Ponnaiyah Ramajayam Institute of Science & Technology Trust, CHENNAI V. ACIT, Trichy

ITA 1891/CHNY/2014

• Counselvise Citation: [2019] 118 COUNSELVISE.COM (IT) 5939 (ITAT-CHENNAI)
• Duration Of Justice: 4 year(s) 6 month(s) 19 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 22-01-2019
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: C
• Assessment Year: 2009-2010
• Appeal Filed On: 03-07-2014
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: SAILENDRA MAMIDIPCIT
• Keywords: Depreciation; Charitable institution; Competent authority
• Section: 40(a)(ia); 12AA; 32; 2; 11

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL , C BENCH, CHENNAI . . . , , BEFORE SHRI N.R.S.GANESAN, JUDICIAL MEMBER AND SHRI INTURI RAMA RAO, ACCOUNTANT MEMBER / ITA NO.1891/CHNY/2014 $$ /ASSESSMENT YEAR : 2009-10 M/S. PONNAIYAH RAMAJAYAM INSTITUTE OF SCIENCE & TECHNOLOGY TRUST, NO,33-34, NATARAJAPURAM SOUTH, M.C.ROAD, THANJAVUR. VS ASSISTANT COMMISSIONER OF INCOME TAX, CENTRAL CIRCLE-II, TIRUCHIRAPPALLI. PAN: AABTP5099B ( /APPELLANT) ( /RESPONDENT) / APPELLANT BY : SHRI P.MURUGESAN, MANAGING TRUSTEE, SHRI K.K.MAHESH RAJA, ADVOCATE SHRI K.MEENAKSHI SUNDARAM, ITP /RESPONDENT BY : SHRI SAILENDRA MAMIDI,PCIT /DATE OF HEARING : 10.01.2019 /DATE OF PRONOUNCEMENT : 22.01.2019 / O R D E R PER N.R.S.GANESAN, JM: THIS APPEAL OF THE ASSESSEE IS DIRECTED AGAINST TH E ORDER OF THE COMMISSIONER OF INCOME-TAX (APPEALS), TIRUCHIRA PPALLI DATED 14.03.2014 AND PERTAINS TO ASSESSMENT YEAR 2009-10. 2. SHRI K.K.MAHESH RAJA, LEARNED COUNSEL FOR THE ASSESSEE SUBMITTED THAT THE ONLY ISSUE ARISES FOR CONSIDERA TION IS DISALLOWANCE MADE BY THE ASSESSING OFFICER UNDER SE CTION 2 ITA NO.1891/CHNY/2014 40(A)(IA) OF THE INCOME-TAX ACT. ACCORDING TO THE L EARNED COUNSEL, ASSESSEE IS A CHARITABLE INSTITUTION ESTABLISHED AN D MAINTAINED SEVERAL ENGINEERING AND MEDICAL COLLEGES. REFERRING TO THE CHAPTER 3 OF THE INCOME-TAX ACT, LEARNED COUNSEL SU BMITTED THAT INCOME OF THE ASSESSEE TRUST HAS TO BE COMPUTED ON LY UNDER CHAPTER 3 OF THE INCOME-TAX ACT. SECTION 40(A)(IA) OF THE ACT FALLS IN CHAPTER 4, THEREFORE CHAPTER 4 IS NOT APPL ICABLE AT ALL. ON A QUERY FROM THE BENCH, WHETHER SECTION 32 OF THE ACT FALLS IN CHAPTER 3 OR CHAPTER 4, LEARNED COUNSEL FOR THE ASS ESSEE VERY FAIRLY SUBMITTED THAT SECTION 32 FALLS IN CHAPTER 4 OF THE INCOME- TAX ACT. REFERRING TO SECTION 10(23C) OF THE ACT, L EARNED COUNSEL SUBMITTED THAT THE SAID SECTION WAS AMENDED BY THE FINANCE ACT, 2018 WITH EFFECT FROM 01.04.2019. THE PROVISIONS OF SECTION 40(A)(IA) OF THE ACT WAS MADE APPLICABLE FOR CHARIT ABLE INSTITUTIONS ONLY WITH EFFECT FROM 01.04.2019, THEREFORE IT MAY NOT BE APPLICABLE FOR THE EARLIER ASSESSMENT YEARS. THEREF ORE, THE COMMISSIONER OF INCOME-TAX (APPEALS) IS NOT JUSTIFI ED IN CONFIRMING THE DISALLOWANCE MADE BY THE ASSESSING O FFICER. 