ITO, Ambala V. M/s Shree Ram Swarup Memorial Trust, Ambala City

ITA 408/CHANDI/2011

• Counselvise Citation: 40821514 RSA 2011
• Duration Of Justice: 10 month(s) 24 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 13-03-2012
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Next Hearing Date: 13-03-2012
• Assessment Year: 2008-2009
• Appeal Filed On: 19-04-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: JYOTI KUMARI
• Keywords: Capital asset; Depreciation; Charitable institution; Cost of acquisition
• Section: 12A; 11

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL CHANDIGARH BENCHES A CHANDIGARH BEFORE SHRI H.L.KARWA, HON'BLE, VICE PRESIDENT AND SHRI MEHAR SINGH, ACCOUNTANT MEMBER ITA NO. 408/CHD/2011 ASSESSMENT YEAR: 2008-09 THE ITO, WARD-1, VS M/S SHREE RAM SWARUP MEMORIAL TRUST, AMBALA AMBALA CITY PAN NO. AACTS3665D (APPELLANT) (RESPONDENT) APPELLANT BY : SMT. JYOTI KUMARI, CIT DR RESPONDENT BY : SHRI ASHOK GOYAL DATE OF HEARING : 13.03.2012 DATE OF PRONOUNCEMENT : 13.03.2012 ORDER PER H.L.KARWA, VP THIS APPEAL FILED BY THE REVENUE IS DIRECTED AGAINS T THE ORDER OF CIT(A), PANCHKULA DATED 15.2.2011 RELATING TO ASSES SMENT YEAR 2008-09. 2. THE ONLY EFFECTIVE GROUND RAISED BY THE REVENUE IN THIS APPEAL READS AS UNDER:- WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES OF T HE CASE, THE LD. CIT(A) HAS ERRED IN ALLOWING DEPRECIA TION OF RS. 1,08,39,033/- TO THE ASSESSEE TRUST AS APPLI CATION OF INCOME EVEN WHEN THE ENTIRE COST OF THE RELEVANT ASSETS HAS ALREADY BEEN CLAIMED AND ALLOWED AS APPLICATION OF INCOME IN THE YEAR OF ACQUISITION IT SELF. 2 3. THE BRIEF FACTS EMERGING FROM THE ORDERS OF LOWE R AUTHORITIES IN RELATION TO THE ISSUE IN HAND IS THAT THE ASSESSEE IS A CHARITABLE INSTITUTION REGISTERED U/S 12A OF THE INCOME TAX ACT, 1961 (IN SHORT 'THE ACT'), THEREFORE, ITS INCOME HAS TO BE ASSESSED AS PER PROVISIONS OF THE SECTIONS 11 TO 13 OF THE ACT. IN ITS INCOME & EXPENDITURE ACCOUNT ATTACHED WITH THE RETURN, THE ASSESSEE, INTER ALIA HAS CLAIMED DEPRECIATION ON VA RIOUS FIXED ASSETS AS UNDER:- DETAIL OF FIXED ASSETS DEPRECIATION CLAIMED (RS.) HOSTEL BUILDING 10,38,001 BUSES 8,25,386 OTHER ASSETS 37,85,644 BUILDING 51,90,003 TOTAL 1,08,39,033 THE ASSESSING OFFICER OPINED THAT THE DEPRECIATION IS A NOTIONAL EXPENDITURE ALLOWABLE IN THE CASE OF ASSESSEES HAVING INCOME FR OM BUSINESS & PROFESSION. HE FURTHER STATED THAT DEPRECIATION IS NOT A REAL OUT GO FROM THE RECEIPTS FOR MAKING ELIGIBLE EXPENDITURE IN THE CASE OF THE ASSE SSEE, SURPLUS OF THE INCOME OVER EXPENDITURE REQUIRES TO BE DETERMINED SO AS TO ASCERTAIN THE TAXABLE SURPLUS AFTER ALLOWING EXEMPTION U/S 11 OF THE ACT. AS