National College Council, Trichy V. ACIT, Trichy

ITA 402/CHNY/2010

• Counselvise Citation: [2011] 134 COUNSELVISE.COM (IT) 4811 (ITAT-CHENNAI)
• Duration Of Justice: 1 year(s) 2 month(s) 23 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 24-06-2011
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Next Hearing Date: 15-06-2011
• Assessment Year: 2005-2006
• Appeal Filed On: 01-04-2010
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: V S JAYAKUMAR
• Keywords: Depreciation; Charitable institution
• Section: 12AA; 12; 11

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL BENCH A CHENNAI (BEFORE SHRI ABRAHAM P. GEORGE, ACCOUNTANT MEMBER AND SHRI GEORGE MATHAN, JUDICIAL MEMBER) .. I.T.A. NOS. 402 & 403/MDS/2010 ASSESSMENT YEARS : 2005-06 & 2006-07 M/S NATIONAL COLLEGE COUNCIL, P.B. NO.369, CHATRAM BUS STAND, TEPPAKULAM, TRICHY 620 002. PAN : AAATT6266H (APPELLANT) V. THE ASSISTANT COMMISSIONER OF INCOME TAX, NO.44, WILLIAMS ROAD, CANTONMENT, TIRUCHIRAPALLI 620 001. (RESPONDENT) APPELLANT BY : SHRI V.S. JAYAKUMAR RESPONDENT BY : SHRI SHAJI P. JACOB O R D E R PER ABRAHAM P. GEORGE, ACCOUNTANT MEMBER : IN BOTH THESE APPEALS, GRIEVANCE OF THE ASSESSEE T HAT ALLOWANCE OF DEPRECIATION WAS NOT CONSIDERED IN WOR KING OUT THE UTILIZATION FOR THE PURPOSE OF COMPUTING ITS INCOME , THOUGH THE ASSESSEE WAS REGISTERED UNDER SECTION 12AA OF INCOM E-TAX ACT, 1961 (IN SHORT THE ACT). AS PER THE ASSESSEE, DE PRECIATION OF ASSETS HAD TO BE CONSIDERED AS UTILIZATION OF INCOME. I.T.A. NOS. 402 & 403/MDS/10 2 2. SHORT FACTS APROPOS ARE THAT ASSESSEE HAD, FOR T HE IMPUGNED ASSESSMENT YEARS, CLAIMED DEPRECIATION ON ITS ASSET S AS AN APPLICATION FOR CHARITABLE PURPOSE. AS PER THE ASS ESSING OFFICER, SUCH CLAIM OF DEPRECIATION WAS AGAINST THE PROVISIONS OF THE ACT AND IF ALLOWED WOULD AMOUNT TO DOUBLE DEDUCTION. HE, THER EFORE, DISALLOWED THE CLAIM OF DEPRECIATION FOR THE RESPECTIVE ASSESS MENT YEARS. 3. IN ITS APPEAL BEFORE THE CIT(APPEALS), ARGUMENT OF THE ASSESSEE WAS THAT THE INCOME OF A TRUST REGISTERED UNDER SECTION 12AA OF THE ACT HAD TO BE ARRIVED IN NORMAL COMMERC IAL MANNER AND DEPRECIATION WHICH REPRESENTED WEAR AND TEAR OF ASS ETS WAS DEFINITELY AN EXPENDITURE TO BE ALLOWED AS DEDUCTION. AS PER THE ASSESSEE, IT WAS NOT CORRECT TO SAY THAT CLAIM OF DEPRECIATION W OULD AMOUNT TO DOUBLE DEDUCTION. HOWEVER, LD. CIT(APPEALS) WAS NO T IMPRESSED. ACCORDING TO HIM, DECISIONS OF HON'BLE APEX COURT I N THE CASE OF