ITO, Coimbatore V. Ramananda Adigalar Foundation, Coimbatore

ITA 2230/CHNY/2014

• Counselvise Citation: [2014] 140 COUNSELVISE.COM (IT) 81297 (ITAT-CHENNAI)
• Duration Of Justice: 3 month(s) 5 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 11-12-2014
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Assessment Year: 2010-2011
• Appeal Filed On: 05-09-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: P RADHAKRISHNAN
• Keywords: Depreciation; Charitable institution; Capital expenditure
• Section: 32

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL A BENCH, CHE NNAI . , ! '! ! #, $ % BEFORE SHRI A.MOHAN ALANKAMONY, ACCOUNTANT MEMBER & SHRI VIKAS AWASTHY, JUDICIAL MEMBER . / I.T.A. NO. 2230/MDS/2014 / ASSESSMENT YEAR : 2010-11 INCOME TAX OFFICER, COMPANY WARD-I, 1 ST FLOOR, 63, RACE COURSE ROAD, COIMBATORE-641 018 ( #& / APPELLANT ) VS M/S. RAMANANDA ADIGALAR FOUNDATION, CHINNAVEDAMPATTY, COIMBATORE-641 006 [PAN: AAATR 3640 M] ( '(#& / RESPONDENT ) REVENUE BY : SHRI P. RADHAKRISHNAN, JCIT ASSESSEE BY : SHRI SAROJ KUMAR PARIDA, ADVOCATE / DATE OF HEARING : 03-12-2014 / DATE OF PRONOUNCEMENT : 11-12-2014 ) / O R D E R PER VIKAS AWASTHY, J.M: THE APPEAL HAS BEEN FILED BY THE REVENUE AGAINST TH E ORDER OF THE COMMISSIONER OF INCOME TAX(APPEALS)-I, COIMBATO RE DATED 06-06-2014 FOR THE ASSESSMENT YEAR (AY) 2010-11. THE ONLY ISSUE RAISED BY THE REVENUE IN APPEAL IS CLAIM OF DEPRECI ATION OF THE ASSESSEE, ALLOWED BY THE CIT(APPEALS). ITA NO. 2230/MDS/2014 -: 2 :- 2. THE ASSESSEE IS A TRUST REGISTERED U/S.12A OF TH E INCOME TAX ACT, 1961 (HEREIN AFTER REFERRED TO AS THE ACT). THE ASSESSEE FILED ITS RETURN OF INCOME FOR THE AY. 2010-11 ON 30-09-2010 DECLARING ITS TAXABLE INCOME AS NIL. IN SCRUTINY ASSESSMENT, T HE ASSESSING OFFICER HELD THAT THE ASSESSEE IS NOT ELIGIBLE FOR CLAIMING DEPRECIATION ON ASSETS. U/S.11 CAPITAL EXPENDITURE INCURRED BY THE TRUST IS ALLOWABLE AS DEDUCTION. ANY FURTHER ALLOWANCE BY WAY OF DEPR ECIATION AMOUNTS TO DOUBLE DEDUCTION. THE ASSESSING OFFICER FURTHER HELD THAT DEPRECIATION IS NOT A CASH EXPENDITURE, THE AMOUNT OF DEPRECIATION REMAINS WITH THE TRUST ITSELF AND HENCE NOT UTILIZE D FOR THE CHARITABLE PURPOSES OF THE TRUST. ACCORDINGLY, THE CLAIM OF ` 12,29,42,255/- ON ACCOUNT OF DEPRECIATION WAS DIS-ALLOWED. AGGRIEVED BY THE ASSESSMENT ORDER DATED 16-03-2013 , THE ASSESSEE PREFERRED AN APPEAL BEFORE THE CIT(APPEALS ). THE CIT(APPEALS) BY FOLLOWING THE DECISION OF THE TRIBUNAL IN ASSESS EES OWN CASE IN ITA NO.1790/MDS/2012 FOR THE AY.2009-10 DECIDED ON 14-02-2013, ALLOWED THE CLAIM OF THE ASSESSEE. NOW, THE REVENU E HAS COME IN APPEAL BEFORE THE TRIBUNAL IMPUGNING THE ORDER OF C IT(APPEALS). 