ITO, Coimbatore V. Suguna Charitable Trust, Coimbatore

ITA 2237/CHNY/2014

• Counselvise Citation: [2014] 140 COUNSELVISE.COM (IT) 81294 (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
• Assessee Lawyers: R MEENAKSHISUNDARAM
• 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. 2237/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. SUGUNA CHARITABLE TRUST, NO.5A, SATHYAMOORTHY ROAD, RAMNAGAR, COIMBATORE-641 009 [PAN: AACTS 0371 C] ( '(#& / RESPONDENT ) REVENUE BY : SHRI P. RADHAKRISHNAN, JCIT ASSESSEE BY : SHRI R.MEENAKSHI SUNDARAM, 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 02-06-2014 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. 2237/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 13-10-2010 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 OF THE ACT, CAPITAL EXPENDITURE INC URRED BY THE TRUST IS ALLOWABLE AS DEDUCTION. ANY FURTHER ALLOWANCE BY W AY OF DEPRECIATION 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 ` 72,20,168/- ON ACCOUNT OF DEPRECIATION WAS DIS-ALLOWED. AGGRIEVED BY THE ASSESSMENT ORDER, THE ASSESSEE PR EFERRED AN APPEAL BEFORE THE CIT(APPEALS). THE CIT(APPEALS) BY FOLLOWING THE DECISION OF THE TRIBUNAL IN THE FOLLOWING CASES: I. M/S.KONGUNADU ARTS & SCIENCE COLLEGE COUNCIL IN ITA NO.1791/MDS/2012 FOR THE AY.2009-10 DECIDED ON 14-02-2013; II. M/S.ELLEN CHARITABLE TRUST IN ITA NO.1910/MDS/2013 DECIDED ON 13-02-2014; III. M/S.VIDYA VIKASINI SOCIETY IN ITA NO.1935/MDS/2013 DECIDED ON 07-03-2014. ITA NO. 2237/MDS/2014 -: 3 :- ALLOWED THE CLAIM OF ASSESSEE. NOW, THE REVENUE HA S COME IN APPEAL BEFORE THE TRIBUNAL IMPUGNING THE ORDER OF CIT(APPE ALS). 3. SHRI P.RADHAKRISHNAN, REPRESENTING THE DEPARTMEN T SUPPORTED THE ASSESSMENT ORDER AND SUBMITTED THAT THE DEPRECI ATION CANNOT BE CONSIDERED AS APPLICATION/EXPENDITURE IN CASE OF TR USTS AS NO CASH OUT FLOW IS INVOLVED. THE ENTIRE COST OF FIXED ASSETS IN CASE OF TRUST IS CONSIDERED AS APPLICATION OF FUNDS. THE CLAIM OF D EPRECIATION WOULD AMOUNT TO DOUBLE DEDUCTION WHICH IS NOT PERMISSIBLE UNDER THE 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 R. MEENAKSHI SUNDARAM, A PPEARING 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 CASE OF M/S.KONGUNADU ARTS & SCIENCE COLLEGE COUNCIL (SUPRA) DECIDED ON 14-02-2013. THEREIN, THE TRIBU NAL 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 ITA NO. 2237/MDS/2014 -: 4 :- REPORTED AS 330 ITR 16 (P&H) AND DECIDED THE ISSUE IN FAVOUR OF THE ASSESSEE. 5. WE HAVE HEARD THE SUBMISSIONS MADE BY THE LD.DR AND HAVE PERUSED THE ORDERS OF THE AUTHORITIES BELOW. THE R EVENUE HAS COME IN APPEAL IMPUGNING THE FINDINGS OF CIT(APPEALS) IN AL LOWING THE CLAIM OF DEPRECIATION OF THE ASSESSEE. IT IS AN UN-DISPUTED FACT THAT THE ISSUE IN APPEAL HAS ALREADY BEEN ADJUDICATED IN FAVOUR OF THE ASSESSEE BY THE CO-ORDINATE BENCH OF THE TRIBUNAL IN THE CASES OF : I. M/S.KONGUNADU ARTS & SCIENCE COLLEGE COUNCIL IN ITA NO.1791/MDS/2012 FOR THE AY.2009-10 DECIDED ON 14-02-2013; II. M/S.ELLEN CHARITABLE TRUST IN ITA NO.1910/MDS/2013 DECIDED ON 13-02-2014; III. M/S.VIDYA VIKASINI SOCIETY IN ITA NO.1935/MDS/2013 DECIDED ON 07-03-2014. THE TRIBUNAL WHILE ALLOWING THE CLAIM OF THE ASSESS EE IN CASE OF M/S.KONGUNADU ARTS & SCIENCE COLLEGE COUNCIL (SUPRA) HAS PLACED RELIANCE ON THE DECISIONS OF HON'BLE DELHI HIGH COU RT IN THE CASE OF DIT VS. VISHWA JAGRITI MISSION REPORTED AS [ 2012] TIOL-271-HC-DEL, 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) AND THE ITA NO. 2237/MDS/2014 -: 5 :- DECISION OF THE CO-ORDINATE BENCH OF THE TRIBUNAL I N THE CASE OF M/S. GRAND LAKES INSTITUTE OF MANAGEMENT IN ITA NOS. 931 & 932/MDS/2012 DECIDED ON 22-06-2012. IN THE AFORESAID DECISION OF CO-ORDINATE BENCH, CATENA OF JUDGMENTS WERE REFERRE D AND DISCUSSED TO CONCLUDE THAT IN CASE OF TRUSTS REGISTERED U/S.1 2A, THE CLAIM OF DEPRECIATION 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 ASSESSEE HAD ALSO CLAIMED THE BENEFIT OF SECTION 32 (1)(II). THE HON'BLE COURT IN THE FACTS AND CIRCUMSTANCES OF THAT CASE H ELD THAT IT AMOUNTS TO DOUBLE DEDUCTION IN RESPECT OF SAME EXPENDITURE WHICH IS NOT PERMISSIBLE UNDER THE PROVISIONS OF THE INCOME TAX ACT. THE FACTS IN THE PRESENT CASE ARE ENTIRELY DIFFERENT. THUS, THE DECISION RENDERED IN ITA NO. 2237/MDS/2014 -: 6 :- THE CASE OF J.K. SYNTHETICS LTD., VS. UNION OF INDIA (SUPRA) BY THE HON'BLE SUPREME COURT OF INDIA IS DISTINGUISHABLE. THE HON'BLE HIGH COURTS IN VARIOUS DECISIONS HAVE UNAMBIGUOUSLY HELD THAT IN SUCH CASES, THE CLAIM OF DEPRECIATION DOES NOT AMOUNT TO DOUBLE DEDUCTION. THE TRIBUNAL HAS A LSO BEEN CONSISTENTLY FOLLOWING SIMILAR VIEW. WE DO NOT FIN D ANY INFIRMITY IN THE ORDER OF CIT(APPEALS) AND THE SAME IS UPHELD. THE APPEAL OF THE REVENUE IS DISMISSED FOR THE AFORESTATED 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