(s) 23 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 18-06-2010
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: E
• Assessment Year: 2007-2008
• Appeal Filed On: 26-03-2010
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: PRATIMA KAUSHIK
• Keywords: Depreciation; Charitable institution; Principle of natural justice; Capital expenditure
• Section: 11

Judgement Text

I.T.A. NO. 1336 /DEL/2010 1/6 IN THE INCOME TAX APPELLATE TRIBUNAL, NEW DELHI, BENCH E BEFORE SHRI RAJPAL YADAV, JUDICIAL MEMBER AND SHRI A K GARODIA, ACCOUTANT MEMBER ITA NO. 1336 /DEL/2010 (ASSESSMENT YEAR 2007-08) MARKET COMMITTEE, VS. THE ITO, WARD 1, ANAJ MANDI, FATEHABAD JAKHAL, DISTT. FATEHABAD (HARYANA) (APPELLANTS) (RESPONDENTS) PAN / GIR NO. AABTM3639A APPELLANT BY: NONE (WRITTEN SUBMISSION) RESPONDENT BY: SMT. PRATIMA KAUSHIK, SR. DR ORDER PER A. K. GARODIA, AM: 1. THIS APPEAL BY THE ASSESSEE HAS BEEN DIRECTED AGAIN ST THE ORDER OF LD. CIT(A), ROHTAK, DATED 08.02.2010 F OR THE ASSESSMENT YEAR 2007-08. THE GROUNDS OF APPEAL RAISED BY THE ASSESSEE READ AS UNDER: 1)THAT THE ORDER OF THE LD. A.O. AS WELL AS THE CI T(A) IS BAD, AGAINST LAW, NATURAL JUSTICE, WITHOUT JURISDICTION AND FACT OF THE CASE. I.T.A. NO. 1336 /DEL/2010 2/6 2) THAT THE LD. A.O. AS WELL AS CIT(A) HAS ERRED ON FACTS AND IN LAW FOR NOT ALLOWING DEPRECIATION ON FIXED ASSETS AMOUNTING TO RS.8,82,994/- AS AN APPLICATION OF FUNDS U/S 11. 2. NONE APPEARED ON BEHALF OF THE ASSESSEE IN PERSON B UT WRITTEN SUBMISSIONS DATED 01.05.2010 HAS BEEN RECEI VED FROM THE ASSESSEE IN WHICH IT HAS BEEN SUBMITTED TH AT THE APPEAL MAY BE DECIDED AFTER CONSIDERING THESE WRITTEN SUBMISSIONS OF THE ASSESSEE. HENCE WE DECI DE THIS APPEAL OF THE ASSESSEE AFTER HEARING THE LD. D .R. AND AFTER CONSIDERING THE WRITTEN SUBMISSIONS OF TH E ASSESSEE. 3. THE LD. D.R. SUPPORTED THE ORDER OF THE LD. CIT(A). IT WAS HIS SUBMISSION THAT THE LD. CIT(A) HAS DECIDED THIS ISSUE BY FOLLOWING THE JUDGEMENT OF HONBLE APEX COURT RENDERED IN THE CASE OF ESCORTS LTD. VS UOI REPORTED IN 199 ITR 43 AND HENCE, THIS APPEAL SHOUL D BE DECIDED BY FOLLOWING THE JUDGEMENT OF HONBLE APEX COURT IN PREFERENCE TO VARIOUS JUDGEMENTS OF HONBL E GUJARAT, AND BOMBAY HIGH COURTS CITED BY THE ASSESS EE IN THE WRITTEN SUBMISSION ALONG WITH FOUR TRIBUNAL DECISIONS. I.T.A. NO. 1336 /DEL/2010 3/6 4. WE HAVE CONSIDERED THE SUBMISSIONS OF THE LD. D.R. OF THE REVENUE AND HAVE PERUSED THE WRITTEN SUBMISSION OF THE ASSESSEE. WE FIND THAT IN THE PRESENT CASE, TH E ONLY DISPUTE IS REGARDING ALLOWABILITY OF DEPRECIATION W HILE COMPUTING THE INCOME OF THE ASSESSEE TRUST. THE A. O. HAD DISALLOWED THE CLAIM OF THE ASSESSEE REGARDING DEPRECIATION ON THE BASIS THAT DEPRECIATION CANNOT BE ALLOWED BECAUSE CAPITAL EXPENDITURE IS ALSO CONSIDE RED TO BE THE APPLICATION OF INCOME AND HENCE, THERE REMAINS NO ASSET AND WDV FOR THE PURPOSE OF CLAIMIN G DEPRECIATION. THE ASSESSEE CARRIED THE MATTER IN A PPEAL BEFORE THE LD. CIT(A) WHO ALSO CONFIRMED THE ASSESSMENT ORDER ON THIS ISSUE BY FOLLOWING THE JUDGEMENT OF HONBLE APEX COURT REPORTED IN 199 ITR 43. WHEN WE HAVE GONE THROUGH THIS CITATION, WE FIND THAT THE JUDGEMENT REPORTED AT THAT CITATION IS THE JUDGEMENT OF HONBLE APEX COURT RENDERED IN THE CAS E OF J K SYNTHETICS LTD. VS UOI AND NOT IN THE CASE O F ESCORTS LTD. VS UOI AS STATED BY THE LD. CIT(A) ON PAGE 2 OF HIS