Income-tax Officer, V. Rajasthani & Gujrati Charitable Foundation, Pune

ITA 170/PUN/2014

• Counselvise Citation: 17024514 RSA 2014
• Duration Of Justice: 1 year(s) 3 month(s) 1 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 29-04-2015
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Next Hearing Date: 21-04-2015
• Assessment Year: 2008-2009
• Appeal Filed On: 27-01-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Capital asset; Depreciation; Revenue expenditure
• Section: 143(3); 12A; 11

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCH A, PUNE BEFORE MS. SUSHMA CHOWLA, JUDICIAL MEMBER AND SHRI R.K. PANDA, ACCOUNTANT MEMBER ITA NO.170/PN/2014 ASSESSMENT YEAR : 2008-09 THE INCOME TAX OFFICER, WARD 6(2), PUNE. . APPELLANT VS. RAJASTHANI AND GUJRATI CHARITABLE FOUNDATION, POONA HOSPITAL AND RESEARCH CENTRE, 27, SADASHIV PETH, PUNE 411 030. PAN : AAATR1097C . RESPONDENT DEPARTMENT BY : SHRI RAJESH DAMOR ASSESSEE BY : NONE DATE OF HEARING : 21-04-2015 DATE OF PRONOUNCEMENT : 29-04-2015 ORDER PER SUSHMA CHOWLA, JM : THIS APPEAL FILED BY THE REVENUE IS AGAINST THE ORD ER OF CIT(A)-III, PUNE, DATED 13.11.2013 RELATING TO ASSESSMENT YEAR 2008-0 9 AGAINST ORDER PASSED UNDER SECTION 143(3) OF THE INCOME TAX ACT, 1961. 2. THE REVENUE HAS RAISED THE FOLLOWING GROUNDS OF APPEAL :- 1. THE ORDER OF THE COMMISSIONER OF INCOME-TAX (AP PEALS) IS CONTRARY TO LAW AND TO THE FACTS AND CIRCUMSTANCES OF THE CASE. 2. THE COMMISSIONER OF INCOME-TAX (APPEALS) ERRED I N HOLDING THAT THE DEPRECIATION IS TO BE ALLOWED IN RESPECT OF COST OF CAPITAL ASSETS WHICH ARE ALLOWED AS DEDUCTION AS REVENUE EXPENDITURE IN P&L A/C OF THE ASSESSEE TRUST. 3. THE COMMISSIONER OF INCOME-TAX (APPEALS) ERRED I N HOLDING THAT THE DEPRECATION IN RESPECT OF COST OF ASSETS ALLOWED TO THE ASSESSEE AS REVENUE EXPENDITURE IS ALLOWABLE AS IT GIVES RISE TO DOUBLE DEDUCTION THOUGH SUCH DEDUCTION NOT SPECIFICALLY PROVIDED IN THE I.T. ACT , 1961. 4. FOR THESE AND SUCH OTHER REASONS AS MAY BE URGED AT THE TIME OF THE HEARING, THE ORDER OF THE COMMISSIONER OF INCOME-TA X (APPEALS) MAY BE VACATED AND THAT OF THE ASSESSING OFFICER BE RESTORED. ITA NO.170/PN/2014 2 5. THE APPELLANT CRAVES LEAVE TO ADD, AMEND, ALTER OR DELETE ANY OF THE ABOVE GROUNDS OF APPEAL DURING THE COURSE OF APPELL ATE PROCEEDINGS BEFORE THE ITAT. 3. DESPITE OF NOTICE, NONE APPEARED ON BEHALF OF TH E ASSESSEE AND NOR ANY APPLICATION WAS MOVED FOR ADJOURNMENT. WE PROCEED TO DECIDE THE PRESENT APPEAL AFTER HEARING THE LD. DEPARTMENTAL REPRESENT ATIVE FOR THE REVENUE. 4. THE ONLY ISSUE ARISING IN THIS APPEAL IN RESPECT OF THE CLAIM OF DEPRECIATION ON THE CAPITAL ASSETS WHICH WERE ALLOWED AS APPLICA TION OF INCOME IN THE HANDS OF THE ASSESSEE TRUST. 5. BRIEFLY, THE FACTS OF THE CASE ARE THAT THE ASSE SSEE WAS A TRUST REGISTERED UNDER THE BOMBAY PUBLIC TRUST ACT, 1950. THE ASSES SEE WAS ALSO GRANTED REGISTRATION UNDER SECTION 12A OF THE INCOME TAX AC T ON 28.04.1981. THE MAIN OBJECT OF THE TRUST WAS TO PROVIDE MEDICAL RELIEF T O THE PUBLIC AND IN FURTHERANCE OF SUCH OBJECT THE ASSESSEE WAS RUNNING A MULTISPEC IALTY HOSPITAL, I.E. POONA HOSPITAL & RESEARCH CENTRE AT 27, SADASHIV PETH, PU NE. THE ASSESSEE HAD CLAIMED DEDUCTION UNDER SECTION 11 OF THE ACT. THE ASSESSING OFFICER NOTED THAT FOR THE YEAR UNDER CONSIDERATION, ASSESSEE HAD CLAI MED DEPRECIATION OF RS.93,68,434/- ON ACCOUNT OF THREE BUILDINGS. THE CONSTRUCTION COST OF THE SAID BUILDINGS WERE MET FROM THE CORPUS FUND AND EAR-MAR KED FUNDS WHICH, IN TURN, WERE CONSIDERED AS EXEMPT FROM APPLICATION OF SECTI ON 11(2) OF THE ACT IN THE YEAR OF THE RECEIPT. THE ASSESSING OFFICER WAS OF THE VIEW THAT THE DEPRECIATION ON THE ASSETS ACQUIRED FROM THE EXEMPTED FUNDS AMOU NTED TO DOUBLE BENEFIT OF DEDUCTION AND CONSEQUENTLY THE DEPRECIATION CLAIMED AT RS.93,68,434/- WAS DISALLOWED AS AN APPLICATION OF INCOME. 