DDIT, CHENNAI V. Lakshmi Saraswathi Educational Trust, CHENNAI

ITA 452/CHNY/2014

• Counselvise Citation: [2014] 120 COUNSELVISE.COM (IT) 7111 (ITAT-CHENNAI)
• Duration Of Justice: 5 month(s) 17 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 08-08-2014
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: B
• Next Hearing Date: 04-08-2014
• Assessment Year: 2010-2011
• Appeal Filed On: 20-02-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: ALAMELU LAKSHMINARAYANAN JDIE
• Assessee Lawyers: A S SRIRAMAN
• Keywords: Business income; Depreciation; Charitable institution
• Section: 143(3); 11

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL B BENCH, CHENNAI . , . . , ! ' BEFORE SHRI A.MOHAN ALANKAMONY, ACCOUNTANT MEMBER & SHRI S.S. GODARA, JUDICIAL MEMBER ./ I.T.A. NO.452/MDS/2014. ( / ASSESSMENT YEAR : 2010-2011) THE DEPUTY DIRECTOR OF INCOME TAX (EXEMPTIONS -1), M.G. ROAD, CHENNAI 600 034. ( #$ /APPELLANT) VS M/S. LAKSHMI SARASWATHI EDUCATIONAL TRUST, NO.621, 1 ST FLOOR SIRE MANSION, ANNA SALAI, THOUSAND LIGHTS, CHENNAI 600 006. [PAN: AAATL0364N] ( %&#$ /RESPONDENT) / APPELLANT BY : SMT. ALAMELU LAKSHMINARAYANAN, JDI(E) / RESPONDENT BY : SHRI. A.S. SRIRAMAN, ADVOCATE /DATE OF HEARING : 04.08.2014. ! /DATE OF PRONOUNCEMENT : 8.08.2014. ' / O R D E R PER S.S. GODARA, JUDICIAL MEMBER THIS REVENUES APPEAL FOR ASSESSMEN T YEAR 2010-11; EMANATES FROM ORDER DATED 10.10.2013 PASSED BY THE COMMISSIONER OF INCOME TAX (APPEALS)-VII, CHENNAI IN ITA NO.116/201 3-14 IN I.T.A.NO.452/MDS/2014. :- 2 -: PROCEEDINGS UNDER SECTION 143(3) OF THE INCOME TAX ACT 1961 [IN SHORT THE ACT]. 2. THE REVENUES SOLE GROUND CHALLENGES THE CIT(A)S ORDER DELETING DISALLOWANCE ON DEPRECIATION OF E60,14,349 /- MADE BY THE ASSESSING OFFICER IN ASSESSMENT ORDER DATED 25.03.2 013. 3. THE ASSESSEE IS A REGISTERED CHARITABLE TRUST SINC E 05.11.1992. IT HAD FILED ITS RETURN ON 19.4.2011 ADMITTING GROSS RECEIPTS OF E6,78,61,520/- AND EXCESS APPLICATION OF INCOME O F E3,30,238/-. IN SCRUTINY, THE ASSESSING OFFICER WAS OF THE VIEW T HAT WHEN ENTIRE EXPENDITURE OF ASSETS COST WAS ALLOWED AS APPLICA TION OF INCOME U/S. 11, DEPRECIATION CLAIMED OF E60,14,349/- QUA VERY ASSETS AMOUNTED TO A CASE OF DOUBLE DEDUCTION. IN OTHER WORDS, HE OBS ERVED THAT THE ASSESSEES CLAIM FOR DEPRECIATION IS NOT PERMISSIBL E FROM BUSINESS INCOME WHEN IT RELATES TO ASSETS WHOSE COST STOOD C LAIMED AS APPLICATION U/S. 11 OF THE ACT. ACCORDINGLY, HE DISALLOWED/ADDED THIS SUM OF E60,14,349/-. 