The Income Tax Officer (Exemption) Ward - 1, Mangaluru V. M/s Sri Ventakaramana Dev Educational & Cultural Trust, Kundapura

ITA 1585/BANG/2018

• Counselvise Citation: [2018] 125 COUNSELVISE.COM (IT) 1310 (ITAT-BANGALORE)
• Duration Of Justice: 3 month(s) 27 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 07-09-2018
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: C
• Assessment Year: 2014-2015
• Appeal Filed On: 11-05-2018
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Depreciation; Charitable institution; Capital expenditure

Judgement Text

ITA.1585/BANG/2018 PAGE - 1 IN THE INCOME TAX APPELLATE TRIBUNAL BENGALURU BENCH 'C', BENGALURU BEFORE SHRI. JASON P. BOAZ, ACCOUNTANT MEMBER AND SHRI. LALIET KUMAR, JUDICIAL MEMBER I.T.A NO.1585/BANG/2018 (ASSESSMENT YEAR : 2014-15) INCOME-TAX OFFICER (EXEMPTIONS), WARD 1, MANGALURU .. APPELLANT V. M/S. SRI VENKATARAMANA DEV EDUCATIONAL & CULTURAL TRUST, OMBATHDANDIGE ROAD, KUNDAPURA 576201 .. RESPONDENT PAN : AAETD2986D ASSESSEE BY : NONE REVENUE BY : DR. P. V. PRADEEP KUMAR, ADDL. CIT HEARD ON : 05.09.2018 PRONOUNCED ON : 07 .09.2018 O R D E R PER LALIET KUMAR, JUDICIAL MEMBER : THE PRESENT APPEAL IS FILED BY THE REVENUE AGAINST THE ORDER OF THE CIT (A)-10, BENGALURU, DT.13.02.2018, FOR TH E ASSESSMENT YEAR 2014-15, ON THE FOLLOWING GROUNDS : ITA.1585/BANG/2018 PAGE - 2 02. BRIEF FACTS ARE, THE AO ON A PERUSAL OF THE STA TEMENT OF COMPUTATION OF INCOME OBSERVED THAT THE ASSESSEE HA D CLAIMED CARRY FORWARD OF EXCESS APPLICATION OF INCOME OF EARLIER YEARS AS WELL AS EXCESS APPLICATION OF CURRENT YEAR TO SUBSEQUENT YE AR. THE AO CONCLUDED THAT WHEN THERE IS NO LOSS ITSELF THE QUE STION OF CARRY FORWARD OF THE SAME DOES NOT ARISE. THE PROVISIONS OF SECTION 11-13 ARE A SELF-CONTAINED CODE AND THEY CANNOT BE IN ANY WAY BE INTERPRETED TO MEAN CARRY FORWARD OF EXCESS EXPENDI TURE AND DISALLOWED THE ASSESSEES CLAIM FOR CARRY FORWARD O F EXCESS ITA.1585/BANG/2018 PAGE - 3 APPLICATION OF EARLIER YEAR. BEING AGGRIEVED, ASSE SSEE FILED AN APPEAL BEFORE THE CIT (A). 03. THE CIT (A), BY RELYING ON THE VARIOUS DECIS IONS OF THE BANGALORE BENCH OF THE ITAT, DIRECTED THE AO TO ALLOW CARRY FORWARD OF EXCESS APPLICATION TO SUBSEQUENT YEARS. NOW THE REVENUE IS AGGRIEVED AND IS IN APPEAL BEFORE THE IT AT. 04. BEFORE US, THE LD. DR RELIED UPON THE ORDER PAS SED BY THE AO. 05. NONE WAS PRESENT ON BEHALF OF THE ASSESSEE. HE NCE IN THE ABSENCE OF REPRESENTATION BY THE ASSESSEE, WE PROCE ED TO ADJUDICATE THE APPEAL WITHOUT THE ASSISTANCE OF THE ASSESSEE. 06. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE RECORD. IN PARA 5.3.1 & 5.3.2 OF THE ORDER THE CIT (A) HAS DECIDED THE ISSUE IN FAVOUR OF THE ASSESSEE, WHICH IS TO THE FOLLOWIN G EFFECT : 5.3 CARRY FORWARD OF EXCESS APPLICATION OF INCOME 5.3.1 THE SUBMISSION OF THE APPELLANT WITH REGARD T O CARRY FORWARD OF EXCESS APPLICATION OF INCOME OF THE APPE LLANT WAS CONSIDERED. IN THE ASSESSMENT ORDER ITSELF THE AO H AS ADMITTED THAT SO FAR THE ISSUE OF CARRY FORWARD OF LOSS IS I N THE FAVOUR OF THE APPELLANT. THE HON'BLE ITAT, BANGALORE BENCH IN THE FOLLOWING CASES ALLOWED THE ABOVE ISSUE OF CARRY FO RWARD OF EXCESS APPLICATION TO THE SUBSEQUENT YEAR AS APPLIC ATION OF INCOME. A) ACIT VS. MANIPAL HOTEL & RESTAURANT MANAGEMENT C OLLEGE TRUST (ITA NO.1142/BANG/2013), DATED 31.10.2014 ASS ESSMENT YEAR 2010-2011. B) DCIT VS. MANIPAL ACADEMY OF HIGHER EDUCATION, MANIP AL (ITA. NO.658(8)/2014, DATED 24.7.2015 (ASSESSMENT YEAR 20 11-2012) ITA.1585/BANG/2018 PAGE - 4 C) ACIT VS. DR.T.M.A. PAI FOUNDATION, (ITA NO.1140/BAN G/2013, VIDE ITS ORDER DATED 21.3.2014 (ASSESSMENT YEAR 2010-201 1) D) ACIT VS CITY HOSPITAL CHARITABLE TRUST IN ITA 676/ 2014 DATED 20.03.2015 E) ACIT VS MEDICAL RELIEF SOCIETY OF SOUTH CANARA IN ITA 1713/ 2013 DATED 10.12.2014. 5.3.2RESPECTFULLY FOLLOWING THE BINDING DECISIONS O F THE JURISDICTIONAL ITAT IN THE ABOVE CASES, I HEREBY DI RECT THE AO TO ALLOW CARRY FORWARD OF EXCESS APPLICATION TO SUBSEQ UENT YEARS. 07. ON EXAMINING THE FACTS, WE FIND THAT ALL THE IS SUE RAISED BY THE REVENUE ARE COVERED BY THE DECISIONS OF THE ITAT WH ICH THE CIT (A) HAS RIGHTLY RELIED UPON WHILE ALLOWING THE ASSE SSEES APPEAL. MOREOVER, WE DRAW SUPPORT FROM THE JUDGMENT OF THE HONBLE SUPREME COURT IN THE MATTER OF RAJASTHAN AND GUJARA TI CHARITABLE FOUNDATION [(2018) 402 ITR 441], WHEREIN THE HONBL E SUPREME COURT WHILE ANSWERING THE QUESTION NO.2 HAS HELD AS UNDER : 4. QUESTION NO. 2 HEREIN IS IDENTICAL TO THE QUESTI ON WHICH WAS RAISED BEFORE THE BOMBAY HIGH COURT IN THE CASE OF DIRECTOR OF INCOME-TAX (EXEMPTION) V. FRAMJEE CAWASJEE INSTITUT E [1993] 109 CTR 463 . IN THAT CASE, THE FACTS WERE AS FOLLOWS: THE ASSESSEE WAS THE TRUST. IT DERIVED ITS INCOME FROM DEPRECIABLE ASSETS. THE ASSESSEE TOOK INTO ACCOUNT DEPRECIATION ON THOSE ASSETS IN COMPUTING THE INCOME OF THE TRUST. THE IT O HELD THAT DEPRECIATION COULD NOT BE TAKEN INTO ACCOUNT BECAUS E, FULL CAPITAL EXPENDITURE HAD BEEN ALLOWED IN THE YEAR OF ACQUISI TION OF THE ASSETS. THE ASSESSEE WENT IN APPEAL