ITO, Yamunanagar V. M/s Guru Nanak Khalsa College, Yamunanagar

ITA 295/CHANDI/2014

• Counselvise Citation: [2014] 140 COUNSELVISE.COM (IT) 77118 (ITAT-CHANDIGARH)
• Duration Of Justice: 2 month(s) 4 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 29-05-2014
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: B
• Assessment Year: 2009-2010
• Appeal Filed On: 25-03-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: MANJIT SINGHDR
• Keywords: Capital asset; Depreciation; Charitable institution
• Section: 143(3); 11

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL CHANDIGARH BENCH B CHANDIGARH BEFORE SHRI T.R.SOOD ACCOUNTANT MEMBER AND MS. SUSHMA CHOWLA, JUDICIAL MEMBER ITA NO.295/CHD/2014 ASSESSMENT YEAR : 2009-10 THE DY. COMMISSIONER OF VS M/S GURU NANAK KHALSA C OLLEGE INCOME TAX, YAMUNA NAGAR. YAMUNA NAGAR CIRCLE, YAMUNA NAGAR. PAN : AAATG0554H (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI MANJIT SINGH,DR RESPONDENT BY : SHRI TEJ MOHAN SINGH DATE OF HEARING : 15.05.2014 DATE OF PRONOUNCEMENT : 29.05.2014 O R D E R PER SUSHMA CHOWLA, JM THE APPEAL BY THE REVENUE IS AGAINST THE ORDER OF T HE COMMISSIONER OF INCOME TAX (APPEALS), PANCHKULA DAT ED 17.01.2014 AGAINST THE ORDER PASSED UNDER SECTION 143(3) OF TH E INCOME-TAX ACT, 1961 ( 'THE ACT' FOR SHORT). 2. THE REVENUE HAS RAISED THE FOLLOWING GROUNDS OF APPEAL : 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E THE LD. CIT(A) HAS ERRED IN DELETING THE ADDITION OF RS.78,35,905/- MADE BY THE A.O. ON ACCOUNT OF DISAL LOWANCE OF DEPRECATION ON THE CAPITAL ASSETS, WHEN THE CAPI TAL EXPENDITURE RELATING TO ACCUSATION OF SUCH ASSETS H AD ALREADY BEEN ALLOWED AS 'APPLICATION OF INCOME' FOR THE PUR POSE OF ALLOWING EXEMPTION U/S 11 OF THE INCOME TAX ACT, 19 61, AS SUCH FURTHER ALLOWING OF DEPRECIATION ON THE ASSETS WOULD AMOUNT TO DOUBLE DEDUCTION FOR THE SAME EXPENDITURE . 2. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E THE LD. CIT(A) IS NOT JUSTIFIED IN ALLOWING THE ASSESSE E'S CLAIM OF DEPRECIATION ON THE VALUE OF SUCH ASSETS, THE EXPEN DITURE OF 2 ACCUSATION OF WHICH HAD ALREADY BEEN TAKEN AS APPLI CATION OF INCOME U/S 11 (L)(A), NOTWITHSTANDING THE FACT THAT IN ORDER TO REFLECT THE TRUE INCOME TO BE AVAILABLE FOR APPLICA TION FOR CHARITABLE PURPOSE, THE ASSESSEE SHOULD WRITE BACK IN THE ACCOUNTS THE DEPRECIATION AMOUNT TO FORM PART OF IN COME TO BE ACCOUNTED FOR APPLICATION FOR CHARITABLE PURPOSE . 3. THE LD. AR FOR THE ASSESSEE AT THE OUTSET POINTE D OUT THAT THE ISSUE IN THE PRESENT APPEAL IS COVERED BY THE RATIO LAID DOWN BY THE HON'BLE PUNJAB & HARYANA HIGH COURT IN CIT VS MARKET COMMIT TEE, PIPLI (2011) 330 ITR 16 (P&H) AND CIT VS TINY TOTS EDUCATIONAL S OCIETY (2011) 330ITR 21 (P&H). IT WAS FURTHER POINTED OUT BY THE LD. AR FOR THE ASSESSEE THAT SIMILAR ISSUE AROSE BEFORE THE TRIBUN AL IN THE CASE OF THE ASSESSEE IN ASSESSMENT YEAR 2006-07 IN ITA 684/CHD/ 2009 AND VIDE ORDER DATED 19.08.2009, THE ISSUE WAS DECIDED IN FAVOUR O F THE ASSESSEE. FURTHER RELIANCE WAS PLACED UPON THE ORDER OF THE T RIBUNAL IN VED PRAKASH MUKAND LAL EDUCATION SOCIETY VS DCIT, YAMUN A NAGAR ITA NO.952/CHD/2011 RELATING TO ASSESSMENT YEAR 2008-09 DATED 25.01.2012. 