ITO, Coimbatore V. Sree Narayana Guru Educational Trust, Coimbatore

ITA 2536/CHNY/2014

• Counselvise Citation: [2015] 140 COUNSELVISE.COM (IT) 90313 (ITAT-CHENNAI)
• Duration Of Justice: 6 month(s) 6 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 13-04-2015
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: D
• Next Hearing Date: 13-04-2015
• Assessment Year: 2010-2011
• Appeal Filed On: 07-10-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: N MADHAVAN IRS
• Assessee Lawyers: K RAGHU
• Keywords: Depreciation; Charitable institution; Capital expenditure
• Section: 12

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL D BENCH, CHENNAI , ! ' , # $% BEFORE SHRI CHANDRA POOJARI, ACCOUNTANT MEMBER & SHRI CHALLA NAGENDRA PRASAD, JUDICIAL MEMBER ./ I.T.A. NO. 2535/MDS/2014 ( / ASSESSMENT YEAR : 2010-2011) THE INCOME TAX OFFICER, COMPANY WARD I, 1 ST FLOOR, 63, RACE COURSE ROAD, COIMBATORE 641 018 ( &' /APPELLANT) VS M/S. GRG TRUST, PSGR KRISHNAMMAL COLLEGE, AVINASHI ROAD, PEELAMEDU, COIMBATORE 641 004. [PAN:AAATG 2076N] ( '(&' /RESPONDENT) ./ I.T.A. NO. 2536/MDS/2014 ( / ASSESSMENT YEAR : 2010-2011) THE INCOME TAX OFFICER, COMPANY WARD I, 1 ST FLOOR, 63, RACE COURSE ROAD, COIMBATORE 641 018 ( &' /APPELLANT) VS M/S. SREE NARAYANA GURU EDUCATIONAL TRUST, 95, SREE NARAYANA GURU ROAD, SAI BABA MISSION, COIMBATORE 641 011. [PAN:AAATS 8493D] ( '(&' /RESPONDENT) / APPELLANT BY : SHRI. N. MADHAVAN, IRS, JCIT. / RESPONDENT BY : SHRI. K. RAGHU, C.A. /DATE OF HEARING : 13.04.2015 ! /DATE OF PRONOUNCEMENT : 13.04.2015 I.T.A.NOS.2535 & 2536/MDS/2014. :- 2 -: ) / O R D E R PER CHANDRA POOJARI, ACCOUNTANT MEMBER THESE TWO APPEALS BY REVENUE ARE DIRE CTED AGAINST DIFFERENT ORDERS OF THE COMMISSIONER OF INCOME TAX (APPEALS)-I, COIMBATORE IN RESPECT OF ABOVE ASSESSEES FOR THE A SSESSMENT YEAR 2010-2011. 2. THE ISSUES IN THESE TWO APPEALS ARE COMMON IN NATUR E, HENCE THESE APPEALS ARE COMBINED, HEARD TOGETHER, AND DIS POSED OF BY A COMMON ORDER FOR THE SAKE OF CONVENIENCE. THE COMMO N GROUNDS IN THESE APPEALS ARE AS FOLLOWS:- 1. THE LD. CIT(A)-I HAS ERRED IN ALLOWING THE APP EAL FILED BY THE ASSESSEE. 2. THE LD. CIT(A)-I HAS ERRED IN LAW BY ALLOWING TH E CLAIM OF DEPRECIATION HOLDING IT AS APPLICATION OF INCOME O N STATED CHARITABLE OBJECTS. 