ACIT, V. Medical Relief Society of South Canara,

ITA 1713/BANG/2013

• Counselvise Citation: [2014] 140 COUNSELVISE.COM (IT) 80797 (ITAT-BANGALORE)
• Duration Of Justice: 1 year(s) 1 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 10-12-2014
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Next Hearing Date: 08-10-2014
• Assessment Year: 2010-2011
• Appeal Filed On: 09-12-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: BIJOY KUMAR PANDA
• Keywords: Capital asset; Depreciation; Charitable institution; Capital expenditure
• Section: 143(3); 12AA

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL BANGALORE BENCH A BEFORE SHRI N.V. VASUDEVAN , JUDICIAL MEMBER AND SHRI JASON P. BOAZ, ACCOUNTANT MEMBER I.T.A. NO. 1713 /BANG/201 3 (ASSESSMENT YEAR : 2010 - 11 ) ASST. COMMISSIONER OF INCOME TAX, CENTRAL CIRCLE 2(2 ), BANGALORE. VS. M/S. MEDICAL RELIEF SOCIETY OF SOUTH CANARA, MADHAV NAGAR, MANIPAL. PAN AAAAM 2004P APPELLANT RESPONDENT. APPELLANT BY : SHRI BIJOY KUMAR PANDA, ADDL. CIT (D.R) RESPONDENT BY : S MT. SHEETAL, ADVOCATE. DATE OF H EARING : 8.10. 2 01 4 . DATE OF P RONOUNCEMENT : 10.12 . 201 4 . O R D E R PER SHRI JASON P. BOAZ, A.M. : THIS APPEAL BY REVENUE IS DIRECTED AGAINST T HE ORDER OF THE COMMISSIONER OF INCOME TAX (APPEALS), MYSORE DT.17.7.2013 FOR ASSESSMENT YEAR 2010 - 11. 2. THE FACTS OF THE CASE, BRIEFLY, ARE AS UNDER : - 2.1 THE ASSESSEE IS A TRUST REGISTERED UNDER SECTION 12AA OF THE INCOME TAX ACT, 1961 ( HEREIN AFTER REFERRED TO AS 'THE ACT') VIDE ORDER NO.PRO - 713/10A/VOL - A 11/M 189 DT.23.8.1974 AND AS A S OCIETY WAS REGISTERED ON 7.11.1956 UNDER THE SOCIETIES REGISTRATION ACT, 1860, WITH THE OBJECT OF PROVIDING MEDICAL RELIEF TO THE POOR IRRESPECTIVE OF CASTE, CO MMUNITY AND RELIGION THROUGH THE DR. T.M.A. PAI ROTARY HOSPITAL AT KARKALA AND THE SCHOOL OF NURSING AT MANIPAL HOSPITAL, BANGALORE. FOR ASSESSMENT YEAR 2010 - 11, THE ASSESSEE FILED ITS RETURN OF INCOME ON 30.10.2010 DECLARING NIL INCOME CLAIMING ITS INCOM E 2 ITA NO. 1713 /BANG/ 2013 EXEMPT UNDER SECTION 10(23C)(VI) OF THE ACT. IN THE RETURN, THE ASSESSEE HAS CLAIMED CURRENT YEAR S DEFICIT OF RS.33,08,324 AND BROUGHT FORWARD UNABSORBED DEFICIT OF RS.263,38,15,991 FROM ASSESSMENT YEARS 1991 - 92 TO 2009 - 10 TO BE CARRIED FORWARD TO THE SUBSEQUENT ASSESSMENT YEAR 2011 - 12, TO SET OFF THE SAME AS APPLICATION OF INCOME. THE RETURN WAS PROCESSED UNDER SECTION 143(1) OF THE ACT AND THE CASE WAS SUBSEQUENTLY TAKEN UP FOR SCRUTINY. THE ASSESSMENT WAS COMPLETED UNDER SECTION 143(3) OF THE ACT B Y ORDER DT.27.12.2012 WHEREIN THE ASSESSEE'S DEFICIT WAS DETERMINED AT ( - ) RS./12,44,699, COMPUTED AS UNDER : - GROSS RECEIPTS AS PER INCOME & EXPENDITURE A/C. : RS.3,15,10,758. CAPITAL GAINS AS DECLARED : RS.3,94,74,840 RS.7,09,85,598 LESS : 1) APPLI CATION AS PER INCOME & EXPENDITURE A/C. RS.5,45,85,197 2) CAPITAL EXPENDITURE : RS.47,08,725. 