Erode Hindu Kalvi Nilayam Trust, Erode V. DCIT, Income Tax(Exemps), Coimbatore

ITA 2195/CHNY/2017

• Counselvise Citation: [2017] 130 COUNSELVISE.COM (IT) 7852 (ITAT-CHENNAI)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 31-01-2017
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Assessment Year: 2013-2014
• Appeal Filed On: 08-09-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: S SRINIRANJANI
• Keywords: Depreciation; Charitable institution; Cost of acquisition
• Section: 143(3); 32; 11

Judgement Text

, , IN THE INCOME - TAX APPELLATE TRIBUNAL A BENCH, CHENNAI . , , BEFORE SHRI DUVVURU RL REDDY, JUDICIAL MEMBER & SHRI S. JAYARAMAN , ACCOUN TANT MEMBER ./ I.T.A.NO. 2195 /MDS/2017 / ASSESSMENT YEAR :20 1 3 - 1 4 ERODE HINDU KALVI NILAYAM TRUST, C/O. HINDU KALVI NILAYAM MATRICULATION HIGHER SECONDARY SCHOOL, MAMARATHUPPALAYAM, PERIASEMUR POST, ERODE 638 004. [PAN: A A AT E6065K ] VS. THE DEPUTY COMMISSIONER OF INCOME TAX (EXEMPTIONS) , COIMBATORE. ( / APPELLANT ) ( / RESPONDENT ) / APPELLANT BY : MS. S. SRINIRANJANI, ADVOCATE / RESPONDENT BY : SHRI AR. V. SREENIVASA N , J CIT / DATE OF HEARING : 25 . 0 1 .201 8 / DATE OF P RONOUNCEMENT : 31 . 0 1 .201 8 / O R D E R PER DUVVURU RL REDDY , JUDICIAL MEMBER : THIS APPEAL FILED BY THE ASSESSEE IS DIRECTED AGAINST THE ORDER OF THE LD. CO MMI SSIONER OF INCOME TAX (APPEALS) 2 , COIMBATORE DATED 23 . 0 6 .201 7 RELEVANT TO THE ASSESSMENT YEAR 20 1 3 - 1 4 . THE ONLY EFFECTIVE GROUND RAISED IN THE APPEAL OF THE ASSESSEE IS THAT THE LD. CIT(A) ERRED IN CONFIRMING THE DISALLOWANCE OF DEPRECIATION CLAIMED BY THE ASSESSEE . I.T.A. NO . 2195 /M/ 1 7 2 2. BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE TRUST FILED IT RETURN OF INCOME FOR THE ASSESSMENT YEAR 201 3 - 1 4 DECLARING NIL INCOME . T HE ASSESSEE CLAIMED DEPRECIATION TO THE EXTENT OF . 2,02,70,333 / - . THE ASSESSING OFFICER DISALLOWED THE CLAIM OF THE ASSESSEE ON THE GROUND THAT THE DEPRECIATION CLAIMED BY THE ASSESSEE CANNOT BE ALLOWED SINCE THE COST OF THE ASSET WAS ALREADY CLAIMED AS APPLICATION OF INCOME AND CONCLUDED THE ASSESSMENT UNDER SECTION 143(3) OF THE ACT. 3. ON APPEAL, AFTER CONSIDERING THE SUBMISSIONS OF THE ASSESSEE AND BY CONSIDERING VARIOUS DECISIONS, THE LD. CIT(A) CONFIRMED THE DISALLOWANCE . 4. ON BEING AGGRIEVED, THE ASSESSEE IS IN APPEAL BEFORE THE TRIBUNAL. BY RELYING UPON THE JUDGMENT OF HON BLE SUPREME COURT IN THE CASE OF CIT V. RAJASTHAN AND GUJARATI CHARITABLE FOUNDATION POONA IN CIVIL APPEAL NO.7186 OF 2014 DATED 13.12.2017, THE LD. COUNSEL FOR THE ASSESSEE SUBMITTED THAT WHILE 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 HON BLE SUPREME COURT CONFIRMED THE JUDGMENT OF THE HON BLE BOMBAY HIGH COURT IN THE CASE OF DIT (EXEMPTION) V. FRAMJEE CAWASJEE I NSTITUTE (1993) 109 CTR 463. IN VIEW OF THE ABOVE JUDGMENT OF THE HON BLE SUPREME COURT, THE LD. I.T.A. NO . 2195 /M/ 1 7 3 COUNSEL FOR THE ASSESSEE HAS SUBMITTED THAT THE ASSESSEE IS ELIGIBLE FOR DEPRECIATION EVEN THOUGH THE COST OF ASSET WAS CLAIMED AS APPLICATION OF INCOME IN TH E YEAR OF ACQUISITION. 5. PER CONTRA, THE LD. DR SUBMITTED THAT, ADMITTEDLY, THE ASSESSEE CLAIMED THE COST OF ACQUISITION AS APPLICATION OF INCOME, THEREFORE, THE COST OF ASSET BECOMES NIL . THE LD. DR FURTHER SUBMITTED THAT THERE IS NO MECHANISM FOR C OMPUTING THE DEPRECIATION. MOREOVER, THE ASSESSEE IS A CHARITABLE INSTITUTION. MOREOVER, THE PROVISION OF SECTION 32 OF THE ACT IS APPLICABLE ONLY FOR THE ASSET WHICH IS USED FOR BUSINESS AND IN THIS CASE, ACCORDING TO THE LD. DR, THE ASSET WAS NOT USED F OR BUSINESS AND, THEREFORE, THERE IS NO QUESTION OF GRANTING DEPRECIATION UNDER SECTION 32 OF THE ACT. THE LD. DR STRONGLY SUPPORTED THE ORDER PASSED BY THE LD. CIT(A). 6. WE HAVE HEARD BOTH SIDES, PERUSED THE MATERIALS AVAILABLE ON RECORD AND GONE THRO UGH THE ORDERS OF AUTHORITIES BELOW. THE HON BLE SUPREME COURT IN THE CASE OF CIT V. RAJASTHAN AND GUJARATI CHARITABLE FOUNDATION POONA (SUPRA) FOUND THAT EVEN THOUGH THE COST OF ASSET WAS ALLOWED 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 THE HON BLE SUPREME COURT, WE ARE UNABLE TO UPHOLD THE I.T.A. NO . 2195 /M/ 1 7 4 CONTENTION OF THE LD. DR. BY RESPECTFULLY FOLLOWING THE JUDGM ENT OF THE HON BLE SUPREME COURT IN THE CASE OF CIT V. RAJASTHAN AND GUJARATI CHARITABLE FOUNDATION POONA (SUPRA) AND FOR THE REASONING STATED THEREIN, THE ORDERS OF BOTH THE AUTHORITIES BELOW ARE SET ASIDE AND THE ASSESSING OFFICER IS DIRECTED TO ALLOW TH E DEPRECIATION AS CLAIMED BY THE ASSESSEE. 7. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS ALLOWED. ORDER PRONOUNCED ON THE 31 ST J ANUARY , 201 8 AT CHENNAI. SD/ - SD/ - ( S. JAYARAMAN ) ACCOUNTANT MEMBER ( DUVVURU RL REDDY ) JUDICIAL MEMBER CHENNA I, DATED, THE 31 . 0 1 .201 8 VM/ - / COPY TO: 1. / APPELLANT , 2. / RESPONDENT , 3. ( ) / CIT(A) , 4. / CIT , 5. / DR & 6. / GF.