4. IN ASSESSEES APPEAL, THE CIT(A) HAS DELETED THE DI SALLOWANCE AS UNDER:- I HAVE GONE THROUGH THE VIEW OF THE ASSESSING OFFI CER AND THE ABOVE DECISIONS AND ALSO A DECISION OF THE INCOME T AX APPELLATE TRIBUNAL, A BENCH, CHENNAI IN THE CASE OF THE ITO , COMPANY WARD I.T.A.NO.452/MDS/2014. :- 3 -: I VS. M/S. CMS EDUCATIONAL & CHARITABLE TRUST, ITA NO.2261/MDS/2012 IN THE CITED DECISION, THE HONBL E TRIBUNAL HAS CONSIDERED THE DECISION GIVEN BY THE HONBLE KERALA HIGH COURT IN THE CASE OF LISSIE MEDICAL INSTITUTIONS, HOLDING DEPREC IATION WAS NOT AVAILABLE TO CHARITABLE TRUSTS ON ASSETS CONSIDERED FOR APPLICATION OF INCOME. HOWEVER, THE HONBLE TRIBUNAL FOLLOWED A D ECISION GIVEN BY THE HONBLE SUPREME COURT IN THE CASE OF CIT VS. VE GETABLE PRODUCTS 88ITR 192 AND STATED THAT IN CASE OF DIVERGENT JUDI CIAL PRECEDENTS, THE ONE WHICH FAVOURS THE ASSESSEE HAS TO BE ADOPTE D AND ALLOWED THE CLAIM OF THE ASSESSEE TRUST FOR DEPRECIATION. RESPECTFULLY FOLLOWING THE ABOVE DECISIONS, I HOLD THAT THE APPELLANT IS ENTITLED FOR DEPRECATION ON ASSETS PURCHASED EVE N THOUGH THE COST OF ASSETS WAS CONSIDERED AS APPLICATION OF INCOME A ND DIRECT THE ASSESSING OFFICER TO ALLOW DEPRECIATION OF E60,14,3 49/-. THEREFORE, THE REVENUE IS IN APPEAL. 5. WE HAVE HEARD BOTH SIDES AND PERUSED THE CASE FILE. ADMITTEDLY, THE CIT(A) HAS FOLLOWED ORDER OF THE T RIBUNAL HOLDING THAT A CLAIM OF DEPRECIATION ALIKE THE CASE INVOLVED HER EIN IS ALLOWABLE IN CASE OF A CHARITABLE TRUST WHO HAS INCLUDED ASSETS IN APPLICATION/EXEMPTION U/S.11A OF THE ACT. THE CO-O RDINATE BENCH HAS FOLLOWED THE CASE LAW OF VEGETABLE PRODUCTS (SUPRA) TO CONCLUDE THAT IN CASE OF DIVERGENT JUDICIAL PRECEDENTS, THE ONE F AVOURING THE ASSESSEE HAS TO BE ADOPTED. ON BEING GRANTED OPPORT UNITY, THE REVENUE NEITHER POINTS OUT ANY DISTINCTION ON FACTS NOR REFERS TO ANY JUDGMENT OF THE HONBLE JURISDICTIONAL HIGH COURT. IN THESE CIRCUMSTANCES, WE AFFIRM CIT(A) FINDINGS UNDER CHA LLENGE. I.T.A.NO.452/MDS/2014. :- 4 -: 6. THE REVENUE APPEAL IS DISMISSED. ORDER PRONOUNCED ON FRIDAY, THE 8TH OF AUGUST, 2014, AT CHENNAI. SD/- SD/- ( . ) (A.MOHAN ALANKAMONY) / ACCOUNTANT MEMBER ( . . ) (S.S. GODARA) ! / JUDICIAL MEMBER '# /CHENNAI, $% /DATED: 08.08.2014. KV %& '( )( /COPY TO: 1. * APPELLANT 2. / RESPONDENT 3. + ( )/CIT(A) 4. + /CIT 5. (,- . /DR 6. -/ 0 /GF.