Income-tax Officer, V. Mahatma Gandhi Mission, Aurangabad

ITA 1633/PUN/2014

• Counselvise Citation: [2018] 125 COUNSELVISE.COM (IT) 9090 (ITAT-PUNE)
• Duration Of Justice: 3 year(s) 6 month(s) 30 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 26-03-2018
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Next Hearing Date: 22-03-2018
• Assessment Year: 2010-2011
• Appeal Filed On: 27-08-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Capital asset; Depreciation; Capital expenditure
• Section: 143(3); 12A; 10; 11

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCH A , PUNE , , . , BEFORE MS. SUSHMA CHOWLA, JM AND SHRI D. KARUNAKARA RAO , AM . / ITA NO S . 1633 & 1634 /P U N/201 4 / ASSESSMENT YEAR S : 20 1 0 - 11 & 20 11 - 12 THE INCOME TAX OFFICER , WARD 1(1), AURANGABAD . / APPELLANT VS. MAHATMA GANDHI MISSION, MGM CAMPUS, N - 6, CIDCO, AURANGABAD . / RESPONDENT PAN: AA ATM4256E / APPELLANT BY : SHRI RAJEEV KUMAR, CIT / RESPONDENT BY : SHRI PRAMOD SHINGTE / DATE OF HEARING : 2 2 . 0 3 . 201 8 / DATE OF PRONOUNCEMENT: 26 . 0 3 .201 8 / ORDER PER SUSHMA CHOWLA, J M : BOTH T H E APPEAL S FILED BY THE REVENUE ARE AGAINST SEPARATE ORDER S OF CIT (A) , AURANGABAD , DATED 1 0 . 06 .201 4 AND 30.06.2014 RELATING TO ASSESSMENT YEAR S 20 1 0 - 11 & 20 11 - 12 AGAINST RESPECTIVE ORDERS PASSED UNDER S ECTION 143(3) OF THE INCOME - TAX ACT , 1961 (IN SHORT THE ACT) . 2. BOTH THE APPEALS FILED BY REVENUE RELATING TO THE SAME ASSESSEE ON SIMILAR ISSUE WERE HEARD TOGETHER AND ARE BEING DISPOSED OF BY THIS CONSOLIDATED ORDER FOR THE SAKE OF CONVENIENCE. IN O RDER TO ADJUDICATE THE ITA NO S . 1633 & 1634 /P U N/20 1 4 MAHATMA GANDHI MISSION 2 ISSUE, WE MAKE REFERENCE TO THE FACTS IN ITA NO. 1633 /PUN/2014, RELATING TO ASSESSMENT YEAR 20 1 0 - 11 . 3. THE REVENUE IN ITA NO. 1633 /PUN/2014, RELATING TO ASSESSMENT YEAR 20 1 0 - 11 HAS RAISED THE FOLLOWING GROUND S OF APPEAL: - 1) WHETHER, ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE CIT(A) IS JUSTIFIED IN DELETING THE DEPRECIATION ON CAPITAL ASSETS WHICH HAD ALREADY BEEN ALLOWED AS APPLICATION OF INCOME U/S 11 OF THE ACT, EARLIER. 2) THE ORDER OF THE AO BE RESTORED AND THAT OF T HE CIT(A) BE VACATED. 4. THE ONLY ISSUE RAISED IN THE PRESENT APPEAL IS THE CLAIM OF DEPRECIATION ON CAPITAL ASSETS, VALUE OF WHICH HAD ALREADY BEEN ALLOWED AS APPLICATION OF INCOME UNDER SECTION 11 OF THE ACT. 5. THE LEARNED AUTHORIZED REPRESENTATIVE FO R THE ASSESSEE POINTED OUT THAT THE ISSUE STANDS COVERED BY THE RATIO LAID DOWN BY THE HONBLE APEX COURT IN CIT VS. RAJASTHAN AND GUJARATI CHARITABLE FOUNDATION POONA IN CIVIL APPEAL NO.7186 OF 2014, JUDGMENT DATED 13.12.2017. 6. THE LEARNED DEPARTMENTAL REPRESENTATIVE FOR THE REVENUE PLACED RELIANCE ON THE ORDER OF ASSESSING OFFICER. 7. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE RECORD. THE ASSESSEE BEFORE US IS A TRUST AND IS REGISTERED UNDER SECTION 12A OF THE ACT. THE ASSESSEE WAS RUNNING HOSPITALS AND EDUCATIONAL INSTITUTIONS FOR IMPARTING EDUCATION IN MEDICAL AND OTHER FIELDS. THE ASSESSEE IS RUNNING 11 HOSPITALS AND 63 EDUCATIONAL INSTITUTIONS. THE ASSESSING OFFICER DURING THE COURSE OF ASSESSMENT PROCEEDINGS NOTED THAT THE ASSESSEE HA D MADE CLAIM OF DEDUCTION ON ACCOUNT OF DEPRECIATION ON CAPITAL ASSETS AT 15,42,83,198/ - IN ASSESSMENT YEAR 2010 - 11. THE ASSESSING OFFICER ALSO NOTED THAT THE COST OF ASSETS HAD ALREADY BEEN ALLOWED AS APPLICATION OF INCOME UNDER SECTION 11 OF THE ACT AND ITA NO S . 1633 & 1634 /P U N/20 1 4 MAHATMA GANDHI MISSION 3 HENCE, WDV WAS NIL AND AS SUCH, THERE WAS NO AMOUNT ON WHICH DEPRECIATI ON COULD BE CLAIMED AND IN ANY CASE, ALLOWANCE OF DEPRECIATION WOULD AMOUNT TO DOUBLE DEDUCTION. IN THIS REGARD, RELIANCE WAS PLACED ON THE RATIO LAID DOWN BY THE HON'BLE SUPREME COURT IN THE CASE OF ESCORTS LTD. & ORS. VS. UNION OF INDIA (1993) 199 ITR 4 3 (SC). THE ASSESSEE IN REPLY, EXPLAINED THAT THE DEPRECIATION ON ASSETS OF TRUST WAS TO BE DEDUCTED WHILE COMPUTING INCOME OF TRUST. IN THIS REGARD, RELIANCE WAS PLACED ON THE RATIO LAID DOWN BY THE HONBLE BOMBAY HIGH COURT IN THE CASE OF FRAMJEE CAWASJ EE INSTITUTE (1993) 109 CTR 463 (BOM) AND ALSO IN CIT VS. INSTITUTE OF BANKING PERSONNEL SELECTION (IBPS) (2003) 264 ITR 110 (BOM). FURTHER, RELIANCE WAS PLACED ON THE JUDGMENTS OF OTHER HIGH COURTS. THE ASSESSING OFFICER HOWEVER, HELD THAT BY ALLOWING D EPRECIATION ON SUCH CAPITAL ASSETS WOULD AMOUNT TO DOUBLE DEDUCTION AS PER THE RATIO OF JUDGMENT IN ESCORTS LTD. VS. UNION OF INDIA (SUPRA) AND HENCE, THE SAME WAS REJECTED. 8. THE CIT(A) NOTED THAT THE HON'BLE SUPREME COURT IN ESCORTS LTD. VS. UNION OF I NDIA (SUPRA) HAD DECIDED THE ISSUE IN RESPECT OF DEDUCTION OF COST OF AN ASSET UNDER SECTION 35 OF THE ACT AND ALLOWED AS DEDUCTION FOR CAPITAL EXPENDITURE INCURRED ON SCIENTIFIC RESEARCH AND FURTHER ALLOWANCE OF DEPRECIATION ON THE SAME ASSET. WHEREAS, T HE ASSESSEE WAS A TRUST AND HAD CLAIMED COST OF ASSET AS APPLICATION OF INCOME UNDER SECTION 11 OF THE ACT AND DEPRECIATION HAD BEEN CLAIMED IN SUBSEQUENT YEAR ON COMMERCIAL PRINCIPLE. THE CIT(A) NOTED THAT THE SAID DECISION OF THE HON'BLE SUPREME COURT I N ESCORTS LTD. VS. UNION OF INDIA (SUPRA) WAS TAKEN NOTE OF BY THE HONBLE HIGH COURT OF DELHI IN CIT VS. VISHWA JAGRITI MISSION REPORTED IN 73 DTR 195 (DEL) AND THE HONBLE HIGH COURT OF PUNJAB & HARYANA HIGH COURT IN CIT VS. MARKET COMMITTEE, PIPLI REPOR TED IN 330 ITR 16 (P&H) AND IT WAS HELD THAT IN THE CASE OF A TRUST, DEPRECIATION CLAIMED ON THE ASSETS IS TO BE ALLOWED AS DEDUCTION ITA NO S . 1633 & 1634 /P U N/20 1 4 MAHATMA GANDHI MISSION 4 UNDER SECTION 11 OF THE ACT, EVEN THOUGH COST OF THE ASSET HA D BEEN ALLOWED AS APPLICATION OF INCOME IN THE PRECEDING YEAR . THE REVENUE IS IN APPEAL AGAINST THE ORDER OF CIT(A). 