Assistant Commissioner of Income Tax,(Exemptions) Circle-1, Mangaluru V. M/s. Diocese of Mangalore, Mangaluru

ITA 752/BANG/2018

• Counselvise Citation: [2018] 125 COUNSELVISE.COM (IT) 7762 (ITAT-BANGALORE)
• Duration Of Justice: 3 month(s) 23 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 04-07-2018
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: C
• Assessment Year: 2010-2011
• Appeal Filed On: 12-03-2018
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Depreciation; Capital expenditure

Judgement Text

ITA.752 TO 755/BANG/2018 PAGE - 1 IN THE INCOME TAX APPELLATE TRIBUNAL BENGALURU BENCH 'C', BENGALURU BEFORE SHRI. INTURI RAMA RAO, ACCOUNTANT MEMBER AND SHRI. LALIET KUMAR, JUDICIAL MEMBER I.T.A NOS.752 TO 755/BANG/2018 (ASSESSMENT YEARS : 2010-11, 2012-13 TO 2014-15) ASST. COMMISSIONER OF INCOME-TAX, CIRCLE 1, MANGALURU .. APPELLANT V. M/S. DIOCESE OF MANGALORE, 13-12-1435, BISHOPS HOUSE, K. S. RAO ROAD, KODIABAIL, MANGALURU 575 001 .. RESPONDENT PAN : AAATD0794J ASSESSEE BY : SHRI. CHAVALI NARAYANAN, CA REVENUE BY : SMT. SUSAN GEORGE, CIT / DR. P. V. PRADEEP KUMAR, A DDL. CIT HEARD ON : 25.06.2018 PRONOUNCED ON : 04.07.2018 O R D E R PER BENCH : THESE ARE APPEALS FILED BY THE REVENUE AGAINST THE RESPECTIVE ORDERS OF THE CIT (A), MANGALURU, DT.28.12.2017, FO R THE AYS. 2010-11, 2012-13 TO 2014-15, ON THE FOLLOWING COMMO N GROUNDS OF APPEAL : ITA.752 TO 755/BANG/2018 PAGE - 2 02. IN THIS REGARD IT IS THE CASE OF THE REVENUE TH AT THE AO HAD MADE THE FOLLOWING DISALLOWANCES TOWARDS THE DEPREC IATION CLAIMED BY THE ASSESSEE, AS UNDER : A.Y AMOUNT OF DEPRECIATION DISALLOWED 2010-11 RS.3,90,12,512 2012-13 RS.3,92,85,125 2013-14 RS.5,04,83,487 2014-15 RS,5,64,59,001 ITA.752 TO 755/BANG/2018 PAGE - 3 THE AO TO MAKE THE ABOVE DISALLOWANCES IN RESPECT O F THE FIXED ASSET, RELIED UPON THE DECISION OF THE HONBLE KERA LA HIGH COURT IN THE MATTER OF LISSIE MEDICAL INSTITUTION [348 ITR 3 44]. BEING AGGRIEVED THE ASSESSEE FILED APPEALS BEFORE THE CIT (A). 03. THE CIT (A) ALLOWED THE CLAIM OF THE ASSESSEE R ELYING UPON THE JUDGMENT OF THE HONBLE SUPREME COURT IN RAJAST HAN AND GUJARATI CHARITABLE FOUNDATION [(2018) 402 ITR 441] . 04. ON THE OTHER HAND, SHRI. CHAVALI NARAYANAN, CA WHO APPEARED ON BEHALF OF THE ASSESSEE SOUGHT ADJOURNME NT. THE ADJOURNMENT SOUGHT BY THE COUNSEL WAS DENIED BY THE BENCH AS THE CASE IS COVERED BY THE JUDGMENT OF THE HONBLE SUPR EME COURT IN RAJASTHAN AND GUJARATI CHARITABLE FOUNDATION (SUPRA ). HENCE THE MATTER WAS HEARD BY THE BENCH. 05. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE RECORD. IN OUR VIEW THE DECISION RECORDED BY THE CIT (A) IN PARAS 5.3 TO 5.5 CORRECTLY STATE THE POSITION LAW, WHICH WAS BASED O N THE RECENT PRONOUNCEMENTS AND AUTHORITATIVE JUDGMENT OF THE HO NBLE SUPREME COURT IN RAJASTHAN AND GUJARATI CHARITABLE FOUNDATION (SUPRA). THEREFORE WE FIND NO REASON TO DISAGREE W ITH THE FINDING RECORDED BY THE CIT (A). ACCORDINGLY THE APPEAL OF THE REVENUE IS DISMISSED. 06. THE REMAINING ASSESSMENT YEARS INVOLVED IN THE PRESENT CASE ARE A.YS.2012-13 TO 2014-15. AS RECORDED BY THE CI T (A) IN PARA 5.3, THE AMENDMENT WAS BROUGHT IN SECTION 11(6) OF THE ACT, W.E.F. AY 2015-16 AND IS NOT PROSPECTIVE IN NATURE THEREFO RE THERE WOULD ITA.752 TO 755/BANG/2018 PAGE - 4 NOT BE ANY CHANGE IN FACTS IN RESPECT TO THESE APPE ALS ALSO. THEREFORE FOLLOWING THE DECISION RENDERED BY US FOR AY 2010-11 IN THE SUPERSEDING PARAGRAPHS, WE HEREBY DISMISS THE A PPEALS OF THE REVENUE FOR THESE ASSESSMENT YEARS ALSO. 07. FOR THE PURPOSE OF CLARITY, WE MAY REPRODUCE TH E RATIO LAID