DCIT, Bangalore V. Sri. Adichunchanagiri Shikshana Trust, Mandya

ITA 594/BANG/2015

• Counselvise Citation: [2015] 121 COUNSELVISE.COM (IT) 1532 (ITAT-BANGALORE)
• Duration Of Justice: 7 month(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 10-11-2015
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Next Hearing Date: 20-10-2015
• Assessment Year: 2008-2009
• Appeal Filed On: 09-04-2015
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SUDHAK AR RAO I
• Assessee Lawyers: L BHARATH
• Keywords: Depreciation; Charitable institution
• Section: 260A; 12A; 6; 11

Judgement Text

IN THE INCOME TAX APPELLATE TRI BUNAL BANGALORE BENCH A, BANGALORE BEFORE SMT ASHA VIJAYARAGHAVAN, JUDICIAL MEMBER AND SHRI ABRAHAM P GEORGE, ACCOUNTANT MEMBER ITA NO.594(B)/2015 (ASSESSMENT YEAR : 2008-09) THE DEPUTY COMMISSIONER OF INCOME-TAX, CIRLE-2(2), BANGALORE APPELL ANT VS SRI ADICHUNCHUNAGIRI SHIKSHANA TRUST, ADICHUNCHUNAGIRI KSHETRA, NAGAMANGALA TALUK, MANDYA RESPONDENT PAN NO.AAATS 3584P REVENUE BY : SHRI SUDHAK AR RAO, CIT-DR-I ASSESSEE BY : SHRI L. BH ARATH, CA DATE OF HEARING : 20-10-2015 DATE OF PRONOUNCEMENT : 10 -11-2015 O R D E R PER SMT ASHA VIJAYARAGHAVAN, JM: THIS APPEAL HAS BEEN FILED BY THE REVENUE AGAINST A N ORDER DATED 04- 12-2014 OF CIT(A), MYSORE FOR THE ASSESSMENT YEAR 2 008-09. 2. IN THIS CASE, THE ASSESSEE HAD FILED ITS RETURN OF INCOME ON 23-10- 2008 DECLARING TOTAL INCOME AS NIL . SUBSEQUENTLY, THE CASE WAS SELECTED FOR SCRUTINY. ITA NO.594(B)/15 2 3. THE FACTS OF THE CASE ARE THAT THE ASSESSEE A CH ARITABLE TRUST ENJOYING REGISTRATION U/S 12A OF THE IT ACT. FOR THE IMPUGNED ASSESSMENT YEAR, THE ASSESSEE HAD A GROSS RECEIPT OF RS.143.49 CRORES. HAVING SPENT RS.120.12 CRORES TOWARDS THE OBJECTIVES OF THE TRUS T, THE ASSESSEE HAD A SURPLUS OF RS.23.36 CRORES WHICH WAS SET OFF, AS PE RMITTED U/S 11 OF THE ACT, AGAINST INVESTMENT MADE IN INFRASTRUCTURAL FAC ILITIES. THUS, THE RETURNED INCOME WAS NIL. 4. THE AO COMPLETED THE ASSESSMENT ACCEPTING THE FA CTS AND FIGURES. HOWEVER, AS A SET OFF, THE AO ALLOWED AN EXPENDITUR E OF RS.100.59 CRORES AS AGAINST HE CLAIM OF THE ASSESSEE OF RS.120.12 CR ORES. THE AO HAS NOT DISCUSSED AS TO THE REASON FOR RESTRICTING THE EXPE NDITURE. THE AO HAS NOT PERMITTED THE DEPRECIATION CLAIMED BY THE ASSESSEE TO THE EXTENT OF RS.19.53 CRORES. 