ITO, Mangalore V. Our Lady of Milagres Church, Udupi

ITA 138/BANG/2015

• Counselvise Citation: [2015] 140 COUNSELVISE.COM (IT) 89944 (ITAT-BANGALORE)
• Duration Of Justice: 4 month(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 11-06-2015
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Assessment Year: 2011-2012
• Appeal Filed On: 11-02-2015
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Capital asset; Depreciation; Charitable institution

Judgement Text

ITA.138/BANG/2015 PAGE - 1 IN THE INCOME TAX APPELLATE TRIBUNAL BANGALORE BENCH 'A', BANGALORE BEFORE SHRI. N. V. VASUDEVAN, JUDICIAL MEMBER AND SHRI. ABRAHAM P. GEORGE, ACCOUNTANT MEMBER I.T.A NO.138/BANG/2015 (ASSESSMENT YEAR : 2011-12) INCOME-TAX OFFICER (E) WARD 1, MANGALURU ..APPELLANT V. OUR LADY OF MILAGRES CHURCH, KALIANPUR, UDUPI DISTRICT, KARNATAKA 576 114 ..RESP ONDENT PAN : AAATO0343G ASSESSEE BY :NONE REVENUE BY : SHRI.P. DHIVAHAR, JCIT HEARD ON : 02.06.2015 PRONOUNCED ON : 11.06.2015 O R D E R PER ABRAHAM P. GEORGE, ACCOUNTANT MEMBER : IN THIS APPEAL FILED BY REVENUE, IT IS AGGRIEVED T HAT CIT (A), MYSURU, VIDE HIS ORDER DT.13.11.2014, ALLOWED THE CLAIM OF DEPRECIATION ON THE ASSETS, COST OF WHICH WAS ALLOWED AS A PART OF UTILISATION. 02. ASSESSEE, A TRUST REGISTERED U/S.12A OF THE INC OME-TAX ACT, 1961 (IN SHORT THE ACT), HAD CLAIMED DEPRECIATION ON ASSETS AS A N OUTGO WHILE COMPUTING ITS ITA.138/BANG/2015 PAGE - 2 INCOME, WHICH CLAIM WAS DISALLOWED BY THE AO RELYIN G ON THE DECISION OF HONBLE APEX COURT IN THE CASE OF ESCORT LTD V. UNI ON OF INDIA (199 ITR 43). 03. IN ITS APPEAL BEFORE THE CIT (A), THE ASSESSEE RELIED ON THE DECISION OF COORDINATE BENCH OF THIS TRIBUNAL IN THE CASE OF AC IT V. ADICHUNCHANAGIRI SHIKSHANA TRUST [19 ITR (TRIB) 828]. CIT (A) ACCEP TED THE CONTENTION OF THE ASSESSEE BY RELYING ON THE DECISIONS OF THE TRIBUNA L IN THE ABOVE MENTIONED CASE AS WELL AS IN THE CASE OF DR. TMA PAI FOUNDATION [I TA NOS.486 TO 491/BANG/2009, DT 16.02.2010] WHICH WENT IN FAVOUR OF THE ASSESSEE. AS PER THE CIT (A), THIS TRIBUNAL HAD DISTINGUISHED THE DE CISION OF HONBLE KERALA HIGH COURT IN THE CASE OF M/S. LISSIE MEDICAL INSTI TUTIONS V. CIT [(2012) 348 ITR 344)], IN THE LATTER DECISION. HE ALLOWED THE CLAIM OF THE ASSESSEE. 04. NOW BEFORE US, LD. DR SUBMITTED THAT IN VIEW OF THE JUDGMENT OF THE HONBLE KERALA HIGH COURT IN THE CASE OF M/S. LISSI E MEDICAL INSTITUTIONS V. CIT [(2012) 348 ITR 344)], THE CLAIM OF DEPRECIATIO N ON ASSETS COST OF WHICH WAS ALLOWED AS AN OUTGO WHILE WORKING OUT THE UTILI SATION COULD NOT BE ALLOWED. 05. NOBODY APPEARED ON BEHALF OF THE ASSESSEE. 