4. THE LD. DR FOR THE REVENUE PLACED RELIANCE ON TH E ORDERS OF THE AUTHORITIES BELOW. 5. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE RECORD. THE ISSUE ARISING IN THE PRESENT APPEAL IS IN RELATION TO THE CLAIM OF DEPRECIATION ON FIXED ASSETS AMOUNTING TO RS. 78,35 ,905/-. THE ASSESSING OFFICER DURING THE COURSE OF ASSESSMENT P ROCEEDINGS NOTED THAT THE COST OF THE SAID FIXED ASSETS HAD ALREADY BEEN CLAIMED BY THE ASSESSEE AS APPLICATION OF INCOME AND CONSEQUENTLY THE DEPRECIATION CLAIMED ON THE SAID ASSETS WAS NOT ALLOWABLE TO THE ASSESSEE. RELIANCE WAS PLACED BY THE ASSESSEE ON THE RATIO LAID DOWN B Y THE HON'BLE BOMBAY HIGH COURT IN CIT VS INSTITUTE OF BANKING 264 ITR 1 10 (BOM). HOWEVER, THE ASSESSING OFFICER HELD THAT THE ASSESS EE WAS NOT ALLOWABLE 3 TO THE CLAIM OF DEPRECIATION AS THE DEPARTMENT HAD FILED SLP IN OTHER SIMILAR CASES INVOLVING CLAIM OF DEPRECIATION. THE COMMISSIONER OF INCOME TAX (APPEALS) PLACED RELIANCE ON THE RATIO L AID DOWN BY THE HON'BLE PUNJAB & HARYANA HIGH COURT IN CIT VS MARKE T COMMITTEE, PIPLI (SUPRA) WHEREIN THE HON'BLE HIGH COURT HAD DI STINGUISHED THE RATIO LAID DOWN BY THE HON'BLE SUPREME COURT IN ESCORTS L TD. VS UNION OF INDIA 199 ITR 43 (S.C). FOLLOWING THE RATIO LAID D OWN BY THE JURISDICTIONAL HIGH COURT, THE COMMISSIONER OF INCO ME TAX (APPEALS) HELD THE ASSESSEE WAS ENTITLED TO CLAIM OF DEPRECIA TION ON THE FIXED ASSETS, THE COST OF WHICH WAS ALREADY ALLOWED ON TH E APPLICATION OF INCOME. WE FIND THAT SIMILAR ISSUE OF CLAIM OF DEP RECIATION IN THE HANDS OF THE ASSESSEE AROSE BEFORE THE TRIBUNAL IN ASSESS EE'S OWN CASE IN ITA 684/CHD/2009 RELATING TO ASSESSMENT YEAR 2006-07 AN D THE SAID CLAIM WAS ALLOWED IN THE HANDS OF THE ASSESSEE. 6. FURTHER, THE TRIBUNAL IN VED PRAKASH MUKAND LAL EDUCATION SOCIETY VS DCIT, YAMUNA NAGAR (SUPRA) WHILE ADJUDIC ATING THE SIMILAR ISSUE OF ALLOWABILITY OF CLAIM OF DEPRECIATION IN V IEW OF THE RATIO LAID DOWN BY THE HON'BLE PUNJAB & HARYANA HIGH COURT IN CIT VS MARKET COMMITTEE, PIPLI (SUPRA) HELD AS UNDER : 9. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE RECORD. THE ASSESSEE-SOCIETY IS AN EDUCATION SOCIE TY AND IS RUNNING SETH JAI PRAKASH MUKAND LAL INSTITUTE & TEC HNOLOGY FOR B.TECH., MBA, MCA AND M.TECH. DEGREES IN AFFILIATIO N WITH KURUKSHETRA UNIVERSITY. DURING THE YEAR UNDER CONS IDERATION THE ASSESSEE HAD FILED RETURN OF INCOME IN WHICH GR OSS RECEIPTS WERE DECLARED AT RS.15,52,33,648/-. AGAINST THE SA ID RECEIPTS, THE ASSESSEE HAD CLAIMED EXPENDITURE AS PER ITS INC OME AND EXPENDITURE ACCOUNT, INCLUDING DEPRECIATION AT RS.9 ,06,31,316/-. THE ASSESSEE HAD FURTHER CLAIMED THE SET OFF OF APP LICATION OF INCOME BY WAY OF ADDITIONS TO FIXED ASSETS TOTALING RS.3,26,22,0950/-. THE ASSESSEE HAD ALSO CLAIMED N ET ADDITIONS TO FDRS DURING THE YEAR AT RS.6,30,42,237/- AND AFT ER SET OFF OF LOAN AGAINST FDRS NET AMOUNT CLAIMED WAS RS.6,00,42 ,237/-. IN TOTALITY, THE EXPENDITURE AND APPLICATION OF INCOME WAS CLAIMED AT RS.18,32,95,603/- I.E. MORE THAT THE GROSS RECEI PTS OF THE ASSESSEE FOR THE FINANCIAL YEAR. ADMITTEDLY, THE E XPENDITURE CLAIMED BY THE ASSESSEE IN ITS INCOME AND EXPENDITU RE ACCOUNT 4 WAS ALLOWED BY THE ASSESSING OFFICER, EXCEPT FOR TH E CLAIM OF DEPRECIATION. THE AUTHORITIES BELOW WERE OF THE VI EW THAT THE DEPRECIATION ON ASSETS, VALUE OF WHICH HAVE BEEN AL LOWED AS APPLICATION OF INCOME AMOUNTS TO DOUBLE DEDUCTION A ND AS SUCH THE SAID DEPRECIATION IS NOT ALLOWABLE TO THE ASSES SEE. 10. WE FIND THAT SIMILAR ISSUE OF ALLOWANCE OF DEPR ECIATION ON ASSETS, VALUE OF WHICH HAS ALSO BEEN CONSIDERED AS APPLICATION OF INCOME IN THE YEAR OF PURCHASE OF THE ASSETS WAS BEFORE THE HON'BLE PUNJAB & HARYANA HIGH COURT IN CIT VS. MARK ET COMMITTEE PIPLI [ITA NO.535 OF 2009 (P&H)] AND CIT VS. MARKET COMMITTEE, KARNAL [ITA NOS. 237,238,239 & 2 45 OF 2010(P&H)]. COPIES OF THE JUDGMENT ARE PLACED ON R ECORD BY THE ASSESSEE. WE FIND THAT THE JURISDICTIONAL HIGH COURT IN THE CASE OF VARIOUS MARKET COMMITTEES HAD HELD THAT THE RE IS NO CLAIM OF DOUBLE DEDUCTION ON ACCOUNT OF DEPRECIATIO N AS SUGGESTED BY THE REVENUE. THE HON'BLE HIGH COURT H ELD THAT THE INCOME OF THE ASSESSEE BEING EXEMPT, THE CLAIM OF T HE ASSESSEE WAS THAT DEPRECIATION SHOULD BE REDUCED FROM THE IN COME FOR DETERMINING THE PERCENTAGE OF FUNDS WHICH WERE TO B E APPLIED FOR THE PURPOSE OF THE TRUST. FOLLOWING THE ABOVE SAID PRINCIPLE WE ARE OF THE VIEW THAT THE ASSESSEE IS ENTITLED TO THE CLAIM OF DEPRECIATION AT RS.2,16,39,334/-. 7. FOLLOWING THE PARITY OF REASONING, WE UPHOLD THE ORDER OF COMMISSIONER OF INCOME TAX (APPEALS) IN ALLOWING DE PRECIATION OF ASSETS, COST OF WHICH HAD ALREADY BEEN ALLOWED AS A PPLICATION OF INCOME UNDER SECTION 11 OF THE ACT IN THE HANDS OF THE ASS ESSEE SOCIETY. HOWEVER, THE ASSESSEE IS ENTITLED TO CLAIM OF DEPRE CIATION OF SUCH ASSETS IN VIEW OF THE RATIO LAID DOWN BY THE JURISDICTIONA L HIGH COURT. FOLLOWING THE SAME, WE DISMISS GROUNDS OF APPEAL RA ISED BY THE REVENUE. 8. IN THE RESULT, APPEAL OF THE REVENUE IS DISMISSE D. ORDER PRONOUNCED IN THE OPEN COURT ON 29 TH MAY, 2014. SD/- SD/- ( T.R.SOOD) (SUSHMA CHOWLA) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED: 29TH MAY, 2014 POONAM COPY TO: THE APPELLANT, THE RESPONDENT, THE CIT(A), THE CIT, DR. ASSISTANT REGISTRAR ITA T,CHD