Educational Trust of Seventh Day Adventists, CHENNAI V. DDIT, CHENNAI

ITA 1709/CHNY/2015

• Counselvise Citation: [2018] 126 COUNSELVISE.COM (IT) 5060 (ITAT-CHENNAI)
• Duration Of Justice: 2 year(s) 5 month(s) 11 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 05-01-2018
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: C
• Next Hearing Date: 01-08-2017
• Assessment Year: 2009-2010
• Appeal Filed On: 24-07-2015
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: N MADHAVAN
• Assessee Lawyers: R M NARAYANAN
• Keywords: Depreciation; Charitable institution; Cost of acquisition
• Section: 12AA; 32; 11

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL C BENCH, CHENNAI . . . , , ' # BEFORE SHRI N.R.S. GANESAN, JUDICIAL MEMBER AND SHRI S. JAYARAMAN, ACCOUNTANT MEMBER ./ ITA NO.1709/MDS/2015 & '& / ASSESSMENT YEAR : 2009-10 M/S EDUCATIONAL TRUST OF SEVENTH DAY ADVENTISTS, AA 148, III AVENUE, ANNA NAGAR, CHENNAI - 600 040. PAN : AAATE 0547 Q V. THE ASSISTANT DIRECTOR OF INCOME TAX (EXEMPTIONS) III, CHENNAI - 600 034. ()*/ APPELLANT) (+,)*/ RESPONDENT) )* - . / APPELLANT BY : SHRI R.M. NARAYANAN, CA +,)* - . / RESPONDENT BY : SHRI N. MADHAVAN, ADDL.CIT / - 0' / DATE OF HEARING : 01.01.2018 12' - 0' / DATE OF PRONOUNCEMENT : 05.01.2018 / O R D E R PER N.R.S. GANESAN, JUDICIAL MEMBER: THIS APPEAL OF THE ASSESSEE IS DIRECTED AGAINST T HE ORDER OF THE COMMISSIONER OF INCOME TAX (APPEALS)-17, CHENNA I, DATED 17.02.2015 AND PERTAINS TO ASSESSMENT YEAR 2009-10. 2. THE ONLY ISSUE ARISES FOR CONSIDERATION IS WITH REGARD TO DISALLOWANCE OF DEPRECIATION CLAIMED BY THE ASSESSE E TO THE EXTENT OF 29,78,460/-. 2 I.T.A. NO.1709/MDS/15 3. SHRI R.M. NARAYANAN, THE LD. REPRESENTATIVE FOR THE ASSESSEE, SUBMITTED THAT THE ASSESSEE CLAIMED DEPRE CIATION TO THE EXTENT OF 29,73,460/-. ACCORDING TO THE LD. REPRESENTATIVE, THE ASSESSEE-TRUST IS REGISTERED UNDER SECTION 12AA OF THE INCOME-TAX ACT, 1961 (IN SHORT 'THE ACT'). THE ASSESSING OFFI CER DISALLOWED THE CLAIM OF THE ASSESSEE ON THE GROUND THAT THE DEPREC IATION CLAIMED BY THE ASSESSEE CANNOT BE ALLOWED SINCE THE COST OF THE ASSET WAS ALREADY CLAIMED AS APPLICATION OF INCOME. PLACING RELIANCE ON THE JUDGMENT OF APEX COURT IN CIT V. RAJASTHAN AND GUJA RATI CHARITABLE FOUNDATION POONA IN CIVIL APPEAL NO.7186 OF 2014 DA TED 13.12.2017, THE LD. REPRESENTATIVE SUBMITTED THAT W HILE COMPUTING THE INCOME OF THE TRUST UNDER SECTION 11 OF THE ACT , THE SAME HAS TO BE COMPUTED COMMERCIALLY AND DEPRECIATION HAS TO BE ALLOWED. IN FACT, THE APEX COURT CONFIRMED THE JUDGMENT OF BOMB AY HIGH COURT IN DIT (EXEMPTION) V. FRAMJEE CAWASJEE INSTITUTE (1 993) 109 CTR 463. IN VIEW OF THIS JUDGMENT OF APEX COURT, ACCOR DING TO THE LD. REPRESENTATIVE, THE ASSESSEE IS ELIGIBLE FOR DEPREC IATION EVEN THOUGH THE COST OF ASSET WAS CLAIMED AS APPLICATION OF INC OME IN THE YEAR OF ACQUISITION. 3 I.T.A. NO.1709/MDS/15 4. ON THE CONTRARY, SHRI N. MADHAVAN, THE LD. DEPAR TMENTAL REPRESENTATIVE, SUBMITTED THAT ADMITTEDLY THE ASSES SEE CLAIMED THE COST OF ACQUISITION AS APPLICATION OF INCOME, THERE FORE, THE COST OF ASSET BECOMES NIL. ACCORDING TO THE LD. D.R., TH ERE IS NO MECHANISM FOR COMPUTING THE DEPRECIATION. MOREOVER , THE ASSESSEE IS A CHARITABLE INSTITUTION. ACCORDING TO THE LD. D.R., SECTION 32 OF THE ACT IS APPLICABLE ONLY FOR THE AS SET WHICH IS USED FOR BUSINESS. IN THIS CASE, ACCORDING TO THE LD. D .R., THE ASSET WAS NOT USED FOR BUSINESS, THEREFORE, THERE IS NO QUEST ION OF GRANTING DEPRECIATION UNDER SECTION 32 OF THE ACT. THE LD. D.R. FURTHER SUBMITTED THAT HE IS PLACING HIS RELIANCE ON THE OB SERVATION MADE BY THE CIT(APPEALS). 5. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS ON EITH ER SIDE AND PERUSED THE RELEVANT MATERIAL AVAILABLE ON RECORD. THE APEX COURT IN RAJASTHAN AND GUJARATI CHARITABLE FOUNDATION POO NA (SUPRA) FOUND THAT EVEN THOUGH THE COST OF ASSET WAS ALLOWE D AS APPLICATION OF INCOME IN THE YEAR OF ACQUISITION OF ASSET, THE CHARITABLE INSTITUTION IS STILL ENTITLED FOR DEPRECIATION. IN VIEW OF THIS JUDGMENT OF APEX COURT, THIS TRIBUNAL IS UNABLE TO UPHOLD THE C ONTENTION OF THE LD. D.R. BY RESPECTFULLY FOLLOWING THE JUDGMENT OF APEX COURT IN 4 I.T.A. NO.1709/MDS/15 RAJASTHAN AND GUJARATI CHARITABLE FOUNDATION POONA (SUPRA) AND FOR THE REASONING STATED THEREIN, THE ORDERS OF BOT H THE AUTHORITIES BELOW ARE SET ASIDE AND THE ASSESSING OFFICER IS DI RECTED TO ALLOW THE DEPRECIATION AS CLAIMED BY THE ASSESSEE. 6. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS ALLOWED. ORDER PRONOUNCED ON 5 TH JANUARY, 2018 AT CHENNAI. SD/- SD/- ( ) ( . . . ) (S. JAYARAMAN) (N.R.S. GANESAN) ' / ACCOUNTANT MEMBER /JUDICIAL MEMBER /CHENNAI, 4 /DATED, THE 5 TH JANUARY, 2018. KRI. - +056 76'0 /COPY TO: 1. )* /APPELLANT 2. +,)* /RESPONDENT 3. / 80 () /CIT(A)-17, CHENNAI-34 4. DIT (EXEMPTIONS), CHENNAI 5. 69 +0 /DR 6. :& ; /GF.