DDIT (E), New Delhi V. M/s The Bhardwaj Welfare Trust, New Delhi

ITA 2565/DEL/2013

• Counselvise Citation: [2015] 140 COUNSELVISE.COM (IT) 86736 (ITAT-DELHI)
• Duration Of Justice: 1 year(s) 9 month(s) 12 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 13-02-2015
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: H
• Next Hearing Date: 11-02-2015
• Assessment Year: 2009-2010
• Appeal Filed On: 01-05-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: J P CHANDRAKAR
• Keywords: Depreciation; Charitable institution; Capital expenditure
• Section: 12AA; 32

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH: H : NEW DELHI BEFORE SHRI I.P. BANSAL, JUDICIAL MEMBER AND SHRI N.K. SAINI, ACCOUNTANT MEMBER ITA NO S . 1979 & 2565 /DEL / 2013 ASSESSMENT YEAR S : 2008 - 09 & 2009 - 10 DY. DIRECTOR OF INCOME TAX (E) VS. THE BHARDWAJ WELFARE TRUST, TRUST CIRCLE - IV, NEW DELHI E - 18, GREATER KAILASH - 1, NEW DELHI (PAN: AATT0758J ) (APPELLANT) (RESPONDENT) APPELLANT BY : SH. J.P. CHANDRAKAR, SR. DR RESPONDEN T BY: NONE DATE OF HEARI NG: 11 .02.2015 DATE OF PRONOUNCEMENT: 13.02.2015 ORDER PER BENCH : 1. BOTH THESE APPEALS ARE FILED BY THE REVENUE AND THEY ARE DIRECTED AGAINST TWO SEPARATE ORDERS PASSED BY LEARNED CIT(A) DATED 16 TH JANUARY, 2013 AND 27 TH FEBRUARY, 2013 FOR THE ASSESSMENT YEARS 2008 - 09 AND 2009 - 10 RESPECTIVELY. 2. THE GROUNDS OF APPEAL IN ITA NO. 1979/DEL/2013 READ AS UNDER: I. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD. CIT(A) HAS ERRED IN IGNORING THE FACT THAT IN A CASE WHERE CAPITAL EXPENDITURE HAS BEEN TREATED TO HAVE BEEN APPLIED FOR THE OBJECT OF THE TRUST, ALLOWANCE OF DEDUCTION ON ACCOUNT OF DEPRECIATION WILL AMOUNT TO DOUBLE DEDUCTION. II. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD. CIT (A) HAS ERRED IN IGNORING THAT AS PER PROVISIONS OF SECTION 32 OF THE INCOME TAX ACT, 1961 DEPRECIATION IS TO BE ALLOWED AGAINST THE PROFIT & GAINS OF BUSINESS OR PROFESSION WHEREAS THE ASSESSEE IS A CHARITABLE 2 ITA NO. 1979 & 2565 /DEL /2013 AYS : 2008 - 09 & 2009 - 10 INSTITUTION REGISTERED UNDER SECTION 12AA OF THE ACT AND IS NOT COMPUTING/OFFERING ITS INCOME UNDER THE HEAD PROFIT & GAINS OF BUSINESS OR PROFESSION. III. THE APPELLANT CRAVES LEAVE TO ADD, TO ALTER OR AMEND ANY GROUND OF APPEAL RAISED ABOVE AT THE TIME OF HEARING. 3. THE GROUND OF APPEALS IN ITA NO. 2 565/DEL/2013 READ AS UNDER: I. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD. CIT(A) HAS ERRED IN IGNORING THE FACT THAT IN A CASE WHERE CAPITAL EXPENDITURE HAS BEEN TREATED TO HAVE BEEN APPLIED FOR THE OBJECT OF THE TRUST, ALLOWANCE OF DEDUCTION ON ACCOUNT OF DEPRECIATION WILL AMOUNT TO DOUBLE DEDUCTION. II. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD. CIT(A) HAS ERRED IN IGNORING THAT AS PER PROVISIONS OF SECTION 32 OF THE INCOME TAX ACT, 1961 DEPRECIATION IS TO BE ALLOWED AGAINST THE PROFIT & GAINS OF BUSINESS OR PROFESSION WHEREAS THE ASSESSEE IS A CHARITABLE INSTITUTION REGISTERED UNDER SECTION 12AA OF THE ACT AND IS NOT COMPUTING/OFFERING ITS INCOME UNDER THE HEAD PROFIT & GAINS OF BUSINESS OR PROFESSION. III. ON THE FACTS AND IN THE CIRCUMSTANCED OF THE CASE AND IN LAW, THE LD. CIT(A) HAS ERRED IN IGNORING THE FACT THAT THE CBDT HAS GIVEN CLARIFICATION TO HON BLE HIGH COURT OF KERELA IN PURSUANCE OF THE INTERLOCUTORY ORDER DATED 03.01.2011 IN THE CASE OF LISSIE MEDICAL INSTITUTION VS. CIT, ITA NO. 42 OF 2011 AND CONVEYED ITS VIEW ON ALLOWANCE OF DEPRECIATION THAT SUCH NOTIONAL STATUTORY DEDUCTIONS LIKE DEPRECIATION, IF CLAIMED AS DEDUCTION WHILE COMPUTING OF INCOME, IS REQUIRED TO BE ADDED BACK WHILE COMPUTING T HE INCOME FOR THE PURPOSE OF APPLICATION IN THE INCOME & EXPENDITURE ACCOUNT. IV. THE APPELLANT CRAVES LEAVE TO ADD, TO ALTER OR AMEND. 4. THE ISSUE RAISED BY THE REVENUE IN BOTH THESE APPEALS IS IDENTICAL THAT IS AGAINST THE GRANT OF DEPRECIATION. THE ASSESSEE IS A CHARITABLE TRUST AND IT CLAIMED DEPRECIATION ON CERTAIN ASSETS , WHICH ACCORDING TO REVENUE WOULD TANTAMOUNT TO DOUBLE DEDUCTION AS CAPITAL EXPENDITURE HAS BEEN TREATED TO HAVE BEEN APPLIED FOR OBJECT OF THE TRUST. THE DEPARTMENT IS CONTESTING SUCH DELETION 3 ITA NO. 1979 & 2565 /DEL /2013 AYS : 2008 - 09 & 2009 - 10 MADE BY LEARNED CIT(A) ON THE BASIS OF ARGUMENTS SUBMITTED IN THE RESPECTIVE GROUNDS OF APPEAL. IT IS FURTHER OBSERVED THAT LEARNED CIT(A) HAS DECIDED THIS ISSUE IN FAVOUR OF ASSESSEE BY FOLLOWING THE DECISION OF HON BLE DELHI HIGH COURT IN THE CASE OF DIRECTOR OF INCOME TAX VS. VS. VISHWA JAGRITI MISSION, 262 CTR 558 (DEL.) . IN THE SAID CASE, THE ASSESSEE WAS REGISTERED UNDER SECTION 12AA OF THE INCOME - TAX ACT, 1961 (FOR SHORT THE ACT ) . THUS, IT WAS ENTITLED TO EXEMPTIONS OF ITS INCOME UND ER SECTION 11 OF THE ACT. THE QUESTION RAISED BEFORE THE HON BLE HIGH COURT WAS THAT WHETHER THE INCOME OF THE ASSESSEE SHOULD BE COMPUTED ON COMMERCIAL PRINCIPLES AND IN DOING SO, WHETHER DEPRECIATION ON FIXED ASSETS UTILIZED FOR THE CHARITABLE PURPOSES S HOULD BE ALLOWED. IT WAS OBSERVED BY HON BLE DELHI HIGH COURT THAT THERE SEEMS TO BE A CONSENSUS OF JUDICIAL THINKING , AS COULD BE SEEN FROM THE AUTHORITIES RELIED UPON BY LEARNED CIT(A) AS WELL AS BY THE TRIBUNAL. IT WAS FURTHER OBSERVED THAT IN COMPUTING THE INCOME OF A CHARITABLE INSTITUTION/TRUST, DEPRECIATION OF ASSETS OWNED BY THE TRUST/INSTITUTION IS A NECESSARY DEDUCTION ON COMMERCIAL PRINCIPLES. THE AMOUNT OF DEPRECIATION DEBITED TO THE ACCOUNTS OF THE CHARITABLE INSTITUTION HAS TO BE DEDUCTED TO A RRIVE AT THE INCOME AVAILABLE FOR APPLICATION TO CHARITABLE AND RELIGIOUS PURPOSES. AND THUS, IT WAS HELD THAT THERE WAS NO ERROR IN THE ORDER OF THE TRIBUNAL VIDE WHICH NECESSARY RELIEF WAS GRANTED