3. THE LD. CIT(A)-I OUGHT TO HAVE OBSERVED THAT THE ENTIRE COST OF THE DEPRECIABLE ASSETS HAVE ALREADY BEEN ALLOWED AS APPLICATION OF INCOME TOWARDS OBJECTS OF THE TRUST AND, THERE FORE, AGAIN ALLOWING OF THE DEPRECIATION ON THE SAME ASSETS, HO LDING IT AS APPLICATION OF INCOME FOR CHARITABLE PURPOSES WOULD AMOUNT TO ALLOWANCE TWICE, AS HELD BY THE HONBLE SUPREME COU RT IN THE CASE OF JK SYNTHETICS LTD. VS. UNION OF INDIA (199 ITR 4 3). 4. THE LD. CIT(A)-I SHOULD HAVE APPRECIATED THE FAC T THE JUDICIAL DECISIONS RELIED UPON BY HIM WERE NOT ACCEPTED BY THE DEPARTMENT AND FURTHER APPEALS WERE PREFERRED. I.T.A.NOS.2535 & 2536/MDS/2014. :- 3 -: 5. THE LD. CIT(A)-I OUGHT TO HAVE OBSERVED THAT IN THE JUDGMENT OF THE KERALA HIGH COURT, IN ITA NO.42 OF 2011 DATE D 17.02.2012, THE KERALA HIGH COURT HAD SOUGHT CLARIFICATION FROM CBD T AND AFTER THAT DECIDED THAT SUCH CLAIM OF DEPRECIATION CANNOT BE A LLOWED. 3. THE FACTS NARRATED IN ITA NO.2535/MDS/2014 ARE CONS IDERED FOR ADJUDICATION. THE ASSESSEE IS A PUBLIC CHARITABLE T RUST DULY REGISTERED U/S.12A OF THE INCOME TAX ACT, 1961. FOR THE ASSES SMENT YEAR 2010- 11, RELEVANT TO THE PREVIOUS YEAR THAT ENDED ON 31. 03.2010,THE TRUST FILED A RETURN DECLARING NIL TOTAL INCOME AFTER THE DUE APPLICATION OF INCOME AS PER STIPULATION CONTAINED IN SECTION 11(1 ) OF THE INCOME TAX ACT. WHILE COMPLETING THE ASSESSMENT, THE ASSESSING OFFICER REJECTED THE CLAIM OF DEPRECIATION, AS IT FALLS OUTSIDE THE PURVIEW OF SEC.11(1) OF THE INCOME TAX ACT. AGGRIEVED, THE ASSESSEE PREFERR ED AN APPEAL BEFORE THE COMMISSIONER OF INCOME TAX (APPEALS). 4. ON APPEAL, THE COMMISSIONER OF INCOME TAX (APPEALS) ALLOWED THE CLAIM OF THE ASSESSEE BY RELYING ON THE ORDER OF THE CO-ORDINATE BENCH OF THE TRIBUNAL IN THE CASE OF M/S KGISL TRUST, IN ITA NO.1813/MDS/2012, DATED 7.10.2013 WHEREIN IT WAS HELD THAT THE ASSESSEE COULD CLAIM DEPRECIATION AS APPLI CATION OF INCOME OF FUNDS WHILE COMPUTING ITS ELIGIBLE EXEMPTION U/S .11 AND 12 OF I.T.A.NOS.2535 & 2536/MDS/2014. :- 4 -: THE INCOME TAX ACT. AGAINST THIS, THE REVENUE IS I N APPEAL IN BOTH THE CASES BEFORE US. 5. WE HAVE HEARD BOTH THE PARTIES AND PERUSED THE MATE RIAL ON RECORD. A SIMILAR ISSUE CAME FOR CONSIDERATION BEF ORE THIS TRIBUNAL IN THE CASE OF M/S. KOVAI MEDICAL TRUST IN ITA NO.1772/MDS/2012 DATED 7 TH OCTOBER, 2013, WHEREIN IT WAS OBSERVED AS UNDER :- 3. IN FIRST APPEAL, THE COMMISSIONER OF INCOME TAX (APPEALS) HELD THAT THE CLAIM OF DEPRECIATION MADE BY THE