Income-tax Officer, V. M/s. Pimpri Chinchwad Education Trust, Pune

ITA 1733/PUN/2014

• Counselvise Citation: [2017] 127 COUNSELVISE.COM (IT) 9545 (ITAT-PUNE)
• Duration Of Justice: 2 year(s) 7 month(s) 18 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 04-05-2017
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Assessment Year: 2009-2010
• Appeal Filed On: 16-09-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: ANN KAPTHUAMA
• Keywords: Depreciation; Charitable institution; Cost of acquisition
• Section: 143(3); 12A

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCH A, PUNE , , BEFORE MS. SUSHMA CHOWLA, JM AND SHRI RAJESH KUMAR , AM . / ITA NO.1733/PUN/2014 / ASSESSMENT YEAR : 2009-10 THE INCOME TAX OFFICER, WARD-10(1), PUNE . / APPELLANT VS. M/S. PIMPRI CHINCHWAD EDUCATION TRUST, SECTOR NO.26, PRADHIKARAN, PUNE 411 044 PAN : AAATP3981F . RESPONDENT / APPELLANT BY : MS. ANN KAPTHUAMA / RESPONDENT BY : SHRI NIKHIL PATHAK DATE OF HEARING : 03.05.2017 / DATE OF PRONOUNCEMENT: 04.05.2017 / ORDER PER SUSHMA CHOWLA, JM: THE CAPTIONED APPEAL FILED BY THE REVENUE IS AGAINS T ORDER OF CIT(A)- V, PUNE, DATED 16.06.2014 RELATING TO ASSESSMENT YE AR 2009-10 AGAINST ORDER PASSED UNDER SECTION 143(3) OF THE INCOME-TAX ACT, 1961 (IN SHORT THE ACT). 2. THE REVENUE HAS RAISED THE FOLLOWING GROUNDS OF APPEAL:- 'WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES OF T HE CASE, THE LD.CIT(A) WAS JUSTIFIED IN ALLOWING THE CLAIM OF DE PRECIATION OF RS.159,83,441/- WHEN THE ASSETS ON WHICH DEPRECIATI ON CLAIMED WERE ACQUIRED OUT OF APPLICATION OF INCOME AND ALLOWING OF DEPRECIATION WOULD AMOUNT TO DOUBLE DEDUCTION? ITA NO.1733/PUN/2014 2009-10 2 2. WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE LD.CIT(A) WAS JUSTIFIED IN NOT FOLLOWING THE LAW LA ID DOWN BY THE HONBLE APEX COURT IN THE CASE OF M/S. ESCORTS LTD. & OTHER S VS. UNION OF INDIA/J.K. SYNTHETICS LTD., VS. UNION OF INDIA 199 ITR 43 (SC) WHEN THE SUPREME COURTS DECISIONS ARE BINDING IN OTHER WORD S LEGAL HIERARCHICAL SUPREMACY OF SUPREME COURT IS CHALLENGED. 3. WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE LD.CIT(A) WAS JUSTIFIED IN FOLLOWING LAW LAID DOWN BY THE JURISDICTIONAL HIGH COURT IN THE CASE OF DIT(EXEMPTION) VS. FRAMJE E CAWASJEE INSTITUTE 109 CTR 463 AS WELL AS INSTITUTE OF BANKI NG PERSONNEL SELECTION 264 ITR 110, WHEN ON THE SAME SUBJECT HON BLE SUPREME COURT HAS DELIVERED JUDGEMENT. IF THERE IS A CONFL ICT BETWEEN THE TWO DECISIONS OF SUPREME COURT AND HIGH COURT, THE ONE DECIDED BY THE LARGER BENCH IS BINDING AS HELD IN : GOVINDA NAIK VS. WEST PATENT PRESS C. LTD. (1980) K AR 92 FB BHIKARAM & ORS. VS. UNION OF INDIA & ORS. (DEL) 238 ITR 113 4. THE APPELLANT CRAVES LEAVE TO ADD, AMEND OR ALTE R ANY OF THE ABOVE GROUNDS OF APPEAL. 