Assistant Director of Income Tax (Exemption), Trivandrum V. Sree Chithira Thirunal College of Engineering, Trivandrum

ITA 156/COCH/2009

• Counselvise Citation: [2012] 140 COUNSELVISE.COM (IT) 61489 (ITAT-COCHIN)
• Duration Of Justice: 3 year(s) 2 month(s) 14 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 08-06-2012
• Appeal Filed By: Department
• Bench Allotted: DB
• Next Hearing Date: 19-04-2012
• Assessment Year: 2005-2006
• Appeal Filed On: 25-03-2009
• Court: TRIBUNAL
• Department Lawyers: S VIJAYAPRABHA
• Assessee Lawyers: V DEVARAJAN
• Keywords: Depreciation; Charitable institution; Cost of acquisition; Capital expenditure

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL COCHIN BENCH, COCHIN BEFORE S/SHRI N.R.S.GANESAN, JM AND B.R.BASKAR AN, AM I.T.A. NOS. 156/COCH/2009 & 545/COCH/2010 ASSESSMENT YEARS : 2005-06 & 2007-08 THE ASSISTANT DIRECTOR OF INCOME-TAX(EXEMPTION), RANGE- 1, TRIVANDRUM. SREE CHITHIRA THIRUNAL COLLEGE OF ENGINEERING, PAPPANAMCODE, TRIVANDRUM-18. {PAN: AADTS 5927K] (REVENUE-APPELLANT) ( ASSESSEE - RESPONDENT) REVENUE BY SMT. S. VIJAYAPRABHA, JR. DR ASSESSEE BY SHRI V. DEVARAJAN, CA DATE OF HEARING 19/04/2012 DATE OF PRONOUNCEMENT 08 /06/2012 O R D E R PER B.R.BASKARAN, ACCOUNTANT MEMBER: THE APPEALS OF THE REVENUE ARE DIRECTED AGAINST T HE SEPARATE ORDERS PASSED BY THE LD. CIT(A)-I, TRIVANDRUM AND THEY RELATE TO THE ASSESSMENT YEARS 2005-06 & 2007- 08. SINCE THE MAJOR ISSUE URGED IN BOTH THE APPEAL S WAS IDENTICAL IN NATURE, THESE APPEALS WERE HEARD TOGETHER AND ARE BEING DISPOSED OF BY THIS COMMON ORDER. 2. THE COMMON ISSUE URGED IN THIS APPEAL IS WHE THER THE LD CIT(A) IS JUSTIFIED IN HOLDING THAT THE ASSESSEE IS ENTITLED TO CLAIM DEPR ECIATION ON THE FIXED ASSETS, WHOSE COST WAS FULLY ALLOWED AS APPLICATION OF INCOME IN THE HANDS OF THE ASSESSEE. 3. AT THE TIME OF HEARING, THE LD COUNSEL FOR T HE ASSESSEE FAIRLY CONCEDED THAT THE IMPUGNED ISSUE IS COVERED AGAINST THE ASSESSEE BY T HE DECISION DATED 26.10.2010 RENDERED BY THE HONBLE JURISDICTIONAL KERALA HIGH COURT IN THE CASE OF LISSIE MEDICAL INSTITUTIONS IN ITA NO.42 OF 2011. IN THAT CASE, T HE ASSESSING OFFICER HAD DISALLOWED THE CLAIM OF DEPRECIATION BY HOLDING THAT THE ASSESSEE IS NOT ENTITLED TO CLAIM DEPRECIATION ITA NOS. 156/COCH/2009 & 545/COCH/ 2010 2 ON THOSE ASSETS WHOSE COST OF ACQUISITION IS CLAIME D AS APPLICATION OF INCOME OF THE CHARITABLE TRUST FOR CHARITABLE PURPOSES, AS IT WOU LD RESULT IN DOUBLE DEDUCTION OF CAPITAL EXPENDITURE. THE VIEW OF THE AO WAS UPHELD BY THE TRIBUNAL BY FOLLOWING THE DECISION OF HONBLE SUPREME COURT IN THE CASE OF ESCORTS LTD & OTHERS VS. UNION OF INDIA, REPORTED IN 199 ITR 43. THE ASSESSEE CHALLENGED TH E ORDER OF THE TRIBUNAL AND THE HONBLE HIGH COURT UPHELD THE ORDER OF THE TRIBUNAL WITH THE FOLLOWING OBSERVATIONS:- FOR THE FOREGOING REASONS, WE DISPOSE OF THE APPEA L BY CONFIRMING THE ORDER OF THE TRIBUNAL. HOWEVER, AS RIGHTLY POINTED OUT BY THE COUNSEL FOR THE ASSESSEE THE SYSTEM OF ALLOWING DEPRECIATI ON WAS FOLLOWED BY THE ASSESSEE FOR SEVERAL YEARS AND IT WAS CONSIST ENT WITH THE VIEW TAKEN BY SEVERAL HIGH COURTS IN INDIA IN THE DECISI ONS ABOVE CITED. WE FIND FORCE IN THIS CONTENTION BECAUSE ASSESSEE CAN NOT BE TAKEN BY SURPRISE BY DISALLOWING DEPRECIATION WHICH WAS BEIN G ALLOWED FOR SEVERAL YEARS AND TO DEMAND TAX FOR ONE YEAR AFTER MAKING DIS- ALLOWANCE. WE FEEL ASSESSEE SHOULD BE ALLOWED TO WR ITE BACK DEPRECIATION AND IF DONE THE ASSESSING OFFICER WILL MODIFY THE ASSESSMENT DETERMINING HIGHER INCOME AND ALLOW RECO MPUTED INCOME WITH THE DEPRECIATION WRITTEN BACK BY THE ASSESSEE TO BE CARRIED FORWARD FOR SUBSEQUENT YEARS FOR APPLICATION FOR CH ARITABLE PURPOSES. 