The Tamilnadu Slum Clearance Board, CHENNAI V. DDIT, CHENNAI

ITA 1786/CHNY/2011

• Counselvise Citation: [2012] 140 COUNSELVISE.COM (IT) 61056 (ITAT-CHENNAI)
• Duration Of Justice: 5 month(s) 22 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 30-04-2012
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: B
• Next Hearing Date: 30-04-2012
• Assessment Year: 2005-2006
• Appeal Filed On: 08-11-2011
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: DR SIBENDU MOHARANA IRS
• Assessee Lawyers: G BASKAR
• Keywords: Depreciation
• Section: 147

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL B BENCH, CHENNAI BEFORE DR. O.K.NARAYANAN, VICE-PRESIDENT AND SHRI CHALLA NAGENDRA PRASAD, JUDICIAL MEMBER ITA NOS.1785, 1786 & 1787(MDS)/2011 ASSESSMENT YEARS: 2004-05, 2005-06 & 2006-07 THE TAMIL NADU SLUM CLEARANCE BOARD, 5-KAMARAJAR SALAI, CHENNAI-5. PAN AABTT2361E. VS. THE DEPUTY COMMISSIONER OF INCOME-TAX(EXEMPTIONS)-I CHENNAI. (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI G.BASKAR, ADVO CATE RESPONDENT BY: DR.SIBENDU MOHARANA, IR S, CIT. DATE OF HEARING : 30 TH APRIL, 2012 DATE OF PRONOUNCEMENT : 30 TH APRIL, 2012 O R D E R PER DR.O.K.NARAYANAN, VICE-PRESIDENT: THESE THREE APPEALS ARE FILED BY THE ASSESSEE. T HE RELEVANT ASSESSMENT YEARS ARE 2004-05, 2005-06 AND 2006-07. THE APPEALS ARE DIRECTED AGAINST THE COMMON ORDER O F THE - - ITA NOS.1785 TO 1787 OF 2011 2 COMMISSIONER OF INCOME-TAX(APPEALS)-XII AT CHENNAI, DATED 26-7-2011 AND ARISE OUT OF THE ASSESSMENT ORDERS PA SSED UNDER SECTION 143(3), READ WITH SECTION 147 OF THE INCOME -TAX ACT,1961. 2. THERE IS A DELAY OF 21 DAYS IN FILING THESE APP EALS BEFORE THE TRIBUNAL. ON GOING THROUGH THE SUBMISSI ONS MADE BY THE ASSESSEE IN THE CONDONATION PETITION FILED BEFO RE US, WE FIND THAT THE DELAY CAUSED IN FILING THE APPEALS WAS NOT WILLFUL OR CAUSED AS A RESULT OF CALLOUS ATTITUDE OF THE ASSES SEE. THE REASONS EXPLAINED BY THE ASSESSEE ARE SATISFACTORY. ACCORDINGLY, THE DELAY IN FILING THESE APPEALS IS C ONDONED AND THE APPEALS ARE ADMITTED FOR HEARING. 3. THE FIRST COMMON GROUND RAISED BY THE ASSESSEE IN THESE APPEALS IS THAT THE COMMISSIONER OF INCOME-TA X(APPEALS) HAS ERRED IN UPHOLDING THE DISALLOWANCE OF DEPRECIA TION FOR THE PURPOSE OF CALCULATING THE APPLICATION OF THE TRUST S INCOME UNDER SECTION 11(1)(A) OF THE ACT. IT IS THE CASE OF THE ASSESSEE THAT THE COMMISSIONER OF INCOME-TAX(APPEALS) HAS GONE WR ONG IN - - ITA NOS.1785 TO 1787 OF 2011 3 OBSERVING THAT AS THE COST OF CONSTRUCTION ITSELF H AS BEEN TREATED AS APPLICATION OF INCOME, FURTHER DEDUCTION OF DEPR ECIATION ALLOWANCE IS NOT AVAILABLE. 4. THE ABOVE ISSUE HAS BEEN CONSIDERED BY THE INCOME-TAX APPELLATE TRIBUNAL, D-BENCH, CHENNAI, IN THE CASE OF SRI MARIAMMAN EDUCATIONAL HEALTH AND CHARITABLE TRU ST VS. ACIT, IN ITA NOS.142 TO 144(MDS)/2010 THROUGH THEIR COMMON ORDER DATED 2-2-2011. THE TRIBUNAL, RELYING ON THE EARLIER ORDERS PASSED BY THE CO-ORDINATE BENCHES OF THE TRIBUNAL A ND ALSO IN THE LIGHT OF THE VARIOUS HIGH COURT JUDGMENTS, HELD THAT THE ASSESSEE IS ENTITLED FOR CLAIMING DEPRECIATION IN C