3. THE LD. AUTHORISED REPRESENTATIVE FOR THE ASSESS EE AT THE OUTSET POINTED OUT THAT THE ONLY ISSUE RAISED IN THE PRESE NT APPEAL IS AGAINST CLAIM OF DEPRECIATION OF ASSETS, COST OF WHICH WAS CLAIME D AS APPLICATION OF INCOME IN THE EARLIER YEARS. THE LD. AUTHORISED REPRESENT ATIVE FOR THE ASSESSEE POINTED OUT THAT THE ISSUE IN THE PRESENT APPEAL IS SQUARELY COVERED BY THE ORDER OF THE TRIBUNAL. 4. THE LD. DEPARTMENTAL REPRESENTATIVE FOR THE REVE NUE ON THE OTHER HAND HEAVILY RELIED ON THE ORDER OF THE AO AND POIN TED OUT THAT THE DIRECTION OF THE CIT(A) HAS RESULTED IN DOUBLE DEDUCTION TO T HE ASSESSEE, WHICH WAS CONTRARY TO THE RATIO LAID DOWN BY THE HONBLE APEX COURT IN THE CASE OF M/S. ESCORTS LTD. & OTHERS VS. UNION OF INDIA AND IN TH E CASE OF J.K. SYNTHETICS LTD. VS. UNION OF INDIA REPORTED IN 199 ITR 43 (SC) . 5. BRIEFLY IN THE FACTS OF THE CASE THE ASSESSEE IS A TRUST WHICH IS REGISTERED UNDER SECTION 12A OF THE ACT. THE ASSES SING OFFICER DURING THE COURSE OF ASSESSMENT PROCEEDINGS NOTED THAT THE ASS ESSEE HAD CLAIMED ITA NO.1733/PUN/2014 2009-10 3 DEPRECIATION OF ASSETS AT RS.1,59,83,441/-, COST OF WHICH WAS CONSIDERED AS APPLICATION OF INCOME IN THE PAST YEARS. THE ASSES SING OFFICER WAS OF THE VIEW THAT THE SAID DEPRECIATION ON OTHER ASSETS WAS NOT ALLOWABLE WHERE 100% COST OF THE ASSET HAS BEEN ALLOWED AS APPLICAT ION OF INCOME IN THE EARLIER YEAR. THE CIT(A) ON THE OTHER HAND ALLOWED THE CLAIM OF THE ASSESSEE INTURN RELYING ON THE RATIO LAID DOWN IN T HE CASE OF DIT(EXEMPTION) VS FRAMJEE CAWASJEE INSTITUTE REPORTED IN 109 CTR 4 63 AND IN THE CASE OF INSTITUTE OF BANKING PERSONNEL SELECTION REPORTED I N 264 ITR 110 (BOM.). 6. THE REVENUE IS IN APPEAL AGAINST THE ORDER OF CI T(A). 7. WE HAVE HEARD THE RIVAL CONTENTIONS. WE FIND TH AT SIMILAR ISSUE OF GRANT OF DEPRECIATION OF ASSETS COST OF WHICH HAS B EEN ALLOWED AS APPLICATION OF INCOME HAS BEEN CONSIDERED BY THE PUNE BENCH OF THE TRIBUNAL IN THE CASE OF DCIT VS. SANJEEVAN VIDYALAYA TRUST IN ITA N O.692/PN/2010 RELATING TO ASSESSMENT YEAR 2005-06 ORDER DATED 27-09-2011 W HEREIN IT WAS HELD AS UNDER : 6. AS NOTED EARLIER, THE ONLY PLEA AGITATED BEFOR E US BY THE REVENUE IS BASED ON THE PROPOSITION THAT THE ALLOWANCE OF DEPR ECIATION WOULD RESULT IN DOUBLE DEDUCTION, SINCE IN THE PAST YEARS THE CAPIT AL EXPENDITURE ON THE RELEVANT ASSET HAS ALREADY BEEN ALLOWED AS APPLICAT ION OF INCOME. IN RESPONSE TO SUCH PLEA, THE LEARNED COUNSEL, APPEARI NG FOR THE RESPONDENT- ASSESSEE, POINTED OUT THAT SIMILAR ARGUMENT FROM TH E SIDE OF THE REVENUE WAS CONSIDERED BY THE HON'BLE BOMBAY HIGH COURT IN THE CASE OF CIT V INSTITUTE OF BANKING 264 ITR 110 (BOM) WHEREIN THE ISSUE WAS DECIDED IN FAVOUR OF THE ASSESSEE, FOLLOWING THE EARLIER JUDGM ENT IN THE CASE OF FRAMJEE CAWASJEE INSTITUTE (SUPRA). MOREOVER, THE PUNE BENC H OF THE TRIBUNAL IN THE CASE OF ACIT V SHRI AGMODHARAK DEVARDHI JAIN AGAM M ANDIT TRUST VIDE ITA NO 1526/PN/07 HAS FOLLOWED THE JUDGMENT OF THE HON' BLE BOMBAY HIGH COURT IN THE CASE OF INSTITUTE OF BANKING (SUPRA) I N UPHOLDING THE STAND SIMILAR TO THAT OF THE ASSESSEE. 