Deputy Commissioner of Income tax, V. Rajasthani & Gujarat Charitable Foundation, Pune

ITA 2820/PUN/2016

• Counselvise Citation: [2019] 112 COUNSELVISE.COM (IT) 6055 (ITAT-PUNE)
• Duration Of Justice: 2 year(s) 22 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 04-01-2019
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Assessment Year: 2011-2012
• Appeal Filed On: 13-12-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: ABHISHEK MESHRAN
• Keywords: Depreciation; Charitable institution
• Section: 12A; 264; 12

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL A BENCH, PUNE . , , BEFORE SHRI D. KARUNAKARA RAO, AM AND SHRI VIKAS AWASTHY, JM . / ITA NOS.2820 & 2821/PUN/2016 / ASSESSMENT YEARS : 2011-12 & 2012-13 DCIT (EXEMPTION) CIRCLE, PUNE. ....... / APPELLANT / V/S. RAJASTHANI & GUJRATHI CHARITABLE FOUNDATION, POONA HOSPITAL & RESEARCH CENTRE, 27, SADASHIV PETH, PUNE. PAN : AAATR1097C / RESPONDENT REVENUE BY : SHRI ABHISHEK MESHRAN, JCIT ASSESSEE BY : NONE / DATE OF HEARING : 01.01.2019 / DATE OF PRONOUNCEMENT : 04.01.2019 / ORDER PER D. KARUNAKARA RAO, AM: THERE ARE TWO APPEALS UNDER CONSIDERATION. BOTH THE APPEALS ARE FILED BY THE REVENUE AGAINST THE COMMON ORDER OF CIT(A)-10, PUNE DATED 07.10.2016 FOR THE ASSESSMENT YEARS 2011-12 & 2012-13. SINCE THE IDENTICAL ISSUE INVOLVED IN BOTH THE APPEALS, THEREFORE, THESE WERE HEARD TOGETHER AND ARE BEING DISPOSED OF BY THIS COMPOSITE ORDER. 2. IN BOTH THE APPEALS, THE REVENUE RAISED SIMILAR GROUND WHICH RELATES TO THE CORRECTNESS OF THE ORDER OF THE CIT(A) WHO DIRECTED THE ASSESSING OFFICER TO GRANT THE DEPRECIATION ON THE ASSETS ALREADY TREATED AS APPLICATION OF INCOME OF THE FOUNDATION-ASSESSEE. 2 ITA NOS.2820 & 2821/PUN/2016 3. BEFORE US, AT THE TIME OF HEARING, WHEN THE NAME OF THE ASSESSEE WAS CALLED THERE WAS NONE TO REPRESENT ON BEHALF OF THE ASSESSEE DESPITE SERVICE OF NOTICE, WHICH IS PLACED ON THE RECORDS. 4. BRIEFLY, THE RELEVANT FACTS INCLUDE THAT THE ASSESSEE IS A TRUST AND HAVE BENEFIT OF REGISTRATION UNDER SECTION 12A OF THE ACT. THE ASSESSEE ENGAGED IN PROVIDING MEDICAL RELIEF TO THE PUBLIC IN GENERAL AND TO CARRY OUT RESEARCH IN ALL THE FACULTIES OF MEDICINE AND SURGERY. THE ASSESSEE ACQUIRED ASSETS WITH THE EXEMPT FUNDS OF THE ASSESSEE. THE ASSESSEE ALSO CLAIMED DEPRECIATION ON THE SAID ASSETS RELYING ON THE HONBLE BOMBAY HIGH COURT JUDGEMENT IN THE CASE OF CIT VS. INSTITUTE OF BANKING, PERSONNEL SELECTION (IBPS) [2013] 264 ITR 11 (BOM.). HOWEVER, THE ASSESSING OFFICER DENIED THE BENEFIT OF CLAIM OF DEPRECIATION AS PER THE DISCUSSION GIVEN IN HIS ORDER. AS PER THE ASSESSING OFFICER, IT IS THE CASE OF CLAIM OF DOUBLE DEDUCTION. 5. DURING THE FIRST APPELLATE PROCEEDINGS, THE ASSESSEE FILED A WRITTEN SUBMISSION WHICH IS EXTRACTED IN PARA 4 OF THE ORDER OF THE CIT(A). IN THE SAID WRITTEN SUBMISSION, THE ASSESSEE RELIED ON THE SERIES OF DECISIONS IN RESPECT OF ALLOWABILITY OF CLAIM OF DEPRECIATION ON THE ASSETS PROCURED OUT OF APPLICATION OF INCOME OF THE ASSESSEE-TRUST. THE CIT(A) AFTER CONSIDERING THE WRITTEN SUBMISSIONS OF THE ASSESSEE AND ALSO THE SERIES OF JUDGEMENTS OF THE JURISDICTIONAL HIGH COURT AS WELL AS OTHER HIGH COURT MADE A DETAILED DISCUSSION IN PARA 5 OF HIS ORDER. THERE IS ALSO A DISCUSSION ABOUT THE AMENDMENT BY THE FINANCE ACT, 2014 W.E.F. 1.4.2015 WHICH PROVIDES FOR NOT ALLOWING THE DEPRECIATION CLAIMED ON SUCH