Indira Ganesan Educational and Charitable Trust, Trichy V. DCIT, Trichy

ITA 250/CHNY/2017

• Counselvise Citation: [2018] 126 COUNSELVISE.COM (IT) 4784 (ITAT-CHENNAI)
• Duration Of Justice: 1 year(s) 9 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 06-02-2018
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: D
• Next Hearing Date: 18-07-2017
• Assessment Year: 2009-2010
• Appeal Filed On: 27-01-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: MRS S VIJAYA PRABHA
• Assessee Lawyers: M NARAYANAN RETD
• Keywords: Depreciation; Charitable institution; Cost of acquisition
• Section: 143(3); 32; 11

Judgement Text

, , IN THE INCOME - TAX APPELLATE TRIBUNAL D BENCH, CHENNAI . , . , BEFORE SHRI ABRAHAM P. GEORGE , ACCOUNTANT MEMBER & SHRI DUVVURU R L REDDY , JUDICIAL MEMBER ./ I.T.A.NO. 2 50 /MDS/2017 / ASSESSMENT YEAR :20 09 - 1 0 INDIRA GANESAN EDUCATIONAL & CHARITABLE TRUST, NO. 72, WEST BOULEVARD ROAD, TRICHIRAPALLI 620 008. [PAN: AAA TI4222Q ] VS. THE DEPUTY COMMISSIONER OF I NCOME TAX, CIRCLE I(2 ), TRICHIRAPALLI 620 001. ( / APPELLANT ) ( / RESPONDENT ) / APPELLANT BY : SHRI M. NARAYANAN, RETD. ADDL. CIT / RESPONDENT BY : MRS. S. VIJAYAPRABHA , J CIT / DATE OF HEARING : 0 6 . 0 2 .201 8 / DATE OF P RONOUNCEMENT : 06 . 0 2 .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. COMMISSIONER OF INCOM E TAX (APPEALS) 2 , TIRUCHIRAPPALLI DATED 08 . 12 .201 6 RELEVANT TO THE ASSESSMENT YEAR 20 09 - 1 0 . 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 . 2 5 0 /M/ 1 7 2 2. BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE TRUST FILED IT S RETURN OF INCOME ON 30 .0 9 .20 09 ADMITTING NIL INCOME AND CLAIMING EXEMPTION UNDER SECTION 1 1 OF THE INCOME TAX ACT, 1961 [ ACT IN SHORT]. FURTHER, THE ASSESSEE CLAIMED DEPRECIATION TO T HE EXTENT OF . 1,17,46,854 / - . 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 WHILE CONCLUD ING 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 ASSESSMENT. 4. ON BEING AGGRIEVED, THE ASSESSEE IS IN APPEAL BEFORE TH E 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. FRAM JEE CAWASJEE INSTITUTE (1993) 109 CTR 463. IN VIEW OF THE ABOVE JUDGMENT OF THE HON BLE SUPREME COURT, THE LD. COUNSEL FOR THE ASSESSEE HAS SUBMITTED I.T.A. NO . 2 5 0 /M/ 1 7 3 THAT THE ASSESSEE IS ELIGIBLE FOR DEPRECIATION EVEN THOUGH THE COST OF ASSET WAS CLAIMED AS APPLICATION O F INCOME IN THE 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 M ECHANISM FOR COMPUTING 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 FOR 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 THROUGH 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 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 I.T.A. NO . 2 5 0 /M/ 1 7 4 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 IN THE OPEN COURT ON THE 06 TH FEBRUARY , 201 8 AT CHENNAI. SD/ - SD/ - ( ABRAHAM P. GEORGE ) ACCOUNTANT MEMBER ( DUVVURU RL REDDY ) JU DICIAL MEMBER CHENNAI, DATED, THE 06 .0 2 . 201 8 VM/ - / COPY TO: 1. / APPELLANT , 2. / RESPONDENT , 3. ( ) / CIT(A) , 4. / CIT , 5. / DR & 6. / GF.