ADIT (E), New Delhi V. Escorts Cardiac Diseases Hospital Society, New Delhi

ITA 73/DEL/2013

• Counselvise Citation: [2015] 140 COUNSELVISE.COM (IT) 87010 (ITAT-DELHI)
• Duration Of Justice: 2 year(s) 2 month(s) 4 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 09-03-2015
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: B
• Next Hearing Date: 09-03-2015
• Assessment Year: 2009-2010
• Appeal Filed On: 04-01-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: PARWINDER KAUR
• Keywords: Depreciation; Charitable institution; Capital expenditure
• Section: 143(3)

Judgement Text

IN TH E INCOME TAX APPELLATE TRIBUNAL DELHI BENCH B : NEW DELHI BEFORE SHRI N.K. SAINI , ACCOUNTANT MEMBER AND SHRI GEORGE GEORGE K., JUDICIAL MEMBER ITA NO. 73 /DEL/201 3 ASSESSMENT YEAR 200 9 - 10 ASSTT. DIRECTOR OF INCOME TAX (E) VS. ESCORTS CARDIAC DISEA SES HOSPITAL TC - II, NEW DELHI. SOCIETY, OKHLA ROAD, NEW DELHI. (PAN AA AAE 0049 G ) ( APPELLANT) (RESPONDENT) DATE OF HEARING : 09 .0 3 .2015 DATE OF PRONOUNCEMENT : 09 . 03 .2015 APPELLANT BY : SMT. PARWINDER KAUR, SR. D.R. R ESPONDENT BY: NONE ORDER PER SHRI GEORGE GEORGE K , J M : 1. TH IS APPEAL , AT THE INSTANCE OF THE REVENUE , IS DIRECTED AGAINST THE CIT(A) S ORDER DATED 2 6 .0 2 .201 2 . THE RELEVANT ASSESSMENT YEAR IS AY 200 9 - 10 . 2. THE EFFECTIVE GROUND RAISED READS AS FOLL OWS: - 1. ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD CIT(A) HAS ERRED IN ALLOWING THE DOUBLE DEDUCTION AS THE VALUE OF ASSETS HAS BEEN CLAIMED AS APPLICATION OF INCOME. 2. ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD CI T(A) HAS ERRED IN ALLOWING THE DEPRECIATION TO THE EXTENT OF RS.51,64,064/ - OF EARLIER YEAR AS DEFICIT AND ALLOWING THE SET OFF FOR THE SAME. IT A NO. 73 /DEL /201 3 2 3. BRIEFLY STATED THE FACTS OF THE CASE ARE AS FOLLOWS. THE ASSESSING OFFICER IN THE ORDER COMPLETED U/S 143(3) OF THE I.T. ACT (ORDER DATED 25.11.2011) DISALLOWED DEPRECIATION AMOUNTING TO RS.14 , 9 2,992/ . ACCORDING TO THE AO, THE CAPITAL COST OF ASSET, ON WHICH DEPRECIATION IS CLAIMED WAS ALLOWED AS APPLICATION OF INCOME. THEREFORE, ACCORDING TO AO ALLOWING DEPRECI ATION ON THESE ASSETS WOULD TANTAMOUNT DOUBLE DEDUCTION. 4. THE ASSESSEE BEING AGGRIEVED FILED AN APPEAL BEFORE THE FIRST APPELLATE AUTHORITY. THE CIT(A) ALLOWED THE APPEAL OF THE ASSESSEE BY GRANTING DEPRECIATION. THE CIT(A) FOLLOWED THE JUDGMENT S OF HON BLE PUNJAB & HARYANA HIGH COURT IN THE CASE OF CIT VS. TINY TOTS EDUCATION SOCIETY REPORTED IN 330 ITR 21( P&H) , AND JUDGMENT OF HON BLE JURISDICTIONAL DELHI HIGH COURT IN THE CASE OF VISHWA JAGRITI MISSION REPORTED IN 2012 - TIOL - 271 - HC - DEL - IT . THE CIT(A) ALSO PLACED RELIANCE ON TRIBUNAL ORDER IN ASSESSEE S OWN CASE FOR AY 2007 - 08. 5. THE REVENUE BEING AGGRIEVED IS IN APPEAL BEFORE US. THE LD. D R SUBMITTED THAT THE ORDER OF THE CIT(A) IS CONTRARY TO THE CBDT CLARIFICATION DATED 02.2.2012. IT WAS FURTHER SUB MITTED THAT THE JUDGMENT OF THE HON BLE KERALA HIGH COURT IN THE CASE OF LISSIE MEDICAL INSTITUTION REPORTED IN 348 ITR 344 IS ALSO IN FAVOUR OF THE REVENUE. NONE WAS PRESENT ON BEHALF OF THE ASSESSEE . IT A NO. 73 /DEL /201 3 3 6 . WE HAVE HEARD LD. DR AND PERUSED THE MATERIAL ON RE CORD. THE CIT(A) HAS ALLOWED THE APPEAL OF THE ASSESSEE , BY FOLLOWING THE JUDGMENT OF THE HON BLE JURISDICTIONAL DELHI HIGH COURT IN THE CASE OF VISHWA JAGRITI MISSION (SUPRA). THE RELEVANT FINDING OF THE CIT(A) READS AS FOLLOWS: - PARA 