PER THE ASSESSING OFFICER, THE COST OF ACQUISITION OF THE FIXED ASSET S IS BEING CLAIMED AND IS ALLOWED AS APPLICATION OF INCOME IN THE YEARS OF AC QUISITION THEREOF. THEREFORE, SINCE WHOLE OF THE AMOUNT HAS ALREADY BE EN ALLOWED AS EXPENDITURE, THE DEPRECIATION THEREON AMOUNTS TO A DOUBLE DEDUCTION FOR WHICH THERE IS NO SPECIAL PROVISION IN THE ACT. TH E ASSESSING OFFICER RELIED 3 UPON THE DECISION OF HON'BLE SUPREME COURT IN THE C ASE OF ESCORTS LTD V UNION OF INDIA, 199 ITR 43 IN WHICH HON'BLE SUPREME COURT HAS RULED THAT THERE IS A FUNDAMENTAL, THOUGH UNWRITTEN AXIOM THAT NO LEGISLATURE COULD HAVE AT ALL INTENDED A DOUBLE DEDUCTION IN REGARD T O THE SAME BUSINESS OUTGOING. AND IF IT IS INTENDED, IT WILL BE CLEARL Y EXPRESSED. THE ASSESSING OFFICER MADE AN ADDITION OF RS. 1,08,39,033/- TO TH E INCOME OF THE ASSESSEE ON ACCOUNT OF DISALLOWANCE OF DEPRECIATION. 4. ON APPEAL, THE CIT(A) DELETED THE IMPUGNED DISAL LOWANCE OBSERVING AS UNDER:- 4. I HAVE CAREFULLY GONE THROUGH THE FACTS OF THE CASE AND THE SUBMISSION MADE BY THE APPELLANT. IT IS SEEN T HAT IN ASSESSEES OWN CASE IN THE ASSESSMENT YEAR 2007-08, IT HAS BEEN HELD, RELYING UPON THE DECISION OF HON'BLE P&H HIGH COURT IN THE CASE OF MARKET COMMITTEE, PIP LI 45 DTR 381 THAT THE DEPRECIATION IS ALLOWABLE ON CAPITAL ASSETS FROM THE INCOME OF THE CHARITABLE TR UST FOR DETERMINING THE QUANTUM OF FUNDS WHICH HAVE TO BE APPLIED FOR THE PURPOSE OF THE TRUST IN TERMS OF SE CTION 11 OF THE ACT. THE ADDITION OF RS. 1,08,39,033/- BY WAY OF DISALLOWANCE OF DEPRECIATION IS DELETED. 5. WE HAVE HEARD THE RIVAL SUBMISSIONS AND HAVE ALS O PERUSED THE MATERIALS AVAILABLE ON RECORD. WE FIND THAT A SIMIL AR ISSUE CAME UP FOR CONSIDERATION BEFORE B BENCH OF THIS TRIBUNAL IN ASSESSEES CASE IN ITA NO. 188/CHD/2011 RELATING TO ASSESSMENT YEAR 2007-08. THE TRIBUNAL RELYING ON THE JUDGMENT OF THE HON'BLE JURISDICTIONAL HIGH COU RT IN CIT V MARKET COMMITTEE, PIPLI (2010) 45 DTR (P&H) 381 DECIDED TH E ISSUE IN FAVOUR OF 4 THE ASSESSEE. THE RELEVANT OBSERVATION OF THE TRIB UNAL DATED 30.3.2011 IN ASSESSEES CASE FOR ASSESSMENT YEAR 2007-08, READS AS UNDER:- 4. WE HAVE HEARD BOTH THE PARTIES. THE SHORT ISSUE IN BOTH THE APPEALS IS WHETHER DEPRECIATION CLAIMED BY THE ASSESSEE AND ALLOWED BY THE DEPARTMENT CAN BE TREATED AS APP LICATION OF INCOME U/S 11 OF THE I-T ACT. FOLLOWING THE DECI SION OF THE HON'BLE JURISDICTIONAL HIGH COURT IN CIT V. MARKET COMMITTEE, PIPLI, 45 DTR (P & H) 381, THE LD. CIT(A ) HAS HELD THAT THE DEPRECIATION ALLOWED BY THE ASSESSEE IS LIABLE TO BE TREATED AS APPLICATION OF INCOME. PARA 3.3 OF THE APPELLATE ORDER PASSED BY THE LD. CIT(A) IN THIS BE HALF IN THE CASE