06. WE HAVE PERUSED THE ORDERS AND HEARD THE CONTEN TIONS OF THE LD. DR. THE ISSUE WHETHER DEPRECIATION SHOULD BE ALLOWED ON ASSETS COST OF WHICH WAS ALLOWED AS A PART OF UTILISATION WHILE COMPUTING TH E INCOME OF AN ASSESSEE REGISTERED U/S.12A OF THE ACT, HAD COME UP BEFORE T HIS TRIBUNAL IN THE CASE OF MEDICAL RELIEF SOCIETY SOUTH V. DIT [ITA.1713/BANG/ 2013, DT 10.12.2014]. ITA.138/BANG/2015 PAGE - 3 THIS TRIBUNAL, INTER ALIA RELYING ON THE DECISION OF THIS TRIBUNAL IN THE CASE OF TMA PAI FOUNDATION (SUPRA) AND ACIT V. ADICHUNCHANA GIRI SHIKSHANA TRUST (SUPRA), AND DISTINGUISHING THE DECISION OF HONBLE KERALA HIGH COURT IN THE CASE OF LIZZIE MEDICAL INSTITUTIONS, HAD HELD AS UN DER : ' GROUND NO.1 : THE LEARNED CIT (APPEALS) ERRED IN LAW BY ALLOWING THE CLAIM OF DEPRECIATION ON CAPITAL ASSETS PURCHAS ED DURING THE YEAR WHICH HAVE BEEN CONSIDERED AS APPLICATION OF INCOME . GROUND NO.2 : THE LEARNED CIT (APPEALS) ERRED BY AL LOWING THE CLAIM OF DEPRECIATION ON CAPITAL ASSETS ACQUIRED DURING T HE YEAR AS IT TANTAMOUNT TO DOUBLE DEDUCTION. GROUND NO.3 : THE L EARNED CIT (APPEALS) OUGHT TO HAVE CONSIDERED THE DECISION OF THE HON'BLE HIGH COURT OF KERALA IN THE CASE OF M/S. LISSIE MEDICAL INSTITUTION (ITA 42 OF 2011)' DEPRECIATION 3.1.2 IN THE GROUNDS RAISED ABOVE, REV ENUE CHALLENGES THE ORDER OF THE LEARNED CIT (APPEALS) IN ALLOWING THE ASSESSEE'S CLAIM FOR DEPRECIATION OF THE ADDITION TO ASSETS DU RING THE RELEVANT PERIOD, EVEN THOUGH THE ENTIRE COST OF THESE ASSETS ACQUIRED IN THE RELEVANT PREVIOUS YEAR HAS BEEN CLAIMED BY THE ASSE SSEE AS APPLICATION OF ITS INCOME FOR ITS CHARITABLE ACTIVI TIES. THE LEARNED DEPARTMENTAL REPRESENTATIVE SUBMITS THAT THIS FINDI NG ON THE PART OF THE LEARNED CIT (APPEALS), HAS RESULTED IN ALLOWING DOUBLE DEDUCTION TO THE ASSESSEE, WHICH IS NOT ADMISSIBLE IN LAW AS PER THE RATIO LAID DOWN BY THE HON'BLE APEX COURT IN THE CASE OF ESCOR TS LTD., AND ANOTHER V UOI REPORTED IN 189 ITR 43. IT WAS ALSO C ONTENDED BY THE LEARNED AUTHORISED REPRESENTATIVE THAT THE LEARNED CIT (APPEALS) ERRED IN NOT FOLLOWING THE DECISION OF THE HON'BLE KERALA HIGH COURT IN THE CASE OF LISSIE MEDICAL ITA NO.1713/BANG/2013 INSTITUTIONS V CIT IN ITA NO.42 OF 2011 DT.17.2.2012. THE LEARNED DEPARTMENTAL REPRESENTATIVE PRAYED THAT IN THE LIGHT OF THE ABOV E, THE ORDER OF THE LEARNED CIT (APPEALS) ON THIS POINT BE REVERSED AND THAT OF THE ASSESSING OFFICER BE RESTORED. 3.2 PER CONTRA, THE LEARNED AUTHORISED REPRESENTATIVE PLACED SUPPORT AND RELIED ON THE IMP UGNED ORDER OF THE LEARNED CIT (APPEALS) ON THIS ISSUE. IT WAS SUB MITTED THAT IN ALLOWING THE ASSESSEE'S CLAIM FOR DEPRECIATION ON A DDITION TO ASSETS DURING THE RELEVANT PERIOD, THE LEARNED CIT (APPEAL S) FOLLOWED THE DECISION OF THE CO-ORDINATE BENCH OF THIS TRIBUNAL IN THE CASE OF ONE OF THE ASSESSEE'S GROUP TRUSTS, I.E. DR. T.M.A. PAI FO UNDATION IN ITA NO.486 TO 491 (BANG)/2009 DT.16.2.2009 FOR ASSESSME NT YEARS 2001- ITA.138/BANG/2015 PAGE - 4 02 TO 2006-07. IT WAS FURTHER SUBMITTED BY THE LEAR