5. IT WAS SUBMITTED BEFORE THE CIT(A) THAT THE AO HAD ERRED IN NOT ALLOWING THE CLAIM OF DEPRECIATION OF APPROXIMATELY RS.19.53 CRORES WITHOUT FURNISHING ANY REASONS. WITHOUT PREJUDICE, EVEN WHERE THE AO HAD UNDERTAKEN THIS ACTION ON THE GROUND THAT THE C APITAL EXPENDITURE ON THE FIXED ASSETS WAS CLAIMED AS APPLICATION OF INCO ME IN THE EARLIER YEARS, THE AO DID NOT CONSIDER THE RULINGS OF VARIOUS HIGH COURTS WHICH HAVE UPHELD THE POSITION ADOPTED BY THE ASSESSEE INCLUDI NG THAT OF THE JURISDICTIONAL HIGH COURT IN THE CASE OF CIT VS SO CIETY OF THE SISTERS OF ST.ANNE (16 TAXMAN 400) AND THE JURISDICTIONAL BANG ALORE ITAT IN ASSESSEES OWN CASE IN ACIT VS SHRI ADICHUNCHUNAGIR I SHIKSHANA TRUST, ITA NO.594(B)/15 3 (ITA NOS.774 & 775(BANG.) 2011) THE APPROACH OF THE ASSESSEE IS ALSO UPHELD IN AN AUGUST 2013 RULING OF THE BANGALORE IT AT IN THE CASE OF DDIT VS CUTCHI MEMON UNION (38 TAXMANN.COM 276). 6. LEARNED AR FURTHER SUBMITTED THAT THE STAND OF THE ASSESSEE IS ALSO SUPPORTED BY THE AMENDMENT TO SECTION 11 BY TH E INTRODUCTION OF SUB-SECTION 6 (VIDE FINANCE (NO.2) ACT, 2014) WHICH SEEKS TO SPECIALLY PROVIDE WITH EFFECT FROM AY: 2015-16 PROSPECTIVELY THAT INCOME FOR THE PURPOSES OF APPLICATION SHALL BE DETERMINED WITHOUT ANY DEDUCTION OR ALLOWANCE BY WAY OF DEPRECIATION IN RESPECT OF ANY ASSET, ACQUISITION OF WHICH HAS BEEN CLAIMED AS AN APPLICATION OF INCOME UNDER THESE SECTIONS IN THE SAME OR ANY OTHER PREVIOUS YEAR AND AS SUCH, FOR THE PREVIOUS YEARS, IN THE ABSENCE OF SUCH A PROVISION, THE STAN D OF THE ASSESSEE IS NOT BARRED BY THE LAW. 7. THE LEARNED CIT(A) HAD AGREED WITH THE ARGUMENT OF THE ASSESSEE THAT PRIOR TO THE AMENDMENT THIS IS A COVERED ISSUE AND ACCORDINGLY, HE DIRECTED THE AO TO ALLOW THE CLAIM OF THE ASSESSEE FOR THE ASSESSMENT YEAR 2008-09. 8. THE REVENUE HAS RAISED THE FOLLOWING GROUNDS OF APPEAL; A. THE LEARNED CIT(A) HAS ERRED IN ALLOWING THE CL AIM OF DEPRECIATION BY THE ASSESSEE HOLDING THAT IT IS COV ERED ISSUE PRIOR TO THE AMENDMENT BY THE FINANCE (NO.2) ACT, 2 014. B. THE LEARNED CIT(A) HAS ERRED IN ALLOWING THE CLA IM AS THE ASSESSEE HAS ALREADY AVAILED BENEFIT UNDER SECTION 11 IN RESPECT OF THE ENTIRE COST OF THE ASSETS. ALLOWING DEPRECIATION ITA NO.594(B)/15 4 ON THE SAME ASSETS WILL AMOUNT TO DOUBLE BENEFIT FOR THE ASSESSEE WHICH IS NOT INTENDED BY THE LAW. C. THE LEARNED CIT(A) HAS ERRED IN NOT APPRECIATING THAT THE AMENDMENT ONLY SEEKS TO EXPLAIN THE EXISTING LAW. THIS IS CLEAR FROM PARA-7.5 OF CIRCULAR NO.1 OF 2015 ISSUE BY THE CBDT EXPLAINING THE PROVISIONS OF THE FINANCE (NO.2 ) ACT, 2014 D. THE LEARNED CIT(A) HAS ERRED IN NOT APPRECIATING THAT THE DEPARTMENT HAS NOT ACCEPTED THE DECISION OF THE ITA T IN THE ASSESSEES OWN CASE FOR THE ASSESSMENT YEARS 2006-0 7 & 2007-08 AND APPEALS UNDER SECTION 260A HAVE BEEN FI LED BEFORE THE HONBLE HIGH COURT OF KARNATAKA. 