ASS ESSEE SHOULD BE ALLOWED, EVEN IF CAPITAL EXPENDITURE INCURRED BY TH E ASSESSEE HAS BEEN TREATED AS APPLICATION OF FUNDS FOR CHARITABLE PURPOSES. IN ORDER TO COME TO THE ABOVE CONCLUSION, THE COMMISSIONER O F INCOME- TAX(APPEALS) HAS RELIED ON THE JUDGMENTS OF THE HON BLE PUNJAB & HARYANA HIGH COURT RENDERED IN THE CASES OF CIT VS. MARKET COMMITTEE, PIPLI (330 ITR 16) AND CIT VS. TINY TOTS EDUCATION SOCIETY (330 ITR 21). THE COMMISSIONER OF INCOME-TA X(APPEALS) HAS ALSO PLACED RELIANCE ON THE DECISIONS OF INCOME -TAX APPELLATE TRIBUNAL, CHENNAI BENCHES IN THE CASES OF GKR CHARI TIES VS. DDIT (EXEMPTIONS) AND RENGALATCHUMI EDUCATIONAL TRUST VS . ITO. 4. THE REVENUE IS AGGRIEVED AND, THEREFORE, THE SE COND APPEAL BEFORE THE TRIBUNAL. 5. THE ONLY RELEVANT GROUND RAISED BY THE REVENUE IS THAT THE DECISIONS RELIED ON BY THE COMMISSIONER OF INCOME T AX(APPEALS) AS RENDERED BY THE TRIBUNAL HAVE NOT BEEN ACCEPTED BY THE DEPARTMENT AND MATTERS ARE BEING TAKEN IN APPEALS BEFORE THE H ONBLE MADRAS HIGH COURT. 6. BUT IN ADDITION TO THE DECISIONS OF INCOME-TAX A PPELLATE TRIBUNAL, THE COMMISSIONER OF INCOME-TAX(APPEALS) H AS ALSO PLACED RELIANCE ON THE DECISIONS OF THE HONBLE PUNJAB & H ARYANA HIGH COURT REFERRED TO, IN PARAGRAPH ABOVE. THERE IS NO DECISION OF JURISDICTIONAL HIGH COURT AGAINST THE PROPOSITIONS ARGUED BY THE REVENUE. WHEN THAT IS THE CASE, AS HELD BY THE HON BLE SUPREME COURT IN THE CASE OF CIT VS. VEGETABLE PRODUCTS LTD ., 88 ITR 192, THE DECISIONS FAVOURABLE TO THE ASSESSEE RENDERED B Y THE HONBLE COURTS HAVE TO BE ACTED UPON. THEREFORE, WE FIND TH AT THE COMMISSIONER OF INCOME-TAX(APPEALS) IS JUSTIFIED IN ACCEPTING THE CONTENTIONS ADVANCED BY THE ASSESSEE. I.T.A.NOS.2535 & 2536/MDS/2014. :- 5 -: 7. IN RESULT, THIS APPEAL FILED BY THE REVENUE IS D ISMISSED. 6. RESPECTFULLY, FOLLOWING THE SAID DECISION OF T HIS TRIBUNAL, WE AFFIRM THE ORDER OF THE COMMISSIONER OF INCOME TAX (APPEAL S) ON THIS ISSUE IN BOTH THESE APPEALS. 7. IN THE RESULT, THE APPEALS OF THE REVENU E IN ITA NOS.2535 AND 2536/MDS/2014 ARE DISMISSED. ORDER PRONOUNCED ON MONDAY, THE 13 TH DAY OF APRIL, 2015, AT CHENNAI. SD/- SD/- ( ! ' ) (CHALLA NAGENDRA PRASAD) # / JUDICIAL MEMBER ( ) (CHANDRA POOJARI) / ACCOUNTANT MEMBER '# /CHENNAI. $% /DATED:13.04.2015. KV %& '( )( /COPY TO: 1. * APPELLANT 2. / RESPONDENT 3. + ( )/CIT(A) 4. + /CIT 5. (,- . /DR 6. -/ 0 /GF.