NED AUTHORISED REPRESENTATIVE THAT THE DECISION OF THE HON'BLE KER ALA HIGH COURT IN THE CASE OF LISSIE MEDICAL INSTITUTIONS (SUPRA), RE LIED ON BY REVENUE, WAS DEALT WITH BY A CO-ORDINATE BENCH OF THE TRIBUN AL IN THE CASE OF ACIT V ADICHUNCHUNAGIRI TRUST REPORTED IN 49 ITCL 5 44. THE LEARNED AUTHORISED REPRESENTATIVE SUBMITTED THAT, SUBSEQUEN T TO THE PASSING OF THE IMPUGNED ORDER BY THE LEARNED CIT (APPEALS), AN OTHER CO-ORDINATE BENCH OF THE TRIBUNAL IN THE CASE OF A GROUP TRUST, DR. T.M.A. PAI FOUNDATION HAS HELD THE VERY SAME ISSUE, OF THE ALL OWABILITY OF DEPRECIATION ON ADDITION TO ASSETS DURING THE RELEV ANT PERIOD, IN FAVOUR OF THE ASSESSEE IN ITA NO.1140/BANG/2013 DT. 21.3.2014. THE LEARNED AUTHORISED REPRESENTATIVE SUBMITTED THAT, I N VIEW OF THE FAVOURABLE DECISIONS OF THE HON'BLE COURTS AND OF T HE CO-ORDINATE BENCH OF THIS JURISDICTIONAL TRIBUNAL REFERRED TO A ND PLACED RELIANCE UPON, THE REVENUE'S APPEAL IS LIABLE TO BE DISMISSE D. 3.3.1 WE HAVE HEARD BOTH PARTIES AND PERUSED AND CA REFULLY CONSIDERED THE MATERIAL ON RECORD, INCLUDING THE JU DICIAL DECISIONS CITED AND PLACED RELIANCE UPON. WE FIND THE ISSUE O F THE ASSESSEE'S CLAIM FOR DEPRECIATION ON ADDITION TO ASSETS ACQUIR ED IN THE RELEVANT PERIOD IS TO BE ALLOWED EVEN IF THE ENTIRE COST OF THE SAME ASSETS HAVE BEEN CLAIMED BY THE ASSESSEE AND ALLOWED AS APPLICA TION OF ITS INCOME FOR CHARITABLE PURPOSES, SINCE THIS ISSUE ITA NO.17 13/BANG/2013 HAS BEEN HELD IN FAVOUR OF THE ASSESSEE IN A NUMBER OF DECISIONS OF THE CO- ORDINATE BENCH OF THIS TRIBUNAL IN THE CASES OF DR. T.M.A. PAI FOUNDATION (SUPRA), ACADEMY OF GENERAL EDUCATION (S UPRA), ADICHUNCHUNAGIRI TRUST (SUPRA), ETC., FOLLOWING THE DECISION OF THE HON'BLE BOMBAY HIGH COURT IN THE CASE OF CIT V INST ITUTE OF BANKING REPORTED IN 264 ITR 110 (BOM). 3.3.2 FOLLOWING THE DECISIONS OF THE HON'BLE BOMBAY HIGH COURT IN THE CASE OF INSTITUTE OF BANKING (SUPRA) AND OF THE CO-ORDINATE BENCHES (CITED SUPRA IN THIS PARA), WE UPHOLD THE ORDER OF THE LEARNED CIT (APPEALS) IN ALLOWING THE ASSESSEE'S CLAIM FOR DEPR ECIATION ON NEW ASSETS ACQUIRED AND PUT INTO USE DURING THE RELEVAN T PREVIOUS YEAR UNDER CONSIDERATION, EVEN IF THE ENTIRE COST OF THO SE ASSETS HAVE BEEN CLAIMED BY THE ASSESSEE AND ALLOWED AS APPLICATION OF ITS INCOME FOR CHARITABLE PURPOSES. WE, CONSEQUENTLY, DISMISS GROU NDS 1 TO 3 RAISED BY THE REVENUE. FOLLOWING THE ABOVE, WE ARE OF THE OPINION THAT CIT (A) WAS JUSTIFIED IN TAKING THE VIEW THAT THE CLAIM OF ASSESSEE WAS ALLOWABLE. WE DO NOT FIND ANY REASON TO INTERFERE WITH THE ORDER OF CIT (A). ITA.138/BANG/2015 PAGE - 5 07. IN THE RESULT, APPEAL OF THE REVENUE STANDS DIS MISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 11 TH DAY OF JUNE, 2015. SD/- SD/- (N. V. VASUDEVAN) (ABRAHAM P GEORGE) JUDICIAL MEMBER ACCOUNTANT MEMBER