3. SHRI P.RADHAKRISHNAN, APPEARING ON BEHALF OF THE REVENUE SUPPORTED THE ASSESSMENT ORDER AND SUBMITTED THAT T HE DEPRECIATION CANNOT BE CONSIDERED AS APPLICATION/EXPENDITURE IN CASE OF TRUSTS AS NO CASH OUT FLOW IS INVOLVED. THE ENTIRE COST OF F IXED ASSETS IN CASE OF TRUST IS CONSIDERED AS APPLICATION OF FUNDS. THE C LAIM OF DEPRECIATION WOULD AMOUNT TO DOUBLE DEDUCTION WHICH IS NOT PERMI SSIBLE UNDER THE ITA NO. 2230/MDS/2014 -: 3 :- PROVISIONS OF THE ACT. IN ORDER TO SUPPORT HIS SUB MISSIONS, THE LD.DR PLACED RELIANCE ON THE DECISION OF THE HON'BLE SUPR EME COURT OF INDIA RENDERED IN THE CASE OF J.K. SYNTHETICS LTD., VS. UNION OF INDIA REPORTED AS 199 ITR 43 (SC). 4. ON THE OTHER HAND, SHRI SAROJ KUMAR PARIDA, APPE ARING ON BEHALF OF THE ASSESSEE VEHEMENTLY SUPPORTED THE ORD ER OF THE CIT(APPEALS). THE LD.COUNSEL FOR THE ASSESSEE SUBM ITTED THAT IDENTICAL ISSUE HAD COME UP IN ASSESSEES OWN CASE IN ITA NO.1790/MDS/2012 FOR THE AY.2009-10 DECIDED ON 14-02-2013. THE TRIB UNAL PLACED RELIANCE ON THE DECISION OF CO-ORDINATE BENCH IN TH E CASE OF M/S. GRAND LAKES INSTITUTE OF MANAGEMENT IN ITA NOS. 931 & 932/MDS/2012 DECIDED ON 22-06-2012, DECISION OF THE HON'BLE DEL HI HIGH COURT IN THE CASE OF DIT VS. VISHWA JAGRITI MISSION REPORTED AS [ 2012] TIOL-271-HC-DEL AND THE JUDGMENT OF HON'BLE PUNJAB & HARYANA HIGH COURT IN THE CASE OF CIT VS. MARKET COMMITTEE, PIPLI REPORTED AS 330 ITR 16 (P&H) DECIDED THE ISSUE IN FAVOUR OF THE ASSESSEE. 5. WE HAVE HEARD THE SUBMISSIONS MADE BY THE REPRES ENTATIVES OF BOTH THE SIDES AND HAVE PERUSED THE ORDERS OF THE A UTHORITIES BELOW. WE HAVE ALSO EXAMINED THE DECISIONS ON WHICH BOTH T HE SIDES HAVE PLACED RELIANCE. THE REVENUE HAS COME IN APPEAL IM PUGNING THE FINDINGS OF CIT(APPEALS) IN ALLOWING THE CLAIM OF D EPRECIATION OF THE ASSESSEE. IT IS AN UN-DISPUTED FACT THAT THE ISSUE IN APPEAL HAS ITA NO. 2230/MDS/2014 -: 4 :- ALREADY BEEN ADJUDICATED BY THE CO-ORDINATE BENCH O F THE TRIBUNAL IN ASSESSEES OWN CASE IN ITA NO.1790/MDS/2012 FOR THE AY.2009-10. THE CO-ORDINATE BENCH OF THE TRIBUNAL WHILE ALLOWIN G THE CLAIM OF THE ASSESSEE HAD PLACED RELIANCE ON THE DECISIONS