DCIT, Satara V. Sanjeevan Vidhyalaya Trust, Satara

ITA 692/PUN/2010

• Counselvise Citation: 69224514 RSA 2010
• Duration Of Justice: 1 year(s) 4 month(s) 21 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 27-09-2011
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: B
• Assessment Year: 2005-2006
• Appeal Filed On: 06-05-2010
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: B D SINGH
• Keywords: Depreciation; Charitable institution; Cost of acquisition; Capital expenditure
• Section: 143(3)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCH B, PUNE BEFORE SHRI I C SUDHIR, JUDICIAL MEMBER AND SHRI G.S. PANNU, ACCOUNTANT MEMBER ITA NO 692/PN/2010 (ASSTT. YEAR 2005-06) DY. COMMISSIONER OF INCOME-TAX, .. APPELLANT SATARA CIR. SATARA VS. SANJEEVAN VIDYALAYA TRUST .. RESPONDENT PANCHGANI, TAL. MAHABALESHWAR, DIST. SATARA PAN AADTS5348E APPELLANT BY: SHRI B D SINGH RESPONDENT BY: SHRI NIKHIL PATHAK DATE OF HEARING : 23.09.2011 DATE OF PRONOUNCEMENT : 27.09.2011 ORDER PER G.S. PANNU, AM THIS APPEAL BY THE REVENUE IS DIRECTED AGAINST THE ORDER OF THE COMMISSIONER OF INCOME-TAX (APPEALS)-III, PUNE DATED 26.02.2010, WHICH IN TURN HAS ARISEN FROM AN ORDER PASSED BY THE ASSESSING OFFICER UNDER SECTION 143(3) OF THE INCOM E-TAX ACT, 1961 (IN SHORT THE ACT), PERTAINING TO THE ASSESSMENT YEAR 2005-06. 2. ALTHOUGH THE REVENUE HAS RAISED MULTIPLE GROUNDS O F APPEAL, BUT ESSENTIALLY THE GRIEVANCE OF THE REVENUE IS THAT THE CO MMISSIONER OF INCOME-TAX (APPEALS) ERRED IN DIRECTING THE ASSESSING OFFICER TO ALL OW THE ASSESSEES CLAIM OF DEPRECIATION ON IMMOVABLE PROPERTY TO THE EXTENT OF RS 59,44,712/- INSPITE OF 2 THE FACT THAT THE RELEVANT CAPITAL EXPENDITURE ON THE CONCERNED ASSETS HAS BEEN CLAIMED IN THE RESPECTIVE YEARS. 3. BEFORE US, THE LEARNED DEPARTMENTAL REPRESENTATIVE , APPEARING FOR THE REVENUE, HAS CONTENDED THAT THE DIRECTION OF THE COMMI SSIONER OF INCOME-TAX (APPEALS) HAS RESULTED IN A DOUBLE DEDUCTION TO THE ASSE SSEE, WHICH WAS CONTRARY TO THE RATIO OF THE DECISION OF THE HONBLE S UPREME COURT IN THE CASE OF ESCORTS LTD V. UNION OF INDIA 199 ITR 43 (SC). 4. IN BRIEF, THE FACTS ARE THAT THE RESPONDENT-ASSESSEE I S A TRUST WHICH IS RUNNING EDUCATIONAL INSTITUTIONS AND IS REGISTERED UNDE R SECTION 12A(A) OF THE ACT WITH THE COMMISSIONER OF INCOME-TAX. WHILE FINALISING T HE ASSESSMENT, THE ASSESSING OFFICER NOTICED THAT THE ASSESSEE HAD CLAIMED DEPR ECIATION OF RS 59,44,712/- ON ASSETS WHOSE COST HAD BEEN TREATED AS APPLI CATION OF INCOME IN THE PAST YEARS. AS PER THE ASSESSING OFFICER, SUCH DEPRECIATIO N CLAIM WAS NOT ALLOWABLE, SINCE 100% OF THE CORRESPONDING CAPITAL EXPE NDITURE WAS ALREADY ALLOWED AS APPLICATION OF INCOME TO THE ASSESSEE IN EARL IER YEAR. THEREFORE, THE ASSESSEES CLAIM OF DEPRECIATION OF RS 59,44,712/- WAS DISALL OWED. 5. IN APPEAL BEFORE THE COMMISSIONER OF INCOME-TAX (AP PEALS), THE ASSESSEE JUSTIFIED THE CLAIM, INTER ALIA, BY RELYING UPON THE JUDGMENT OF THE HONBLE BOMBAY HIGH COURT IN THE CASE OF DIT(E) V FRAMJEE CAWASJEE I NSTITUTE 109 CTR 463 (BOM). THE COMMISSIONER OF INCOME-TAX (APPEALS) RELYING UPON THE AFORESAID DECISION OF THE JURISDICTIONAL HIGH COURT ALLOWED THE CL AIM OF THE ASSESSEE FOR DEPRECIATION. AGAINST THE AFORESAID, REVENUE IS IN APPE