4.1 I HAVE GONE TH ROUGH THE FINDINGS OF THE AO IN THE ASSESSMENT ORDER AND WRITTEN SUBMISSION OF THE LD.AR OF THE APPELLANT AND HIS RELIANCE ON THE JUDGEMENT OF HO N 'BLE ITA T IN THE APPELLANT'S OWN CASE FOR A. YR. 2007 - 08, WHEREIN, HON 'BLE IT AT HAS ALLOWED THE ISSUE IN FAV OUR OF THE APPELLANT BY RELYING ON THE JUDGEMENT OF HON'BLE PUNJAB & HARYANA HIGH COURT IN THE CASE OF CIT VS. TINY TOTS EDUCATION SOCIETY. FURTHERMORE, SIMILAR ISSUE HAS BEEN DECIDED BY HON'BLE DELHI HIGH COURT IN THE LATEST JUDGEMENT IN THE CASE OF VISHW A JAGRITI MISSION, WHEREIN, THE HON 'BLE DELHI HIGH COURT HAS DECIDED THE ISSUE IN FAVOUR OF THE APPELLANT (2012 - TIOL - 271 - HC - DEL - IT) B Y OBSERVIN G AS UNDER: - 13 THE JUDGEMENT OF THE SUPREME COURT IN ESCORTS LIMITED VS. UNION OF INDIA (SUPRA) HAS BEEN R IGHTLY HELD TO BE INAPPLICABLE TO THE PRESENT CASE. THERE ARE TO REASONS AS TO WHY T HE JUDGEMENT CANNOT BE APPLIED TO THE PRESENT CASE. FIRSTLY , THE SUPREME COURT WAS NOT CONCERNED WITH THE CASE OF A CHARITABLE TRUST/INSTITUTION INVOLVING THE QUESTION AS TO WHETHER ITS INCOME SHOULD BE COMPUTED ON COMMERCIAL PRINCIPLES IN ORDER TO DETERMINE THE AMOUNT OF INCOME AVAILABLE FOR APPLICATION TO CHARITABLE PURPOSES. IT WAS A CASE WHERE THE ASSESSEE WAS CARRYING ON BUSINESS AND THE STATUTORY COMPUTATION PROVISIONS OF CHAPTER IV - D OF THE ACT WERE APPLICABLE. IN THE PRESENT CASE, WE ARE NOT CONCERNED WITH THE APPLICABILITY OF THESE PROVISIONS. WE ARE CONCERNED ONLY WITH THE CONCEPT OF COMMERCIAL INCOME AS UNDERSTOOD FROM THE ACCOUNTING POINT OF VIEW. EVEN UNDER NORMAL COMMERCIAL ACCOUNTING PRINCIPLES, THERE IS AUTHORITY FOR THE PROPOSITION THAT DEPRECIATION IS A NECESSARY CHARGE IN COMPUTING THE NET INCOME. SECONDLY, THE SUPREME COURT WAS CONCERNED WITH THE CASE WHERE THE ASSESSEE HAD CLAIMED DEDUCTION OF THE COST OF T HE ASSET UNDER SECTION 35(1) OF THE ACT WHICH ALLOWED DEDUCTION FOR CAPITAL EXPENDITURE INCURRED ON SCIENTIFIC RESEARCH. THE QUESTION W AS WHETHER AFTER CLAIMING DEDUCTION IN RESPECT OF THE COST OF THE ASSET UNDER SECTION 35(1) , CAN THE ASSESSEE AGAIN CLAI M DEDUCTION ON ACCOUNT OF DEPRECIATION IN RESPECT OF THE SAME ASSET. THE SUPREME COURT RULED THAT, UNDER GENERAL PRINCIPLES OF TAXATION. NOT ONE OF THIS TYPE, AS RIGHTLY DISTINGUISHED BY THE CIT (APPEALS). PARA 4.2 AS THE ISSUE IS COVERED BY THE JUDGEM ENT OF HON'BLE ITAT, DELHI IN APPELLANT'S OWN CASE AND THE JUDGMENT OF HON'BLE DELHI HIGH COURT IN THE CASE OF VISHWA JAGRITI IT A NO. 73 /DEL /201 3 4 MISSION AS DISCUSSED ABOVE, GROUND NO.2 OF THE APPELLANT IS ALLOWED. 7. NO DOUBT JUDGMENT OF HON BLE KERALA HIGH COURT IN THE C ASE OF LISSIE MEDICAL INSTITUTION (SUPRA) IS IN FAVOUR OF THE REVENUE , H OWEVER, WE ARE BOUND BY THE JUDGMENT OF THE HON BLE JURISDICTIONAL DELHI HIGH COURT CITED SUPRA . THE CIT(A) GAVE RELIEF TO THE ASSESSEE, BY FOLLOWING THE DICTUM LAID DOWN BY THE JURISD ICTION HIGH COURT IN THE CASE OF VISHWA JAGRITI MISSION (SUPRA). THEREFORE, WE CONFIRM THE ORDER OF THE CIT(A) AS CORRECT AND IN ACCORDANCE WITH LAW AND NO INTERFERENCE IS CALLED FOR . 8. IN THE RESULT, THE APPEAL FILED BY THE REVENUE IS DISMISSED. TH E DE CISION WAS PRONOUNCED IN THE OPEN COURT ON 09 TH MARCH , 201 5 . SD/ - SD/ - ( B.C. MEENA ) (GEORGE GEORGE K.) A CCOUNTANT MEMBER J UDICIAL MEMBER DATED: 09 TH MARCH , 201 5 . AKS/ - COPY FORWARDED TO 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(A) 5. DR ASST . REGISTRAR, ITAT, NEW DELHI