3) REPAYMENT OF LOAN : RS.1,50,00,000 RS.7,42,93,922 LESS : ( - ) RS.33,08,324 LESS : DEPRECIATION DISALLOWED : RS.20,63,625 DEFICIT : ( - ) RS.12,44,699. THE ASSESSING OFFICER ALSO DISALLOWED THE ASSESSEE'S CLAIM FOR CARRY FORWARD OF UNABSORBED DEFICIT FROM ASSESSMENT YEARS 1990 - 91 TO 2009 - 10 AGGREGATING RS.263,38,15,591 TO THE SUBSEQUENT YEARS. 2.2 AGGRIEVED BY THE ORDER OF ASSESSMENT FOR ASSESSMENT YEARS 2010 - 11 DT.27.12.2012, THE ASSESSEE PREFERRED AN APPEAL BEFORE THE CIT(APPEALS), MYSORE ON THE FOLLOWING ISSUES ; - 3 ITA NO. 1713 /BANG/ 2013 I) D EPRECIATION CLAIMED ON CAPITAL EXPENDITURE AMOUNTING TO RS.20,63,625; AND II) CLAIM FOR CARRY FORWARD OF UNABSORBED DEFICIT OF RS.263,38,15,991 FOR A.YS 1990 - 91 TO 2009 - 10 TO SUBSEQUENT YEARS. THE LEARNED CIT (APPEALS) ALLOWED THE ASSESSEE'S APPEAL V IDE ORDER DT.17.7.2013. 3.1.1 REVENUE, BEING AGGRIEVED BY THE ORDER OF THE CIT(APPEALS), MYSORE DT.17.7.2013 FOR ASSESSMENT YEAR 2010 - 11, HAS PREFERRED THIS APPEAL BEFORE THE TRIBUNAL RA I SING THE FOLLOWING GROUNDS : - GROUND NO.1 : THE LEARNED CI T (APPEALS) ERRED IN LAW BY ALLOWING THE CLAIM OF DEPRECIATION ON CAPITAL ASSETS PURCHASED DURING THE YEAR WHICH HAVE BEEN CONSIDERED AS APPLICATION OF INCOME. GROUND NO.2 : THE LEARNED CIT (APPEALS) ERRED BY ALLOWING THE CLAIM OF DEPRECIATION ON CAPITAL ASSETS ACQUIRED DURING THE YEAR AS IT TANTAMOUNT TO DOUBLE DEDUCTION. GROUND NO.3 : THE LEARNED CIT (APPEALS) OUGHT TO HAVE CONSIDERED THE DECISION OF THE HON'BLE HIGH COURT OF KERALA IN THE CASE OF M/S. LISSIE MEDICAL INSTITUTION (ITA 42 OF 2011) DEPRECIATION 3.1.2 IN THE GROUNDS RAISED ABOVE, REVENUE CHALLENGES THE ORDER OF THE LEARNED CIT (APPEALS) IN ALLOWING THE ASSESSEE'S CLAIM FOR DEPRECIATION OF THE ADDITION TO ASSETS DURING THE RELEVANT PERIOD, EVEN THOUGH THE ENTIRE COST OF THESE ASS ETS ACQUIRED IN THE RELEVANT PREVIOUS YEAR HAS BEEN CLAIMED BY THE ASSESSEE AS APPLICATION OF ITS INCOME FOR ITS CHARITABLE ACTIVITIES. THE LEARNED DEPARTMENTAL REPRESENTATIVE SUBMITS THAT THIS FINDING ON THE PART OF THE LEARNED CIT (APPEALS), HAS RESULTE D IN ALLOWING DOUBLE DEDUCTION TO THE ASSESSEE, WHICH IS NOT ADMISSIBLE IN LAW AS PER THE RATIO LAID DOWN BY THE HON'BLE APEX COURT IN THE CASE OF ESCORTS LTD., AND ANOTHER V UOI REPORTED IN 189 ITR 43. IT WAS ALSO CONTENDED BY THE LEARNED AUTHORISED REPR ESENTATIVE THAT THE LEARNED CIT (APPEALS) ERRED IN NOT FOLLOWING THE DECISION OF THE HON'BLE KERALA HIGH COURT IN THE CASE OF LISSIE MEDICAL 4 ITA NO. 1713 /BANG/ 2013 INSTITUTIONS V CIT IN ITA NO.42 OF 2011 DT.17.2.2012. THE LEARNED DEPARTMENTAL REPRESENTATIVE PRAYED THAT IN THE L IGHT OF THE ABOVE, THE ORDER OF THE LEARNED CIT (APPEALS) ON THIS POINT BE REVERSED AND THAT OF THE ASSESSING OFFICER BE RESTORED. 