4. IN THE ABOVE CITED CASE, THE HONBLE HIGH COU RT HAS GIVEN RELIEF WITH REGARD TO THE WRITE BACK OF THE DEPRECIATION. THE LD COUNSEL FOR THE ASSESSEE REQUESTED THE TRIBUNAL TO GIVE SIMILAR DIRECTIONS AS GIVEN BY THE HONBLE HIGH COURT FOR WRITING BACK OF THE DEPRECIATION IN THE INSTANT CASES ALSO. HOWEVER, W E ARE DOUBTFUL WHETHER THE TRIBUNAL IS EMPOWERED TO GIVE ANY SUCH DIRECTION. THE ACCUMU LATION OF INCOME, AS SUBMITTED BY LD D.R, IS GOVERNED BY THE PROVISIONS OF EXPLANATI ON 2 TO SEC. 11(1) AND ALSO BY SEC. 11(2) OF THE ACT. IN THE ABOVE CITED CASE, IT IS P ERTINENT TO NOTE THAT THE HONBLE HIGH COURT HAS NOT MODIFIED THE ABOVE SAID PROVISIONS. INSTEAD, IT HAS GIVEN CONCESSION TO THE ASSESSEE, WHICH IN OUR VIEW, IS APPLICABLE TO T HAT PARTICULAR ASSESSEE ONLY. THE ITAT, BEING A CREATURE OF STATUTE, IN OUR VIEW, CAN NOT ARM ITSELF WITH ANY SUCH POWERS, WHICH ARE VESTED WITH THE HIGH COURT. ACCORDINGLY, WE ARE OF THE VIEW THAT THE TRIBUNAL IS NOT ENTITLED TO GIVE ANY SUCH RELIEF AS GIVEN BY THE HIGH COURT, SINCE THE TRIBUNAL HAS TO ACT WITHIN THE AUTHORITY OF THE PROVISIONS OF TH E ACT. ACCORDINGLY, WE DECLINE TO GIVE ITA NOS. 156/COCH/2009 & 545/COCH/ 2010 3 ANY SUCH DIRECTION AS GIVEN BY THE HONBLE HIGH COU RT. ACCORDINGLY, WE UPHOLD THE ORDERS OF LD CIT(A) ON THIS ISSUE. 5. IN THE APPEAL RELATING TO THE ASSESSMENT YEA R 2005-06, THE REVENUE HAS RAISED ONE MORE GROUND. THE AO HAD ALLOWED DEDUCTION U/S 11(2) OF THE ACT ONLY TO THE EXTENT CLAIMED BY THE ASSESSEE. U/S 11(2) OF THE A CT, THE ASSESSEE IS ALLOWED DEDUCTION TO THE EXTENT IT HAS ACCUMULATED INCOME FOR SPECIFI C PURPOSES FOR FUTURE APPLICATION. HOWEVER, SINCE THE TOTAL INCOME WAS ENHANCED BY DIS ALLOWING DEPRECIATION, THE ASSESSEE HAD RAISED A GROUND BEFORE LD CIT(A) SEEKI NG PERMISSION TO MODIFY THE AMOUNT OF ACCUMULATION. SINCE THE LD CIT(A) ALLOWE D THE CLAIM OF DEPRECIATION, HE DID NOT FIND IT NECESSARY TO ADDRESS THIS GROUND. THE REVENUE IS FINDING FAULT WITH THIS DECISION OF LD CIT(A). IN OUR VIEW, THE REVENUE SH OULD NOT BE AGGRIEVED BY THE SAID DECISION OF LD CIT(A). IT IS FOR THE ASSESSEE TO S EEK APPROPRIATE RELIEF FROM THE LD CIT(A). ACCORDINGLY, WE REJECT THE GROUNDS RAISED BY THE REVENUE ON THIS ISSUE. 6. IN THE RESULT, BOTH THE APPEAL OF THE REVENU E FOR ASSESSMENT YEAR 2005-06 IS PARTLY ALLOWED AND THE APPEAL RELATING TO THE ASSES SMENT YEAR 2007-08 IS ALLOWED. PRONOUNCED ACCORDINGL Y ON 08-06-2012 SD/- SD/- (N.R.S.GANESAN) (B.R.BASKARAN) JUDICIAL MEMBER ACCOUNTANT MEMBER PLACE: KOCHI DATED: 8TH JUNE, 2012 GJ COPY TO: 1. SREE CHITHIRA THIRUNAL COLLEGE OF ENGINEERING, PA PPANAMCODE, TRIVANDRUM-18. 2. THE ASSISTANT DIRECTOR OF INCOME-TAX(EXEMPTION), RANGE-1, TRIVANDRUM. 3. THE COMMISSIONER OF INCOME-TAX (APPEALS)-I, TRIV ANDRUM. 4. THE COMMISSIONER OF INCOME-TAX, TRIVANDURM. 5. D.R., I.T.A.T., COCHIN BENCH, COCHIN. 6. GUARD FILE. BY ORDER (ASSISTANT REGISTRAR) I.T.A.T, COCHIN