3 ITA NO.1891/CHNY/2014 3. WE HEARD SHRI SAILENDRA MAMIDI, LEARNED DR ALSO. A BARE PERUSAL OF THE ORDER OF THE ASSESSMENT CLEARLY INDI CATES THAT ASSESSEE TRUST WAS REGISTERED UNDER SECTION 12AA OF THE ACT. ADMITTEDLY, TOTAL RECEIPT OF THE ASSESSEE EXCEEDED 1 CRORE. THEREFORE, FOR CLAIMING EXEMPTION UNDER SECTION 10( 23C) OF THE ACT, THE ASSESSEE HAS TO NECESSARILY GET APPROVAL O F THE CHIEF COMMISSIONER, WHO IS THE COMPETENT AUTHORITY. IT IS NOT KNOWN WHETHER THE ASSESSEE HAS OBTAINED SUCH APPROVAL FRO M THE CHIEF COMMISSIONER. MOREOVER, THE ASSESSEE HAS ALSO CLAIM ED DEPRECIATION IN RESPECT OF THE ASSET FOR WHICH INCO ME WAS ALREADY ALLOWED AS APPLICATION OF INCOME. ONCE THE ASSESSEE CLAIMS DEPRECIATION UNDER SECTION 32, THE INCOME HAS TO BE COMPUTED COMMERCIALLY ALLOWING DEPRECIATION AND ALL OTHER CL AIMS. RECENTLY, THE APEX COURT FOUND THAT INCOME OF THE CHARITABLE INSTITUTION HAS TO BE COMPUTED COMMERCIALLY AND DEPRECIATION HAS T O BE ALLOWED EVEN THOUGH THE COST OF THE ASSET WAS ALLOWED AS A PPLICATION OF INCOME UNDER SECTION 11 OF THE ACT. IN VIEW OF THE ABOVE, THIS TRIBUNAL IS OF THE CONSIDERED OPINION THAT INCOME O F THE ASSESSEE AT THE FIRST INSTANCE HAS TO BE COMPUTED COMMERCIA LLY BY APPLYING THE PROVISIONS OF CHAPTER 4. THIS BEING THE JUDGEME NT OF THE APEX COURT, IT IS BINDING UPON THIS TRIBUNAL. NO DOUBT, SECTION 10(23C) 4 ITA NO.1891/CHNY/2014 OF THE ACT WAS AMENDED WITH EFFECT FROM 01.04.2019 FOR MAKING DISALLOWANCE UNDER SECTION 40(A)(IA) OF THE ACT. IN THIS CASE, THE EXEMPTION WAS SAID TO BE CLAIMED UNDER SECTION 11 O F THE ACT. MOREOVER, EVEN OTHERWISE THE INCOME MUST BE COMPUT ED COMMERCIALLY. THEREFORE, THE ASSESSEE HAS TO NECESS ARILY DEDUCT TAX UNDER SECTION 11 OF THE ACT IN RESPECT OF ADVER TISEMENT EXPENSES. THEREFORE, THE ASSESSING OFFICER HAS RIG HTLY DISALLOWED CLAIM OF THE ASSESSEE UNDER SECTION 40(A)(IA) OF TH E ACT. THEREFORE, THIS TRIBUNAL DO NOT FIND ANY REASON TO INTERFERE WITH THE ORDER OF THE LOWER AUTHORITIES, ACCORDINGLY THE SAME IS CONFIRMED. 4. IN RESULT, THE APPEAL OF THE ASSESSEE IS DISMIS SED. ORDER PRONOUNCED IN THE OPEN COURT ON 22 ND JANUARY, 2019 SD/- SD/- ( ) ( . . . ) ( INTURI RAMA RAO ) ( N.R.S.GANESAN) / ACCOUNTANT MEMBER / JUDICIAL MEMBER /CHENNAI, /DATED 22 ND JANUARY, 2019. SOMU /COPY TO: 1. APPELLANT 2. RESPONDENT 3. ( ) /CIT(A) 4. /CIT 5. /DR 6. /GF