Assistant Commissioner of Income tax, Bangalore V. Gokula Education Foundation(Medical), Bangalore

ITA 767/BANG/2017

• Counselvise Citation: [2018] 121 COUNSELVISE.COM (IT) 4593 (ITAT-BANGALORE)
• Duration Of Justice: 1 year(s) 1 month(s) 14 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 15-06-2018
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: C
• Assessment Year: 2011-2012
• Appeal Filed On: 01-05-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: L RAJASEKAR REDDY
• Keywords: Depreciation; Charitable institution
• Section: 143(3)

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. 767 / BANG/ 201 7 (ASSESSMENT YEAR : 201 1 - 12) AND ITA NO.768/BANG/2017 (ASSESSMENT YEAR: 2011 - 12) A SST. COMMISSIONER OF INCOME - TAX CENTRAL CIRCLE 1(2), BENGALURU. VS. APPELLANT 1. M/S.GOKULA EDUCATION FOUNDATION (MEDICAL), M S RAMAIAH NAGAR, MSRIT POST, BENGALURU - 560 054. PAN: AAATG 1779 Q 2. M/S.GOKULA EDUCATION FOUNDATION (ENGINEERING), M S RAMAIAH NAGAR, MSRIT POST, BENGALURU - 560 054. PAN: AAATG 1781 E RESPONDENT APPELLANT BY : SHRI L.RAJASEKAR REDDY, CIT(DR) RESPONDENT BY : SHRI NARENDRA SHARMA, ADVOCATE DATE OF HEARING : 14/06/2018 DATE OF PRONOUNCEMENT : 15 /0 6 /2018 O R D E R PER I NTURI RAMA RAO, AM : THESE ARE APPEALS FILED BY THE REVENUE DIRECTED AGAINST DIFFERENT ORDERS OF LEARNED COMMISSIONER OF INCOME - TAX (APPEALS) - 14 [CIT(A)], LTU, BENGALURU, BOTH DATED 31/01/2017 IN RESPECT OF M/S.GO KULA EDUCATION FOUNDATION (MEDICAL) AND M/S.GOKULA EDUCATION FOUNDATION (ENGINEERING) FOR THE ASSESSMENT YEAR 2011 - 12. 2. THE REVENUE RAISED THE FOLLOWING COMMON GROUNDS OF APPEAL: ITA NO S . 767 & 768 /BANG/201 7 PAGE 2 OF 4 SINCE COMMON ISSUE IS INVOLVED, BOTH THE APPEALS WERE HEARD TOGETHER AND ARE DISPOSED OF BY THIS CONSOLIDATED ORDER FOR THE SAKE CONVENIENCE. THE FACTS IN THE CASE OF M/S.GOKULA EDUCATION FOUNDATION (MEDICAL), ARE STATED HEREUNDER: THE RESPONDENT - ASSESSEE IS A PUBLIC CHARITABLE TRUST REGISTERED UNDER THE PROVISIONS OF THE INCOME - TAX ACT, 1961 [HEREINAFTER REFERRED TO AS THE ACT ] FORMED FOR THE PURPOSE OF PROVIDING EDUCATION. RETURN OF INCOME FOR THE ASSESSMENT YEAR 2011 - 12 WAS FILED ON 30 / 09 /201 1. AFTER PROCESSING THE RETURN OF INCOME UNDER THE PROVISIONS OF SECTION 143(1) OF THE ACT, THE ASSESSMENT WAS COMPLETED U/S 143(3) OF THE ACT VIDE ORDER DATED 29 / 03 /201 4 . WHILE DOING SO, THE AO HAS NOT ALLOWED DEPRECIATION AS APPLICATION OF INCOME AND AFTER ALLOWING ACCUMULATION AT 15% OF THE GROSS RECEIPTS, DETERMINED TOTAL INCOME AT RS.24,63,42,292/ - . 4. BEING AGGRIEVED, AN APPEAL WAS FILED BEFORE THE LD. CIT(A), WHO VIDE IMPUGNED ORDER, HAD ALLOWED DEPRECIATION AS APPLICATION OF INCOME FOLLOWING THE RATIO LAID DOWN BY THE JURISDICTIONAL HIGH COURT IN THE CASE OF CIT VS.SOCIETY OF THE SISTERS OF ST.ANNE (146 ITR 28) AND THE DECISION OF THE TRIBUNAL IN THE CASE OF JYOTHI CHARITABLE TRUST (60 TAXMANN.COM 165)(BANG - TRIB.). ITA NO S . 767 & 768 /BANG/201 7 PAGE 3 OF 4 5. BEING AGGRIEVED BY THIS ORDER, THE REVENUE IS IN APPEAL BEFORE US IN THE PRESENT APPEALS. 6. WE HEARD RIVAL SUBMISSIONS AND PERUSED THE MATERIAL ON RECORD. THE ISSUE RAISED BY THE REVENUE IN THE PRESENT APPEALS 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 CHARITABLE 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 B OMBAY 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 ASSESS EE 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 ITO HELD THAT DEPRECIATION COULD NOT BE TAKEN INTO ACCOUNT BECAUSE, FULL CAPITAL EXPENDIT URE HAD BEEN ALLOWED 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 AL LOWED IN THE YEAR OF 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 COMPUTING INCOME FROM THOSE ASSETS IN SUBSEQUENT YEARS, 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 O F 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 EXCEPTI ON THERETO BY THE HIGH COURT OF ITA NO S . 767 & 768 /BANG/201 7 PAGE 4 OF 4 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 (K ER.) '. 4. IT MAY ALSO 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 F ROM 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 DEPRECIATI ON 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 THE HON BLE APEX COURT IN THE CASE OF RAJASTHAN & G UJARATI CHARITABLE FOUNDATION POONA (SUPRA), WE DO NOT FIND ANY FALLACY IN THE REASONING ADOPTED BY THE LD. CIT(A) AND THE GROUNDS OF APPEAL RAISED BY THE REVENUE ARE DISMISSED. IN THE RESULT, THE APPEALS FILED BY THE REVENUE ARE DISMISSED. OR DER PRONOUNCED IN THE OPEN COURT ON 15 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 : 15 /0 6 /2018 SRINIVASULU, SPS COPY TO : 1 APPELLANT 2 RESPONDENT 3 CIT(A) - 4 CIT 5 DR, ITAT, BANGALORE. 6 GUARD FILE BY ORDER SENIOR PRIVATE SECRETARY INCOME - TAX APPELLATE TR IBUNAL BANGALORE