M/s. Manarul Huda Trust, Trivandrum V. The Assistant Director of Income Tax(Exemption) CIT, Trivandrum

ITA 547/COCH/2009

• Counselvise Citation: [2012] 140 COUNSELVISE.COM (IT) 61465 (ITAT-COCHIN)
• Duration Of Justice: 2 year(s) 5 month(s) 8 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 27-04-2012
• Appeal Filed By: Assessee
• Bench Allotted: DB
• Next Hearing Date: 18-04-2012
• Assessment Year: 2005-2006
• Appeal Filed On: 18-11-2009
• Court: TRIBUNAL
• Department Lawyers: VIJAYAPRABHA
• Assessee Lawyers: T M SREEDHARAN
• Keywords: Depreciation; Charitable institution; Cost of acquisition; Capital expenditure

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL COCHIN BENCH, COCHIN BEFORE S/SHRI N.R.S.GANESAN, JM AND B.R.BASKAR AN, AM I.T.A. NOS. 547 & 548 /COCH/2009 ASSESSMENT YEARS : 2005-06 & 2006-07 M/S. MANARUL HUDA TRUST, EMKE MANZIL, KALLATTUMUKKU,MANACAUD, TRIVANDRUM. [PAN: AAATM 6592K] THE ASSISTANT DIRECTOR OF INCOME- TAX(EXEMPTION), TRIVANDRUM. (ASSESSEE-APPELLANT) (REVENUE - RESP ONDENT) ASSESSEE BY SHRI T.M. SREEDHARAN, SR. ADV. REVENUE BY SMT. VIJAYAPRABHA, JR. DR DATE OF HEARING 18/04/2012 DATE OF PRONOUNCEMENT 27/04/2012 O R D E R PER B.R.BASKARAN, ACCOUNTANT MEMBER: THE APPEASL OF THE ASSESSEE ARE DIRECTED AGAINST THE SEPARATE ORDERS DATED 28-08- 2009 PASSED BY THE LD. CIT(A)-I, TRIVANDRUM AND TH EY RELATE TO THE ASSESSMENT YEARS 2005-06 AND 2006-07. THE SOLITARY ISSUE URGED IN T HIS APPEAL IS WHETHER THE LD CIT(A) IS JUSTIFIED IN HOLDING THAT THE ASSESSEE IS NOT ENTIT LED TO CLAIM DEPRECIATION ON THE FIXED ASSETS, WHOSE COST WAS FULLY ALLOWED AS APPLICATION OF INCOME IN THE HANDS OF THE ASSESSEE. 2. AT THE TIME OF HEARING, THE LD COUNSEL FOR T HE ASSESSEE FAIRLY CONCEDED THAT THE IMPUGNED ISSUE IS COVERED AGAINST THE ASSESSEE BY T HE DECISION DATED 26.10.2010 RENDERED BY THE HONBLE JURISDICTIONAL KERALA HIGH COURT IN THE CASE OF LISSIE MEDICAL INSTITUTIONS IN ITA NO.42 OF 2011. IN THAT CASE, THE ASSESSING OFFICER HAD DISALLOWED THE CLAIM OF ITA NOS. 547 & 548/COCH/ 2009 2 DEPRECIATION BY HOLDING THAT THE ASSESSEE IS NOT EN TITLED TO CLAIM DEPRECIATION ON THOSE ASSETS WHOSE COST OF ACQUISITION IS CLAIMED AS APPL ICATION OF INCOME OF THE CHARITABLE TRUST FOR CHARITABLE PURPOSES, AS IT WOULD RESULT IN DOUB LE DEDUCTION OF CAPITAL EXPENDITURE. THE VIEW OF THE AO WAS UPHELD BY THE TRIBUNAL BY FOLLOW ING THE DECISION OF HONBLE SUPREME COURT IN THE CASE OF ESCORTS LTD & OTHERS V S. UNION OF INDIA, REPORTED IN 199 ITR 43. THE ASSESSEE CHALLENGED THE ORDER OF THE T RIBUNAL AND THE HONBLE HIGH COURT UPHELD THE ORDER OF THE TRIBUNAL WITH THE FOLLOWING OBSERVATIONS:- FOR THE FOREGOING REASONS, WE DISPOSE OF THE APPEA L