DDIT(E), Bangalore V. Karnataka State Muslim Federation, Bangalore

ITA 365/BANG/2014

• Counselvise Citation: [2015] 140 COUNSELVISE.COM (IT) 86000 (ITAT-BANGALORE)
• Duration Of Justice: 9 month(s) 23 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 09-01-2015
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Assessment Year: 2009-2010
• Appeal Filed On: 17-03-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: C H SUNDAR RAO CITI
• Assessee Lawyers: C R NULVI
• Keywords: Depreciation; Charitable institution; Capital expenditure
• Section: 143(3); 32; 263

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL A BENCH : BANGALORE BEFORE SHRI N.V. VASUDEVAN, JUDICIAL MEMBER AND SHRI ABRAHAM P. GEORGE, ACCOUNTANT MEMBER ITA NO. 365/BANG/ 2014 ASSESSMENT YEAR : 2009-10 THE DEPUTY DIRECTOR OF INCOME TAX (E), CIRCLE 17(1), BANGALORE. VS. KARNATAKA STATE MUSLIM FEDERATION, NO.22/1, ARABIC COLLEGE POST, NAGAWARA, BANGALORE 560 045. PAN : AAATK 5933C APPELLANT RESPONDENT APPELLANT BY : SHRI C.H. SUNDAR RAO, CIT-I (DR) RESPONDENT BY : SHRI C.R. NULVI, C.A. DATE OF HEARING : 26.11.2014 DATE OF PRONOUNCEMENT : 09.01.2015 O R D E R PER N.V. VASUDEVAN, JUDICIAL MEMBER THIS APPEAL BY THE REVENUE IS AGAINST THE ORDER DATED 29.10.2013 OF THE CIT(APPEALS), MYSORE RELATING TO ASSESSMENT YEA R 2009-10. 2. THE ASSESSEE IS AN AOP (TRUST). IT FILED RETURN OF INCOME FOR THE AY 2009-10 DECLARING NIL INCOME. THE ORDER OF ASSESSM ENT WAS COMPLETED U/S. 143(3) OF THE ACT DATED 28.11.2011. THE CIT, IN EXERCISE OF HIS POWERS U/S. 263 OF THE ACT HELD THAT THE AFORESAID ORDER O F THE AO WAS ERRONEOUS ITA NO. 365/BANG/2014 PAGE 2 OF 4 AND PREJUDICIAL TO THE INTERESTS OF REVENUE FOR THE REASON THAT THE ASSESSEE HAD CLAIMED CAPITAL EXPENDITURE OF RS.1,78,87,478 O N ACQUISITION OF DEPRECIABLE ASSETS WHICH WAS CONSIDERED AS APPLICAT ION OF INCOME. ON THE VERY SAME DEPRECIABLE ASSET DEPRECIATION AMOUNTING TO RS.1,13,93,492/- WAS ALSO CONSIDERED AS APPLICATION OF FUNDS TOWARDS THE OBJECTS OF TRUST FOR THE A.Y. 2009-10. ACCORDING TO THE CIT ALLOWING TH E CAPITAL EXPENDITURE ON PURCHASE OF DEPRECIABLE ASSETS AS APPLICATION OF FU NDS FOR CHARITABLE PURPOSE AND AGAIN ALLOWING DEPRECIATION ON THE DEPR ECIABLE ASSETS WOULD AMOUNT TO ALLOWING DOUBLE DEDUCTION AND CONTRARY TO THE DECISION OF THE HONBLE SUPREME COURT IN THE CASE OF ESCORTS LTD. & ANR. V. UOI, 199 ITR 43 WHEREIN IT WAS HELD WHEN DEDUCTION U/S. 35(2)(IV ) IS ALLOWED IN RESPECT OF CAPITAL EXPENDITURE ON SCIENTIFIC RESEARCH, NO D EPRECIATION IS ALLOWABLE U/S. 32 ON THE SAME ASSET. 3. CONSEQUENT TO THE ORDER OF LD. CIT, THE AO PASSE D AN ORDER DATED 15.2.2013 DISALLOWING DEPRECIATION OF ASSETS AMOUNT ING TO RS.1,13,93,492 AND REVISING THE TOTAL INCOME ACCORDINGLY. 4. AGGRIEVED BY THE AFORESAID ORDER, THE AO PREFERR ED APPEAL BEFORE THE CIT(APPEALS). 5. BEFORE THE CIT(APPEALS), IT WAS POINTED OUT THAT AS AGAINST THE ORDER OF CIT PASSED U/S. 263 OF THE ACT DATED 21.12.2012, ASSESSEE PREFERRED APPEAL BEFORE THE TRIBUNAL IN ITA NO.37/BANG/2013 A ND THE TRIBUNAL BY ITS ORDER DATED 09.10.2013 QUASHED THE ORDER OF THE CIT U/S. 263 OF THE ACT. ITA NO. 365/BANG/2014 PAGE 3 OF 4 THE ASSESSEE ACCORDINGLY SUBMITTED THAT ADDITION MA DE BY THE AO CANNOT BE SUSTAINED AS THE VERY BASIS ON WHICH THE AO PASS ED THE ORDER VIZ., ORDER U/S. 263 OF THE ACT BY THE CIT NO LONGER SURV IVED. THE CIT(A) ACCEPTED THE CONTENTION PUT FORTH BY THE ASSESSEE A ND ACCORDINGLY ANNULLED ORDER OF ASSESSMENT PASSED BY THE AO. 6. AGGRIEVED BY THE ORDER OF CIT(APPEALS), REVENUE HAS PREFERRED THE PRESENT APPEAL BEFORE THE TRIBUNAL. THE SUM AND SU BSTANCE OF THE GROUNDS OF APPEAL OF THE REVENUE IS THAT ORDER OF T HE TRIBUNAL QUASHING THE ORDER U/S. 263 OF THE ACT IS NOT CORRECT. IN OUR V IEW, SUCH CONTENTIONS CANNOT BE RAISED IN THIS APPEAL BY THE REVENUE. SI NCE THE ORDER U/S. 263 OF THE ACT HAS BEEN QUASHED BY THE TRIBUNAL, PROCEEDIN GS PURSUANT TO THE ORDER U/S. 263 OF THE ACT CANNOT SURVIVE. ACCORDIN GLY, WE HOLD THAT THE LD. CIT(APPEALS) WAS RIGHT IN ANNULLING THE ORDER OF AS SESSMENT PASSED BY THE AO. 7. IN THE RESULT, APPEAL OF THE REVENUE IS DISMISSED . PRONOUNCED IN THE OPEN COURT ON THIS 9 TH DAY OF JANUARY , 2015 . SD/- SD/- ( ABRAHAM P. GEORGE ) ( N.V. VASU DEVAN ) ACCOUNTANT MEMBER JUDICIAL MEMBER BANGALORE, DATED, THE 9 TH JANUARY, 2015 . /D S/ ITA NO. 365/BANG/2014 PAGE 4 OF 4 COPY TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(A) 5. DR, ITAT, BANGALORE. 6. GUARD FILE BY ORDER ASSISTANT REGISTRAR / SENIOR PRIVATE SECRETARY ITAT, BANGALORE.