7. IN THIS BACKGROUND, WE HAVE CONSIDERED THE RIVA L SUBMISSIONS AND FIND OURSELVES UNABLE TO UPHOLD THE STAND CANVASSED BY THE REVENUE, INASMUCH AS THE COMMISSIONER OF INCOME-TAX (APPEALS ) HAS DECIDED THE ISSUE FOLLOWING THE JUDGMENT OF THE HON'BLE JURISDI CTIONAL HIGH COURT IN THE CASE OF FRAMJEE CAWASJEE INSTITUTE (SUPRA) WHICH HA S BEEN SUBSEQUENTLY FOLLOWED BY THE HON'BLE HIGH COURT IN THE CASE OF I NSTITUTE OF BANKING (SUPRA). AS PER THE HON'BLE HIGH COURT, MERELY BECA USE THE COST OF ACQUISITION OF AN ASSET HAS BEEN CLAIMED AS AN APPL ICATION OF INCOME FOR CHARITABLE PURPOSES IN THE PAST YEARS, THE ASSESSEE COULD NOT BE DENIED DEPRECIATION IN RESPECT OF SUCH ASSETS IN A SUBSEQU ENT YEAR. ITA NO.1733/PUN/2014 2009-10 4 8. IN SO FAR AS THE RELIANCE PLACED BY THE LEARNED DEPARTMENTAL REPRESENTATIVE IN THE CASE OF ESCORTS LTD. (SUPRA) IS CONCERNED, THE SAME, IN OUR VIEW, DOES NOT HELP THE CASE OF THE REVENUE. THE HONBLE HIGH COURT OF PUNJAB & HARYANA IN ITS DECISION IN THE CASE OF CIT, KARNAL V. MARKET COMMITTEE, VIDE ITA NO 535/09 DATED 5.7.2010 CONSID ERED AN IDENTICAL ISSUE AND ALSO DEALT WITH THE PLEA OF THE REVENUE B ASED ON THE JUDGMENT OF THE HON'BLE SUPREME COURT IN THE CASE OF ESCORTS LT D. (SUPRA). AS PER THE HON'BLE PUNJAB & HARYANA HIGH COURT, THE JUDGMENT O F THE HON'BLE SUPREME COURT IN THE CASE OF ESCORTS LTD. (SUPRA) W AS DISTINGUISHABLE, INASMUCH AS THERE WAS NO CASE OF THE ASSESSEE CLAIM ING DOUBLE DEDUCTION ON ACCOUNT OF DEPRECIATION. FOLLOWING THE AFORESAID JUDGMENT OF THE HON'BLE PUNJAB & HARYANA HIGH COURT, WE, THEREFORE, FIND NO MERIT IN THE PLEA RAISED BY THE REVENUE BASED ON THE JUDGMENT IN THE CASE OF ESCORTS LTD. (SUPRA). 9. IN THE RESULT, FOLLOWING THE JUDGMENT OF THE HO N'BLE JURISDICTIONAL HIGH COURT, WE HEREBY AFFIRM THE ORDER OF THE COMMISSION ER OF INCOME-TAX (APPEALS). 10. IN THE RESULT, APPEAL OF THE REVENUE IS DISMIS SED. 8. FURTHER SIMILAR ISSUE HAS BEEN ALLOWED BY THE HO NBLE BOMBAY HIGH COURT IN CIT VS. INSTITUTE OF BANKING REPORTED IN 2 64 ITR 110. 9. THE ISSUE ARISING IN THE PRESENT APPEAL IS IDENT ICAL TO THE ISSUE DECIDED BY THE HONBLE BOMBAY HIGH COURT IN CIT VS. INSTITUTE OF BANKING (SUPRA) AND THE PUNE BENCH OF THE TRIBUNAL IN DCIT VS. SANJEEVAN VIDYALAYA TRUST (SUPRA). FOLLOWING THE SAME PARITY OF REASONING, WE UPHOLD THE ORDER OF THE CIT(A) AND DISMISS THE GROUNDS OF APPEAL RAISED BY THE REVENUE. 10. IN THE RESULT, THE APPEAL OF THE REVENUE IS DIS MISSED. ORDER PRONOUNCED ON THIS 4 TH DAY OF MAY, 2017. SD/- SD/- (RAJESH KUMAR) (SUSHMA CHOWLA) / ACCOUNTANT MEMBER / JUDICIAL MEMBER / PUNE; DATED : 4 TH MAY, 2017. SATISH ITA NO.1733/PUN/2014 2009-10 5 / COPY OF THE ORDER IS FORWARDED TO : THE APPELLANT; THE RESPONDENT; ( ) THE CIT(A)-V, PUNE; / THE CIT - V , PUNE ; , , / DR A, ITAT, PUNE; / GUARD FILE. / BY ORDER // TRUE COPY // / ASSISTANT REGISTRAR, , / ITAT, PUNE