3.2 PER CONTRA, THE LEARNED AUTHORISED REPRESENTATIVE PLACED SUPPORT AND RELIED ON THE IMPUGNED ORDER OF THE LEARNED CIT (APPEALS) ON THIS ISSUE. IT WAS SUBMITTED THAT IN ALLOWING THE ASSESSEE'S CLAIM FOR DEPRECIATION ON ADDITION TO ASSETS DURING THE RELEVANT PERIOD, THE LEARNED CIT (APPEALS) FOLLOWED THE DECISION OF THE CO - ORDINATE BENCH OF THIS TRIBUNAL IN THE CASE OF ON E OF THE ASSESSEE'S GROUP TRUSTS, I.E. DR. T.M.A. PAI FOUNDATION IN ITA NO.486 TO 491 (BANG)/2009 DT.16.2.2009 FOR ASSESSMENT YEARS 2001 - 02 TO 2006 - 07. IT WAS FURTHER SUBMITTED BY THE LEARNED AUTHORISED REPRESENTATIVE THAT THE DECISION OF THE HON'BLE KERA LA HIGH COURT IN THE CASE OF LISSIE MEDICAL INSTITUTIONS (SUPRA), RELIED ON BY REVENUE, WAS DEALT WITH BY A CO - ORDINATE BENCH OF THE TRIBUNAL IN THE CASE OF ACIT V ADICHUNCHUNAGIRI TRUST REPORTED IN 49 ITCL 544. THE LEARNED AUTHORISED REPRESENTATIVE SUBMI TTED THAT, SUBSEQUENT TO THE PASSING OF THE IMPUGNED ORDER BY THE LEARNED CIT (APPEALS), ANOTHER CO - ORDINATE BENCH OF THE TRIBUNAL IN THE CASE OF A GROUP TRUST, DR. T.M.A. PAI FOUNDATION HAS HELD THE VERY SAME ISSUE, OF THE ALLOWABILITY OF DEPRECIATION ON ADDITION TO ASSETS DURING THE RELEVANT PERIOD, IN FAVOUR OF THE ASSESSEE IN ITA NO.1140/BANG/2013 DT.21.3.2014. THE LEARNED AUTHORISED REPRESENTATIVE SUBMITTED THAT, IN VIEW OF THE FAVOURABLE DECISIONS OF THE HON'BLE COURTS AND OF THE CO - ORDINATE BENCH OF THIS JURISDICTIONAL TRIBUNAL REFERRED TO AND PLACED RELIANCE UPON, THE REVENUE S APPEAL IS LIABLE TO BE DISMISSED. 3.3 .1 WE HAVE HEARD BOTH PARTIES AND PERUSED AND CAREFULLY CONSIDERED THE MATERIAL ON RECORD, INCLUDING THE JUDICIAL DECISIONS CIT ED A ND PLACED RELIANCE UPON. WE FIND THE ISSUE OF THE ASSE SSEE'S CLAIM FOR DEPRECIATION ON ADDITION TO ASSETS ACQUIRED IN THE RELEVANT PERIOD IS TO BE ALLOWED EVEN IF THE ENTIRE COST OF THE SAME ASSETS HAVE BEEN CLAIMED BY THE ASSESSEE AND ALLOWED AS APPLICA TION OF ITS INCOME FOR CHARITABLE PURPOSES, SINCE THIS ISSUE 5 ITA NO. 1713 /BANG/ 2013 HAS BEEN HELD IN FAVOUR OF THE ASSESSEE IN A NUMBER OF DECISIONS OF THE CO - ORDINATE BENCH OF THIS TRIBUNAL IN THE CASES OF DR. T.M.A. PAI FOUNDATION (SUPRA), ACADEMY OF GENERAL EDUCATION (SUPRA), ADICHUNCHUNAGIRI TRUST (SUPRA), ETC., FOLLOWING THE DECISION OF THE HON'BLE BOMBAY HIGH COURT IN THE CASE OF CIT V INSTITUTE OF BANKING REPORTED IN 264 ITR 110 (BOM). 3.3.2 FOLLOWING THE DECISIONS OF THE HON'BLE BOMBAY HIGH COURT IN THE CASE OF INST ITUTE OF BANKING (SUPRA) AND OF THE CO - ORDINATE BENCH ES (CITED SUPRA IN THIS PARA), WE UPHOLD THE ORDER OF THE LEARNED CIT (APPEALS) IN ALLOWING THE ASSESSEE'S CLAIM FOR DEPRECIATION ON NEW ASSETS ACQUIRED AND PUT INTO USE DURING THE RELEVANT PREVIOUS YEAR UNDER CONSIDERATION, EVEN IF THE ENTIRE COST OF THOSE ASSETS HAVE BEEN CLAIMED BY THE ASSESSEE AND ALLOWED AS APPLICATION OF ITS INCOME FOR CHARITABLE PURPOSES. WE, CONSEQUENTLY, DISMISS GROUNDS 1 TO 3 RAISED BY THE REVENUE. 4. IN THE RESULT, REVENUE S APPEAL IS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 10 TH DEC., 2 01 4 . SD/ - SD/ - ( N.V. VASUDEVAN ) ( JASON P BOAZ ) JUDICIAL MEMBER ACCOUNTANT MEMBER *REDDY GP COPY TO : 1. APPELLANT 2. RESPONDENT 3. C.I.T. 4. CIT(A) 5. DR, - A BENCH. 6. GUARD FILE. (TRUE COPY) BY ORDER ASST. REGISTRAR, ITAT, BANGALORE