The Assistant Commissioner of Income Tax (Exemptions) Circle-1 , Mangalore V. M/s Sri Mookambika Temple , Udupi

ITA 759/BANG/2018

• Counselvise Citation: [2018] 121 COUNSELVISE.COM (IT) 4635 (ITAT-BANGALORE)
• Duration Of Justice: 3 month(s) 18 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 29-06-2018
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: C
• Assessment Year: 2009-2010
• Appeal Filed On: 12-03-2018
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: DR P V PRADEEP KUMAR
• Keywords: Depreciation; Charitable institution; Capital expenditure
• Section: 143(3); 147

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL C BENCH, B E NGAL U R U BEFORE SHRI INTURI RAMA RAO, ACCOUNTANT MEMBER AND SHRI LALI E T KUMAR, JUDICIAL MEMBER ITA NO. 759 / BANG/ 201 8 (ASSESSMENT YEAR : 20 09 - 10 ) ASST. COMMISSIONER OF INCOME - TAX (EXEMPTIONS) CI RCLE 1, APPELLANT MAN GALURU. VS. SRI MOOKAMBIKA TEMPLE, KOLLUR, UDUPI - 576220. PAN:AA B A S 4235 R ... RESPONDENT APPELLANT BY : DR. P.V.PRADEEP KUMAR, ADDL.CIT(DR) RESPONDENT BY : NONE. DATE OF HEARING : 25 /06/2018 DATE OF PRONOUNCEMENT : 29 /0 6 /2018 O R D E R PER I NTURI RAMA RAO, AM : THIS IS AN APPEAL FILED BY THE REVENUE DIRECTED AGAINST THE ORDER OF THE LEARNED COMMISSIONER OF INCOME - TAX (APPEALS) , MANGALORE, DATED 13/12/2017 F OR THE ASSESSMENT YEAR 2009 - 10 . 2. THE REVENUE RAISED THE FOLLOWING GROUNDS OF APPEAL: ITA NO . 7 5 9 /BANG/201 8 PAGE 2 OF 5 4. BRIEFLY FACTS OF THE CASE ARE THAT T HE ASSESSEE IS A PUBLIC CHARITABLE TRUST REGISTERED UNDER THE PROVISIONS OF THE INCOME - TAX ACT, 1961 [HEREINAFTER REFERRED TO AS THE ACT ] . THE R ETURN OF INCOME FOR THE ASSESSMENT YEAR 20 09 - 10 WAS FILED ON 02/03/2010 DECLARING NIL INCOME. T HE ASSESSMENT WAS COMPLETED U/S 143(3) OF THE ACT VIDE ORDER DATED 29/07/2011. SUBSEQUENTLY, THE ASSESSMENT W AS REOPENED U/S 147 AND THE ASSESSMENT WAS COMPLETED U/S 143(3) R.W.S. 147 ON 01/12/2016 . WHILE DOING SO, THE AO HAS DIS ALLOWED SET OFF OF BROUGHT FORWARD DEFICIT OF EARLIER YEARS FROM THE CURRENT YEAR S SURPLUS AND BALANCE UNABSORBED BROUGHT FORWARD DE FICIT TO BE CARRIED FORWARD T O THE SUBSEQUENT ASSESSMENT YEARS AS APPLICATION OF INCOME. ITA NO . 7 5 9 /BANG/201 8 PAGE 3 OF 5 4. BEING AGGRIEVED, AN APPEAL WAS FILED BEFORE THE LD. CIT(A), WHO VIDE IMPUGNED ORDER, DIRECTED THE AO TO ALLOW SET OFF OF BROUGHT FORWARD DEFICIT WITH CURRENT YEAR SURPLUS AND ALLOW THE BALANCE UNABSORBED DEFICIT TO BE CARRIED FORWARD TO SUBSEQUENT YEARS AS APPLICATION OF INCOME AFTER PLACING RELIANCE ON THE FOLLOWING DECISIONS: 5. BEING AGGRIEVED, THE REVENUE IS IN APPEAL BEFORE US. 6. WE HEARD RI VAL SUBMISSIONS AND PERUSED THE MATERIAL ON RECORD. THE ISSUE RAISED BY THE REVENUE IN THE PRESENT APPEAL IS COVERED AGAINST THE REVENUE BY THE DECISION OF THE HON BLE APEX COURT IN THE CASE OF COMMISSIONER OF INCOME TAX VS. RAJASTHAN & GUJARATI CHARITABL E FOUNDATION POONA (2018)(89 TAXMAN.COM127)(SC) WHEREIN IT WAS HELD AS UNDER: 1 ......................................................... 