BY CONFIRMING THE ORDER OF THE TRIBUNAL. HOWEVER, AS RIGHTLY POINTED OUT B Y THE COUNSEL FOR THE ASSESSEE THE SYSTEM OF ALLOWING DEPRECIATION WAS FOLLOWED BY THE ASSESSEE FOR SEVERAL YEARS AND IT WAS CONSISTENT WITH THE VIEW TAKEN BY SEVERAL HIGH COURTS IN INDIA IN THE DECISIONS ABOVE CITED. WE F IND FORCE IN THIS CONTENTION BECAUSE ASSESSEE CANNOT BE TAKEN BY SURPRISE BY D ISALLOWING DEPRECIATION WHICH WAS BEING ALLOWED FOR SEVERAL YEARS AND TO D EMAND TAX FOR ONE YEAR AFTER MAKING DIS-ALLOWANCE. WE FEEL ASSESSEE SHOU LD BE ALLOWED TO WRITE BACK DEPRECIATION AND IF DONE THE ASSESSING OFFICER WIL L MODIFY THE ASSESSMENT DETERMINING HIGHER INCOME AND ALLOW RECOMPUTED INC OME WITH THE DEPRECIATION WRITTEN BACK BY THE ASSESSEE TO BE CA RRIED FORWARD FOR SUBSEQUENT YEARS FOR APPLICATION FOR CHARITABLE PU RPOSES. 3. IN THE ABOVE CITED CASE, THE HONBLE HIGH COU RT HAS GIVEN RELIEF WITH REGARD TO THE WRITE BACK OF THE DEPRECIATION. THE LD COUNSEL FOR THE ASSESSEE REQUESTED THE TRIBUNAL TO GIVE SIMILAR DIRECTIONS AS GIVEN BY THE HONBLE HIG H COURT FOR WRITING BACK OF THE DEPRECIATION IN THE INSTANT CASES ALSO. HOWEVER, W E ARE DOUBTFUL WHETHER THE TRIBUNAL IS EMPOWERED TO GIVE ANY SUCH DIRECTION. THE ACCUMULAT ION OF INCOME, AS SUBMITTED BY LD D.R, IS GOVERNED BY THE PROVISIONS OF EXPLANATION 2 TO SEC. 11(1) AND ALSO BY SEC. 11(2) OF THE ACT. IN THE ABOVE CITED CASE, IT IS PERTINE NT TO NOTE THAT THE HONBLE HIGH COURT HAS NOT MODIFIED THE ABOVE SAID PROVISIONS. INSTEAD, I T HAS GIVEN CONCESSION TO THE ASSESSEE, WHICH IN OUR VIEW, IS APPLICABLE TO THAT PARTICULAR ASSESSEE ONLY. THE ITAT, BEING A CREATURE OF STATUTE, IN OUR VIEW, CANNOT ARM ITSELF WITH ANY SUCH POWER, WHICH ARE VESTED WITH THE HIGH COURT. ACCORDINGLY, WE ARE OF THE VI EW THAT THE TRIBUNAL IS NOT ENTITLED TO GIVE ANY SUCH RELIEF AS GIVEN BY THE HIGH COURT, SI NCE THE TRIBUNAL HAS TO ACT WITHIN THE AUTHORITY OF THE PROVISIONS OF THE ACT. ACCORDINGL Y, WE DECLINE TO GIVE ANY SUCH DIRECTION ITA NOS. 547 & 548/COCH/ 2009 3 AS GIVEN BY THE HONBLE HIGH COURT. ACCORDINGLY, W E UPHOLD THE ORDERS OF LD CIT(A) ON THIS ISSUE. 4. IN THE RESULT, BOTH THE APPEALS OF THE ASSESSEE ARE DISMISSED. PRONOUNCED ACCO RDINGLY ON 27-04-2012 SD/- SD/- (N.R.S.GANESAN) (B.R.BASKARAN) JUDICIAL MEMBER ACCOUNTANT MEMBER PLACE: KOCHI DATED: 27TH APRIL, 2012 GJ COPY TO: 1. M/S. MANARUL HUDA TRUST, EMKE MANZIL, KALLATTUMU KKU,MANACAUD, TRIVANDRUM. 2. THE ASSISTANT DIRECTOR OF INCOME-TAX(EXEMPTION), TRIVANDRUM. 3. THE COMMISSIONER OF INCOME-TAX (APPEALS)-I, TRIV ANDRUM. 4. THE COMMISSIONER OF INCOME-TAX, TRIVANDURM. 5. D.R., I.T.A.T., COCHIN BENCH, COCHIN. 6. GUARD FILE . BY ORDER (ASSISTANT REGISTRAR) I.T.A.T, COCHIN