OF M/S MATA SUDERSHAN TILAK RAJ DHAWAN EDUCATI ONAL TRUST, AMBALA CANTT READS AS UNDER: I HAVE CAREFULLY CONSIDERED THE SUBMISSIONS MADE B Y THE APPELLANT AND THE REASONING GIVEN BY THE AO WHI LE DISALLOWING THE CLAIM OF DEPRECIATION BY THE APPELL ANT AND FIND MERIT IN THE SUBMISSIONS MADE BY THE APPELLANT. THE HON'BLE PUNJAB & HARYANA HIGH COURT IN THE CASE OF MARKET COMMITTEE, PIPLI, 45 DTR 381 HAVE HELD THAT THE DEPRECIATION IS ALLOWABLE ON CAP ITAL ASSETS FROM THE INCOME OF THE CHARITABLE TRUST FOR DETERMINING THE QUANTUM OF FUNDS WHICH HAVE TO BE APPLIED FOR THE PURPOSES OF THE TRUST IN TERMS OF SECTION 11 OF THE ACT. RESPECTFULLY FOLLOWING THE DECISION OF HON'BLE PUNJAB & HARYANA HIGH COURT AND THE ADDITION MADE BY THE AO AMOUNTING TO RS. 1,16,34,123/- BY WAY OF DISALLOWANCE OF DEPRECIATIO N IS DELETED. THIS GROUND OF APPEAL IS ALLOWED. 5. THE APPEAL BY SHRI RAM SWARUP MEMORIAL TRUST, AMBALA CANTT HAS ALSO BEEN ALLOWED BY THE LD. CIT(A ) WITH SIMILAR OBSERVATIONS AS AFORESAID. 6. WE HAVE HEARD BOTH THE PARTIES. AT THE TIME OF H EARING, THE LD. DR COULD NOT BRING TO OUR NOTICE ANY DECISI ON EITHER BY A LARGER BENCH OF THE HON'BLE JURISDICTIONAL HIG H COURT OR THE HON'BLE SUPREME COURT OVER-RULING THE JUDGME NT IN CIT V. MARKET COMMITTEE, PIPLI (SUPRA). THE AFORESA ID JUDGMENT RENDERED BY THE HON'BLE JURISDICTIONAL HIG H COURT IS BINDING ON THIS TRIBUNAL AS ALSO ON THE LD. CIT( A). WE, THEREFORE, DO NOT FIND ANY INFIRMITY IN THE ORDER O F THE LD. CIT(A). HIS ORDERS IN BOTH THE APPEALS ARE CONFIRME D. BOTH THE APPEALS FILED BY THE DEPARTMENT ARE DISMISSED. 5 6. THERE IS NO MATERIAL CHANGE IN THE FACTS IN THIS YEAR AS COMPARED TO THE FACTS OF THE CASE FOR ASSESSMENT YEAR 2007-08. IN THE CASE OF MARKET COMMITTEE, PIPLI (SUPRA), THE HON'BLE JURISDICTIONA L HIGH COURT HELD THAT DEPRECIATION IS ALLOWABLE ON CAPITAL ASSETS FROM IN COME OF CHARITABLE TRUST FOR DETERMINING THE QUANTUM OF FUNDS WHICH HAVE TO BE APPLIED FOR THE PROPOSES OF THE TRUST IN TERMS OF SECTION 11. RESPECTFULLY FOLLOWING THE DECISION OF THE TRIBUNAL DATED 30.3.2011 RELATING TO ASSESSMENT YEA R 2007-08 AND THE DECISION OF THE HON'BLE JURISDICTIONAL HIGH COURT IN THE CASE OF MARKET COMMITTEE, PIPLI (SUPRA), WE DO NOT SEE ANY VALID G ROUND IN INTERFERING WITH THE ORDER OF CIT(A) ON THIS ISSUE. CONSEQUENTLY, W E DISMISS THE GROUND OF APPEAL OF THE REVENUE. 7. IN THE RESULT, APPEAL IS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON THIS 13 TH DAY OF MARCH, 2012. SD/- SD/- (MEHAR SINGH) (H.L.KARWA) ACCOUNTANT MEMBER VICE PRESIDENT DATED : 13 TH MARCH, 2012 RKK COPY TO: 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT 4. THE CIT(A) 5. THE DR