4. QUESTION NO. 2 HEREIN IS IDENTICAL TO THE QUESTION WHICH WAS RAISED BEFORE THE BOMBAY HIGH COURT IN THE CASE OF DIRECTOR OF INCOME - TAX (EXEMPTION) V. FRAMJEE CAWASJEE INSTITUTE [1993] 109 CTR 463 . IN THAT CASE, THE FACTS WERE AS FOLLOWS: THE ASSESSEE WAS THE TRUST. I T DERIVED ITS INCOME FROM DEPRECIABLE ASSETS. THE ASSESSEE TOOK INTO ACCOUNT DEPRECIATION ON THOSE ASSETS IN COMPUTING THE INCOME OF THE TRUST. THE ITO HELD THAT DEPRECIATION COULD NOT BE TAKEN INTO ACCOUNT BECAUSE, FULL CAPITAL EXPENDITURE HAD BEEN ALLOWE D IN THE YEAR OF ACQUISITION OF THE ASSETS. THE ASSESSEE WENT IN APPEAL BEFORE THE ASSISTANT APPELLATE COMMISSIONER. THE APPEAL WAS REJECTED. THE TRIBUNAL, HOWEVER, TOOK THE VIEW THAT WHEN THE ITO STATED THAT FULL EXPENDITURE HAD BEEN ALLOWED IN THE YEAR O F ACQUISITION OF THE ASSETS, WHAT HE REALLY MEANT WAS THAT THE AMOUNT SPENT ON ACQUIRING THOSE ASSETS HAD BEEN TREATED AS 'APPLICATION OF INCOME' OF THE TRUST IN THE YEAR IN WHICH THE INCOME WAS SPENT IN ACQUIRING THOSE ASSETS. THIS DID NOT MEAN THAT IN CO MPUTING INCOME FROM THOSE ASSETS IN SUBSEQUENT YEARS, ITA NO . 7 5 9 /BANG/201 8 PAGE 4 OF 5 DEPRECIATION IN RESPECT OF THOSE ASSETS CANNOT BE TAKEN INTO ACCOUNT. THIS VIEW OF THE TRIBUNAL HAS BEEN CONFIRMED BY THE BOMBAY HIGH COURT IN THE ABOVE JUDGMENT. HENCE, QUESTION NO. 2 IS COVERED BY THE DECISION OF THE BOMBAY HIGH COURT IN THE ABOVE JUDGMENT. CONSEQUENTLY, QUESTION NO. 2 IS ANSWERED IN THE AFFIRMATIVE I.E., IN FAVOUR OF THE ASSESSEE AND AGAINST THE DEPARTMENT.' 2. AFTER HEARING LEARNED COUNSEL FOR THE PARTIES, WE ARE OF THE OPINION THAT THE AFORESAID VIEW TAKEN BY THE BOMBAY HIGH COURT 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 HAVE TAKEN THE AFORESAID VIEW WITH ONLY EXCEPTION THERETO BY THE H IGH COURT OF KERALA WHICH HAS TAKEN A CONTRARY VIEW IN ' LISSIE MEDICAL INSTITUTIONS V. CIT [2012] 24 TAXMANN.COM 9/209 TAXMAN 19 (MAG.)/348 ITR 344 (KER.) '. 4. IT MAY A LSO BE MENTIONED AT THIS STAGE THAT THE LEGISLATURE, REALISING THAT THERE WAS NO SPECIFIC PROVISION IN THIS 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 PROSPECTIVE IN NATURE. 5. IT ALSO FOLLOWS THAT ONCE ASSESSEE IS ALLOWED DEPRECIATION, HE SHALL BE ENTITLED TO CARRY FORWARD THE DEPRECIATION AS WELL. 6. FOR THE AFORESAID REASONS, WE AFFIRM THE VIEW TAKEN BY THE HIGH COURTS IN THESE CASES AND DISMISS THESE MATTERS. SINCE T HE DECISION OF THE CIT(A) IS IN CONSONANCE WITH THE LAW LAID BY THE HON BLE APEX COURT IN THE CASE OF RAJASTHAN & GUJARATI CHARITABLE FOUN DATION POONA (SUPRA), WE DO NOT FIND ANY FALLACY IN THE REASONING ADOPTED BY THE LD. CIT(A) . 7. IN THE RESULT, THE APPEAL FILED BY THE REVENUE IS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 29 TH JUNE 2018. S D/ - SD/ - ( LALI E T KUMAR ) (INTURI RAMA RAO) JUDICIAL MEMBER ACCOUNTANT MEMBER PLACE : B EN GAL URU D A T E : 29 /0 6 /2018 SRINIVASULU, SPS ITA NO . 7 5 9 /BANG/201 8 PAGE 5 OF 5 COPY TO : 1 APPELLANT 2 RESPONDENT 3 CIT(A) - 4 CIT 5 DR, ITAT, BANGALORE. 6 GUARD FI LE BY ORDER SENIOR PRIVATE SECRETARY INCOME - TAX APPELLATE TRIBUNAL BANGALO RE