6. THE CIT(A) NOTED THAT THE ISSUE OF THE DEPRECIAT ION OF SUCH ASSETS HAS BEEN ALLOWED BY THE CIT(A) FOR AND FROM ASSESSMENT YEAR 2004-05 ONWARDS. FURTHER, THE PUNE BENCH OF THE TRIBUNAL IN ITA NOS. 336 & 337/PN/2009 RELATING ITA NO.170/PN/2014 3 TO ASSESSMENT YEARS 2004-05 AND 2005-06 VIDE ORDER DATED 28.10.2010 AND IN ITA NO.467/PN/2010 RELATING TO ASSESSMENT YEAR 2006 -07 VIDE ORDER DATED 30.11.2011 HAD ALSO ALLOWED THE CLAIM OF THE ASSESS EE. FURTHER, THE TRIBUNAL HAD FOLLOWED THE RATIO LAID DOWN BY THE HONBLE BOM BAY HIGH COURT IN THE CASE OF CIT VS. INSTITUTE OF BANKING REPORTED IN 264 ITR 11 0 (BOM.), WHEREIN IT WAS HELD THAT DEPRECIATION WAS ALLOWABLE ON ASSETS, COST OF WHICH HAD BEEN FULLY ALLOWED AS APPLICATION OF INCOME UNDER SECTION 11 OF THE AC T IN THE PAST YEARS. IN VIEW THEREOF, THE ASSESSING OFFICER WAS DIRECTED TO ALLO W DEPRECATION ON THE BUILDINGS AND THE APPEAL OF THE ASSESSEE WAS ALLOWED BY THE C IT(A). 7. AGAINST THE SAID ORDER OF THE CIT(A), REVENUE IS IN FURTHER APPEAL BEFORE US. THE LD. DEPARTMENTAL REPRESENTATIVE FOR THE RE VENUE HAS FAILED TO CONTROVERT THE OBSERVATIONS OF THE CIT(A) AND HAD E VEN FAILED TO POINT OUT WHETHER THE ORDERS OF THE TRIBUNAL HAVE BEEN REVERS ED BY ANY HIGHER FORUM. 8. ON THE PERUSAL OF THE RECORD, WE FIND THAT THE I SSUE RAISED IN THE PRESENT APPEAL I.E. ALLOWABILITY OF DEPRECIATION OF ASSETS, COST OF WHICH HAS BEEN CLAIMED AS APPLICATION OF INCOME UNDER SECTION 11 OF THE AC T IN THE PAST YEARS, IS SQUARELY COVERED BY THE ORDERS OF THE TRIBUNAL IN ASSESSEES OWN CASE IN ASSESSMENT YEARS 2004-05 TO 2006-07 (SUPRA). FURTHER, THE HON BLE BOMBAY HIGH COURT IN THE CASE OF CIT VS. INSTITUTE OF BANKING (SUPRA) HA D ALSO ALLOWED THE CLAIM OF THE ASSESSEE THEREIN IN RESPECT OF THE DEPRECIATION ALL OWABLE ON ASSETS, COST OF WHICH WAS FULLY ALLOWED AS APPLICATION OF INCOME UN DER SECTION 11 OF THE ACT. THE HONBLE BOMBAY HIGH COURT, IN TURN, HAD FOLLOWE D THE EARLIER DECISION IN THE CASE OF CIT VS. MUNISUVRAT JAIN, (1994) TAX LR 1084 (BOM.), WHEREIN IT WAS HELD THAT NORMAL DEPRECIATION CAN BE CONSIDERED AS A LEG ITIMATE DEDUCTION IN COMPUTING THE REAL INCOME OF THE ASSESSEE ON GENERA L PRINCIPLES OR UNDER SECTION 11(1)(A) OF THE ACT. ITA NO.170/PN/2014 4 9. FOLLOWING THE RATIO LAID DOWN BY THE HONBLE BOM BAY HIGH COURT AND THE PUNE BENCH OF THE TRIBUNAL IN ASSESSEES OWN CASE, WE FIND NO MERIT IN THE GROUNDS OF APPEAL RAISED BY THE REVENUE AND UPHOLDI NG THE ORDER OF THE CIT(A), WE DISMISS THE SAME. 10. IN THE RESULT, THE CAPTIONED APPEAL OF THE REVE NUE IS DISMISSED, AS ABOVE. ORDER PRONOUNCED ON THIS 29 TH DAY OF APRIL, 2015. SD/- SD/- (R.K. PANDA) (SUSHMA CHOWLA) ACCOUNTANT MEMBER JUDICIAL MEMBER PUNE, DATED: 29 TH APRIL, 2015 SUJEET COPY OF THE ORDER IS FORWARDED TO: - 1) THE ASSESSEE; 2) THE DEPARTMENT; 3) THE CIT(A)-III, PUNE; 4) THE CIT-III, PUNE; 5) THE DR A BENCH, I.T.A.T., PUNE; 6) GUARD FILE. BY ORDER //TRUE COPY// ASSISTANT REGISTRAR I.T.A.T., PUNE