OMPUTING ITS INCOME AND ALSO IN CLAIMING THE COST OF CONSTRUCTIO N AS APPLICATION OF ITS INCOME. IN THE ABOVE STATED ORD ER, THE TRIBUNAL HAS RELIED ON THE EARLIER DECISION OF THE TRIBUNAL, D-BENCH, CHENNAI IN THE CASE OF DDIT(EXEMPTIONS) VS. M/S.ST. JOHNS EDUCATIONAL TRUST IN ITA NOS.987 TO 990(MDS)/2010 D ATED 18-10-2010; THE DECISION OF THE HONBLE PUNJAB AND HARYANA HIGH COURT IN THE CASE OF CIT VS. MARKET COMMITTEE, PIPLI, 330 ITR 16 AND CIT VS. TINY TOTS EDUCATION SOCIETY, 330 ITR 160. IT - - ITA NOS.1785 TO 1787 OF 2011 4 IS ON THE BASIS OF THE ABOVE, THAT THE TRIBUNAL HAS COME TO THE FINDING THAT THE ASSESSEE IS ENTITLED FOR ITS CLAIM . 5. WE FIND THAT THE ISSUE RAISED IN THE PRESENT AP PEAL IS COVERED BY THE ABOVE STATED DECISION OF THE D-BE NCH, INCOME- TAX APPELLATE TRIBUNAL, CHENNAI. THEREFORE, WE ACC EPT THE CONTENTION OF THE ASSESSEE AND DIRECT THE ASSESSING OFFICER TO FIRST COMPUTE THE INCOME OF THE ASSESSEE ON REGULAR BASIS AFTER ALLOWING THE DEPRECIATION AND THEREAFTER COMPUTE TH E APPLICATION OF FUNDS TREATING THE COST OF CONSTRUCTION AS FORMI NG PART OF THE APPLICATION OF FUNDS. THIS ISSUE IS DECIDED IN FAV OUR OF THE ASSESSEE. 6. THE SECOND COMMON GROUND RAISED BY THE ASSESSEE IS THAT THE COMMISSIONER OF INCOME-TAX(APP EALS) HAS ERRED IN REJECTING THE CLAIM FOR EXEMPTION UNDER SE CTION 10(20) OF THE INCOME-TAX ACT, 1961. SECTION 10(20) PROVIDES FOR EXEMPTION THE INCOME OF A LOCAL AUTHORITY WHICH IS CHARGEABLE UNDER THE HEAD INCOME FROM HOUSE PROPERTY, CAPIT AL GAINS OR INCOME FROM OTHER SOURCES OR FROM A TRADE OR BUSI NESS CARRIED - - ITA NOS.1785 TO 1787 OF 2011 5 ON BY IT WHICH ACCRUES OR ARISES FROM THE SUPPLY OF A COMMODITY OR SERVICE NOT BEING WATER OR ELECTRICITY WITHIN OR OUTSIDE ITS OWN JURISDICTIONAL AREA OR FROM THE SUPPLY OF WATER OR ELECTRICITY WITHIN OR OUTSIDE ITS OWN JURISDICTIONAL AREA. 7. IN SHORT, THE CLAIM OF THE ASSESSEE IS THAT IT SHOULD BE TREATED AS A LOCAL AUTHORITY. THE EXPLANATION P ROVIDED UNDER SECTION 10(20) SPEAKS OUT THE MEANING OF THE EXPRES SION LOCAL AUTHORITY. LOCAL AUTHORITY MEANS PANCHAYAT OR M UNICIPALITY OR MUNICIPAL COMMITTEE AND DISTRICT BOARD OR CANTONMEN T BOARD. THE ASSESSEE DOES NOT FALL UNDER ANY OF THE ABOVE C ATEGORIES. THE ASSESSEE IS AN INSTRUMENT CONSTITUTED BY THE ST ATE GOVERNMENT FOR PROVIDING FOR SOME PUBLIC SERVICE. BUT, BY THAT ITSELF IT IS NOT POSSIBLE TO HOLD THAT THE ASSESSEE IS A LOCAL AUTHORITY. A LOCAL AUTHORITY USUALLY IS BESTOWED W ITH CONSTITUTIONAL RIGHTS OR RIGHTS ENTRUSTED BY THE GO VERNMENT FOR THE MANAGEMENT AND CONTROL OF LOCAL FUND, ULTIMATELY BELONGING TO THE STATE. - - ITA NOS.1785 TO 1787 OF 2011 6 8. THEREFORE, THE SECOND GROUND RAISED BY THE ASSESSEE FAILS. 9. IN RESULT, THESE APPEALS FILED BY THE ASSESSEE ARE PARTLY ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT AT THE TIME OF HEARING ON MONDAY, THE 30 TH OF APRIL, 2012 AT CHENNAI. SD/- SD/- (CHALLA NAGENDRA PRASAD) (DR. O.K.NARAYANAN) JUDICIAL MEMBER VICE-PRESIDENT CHENNAI, DATED THE 30 TH APRIL, 2012. V.A.P. COPY TO: (1) APPELLANT (2) RESPONDENT (3) CIT (4) CIT(A) (5) D.R. (6) G.F.