ASSETS. HOWEVER, THIS AMENDMENT DOES NOT APPLY TO THE YEAR UNDER 3 ITA NOS.2820 & 2821/PUN/2016 CONSIDERATION. DISTINGUISHING THE JUDGEMENT OF THE HONBLE APEX COURT IN THE CASE OF ESCORTS LTD. 199 ITR 43, THE CIT(A) ALLOWED THE GROUND RAISED BY THE ASSESSEE AS PER DISCUSSION GIVEN IN PARA 5 OF HIS ORDER. FOR THE SAKE OF COMPLETENESS, THE SAID PARA 5 OF THE ORDER OF THE CIT(A) IS EXTRACTED HEREUNDER :- 5. GROUND NO.1 THIS GROUND RELATES TO ALLOWABILITY OF DEDUCTION IN THE FORM OF DEPRECIATION ON ASSETS ON WHICH DEDUCTION HAS ALREADY BEEN CLAIMED AT THE TIME OF PURCHASE AS APPLICATION OF INCOME. FIRST THE DEDUCTION WAS CLAIMED ON THE GROUND OF APPLICATION OF INCOME WHEN THE ASSETS WERE PURCHASED AND THEREAFTER DEDUCTION ON ACCOUNT OF DEPRECIATION ON THOSE ASSETS DURING THE YEARS UNDER CONSIDERATION. WHILE ADJUDICATING THE ISSUE, THE A.O. HAS APPLIED THE RATIO LAID DOWN IN THE DECISIONS CITED (SUPRA), HOWEVER, THE SAID RULINGS CANNOT BE APPLIED IN THE IMPUGNED CASE ON THE FOLLOWING GROUNDS : (I) THE DECISION OF HONBLE SUPREME COURT RENDERED IN THE CASE OF ESCORT LTD. WAS WITH REFERENCE TO APPLICABILITY OF SECTION 35 OF I.T. ACT AND NOT WITH REFERENCE TO SECTION 11, 12 OR 13 OF I.T. ACT. (II) THERE ARE PLETHORA OF CASE LAWS, WHICH DEALT THE ISSUE WITH REFERENCE TO CHARITABLE TRUST AND DECIDED THE ISSUE OF DOUBLE DEDUCTION AGAINST THE DEPARTMENT. THESE ARE AS UNDER : (E) CIT V. INSTITUTE OF BANKING PERSONNEL SELECTION (IBPS) (2003) 264 ITR 110 (BOM). (F) G.K.R. CHARITIES V. DEPUTY DIRECOTR OF IT (EXEMPTIONS)-I (2012) 051 SOT 0538 (CHEN TRIB). (G) CIT V. SOCIETY OF THE SISTERS OF ST. ANNE (1984) 146 ITR 28 (KAR). (H) CIT V. RAIPUR POLLOTTINE SOCIETY (1989) 180 ITR 579 (MP). (I) CIT V. SHETH MANILAL RANCHHODDAS VISHRAM BHAVAN TRUST (1992) 198 ITR 598 (GUJ). (K) CIT V. TINY TOTS EDUCATION SOCIETY (2011) 330 ITR 21 (P&H). (L) CIT V. RAO BAHADUR CALAVALA CUNNAN CHETTY CHARITIES (1982) 135 ITR 485 (MAD.). (M) COMMISSIONER OF INCOME TAX V. BHORUKHA PUBLIC WELFARE TRUST (1999) 240 ITR 513 (CAL.). (III) BY FINANCE ACT, 2014, W.E.F. 1.4.2015, A NEW SUB-SECTION (6) HAS BEEN INSERTED IN SECTION 11, WHEREIN, IT HAS BEEN PROVIDED THAT ONCE DEDUCTION HAS BEEN CLAIMED ON ACCOUNT OF 4 ITA NOS.2820 & 2821/PUN/2016 APPLICATION OF INCOME AT THE OCCASION OF PURCHASE OF THE ASSETS, FURTHER DEDUCTION WILL NOT BE ALLOWED IN THE FORM OF DEPRECIATION ON THE SAME ASSETS, HOWEVER, THE NEW INSERTED CLAUSE IS OPERATIONAL WITH PROSPECTIVE EFFECT ONLY. HENCE, CONSIDERING THE ABOVE FACTS AND LEGAL POSITION ON THIS ISSUE, GROUND NO.1 IS ALLOWED. 6. ON HEARING THE LD. DR FOR THE REVENUE ON THIS ISSUE AND ALSO ON PERUSAL OF THE SAID ORDER OF THE CIT(A) IN GENERAL AND PARA 5 IN PARTICULAR, WE ARE OF THE OPINION THAT THE ABOVE FINDING OF THE CIT(A) ON THE ISSUE UNDER CONSIDERATION IS FAIR AND REASONABLE AND IT DOES NOT CALL FOR ANY INTERFERENCE IN BOTH THE ASSESSMENT YEARS. 7. IN THE RESULT, BOTH THE APPEALS FILED BY THE REVENUE ARE DISMISSED. ORDER PRONOUNCED ON 04 TH DAY OF JANUARY, 2019. SD/- SD/- ( /VIKAS AWASTHY) ( . /D. KARUNAKARA RAO) / JUDICIAL MEMBER / ACCOUNTANT MEMBER / PUNE; / DATED : 04 TH JANUARY, 2019. SUJEET / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT. 2. / THE RESPONDENT. 3. THE CIT(A)-10, PUNE. 4. THE PR. CCIT, PUNE. 5. , , , / DR, ITAT, A BENCH, PUNE. 6. / GUARD FILE. / BY ORDER, // TRUE COPY // SENIOR PRIVATE SECRETARY , / ITAT, PUNE.