ORDER. WE CONSIDER THE JUDGEMENT OF HONBLE APEX COURT RENDERED IN THE CASE OF J K SYNTHETICS LTD (SUPRA) AND WE FIND THAT THIS JUDGEM ENT IS NOT APPLICABLE IN THE PRESENT CASE BECAUSE THE F ACTS I.T.A. NO. 1336 /DEL/2010 4/6 ARE DIFFERENT. IN THAT CASE THE ISSUE WAS REGARDIN G ALLOWABILITY OF DEDUCTION U/S 32(1)(II) ALONG WITH DEDUCTION ALLOWED TO THE ASSESSEE U/S 35(2)(IV). U NDER THESE FACTS, IT WAS HELD BY THE HONBLE APEX COURT THAT IF THE DEDUCTION IS ALLOWED UNDER THE PROVISIONS OF BOTH THESE SECTIONS FOR THE SAME ASSETS, IT WOULD AMOUNT TO GRANTING THE DOUBLE DEDUCTION. IN THE PRESENT CASE , THE FACTS ARE DIFFERENT. IN THE PRESENT CASE, DEPRECIA TION HAS TO BE ALLOWED FOR WORKING OUT THE INCOME OF THE ASSESSEE TRUST FROM ITS ACTIVITIES AND THEREAFTER, FOR CLAIMING EXEMPTION U/S 11, THE ASSESSEE HAS TO ESTA BLISH THAT MORE THAN 85% OF SURPLUS WAS UTILIZED FOR THE CHARITABLE ACTIVITIES OF THE TRUST TO BE ELIGIBLE F OR EXEMPTION U/S 11. HENCE, WHEN INVESTMENT BY THE ASSESSEE IN FIXED ASSETS IS CONSIDERED WHICH IS ALL OWABLE EXEMPTION U/S 11, THE SAME IS NOT EQUAL TO ALLOWING THE DEDUCTION WHILE COMPUTING INCOME OF THE ASSESSEE. IT IS ONE OF THE CONDITIONS FOR GRANTING EXEMPTION U/S 11 THAT MINIMUM 85% OF THE INCOME SHOULD BE APPLIED OR UTILIZED FOR THE PURPOSE OF CHARITABLE TRUST. THIS DOES NOT AMOUNT TO GRANTING THE DEDUCTION WHILE COMPUTIN G THE INCOME OF THE ASSESSEE. HENCE, WE ARE OF THE CONSIDERED OPINION THAT THIS JUDGEMENT OF THE HONB LE I.T.A. NO. 1336 /DEL/2010 5/6 APEX COURT HAS NO RELEVANCE IN THE PRESENT CASE BECAUSE THE FACTS ARE DIFFERENT. IN THE PRESENT CA SE, ISSUE INVOLVED IS COVERED IN FAVOUR OF THE ASSESSEE BY THE JUDGEMENT OF HONBLE GUJARAT HIGH COURT RENDERE D IN THE CASE OF CIT VS SETH MANILAL RANCHHODDAS VISHRAM BHAWAN AS REPORTED IN 198 ITR 598 (GUJ.) AND ALSO BY THE JUDGEMENT OF HONBLE BOMBAY HIGH COURT RENDERED IN THE CASE OF CIT VS INSTITUTE OF BANKING PERSONNEL SELECTION (IBPS) AS REPORTED IN 1 31 TAXMAN 386 (BOMBAY). BY FOLLOWING THESE TWO JUDGEMENTS, COORDINATE BENCH OF THIS TRIBUNAL HAS DECIDED THAT THE ISSUE IN FAVOUR OF THE FOLLOWING ASSESSEES IN THE FOLLOWING CASES: I) SRIMAD VALLABH VISHWA DHARMA SANSTHA VS ADDL. CIT IN I.T.A. NO. 792/AHD/2000; DT. 24 TH MARCH, 2006 (102 TJ(AHD.) 653) II) ITO VS. MARKET COMMITTEE, BHUNA, IN I.T.A. NO. 2411, 2412/DEL/2008 III) DCIT HISSAR VS MARKET COMMITTEE ADAMPUR IN I.T.A. NO. 1089/DEL/2008; IV) ITO VS MARKET COMMITTEE DHARSUL & BHATTU IN I.T.A. NO. 2983 & 2984/DEL/20- 09. 5. WE FIND THAT THE ISSUE INVOLVED IN THE PRESENT APPE AL IS COVERED IN FAVOUR OF THE ASSESSEE BY THESE TRIBUNAL I.T.A. NO. 1336 /DEL/2010 6/6 DECISIONS IN WHICH THE TRIBUNAL HAS FOLLOWED THESE TWO JUDGEMENTS OF HONBLE GUJARAT & BOMBAY HIGH COURTS CITED ABOVE. BY RESPECTFULLY FOLLOWINGS THESE DECI SIONS OF THE TRIBUNAL AND VARIOUS HIGH COURTS, WE DECIDE THE ISSUE IN THE PRESENT CASE IN FAVOUR OF THE ASSESSEE AND DIRECT THE A.O. TO ALLOW DEDUCTION TO THE ASSESSEE ON ACCOUNT OF DEPRECIATION AS PER LAW. 6. IN THE RESULT, THE APPEAL OF HE ASSESSEE IS ALLOWED . 7. THIS DECISION WAS PRONOUNCED IN THE OPEN COURT ON 18 TH JUNE, 2010. SD./- SD./- (RAJPAL YADAV) (A K GARODIA) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED:18 TH JUNE, 2010 SP. COPY FORWARDED TO 1. APPELLANT 2. RESPONDENT 3. CIT TRUE COPY: BY ORDER 4. CIT(A) 5. DR DY. REGISTRAR, ITAT, NEW DELHI