OF HO N'BLE DELHI HIGH COURT IN THE CASE OF VISHWA JAGRITI MISSION (SUPRA), THE DECISION OF HON'BLE PUNJAB & HARYANA HIGH COURT IN THE CASE OF CIT VS. MARKET COMMITTEE, PIPLI (SUPRA) AND THE DECISION OF THE CO-ORDINATE BENCH O F THE TRIBUNAL IN THE CASE OF M/S. GRAND LAKES INSTITUTE OF MANAGEMENT (SUPRA). IN THE AFORESAID DECISION OF CO-ORDINATE BENCH, CATENA OF JUDGMENTS WERE REFERRED AND DISCUSSED TO CONCLUDE T HAT IN CASE OF TRUSTS REGISTERED U/S.12A, THE CLAIM OF DEPRECIATIO N DOES NOT AMOUNT TO DOUBLE DEDUCTION. THE HON'BLE PUNJAB & HARYANA HIGH COURT IN THE CAS E OF CIT VS. MARKET COMMITTEE, PIPLI (SUPRA) HAS HELD THAT THE INCOME OF THE ASSESSEE BEING EXEMPT, THE ASSESSEE IS ONLY CLAIMIN G THAT DEPRECIATION SHOULD BE REDUCED FROM THE INCOME FOR DETERMINING T HE PERCENTAGE OF FUNDS WHICH HAVE TO BE APPLIED FOR THE PURPOSE OF T HE TRUST. THIS DOES NOT AMOUNT TO DOUBLE DEDUCTION AS CONTEMPLATED BY T HE REVENUE. IN VIEW OF THE SETTLED POSITION WE DO NOT FIND ANY INFIRMITY IN THE ORDER OF CIT(APPEALS). 6. THE REVENUE IN SUPPORT OF ITS STAND HAS PLACED R ELIANCE ON THE DECISION OF THE HON'BLE APEX COURT IN THE CASE OF J.K. SYNTHETICS LTD., VS. UNION OF INDIA (SUPRA). THE HON'BLE COURT IN THE SAID CASE WAS DEALING WITH THE EXPENDITURE U/S.35(2)(IV) ON SCIEN TIFIC RESEARCH. THE ITA NO. 2230/MDS/2014 -: 5 :- ASSESSEE HAD ALSO CLAIMED THE BENEFIT OF SECTION 32 (1)(II). THE HON'BLE COURT HELD THAT IT AMOUNTS TO DOUBLE DEDUCTION IN R ESPECT OF SAME EXPENDITURE WHICH IS NOT PERMISSIBLE UNDER THE PROV ISIONS OF THE INCOME TAX ACT. THE FACTS IN THE PRESENT CASE ARE ENTIRELY DIFFERENT. IN THE PRESENT CASE, THE ASSESSEE-TRUST IS CLAIMING DEPRECIATION ON THE ASSETS OWNED BY IT. THE HON'BLE HIGH COURTS IN VAR IOUS DECISIONS HAVE UNAMBIGUOUSLY HELD THAT IN SUCH CASES, THE CLA IM OF DEPRECIATION DOES NOT AMOUNT TO DOUBLE DEDUCTION. THUS, THE DEC ISION RENDERED IN THE CASE OF J.K. SYNTHETICS LTD., VS. UNION OF INDIA (SUPRA) BY THE HON'BLE SUPREME COURT OF INDIA IS DISTINGUISHABLE. THE APPEAL OF THE REVENUE IS DISMISSED FOR THE AFO RESTATED REASONS. ORDER PRONOUNCED ON THURSDAY, THE 11 TH DECEMBER, 2014 AT CHENNAI. SD/- SD/- ( . ) ('! ! #) (A. MOHAN ALANKAMONY) / ACCOUNTANT MEMBER (VIKAS AWASTHY) $ / JUDICIAL MEMBER / CHENNAI, !' / DATED: 11 TH DECEMBER, 2014 TNMM '# $% & '& / COPY TO: 1. () / APPELLANT 2. $*() / RESPONDENT 3. + ( ) / CIT(A) 4. + / CIT 5. &./ $0 / DR 6. /1 2 / GF