9. THE ISSUE OF CLAIM OF DEPRECIATION ON ASSETS COST OF WHICH HAS BEEN ALLOWED AS APPLICATION OF INCOME IN THE PRECEDING YEAR, HAS BEEN DECIDED BY THE HONBLE APEX COURT IN CIT VS. RAJASTHAN AND GUJ ARATI CHARITABLE FOUNDATION POONA (SUPRA). THE HONBLE APEX COURT HELD THAT THE ISSUE HAS BEEN DECIDED BY THE HONBLE BOMBAY HIGH COURT IN CIT VS. INSTITUTE OF BANKING PERSONNEL SELECTION (IBPS) (2003) 131 TAXMAN 386 (BOM). THE CONTENTION OF DEPARTMENT O F DOUBLE BENEFIT WAS TURNED DOWN IN THE SAID DECISION AND THE RELEVANT FINDING OF THE HONBLE HIGH COURT HAS BEEN REPRODUCED, WHEREIN THE HONBLE HIGH COURT HELD THAT THE INCOME OF TRUST WAS REQUIRED TO BE COMPUTED UNDER SECTION 11 OF THE ACT ON COMMERCIAL PRINCIPLES , AFTER PROVIDING FOR ALLOWANCE FOR NORMAL DEPRECIATION AND DEDUCTION THEREOF FROM GROSS INCOME OF THE TRUST. IN VIEW THEREOF, THE SAID CLAIM OF DEPRECIATION ON THE ASSETS, COST OF WHICH HAD ALREADY BEEN ALLOWED AS DEDUCTION IN THE PRECEDING YE ARS WAS ALLOWED IN THE HANDS OF ASSESSEE. THE HONBLE APEX COURT ALSO TOOK NOTE OF THE FACT THAT MOST OF THE HIGH COURTS HAD TAKEN THE SAID VIEW WITH ONLY EXCEPTION BEING THE HIGH COURT OF KERALA IN LISSIE MEDICAL INSTITUTION VS. CIT. THE HON'BLE SUPREME COURT FURTHER TOOK NOTE OF THE AMENDMENT BY THE FINANCE ACT NO.2/2014, WHICH IS EFFECTIVE FROM ASSESSMENT YEAR 2015 - 16, WHEREIN AMENDMENT HAS BEEN MADE TO SECTION 11(6) OF THE ACT. IT WAS FURTHER HELD THAT THE SAID AMENDMENT WAS PROSPECTIVE IN NATURE. T HE HONBLE APEX COURT THUS, HELD THAT IN CASE DEPRECIATION WAS TO BE ALLOWED, THEN THE SAME COULD BE CARRIED FORWARD ALSO. 10. THE ISSUE ARISING IN THE PRESENT APPEAL BEFORE US IS IDENTICAL TO THE ISSUE BEFORE THE HONBLE APEX COURT IN CIT VS. RAJASTHAN AND GUJA RATI CHARITABLE ITA NO S . 1633 & 1634 /P U N/20 1 4 MAHATMA GANDHI MISSION 5 FOUNDATION POONA (SUPRA) AND FOLLOWING THE SAME PARITY OF REASONING, WE HOLD THAT THE ASSESSEE IS ENTITLED TO CLAIM DEDUCTION ON ACCOUNT OF DEPRECIATION ON THE ASSETS, COST OF WHICH HAS ALREADY BEEN ALLOWED AS APPLICATION OF INCOME UNDER SE CTION 11 OF THE ACT IN PRECEDING YEARS. UPHOLDING THE ORDER OF CIT(A), WE DISMISS THE GROUNDS OF APPEAL RAISED BY THE REVENUE. 1 1 . THE FACTS AND ISSUES IN ITA NO. 1634 /PUN/2014 ARE IDENTICAL TO THE FACTS AND ISSUES IN ITA NO. 1633 /PUN/201 4 AND OUR DECISION IN ITA NO. 1633 /PUN/2014 SHALL APPLY MUTATIS MUTANDIS TO ITA NO. 1634 /PUN/2014. 1 2 . IN THE RESULT, BOTH THE APPEALS OF REVENUE ARE DISMISSED. ORDER PRONOUNCED ON THIS 26 TH DAY OF MARCH , 201 8 . SD/ - SD/ - ( D.KARUNAKAR A RAO ) (SUSHMA CHOWLA ) / ACCOUNTANT MEMBER / JUDICIAL MEMBER / PUNE ; DATED : 26 TH MARCH , 201 8 . GCVSR / COPY OF THE ORDER IS FORWARDED TO : 1. / THE APPE LLANT ; 2. / THE RESPONDENT; 3. ( ) / THE C I T (A), AURANGABAD ; 4. THE C I T , AURANGABAD ; 5. , , / DR A , ITAT, PUNE; 6. / GUARD FILE . / BY ORDER , // TRUE COPY // / SR. PRIVATE SECRETARY , / ITAT, PUNE