DOWN BY THE HONBLE SUPREME COURT IN RAJASTHAN AND GUJARATI CHARITABLE FOUNDATION [(2018) 402 ITR 441], WHEREIN THE HONBLE SUPREME COURT WHILE ANSWERING THE QUESTION NO.2 HAS HELD AS UNDER: 4. QUESTION NO. 2 HEREIN IS IDENTICAL TO THE QUESTI ON WHICH WAS RAISED BEFORE THE BOMBAY HIGH COURT IN THE CASE OF DIRECTOR OF INCOME-TAX (EXEMPTION) V. FRAMJEE CAWASJEE INSTITUT E [1993] 109 CTR 463 . IN THAT CASE, THE FACTS WERE AS FOLLOWS: THE ASSESSEE WAS THE TRUST. IT DERIVED ITS INCOME FROM DEPRECIABLE ASSETS. THE ASSESSEE TOOK INTO ACCOUNT DEPRECIATION ON THOSE ASSETS IN COMPUTING THE INCOME OF THE TRUST. THE IT O HELD THAT DEPRECIATION COULD NOT BE TAKEN INTO ACCOUNT BECAUS E, FULL CAPITAL EXPENDITURE HAD BEEN ALLOWED IN THE YEAR OF ACQUISI TION OF THE ASSETS. THE ASSESSEE WENT IN APPEAL BEFORE THE ASSI STANT APPELLATE COMMISSIONER. THE APPEAL WAS REJECTED. TH E TRIBUNAL, HOWEVER, TOOK THE VIEW THAT WHEN THE ITO STATED THA T FULL EXPENDITURE HAD BEEN ALLOWED IN THE YEAR OF ACQUISI TION OF THE ASSETS, WHAT HE REALLY MEANT WAS THAT THE AMOUNT SP ENT ON ACQUIRING THOSE ASSETS HAD BEEN TREATED AS 'APPLICA TION OF INCOME' OF THE TRUST IN THE YEAR IN WHICH THE INCOM E WAS SPENT IN ACQUIRING THOSE ASSETS. THIS DID NOT MEAN THAT IN C OMPUTING INCOME FROM THOSE ASSETS IN SUBSEQUENT YEARS, DEPRE CIATION IN RESPECT OF THOSE ASSETS CANNOT BE TAKEN INTO ACCOUN T. THIS VIEW OF THE TRIBUNAL HAS BEEN CONFIRMED BY THE BOMBAY HIGH COURT IN THE ABOVE JUDGMENT. HENCE, QUESTION NO. 2 IS COVERE D BY THE DECISION OF THE BOMBAY HIGH COURT IN THE ABOVE JUDG MENT. CONSEQUENTLY, QUESTION NO. 2 IS ANSWERED IN THE AFF IRMATIVE I.E., IN FAVOUR OF THE ASSESSEE AND AGAINST THE DEPARTMEN T.' 2. AFTER HEARING LEARNED COUNSEL FOR THE PARTIES, WE ARE OF THE OPINION THAT THE AFORESAID VIEW TAKEN BY THE BOMBAY HIGH COURT ITA.752 TO 755/BANG/2018 PAGE - 5 CORRECTLY STATES THE PRINCIPLES OF LAW AND THERE IS NO NEED TO INTERFERE WITH THE SAME. 3. IT MAY BE MENTIONED THAT MOST OF THE HIGH COURTS H AVE TAKEN THE AFORESAID VIEW WITH ONLY EXCEPTION THERETO BY T HE HIGH COURT OF KERALA WHICH HAS TAKEN A CONTRARY VIEW IN 'LISSI E MEDICAL INSTITUTIONS V. CIT [2012] 24 TAXMANN.COM 9/209 TAXMAN 19 (MAG.)/348 ITR 344 (KER.) '. 4. IT MAY ALSO BE MENTIONED AT THIS STAGE THAT THE LE GISLATURE, REALISING THAT THERE WAS NO SPECIFIC PROVISION IN T HIS BEHALF IN THE INCOME TAX ACT, HAS MADE AMENDMENT IN SECTION 11(6) OF THE ACT VIDE FINANCE ACT NO. 2/2014 WHICH BECAME EFFECTIVE FROM THE ASSESSMENT YEAR 2015-2016. THE DELHI HIGH COURT HAS TAKEN THE VIEW AND RIGHTLY SO, THAT THE SAID AMENDMENT IS PRO SPECTIVE IN NATURE. 5. IT ALSO FOLLOWS THAT ONCE ASSESSEE IS ALLOWED DEPR ECIATION, HE SHALL BE ENTITLED TO CARRY FORWARD THE DEPRECIATION AS WELL. IT MAY BE PERTINENT TO MENTION HERE THAT THE HONBL E SUPREME COURT UPHELD THE VIEW OF THE BOMBAY HIGH COURT AND HAS DI SAGREED WITH THE VIEW TAKEN BY THE KERALA HIGH COURT IN THE MATT ER OF LISSIE MEDICAL INSTITUTIONS (SUPRA). IN VIEW OF THE ABOVE , WE DO NOT FIND ANY MERIT IN THE APPEAL OF THE REVENUE AND ACCORDIN GLY THE SAME IS DISMISSED. 16. IN THE RESULT, THE APPEAL OF THE REVENUE IS DIS MISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 4TH DAY OF J ULY, 2018. SD/- SD/- (INTURI RAMA RAO) (LALIET KUMAR) ACCOUNTANT MEMBER JUDICIAL MEMBE R BENGALURU DATED : 04.07.2018 MCN* ITA.752 TO 755/BANG/2018 PAGE - 6 COPY TO: 1. THE ASSESSEE 2. THE ASSESSING OFFICER 3. THE COMMISSIONER OF INCOME-TAX 4. COMMISSIONER OF INCOME-TAX(A) 5. DR 6. GF, ITAT, BANGALORE BY ORDER SENIOR PRIVATE SECRETARY, INCOME TAX APPELLATE TRIBUNAL, BANGALORE.