AL BEFORE US. 6. AS NOTED EARLIER, THE ONLY PLEA AGITATED BEFORE U S BY THE REVENUE IS BASED ON THE PROPOSITION THAT THE ALLOWANCE OF DEPRECIATION WOULD RESULT IN DOUBLE DEDUCTION, SINCE IN THE PAST YEARS THE CAPITAL EXPENDITU RE ON THE RELEVANT ASSET HAS ALREADY BEEN ALLOWED AS APPLICATION OF INCOME. IN R ESPONSE TO SUCH PLEA, THE LEARNED COUNSEL, APPEARING FOR THE RESPONDENT-ASSESSEE, P OINTED OUT THAT SIMILAR ARGUMENT FROM THE SIDE OF THE REVENUE WAS CONSIDERED B Y THE HONBLE BOMBAY 3 HIGH COURT IN THE CASE OF CIT V INSTITUTE OF BANKING 26 4 ITR 110 (BOM) WHEREIN THE ISSUE WAS DECIDED IN FAVOUR OF THE ASSESSEE, FOLLOWING THE EARLIER JUDGMENT IN THE CASE OF FRAMJEE CAWASJEE INSTITUTE (SUPRA). MOREOVE R, THE PUNE BENCH OF THE TRIBUNAL IN THE CASE OF ACIT V SHRI AGMODHARAK DEVAR DHI JAIN AGAM MANDIT TRUST VIDE ITA NO 1526/PN/07 HAS FOLLOWED THE JUDGMEN T OF THE HONBLE BOMBAY HIGH COURT IN THE CASE OF INSTITUTE OF BANKING (SUPRA) IN UPHOLDING THE STAND SIMILAR TO THAT OF THE ASSESSEE. 7. IN THIS BACKGROUND, WE HAVE CONSIDERED THE RIVAL SUBMI SSIONS AND FIND OURSELVES UNABLE TO UPHOLD THE STAND CANVASSED BY THE REV ENUE, INASMUCH AS THE COMMISSIONER OF INCOME-TAX (APPEALS) HAS DECIDED THE ISSUE FOLLOWING THE JUDGMENT OF THE HONBLE JURISDICTIONAL HIGH COURT IN THE CASE OF FRAMJEE CAWASJEE INSTITUTE (SUPRA) WHICH HAS BEEN SUBSEQUENTLY F OLLOWED BY THE HONBLE HIGH COURT IN THE CASE OF INSTITUTE OF BANKING (SUPRA) . AS PER THE HONBLE HIGH COURT, MERELY BECAUSE THE COST OF ACQUISITION OF AN ASSET H AS BEEN CLAIMED AS AN APPLICATION OF INCOME FOR CHARITABLE PURPOSES IN THE PA ST YEARS, THE ASSESSEE COULD NOT BE DENIED DEPRECIATION IN RESPECT OF SUCH ASSETS I N A SUBSEQUENT YEAR. 8. IN SO FAR AS THE RELIANCE PLACED BY THE LEARNED DEPA RTMENTAL REPRESENTATIVE IN THE CASE OF ESCORTS LTD. (SUPRA) IS CONCER NED, THE SAME, IN OUR VIEW, DOES NOT HELP THE CASE OF THE REVENUE. THE HON BLE HIGH COURT OF PUNJAB & HARYANA IN ITS DECISION IN THE CASE OF CIT, KARNAL V. MARKET COMMITTEE, VIDE ITA NO 535/09 DATED 5.7.2010 CONSIDERED AN IDENTICAL ISSUE AND ALSO DEALT WITH THE PLEA OF THE REVENUE BASED ON THE JUDGMENT OF THE HON BLE SUPREME COURT IN THE CASE OF ESCORTS LTD. (SUPRA). AS PER THE HONBLE PUNJA B & HARYANA HIGH COURT, THE JUDGMENT OF THE HONBLE SUPREME COURT IN THE CASE OF ESCORTS LTD. (SUPRA) WAS DISTINGUISHABLE, INASMUCH AS THERE WAS NO CASE OF THE A SSESSEE CLAIMING DOUBLE DEDUCTION ON ACCOUNT OF DEPRECIATION. FOLLOWING THE AFORESAID JUDGMENT OF THE HONBLE PUNJAB & HARYANA HIGH COURT, WE, THEREF ORE, FIND NO MERIT IN THE PLEA RAISED BY THE REVENUE BASED ON THE JUDGMENT IN THE CAS E OF ESCORTS LTD. (SUPRA). 4 9. IN THE RESULT, FOLLOWING THE JUDGMENT OF THE HON BLE JURISDICTIONAL HIGH COURT, WE HEREBY AFFIRM THE ORDER OF THE COMMISSIONER OF INCOME-TAX (APPEALS). 10. IN THE RESULT, APPEAL OF THE REVENUE IS DISMISSED. DECISION PRONOUNCED IN THE OPEN COURT ON THIS 27 TH DAY OF SEPTEMBER, 2011. SD/- SD/- (I C SUDHIR) JUDICIAL MEMBER (G.S. PANNU) ACCOUNTANT MEMBER PUNE: DATED: 27 TH SEPTEMBER, 2011 B COPY OF THE ORDER IS FORWARDED TO : 1. APPELLANT 2. RESPONDENT 3. THE CIT(A)-III PUNE 4. THE CIT-III, PUNE 5. THE D.R, B BENCH, PUNE 6. GUARD FILE TRUE COPY BY ORDER ASSISTANT REGISTRAR ITAT, PUNE BENCHES, PUNE