9. WE FIND THAT THE ISSUE IS COVERED BY THE DECISIO N OF THE CO- ORDINATE BENCH OF THIS TRIBUNAL IN ASSESSEES OWN C ASE, WHEREIN IT HAS BEEN HELD AS UNDER; 13. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUS ED THE MATERIALS ON RECORD. THE TRIBUNAL IN THE ASSESSEES OWN CASE FOR THE ASSESSMENT YEAR 2006-07 AT PARAGRAPH-7 OF ITS ORDER HAS DECIDED THE ISSUE IN FAVOUR OF THE ASSESS EE. THE RELEVANT FINDING OF THE TRIBUNAL READS AS UNDER; 7. WE HAVE HEARD BOTH PARTIES. WE HAVE IN THE EA RLIER PARA REFERRED TO THE FINDINGS OF THE HONBLE BOMBAY HIGH COURT IN THE CASE OF INSTITUTE OF BANKING (2003) 2 64 ITR 110 (BOM.) WE HAVE ALSO GONE THROUGH THE DECISION OF TH E JURISDICTIONAL HIGH COURT. THE HONBLE JURISDICTIO NAL HIGH COURT HELD THAT THE AMOUNT OF DEPRECIATION DEBITED TO THE ACCOUNT OF CHARITABLE INSTITUTIONS IS TO BE DEDUCTE D TO ARRIVE AT AN AVAILABLE INCOME FROM CHARITABLE RELIGIOUS PU RPOSES. ITA NO.594(B)/15 5 FOLLOWING THE DECISION OF THE JURISDICTIONAL HIGH C OURT, WE THEREFORE, HOLD THAT THE DEPRECIATION IS TO BE DEDU CTED TO ARRIVE AT AN INCOME AVAILABLE TO CHARITABLE AND REL IGIOUS PURPOSES. 14. THE ABOVE ORDER OF THE TRIBUNAL HAS NOT BEEN REVERSED BY THE HONBLE JURISDICTIONAL HIGH COURT. THE FACTS FOR THE ASSESSMENT YEAR 2007-08 AND 2008-09 BEING IDENTICAL TO THE FACTS CONSIDERED BY THE TRIBUNAL F OR THE ASSESSMENT YEAR 2006-07 (ITA NO.775/BANG/2009) DAT ED JANUARY 29, 2010), WE FOLLOW THE CO-ORDINATE BENCH ORDER OF THE TRIBUNAL IN THE ASSESSEES OWN CASE FOR THE ASS ESSMENT YEAR 2006-07 AND HOLD THAT THE COMMISSIONER OF INCO ME-TAX (A) IS JUSTIFIED IN DIRECTING THE AO TO GRANT DEPRE CIATION IN RESPECT OF THE ASSESSMENT YEARS 2007-08 AND 2008-09 . 10. RESPECTFULLY FOLLOWING THE DECISION OF THE CO- ORDINATE BENCH OF THIS TRIBUNAL, WE DISMISS THE APPEAL FILED BY THE R EVENUE. 11. IN THE RESULT, THE APPEAL FILED BY THE REVENUE IS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON THE SD/- SD/- (ABRAHAM P GEORGE ( ASHA VIJYARAGHAVAN) ACCOUNTANT MEMBER JUDICIAL MEMBER P L A C E : BANGALORE D A T E D : 10-11-2015 AM* ITA NO.594(B)/15 6 COPY TO : 1 APPELLANT 2 RESPONDENT 3 CIT(A) 4 CIT 5 DR, ITAT, BANGALORE. 6 GUARD FILE BY ORDER AR, ITAT, BANGALORE