BEFORE THE ASSI STANT APPELLATE COMMISSIONER. THE APPEAL WAS REJECTED. TH E TRIBUNAL, HOWEVER, TOOK THE VIEW THAT WHEN THE ITO STATED THA T FULL EXPENDITURE HAD BEEN ALLOWED IN THE YEAR OF ACQUISI TION OF THE ASSETS, WHAT HE REALLY MEANT WAS THAT THE AMOUNT SP ENT ON ACQUIRING THOSE ASSETS HAD BEEN TREATED AS 'APPLICA TION OF INCOME' OF THE TRUST IN THE YEAR IN WHICH THE INCOM E WAS SPENT IN ACQUIRING THOSE ASSETS. THIS DID NOT MEAN THAT IN C OMPUTING INCOME FROM THOSE ASSETS IN SUBSEQUENT YEARS, DEPRE CIATION IN RESPECT OF THOSE ASSETS CANNOT BE TAKEN INTO ACCOUN T. THIS VIEW OF ITA.1585/BANG/2018 PAGE - 5 THE TRIBUNAL HAS BEEN CONFIRMED BY THE BOMBAY HIGH COURT IN THE ABOVE JUDGMENT. HENCE, QUESTION NO. 2 IS COVERE D BY THE DECISION OF THE BOMBAY HIGH COURT IN THE ABOVE JUDG MENT. CONSEQUENTLY, QUESTION NO. 2 IS ANSWERED IN THE AFF IRMATIVE I.E., IN FAVOUR OF THE ASSESSEE AND AGAINST THE DEPARTMEN T.' 2. AFTER HEARING LEARNED COUNSEL FOR THE PARTIES, WE ARE OF THE OPINION THAT THE AFORESAID VIEW TAKEN BY THE BOMBAY HIGH COURT CORRECTLY STATES THE PRINCIPLES OF LAW AND THERE IS NO NEED TO INTERFERE WITH THE SAME. 3. IT MAY BE MENTIONED THAT MOST OF THE HIGH COURTS H AVE TAKEN THE AFORESAID VIEW WITH ONLY EXCEPTION THERETO BY T HE HIGH COURT OF KERALA WHICH HAS TAKEN A CONTRARY VIEW IN 'LISSI E MEDICAL INSTITUTIONS V. CIT [2012] 24 TAXMANN.COM 9/209 TAXMAN 19 (MAG.)/348 ITR 344 (KER.) '. 4. IT MAY ALSO BE MENTIONED AT THIS STAGE THAT THE LE GISLATURE, REALISING THAT THERE WAS NO SPECIFIC PROVISION IN T HIS BEHALF IN THE INCOME TAX ACT, HAS MADE AMENDMENT IN SECTION 11(6) OF THE ACT VIDE FINANCE ACT NO. 2/2014 WHICH BECAME EFFECTIVE FROM THE ASSESSMENT YEAR 2015-2016. THE DELHI HIGH COURT HAS TAKEN THE VIEW AND RIGHTLY SO, THAT THE SAID AMENDMENT IS PRO SPECTIVE IN NATURE. 5. IT ALSO FOLLOWS THAT ONCE ASSESSEE IS ALLOWED DEPR ECIATION, HE SHALL BE ENTITLED TO CARRY FORWARD THE DEPRECIATION AS WELL. THEREFORE, WE DO NOT FIND ANY REASON TO INTERFERE W ITH THE ORDER OF THE CIT (A) AND WE UPHOLD THE SAME. 08. IN THE RESULT, APPEAL OF THE REVENUE IS DISMISS ED. ORDER PRONOUNCED IN THE OPEN COURT ON 7 TH DAY OF SEPTEMBER, 2018. SD/- SD/- (JASON P. BOAZ) (LALIET KUMAR) ACCOUNTANT MEMBER JUDICIAL MEMBE R BENGALURU DATED : 07.09.2018 MCN* ITA.1585/BANG/2018 PAGE - 6 COPY TO: 1. THE ASSESSEE 2. THE ASSESSING OFFICER 3. THE COMMISSIONER OF INCOME-TAX 4. COMMISSIONER OF INCOME-TAX(A) 5. DR 6. GF, ITAT, BANGALORE BY ORDER SENIOR PRIVATE SECRETARY, INCOME TAX APPELLATE TRIBUNAL, BANGALORE.