ESCORTS LTD. V. UNION OF INDIA (199 ITR 43) AND IN THE CASE OF CIT V. HICO PRODUCTS P LTD. (247 ITR 797) WERE IN FAVOUR O F REVENUE. HENCE, HE HELD THAT THE A.O. WAS CORRECT IN DISALLO WING THE DEPRECIATION CLAIM OF THE ASSESSEE. I.T.A. NOS. 402 & 403/MDS/10 3 4. NOW BEFORE US, LEARNED A.R., STRONGLY ASSAILING THE ORDERS OF AUTHORITIES BELOW, SUBMITTED THAT THE ISSUE STOOD D ECIDED IN FAVOUR OF ASSESSEE BY THE DECISIONS OF HON'BLE PUNJAB AND HAR YANA HIGH COURT IN THE CASE OF CIT V. MARKET COMMITTEE, PIPLI (330 ITR 16) AND IN THE CASE OF CIT V. TINY TOTS EDUCATION SOCIETY ( 330 ITR 21) 5. LEARNED D.R. FAIRLY ADMITTED THAT THE ISSUE AS O N DATE WENT IN FAVOUR OF ASSESSEE. 6. WE HAVE PERUSED THE ORDERS AND HEARD THE RIVAL C ONTENTIONS. WE FIND THAT SAME QUESTION HAD COME BEFORE THE HON' BLE PUNJAB AND HARYANA HIGH COURT REFERRED SUPRA. THEIR LORDSHIPS , IN THE CASE OF TINY TOTS EDUCATION SOCIETY (SUPRA), HAD HELD AT PA RA 6 AS UNDER:- 9. IN THE PRESENT CASE, THE ASSESSEE IS NOT CLAIMIN G DOUBLE DEDUCTION ON ACCOUNT OF DEPRECIATION AS HAS BEEN SU GGESTED BY LEARNED COUNSEL FOR THE REVENUE. THE INCOME OF THE ASSESSEE BEING EXEMPT, THE ASSESSEE IS ONLY CLAIMING THAT DEP RECIATION SHOULD BE REDUCED FROM THE INCOME FOR DETERMINING T HE PERCENTAGE OF FUNDS WHICH HAVE TO BE APPLIED FOR TH E PURPOSE OF THE TRUST. THERE IS NO DOUBLE DEDUCTION CLAIMED BY THE ASSESSEE AS CANVASSED BY THE REVENUE. THE JUDGEMENT OF THE H ON'BLE SUPREME COURT IN ESCORTS LTD. [1993] 199 ITR 43 IS DISTINGUISHABLE FOR THE ABOVE REASONS. IT CANNOT B E HELD THAT DOUBLE BENEFIT IS GIVEN IN ALLOWING CLAIM FOR DEPRE CIATION FOR I.T.A. NOS. 402 & 403/MDS/10 4 COMPUTING INCOME FOR PURPOSES OF SECTION 11. THE Q UESTIONS PROPOSED HAVE, THUS, TO BE ANSWERED AGAINST THE REV ENUE AND IN FAVOUR OF THE ASSESSEE. NO OTHER DECISION, WHICH WOULD GO AGAINST ASSESSEE, WAS BROUGHT TO OUR ATTENTION. HENCE, WE ARE OF THE OPINION THAT T HE ASSESSEE HAS TO SUCCEED IN THESE APPEALS. DEPRECIATION HAS TO BE C ONSIDERED FOR THE PURPOSE OF CALCULATING THE INCOME OF THE ASSESSEE E VEN UNDER SECTIONS 11 AND 12 OF THE ACT. 7. IN THE RESULT, BOTH THE APPEALS FILED BY THE ASS ESSEE ARE ALLOWED. THE ORDER WAS PRONOUNCED IN THE COURT ON 24 TH JUNE, 2011. SD/- SD/- (GEORGE MATHAN) (ABRAHAM P. GEORGE) JUDICIAL MEMBER ACCOUNTANT MEMBER CHENNAI, DATED THE 24 TH JUNE, 2011. KRI. COPY TO: (1) APPELLANT (2) RESPONDENT (3) CIT(A), TIRUCHIRAPPALLI (4) CIT-I, TIRUCHY (5) D.R. (6) GUARD FILE