TO THE ASSESSEE. THE HON BLE DELHI HIGH COURT FURTHER HELD THAT THE DECISION OF THE HON BLE SUPREME COURT IN THE CASE OF ESCORTS LIMITED VS. UNION OF INDIA, 199 ITR 43 (SC) WOULD 4 ITA NO. 1979 & 2565 /DEL /2013 AYS : 2008 - 09 & 2009 - 10 NOT BE APPLICABLE TO SUCH CASES. THE RELEVANT OBSERVATIONS OF HON BLE DELHI HIGH COURT HAVE BEEN R EPRODUCED BY LEARNED CIT(A) IN THE ORDER PASSED FOR THE ASSESSMENT YEAR 2008 - 09. AS AGAINST THE AFOREMENTIONED VIEW TAKEN BY LEARNED CIT(A), THE DEPARTMENT IS CONTESTING THE DELETION ON THE GROUND THAT IT WILL AMOUNT TO DOUBLE DEDUCTION AN D DURING THE COUR SE OF HEARING BEFORE THE HON BLE KERELA HIGH COURT IN THE CASE OF LISSIE MEDICAL INSTITUTIONS VS. CIT, CBDT HAS CLARIFIED THAT GRANTING OF DEPRECIATION TO THE CHARITABLE INSTITUTION WOULD AMOUNT TO DOUBLE DEDUCTION. THESE APPEALS WERE FIXED FOR HEARING ON 11 TH FEBRUARY, 2015 AND NOTICE WAS SENT TO THE ASSESSEE. HOWEVER, NONE WAS PRESENT ON BEHALF OF THE ASSESSEE. 5. SINCE THE ISSUE WAS DECIDED BY LEARNED CIT(A) ON THE BASIS OF DECISION OF HON BLE JURISDICTIONAL HIGH COURT, WE PROCEED TO DECIDE THE PRESENT A PPEAL S EX - PARTE QUA THE ASSESSEE. 6. LEARNED DR RELYING UPON THE GROUNDS OF APPEAL SUBMITTED THAT LEARNED CIT(A) HAS COMMITTED AN ERROR IN GRANTING THE RELIEF TO THE ASSESSEE IN VIEW OF THE CLARIFICATION GIVEN BY CBDT DURING THE COURSE OF HEARING BEFORE TH E HON BLE HIGH COURT OF KERELA IN THE CASE OF LISSIE MEDICAL INSTITUTIONS VS. CIT , 348 ITR 344. 7. AFTER HEARING LEARNED DR , WE DO NOT FIND ANY FORCE IN THE CONTENTIONS RAISED BY LEARNED DR AS THE RELIEF HAS BEEN GRANTED BY THE LEARNED CIT(A) ON THE BASIS OF DECISION OF JURISDICTIONAL HIGH COURT IN THE CASE OF 5 ITA NO. 1979 & 2565 /DEL /2013 AYS : 2008 - 09 & 2009 - 10 DIRECTOR OF INCOME TAX VS. VS. VISHWA JAGRITI MISSION (SUPRA). WHEN THE DECISION OF JURISDICTIONAL HIGH COURT IS AVAILABLE ON ANY ISSUE THE N AS PER WELL ESTABLISHED LAW, THE SAME IS BINDING UPON THE AUTHORITIES WORKING UNDER THE JURISDICTION OF HIGH COURT. THE ISSUE RAISED BY THE REVENUE IS SQUARELY COVERED BY THE AFOREMEN TIONED DECISION OF THE HON BLE JURISDICTIONAL HIGH COURT IN THE CASE OF DIRECTOR OF INCOME TAX VS. VS. VISHWA JAGRITI MISSION (SUPRA) THEREFORE, WE DO NOT FIND ANY ERROR IN THE RELIEF GIVEN BY LEARNED CIT(A) TO THE ASSESSEE IN RESPECT OF BOTH THE IMPUGNED ASSESSMENT YEARS. ACCORDINGLY, W E DECLINE TO INTERFERE AND THE DEPARTMENTAL APPEALS BEING DEVOID OF MERITS ARE DISMISSED. 8. IN THE RESULT, BOTH THE APPEAL S OF THE REVENUE ARE DISMISSED. THE DECISION IS PRONO UNCED IN THE OPEN COURT ON 13 TH FEBRUARY , 2015. SD/ - SD/ - (N.K. SAINI) ( I.P. BANSAL ) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED: 1 3 TH FEBRUARY , 2015. RK/ - COPY FORWARDED TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(A) 5. DR ASST. REGISTRAR, ITAT, NEW DELHI