ACIT, Mysore V. Adichunchanagiri Shikshana Trust, Nagamangala

ITA 775/BANG/2011

• Counselvise Citation: [2012] 140 COUNSELVISE.COM (IT) 63624 (ITAT-BANGALORE)
• Duration Of Justice: 11 month(s) 1 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 03-08-2012
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: C
• Next Hearing Date: 01-08-2012
• Assessment Year: 2008-2009
• Appeal Filed On: 02-09-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: PATANJALI CITIII
• Keywords: Depreciation; Charitable institution
• Section: 260A; 12A; 11

Judgement Text

PAGE 1 OF 6 ITA NOS.774 & 775 /BANG/2011 1 IN THE INCOME TAX APPELLATE TRIBUNAL, BANGALORE BENCH C BEFORE SHRI N BARATHVAJA SANKAR, VICE PRESIDENT AND SHRI GEORGE GEORGE K, JUDICIAL MEMBER ITA NOS.774 & 775/BANG/2011 (ASSESSMENT YEARS 2007-08 & 2008-09) THE ASST. COMMISSIONER OF INCOME TAX, CIRCLE- 1(1), MYSORE. VS SHRI ADICHUNCHANAGIRI SHIKSHANA TRUST, ADICHUNCHANAGIRI KSHETRA, NAGAMANGALA TALUK, MANDYA DIST. PA NO.AAATS 3584 P (APPELLANT) (RESPONDENT) DATE OF HEARING : 01.08.2012 DATE OF PRONOUNCEMENT : 03.08.2012 APPELLANT BY : SHRI PATANJALI, CIT-III RESPONDENT BY : SHRI RANGANATH, C.A. ORD ER PER BENCH : THESE ARE APPEALS PREFERRED BY THE DEPARTMENT AGA INST THE SEPARATE ORDERS OF THE CIT(A), MYSORE, BOTH DATED 29 .06.2011. THE RELEVANT ASSESSMENT YEARS ARE 2007-08 AND 2008-09. 2. THE GROUNDS RAISED IN THESE APPEALS ARE IDENTIC AL. THEY READ AS FOLLOWS:- (I) THE LEARNED CIT(A) HAS ERRED IN ALLOWING THE D EPRECIATION IN THE INSTANT CASE. (II) WHILE FILING RETURN OF INCOME ASSESSEE HAS CLAIMED BENEFIT UNDER SECTION 11 WHICH INCLUDE ONE, IN THE FORM OF APPLICATION OF FUNDS AND SECOND IN THE FORM OF DEPRECIATION. THE APPLICATION OF FUNDS IS ALLOWED UNDER PAGE 2 OF 6 ITA NOS.774 & 775 /BANG/2011 2 SECTION 11 ALREADY, DURING THE ASSESSMENT. ASSESSEE S CLAIM FOR DEPRECIATION AMOUNTS CLAIMING OF DOUBLE DEDUCTION. FOR THIS REASON, DEPRECIATION IS DISALL OWED. THE LEARNED CIT(A) HAS ERRED IN NOT APPRECIATING TH IS FACT BROUGHT OUT IN THE ASSESSMENT ORDER ON THE ISS UE OF DISALLOWING DEPRECIATION, WHICH HAS IN EFFECT NECES SITATED THIS APPEAL. 3. THE BRIEF FACTS OF THE CASE ARE AS FOLLOWS:- THE APPELLANT IS A REGISTERED CHARITABLE INSTITUT ION UNDER SECTION 12A OF THE ACT. FOR THE ASSESSMENT YEAR 200 7-08, RETURN OF INCOME WAS FILED ON 6/2/2008 DECLARING NIL INCOME. THE RE TURN WAS SELECTED FOR SCRUTINY AND THE ASSESSMENT WAS COMPLETED VIDE ORDER DATED 29/12/2009. IT WAS NOTED BY THE ASSESSING OFFICER THAT THE ASSES SEE HAD INVESTED ON BUILDING, WHICH WAS HELD FOR THE PURPOSES OF ITS OB JECTIVES. THE INVESTMENT IN BUILDING, IN THE RESPECTIVE YEARS OF INVESTMENT, WAS TAKEN AS APPLICATION OF INCOME AND HENCE, ACCORDING TO THE ASSESSING OFFICE R, THE SAME IS NOT ENTITLED TO DEPRECIATION. 3.1 SIMILARLY, FOR THE ASSESSMENT YEAR 2008-09, NIL RETURN OF INCOME WAS FILED. THE ASSESSING OFFICER COMPLETED THE ASSESSMENT BY ALLOWING THE EXPENDITURE OF RS.7.09 CRORES AS AGAIN ST THE CLAIM OF RS.16.78 CRORES. THE ASSESSING OFFICER REJECTED THE CLAIM O F THE ASSESSEE TO SET OFF OF DEPRECIATION AS AN INCOME APPLIED FOR THE OB JECTIVES OF THE TRUST. 4. AGGRIEVED BY THE DISALLOWANCE OF DEPRECIATION IN COMPUTING THE COMMERCIAL PROFITS OF THE ASSESSEE, THE ASSESSEE CA RRIED THE MATTER IN APPEAL BEFORE THE FIRST APPELLATE AUTHORITY. PAGE 3 OF 6 ITA NOS.774 & 775 /BANG/2011 3 5. IT WAS SUBMITTED BEFORE THE FIRST APPELLATE AUT HORITY THAT THE ASSESSING OFFICER HAS ERRED IN NOT PERMITTING THE S ET OFF OF DEPRECIATION CLAIMED ON THE ASSETS PUT TO USE FOR ACHIEVING THE OBJECTIVES OF THE TRUST AGAINST THE GROSS RECEIPTS AS PERMITTED UNDER SECTI ON 11 OF THE ACT. IT WAS FURTHER SUBMITTED THAT THE ASSESSING OFFICER HAD ER RED IN NOT FOLLOWING THE ORDER OF THE JURISDICTIONAL BENCH OF THE TRIBUNAL I N ASSESSEES OWN CASE FOR THE ASSESSMENT YEAR 2006-07 IN ITA NO.775/BANG/2009 DATED 29/1/2010. 6. THE CIT(A) ALLOWED THE APPEAL OF THE ASSESSEE. THE RELEVANT OBSERVATION OF THE CIT(A) IN RESPECT TO ASSESSMENT YEAR 2007-08 IS AS FOLLOWS:- ALL THE GROUNDS OF APPEAL FROM GROUND NOS.1 AND 2 ARE RELATING TO THE CLAIM OF DEPRECIATION NOT BEING ALL OWED BY THE ASSESSING OFFICER IN THE ASST. ORDER DT.29.12.2 009 UNDER SECTION 143(3). THE APPELLANT HAS FILED COPY OF THE ITATS ORDER IN APPELLANTS OWN CASE FOR THE ASSESS MENT YEAR 2006-07 VIDE ITA NO.775(BANG)/2009 DATED 29.1.2010 WHEREIN THE ITAT HAS DIRECTED TO ALLOW TH E DEPRECIATION. THE ITAT, FOLLOWING THE DECISION OF JURISDICTIONAL HIGH COURT IN THE CASE OF CIT V SOCI ETY OF THE SISTERS OF ST. ANNE 146 ITR 28, DIRECTED THAT T HE DEPRECIATION SHOULD BE ALLOWED. IN VIEW OF THE DEC ISIONS OF THE HONBLE ITAT IN THE CASE OF APPELLANTS OWN CASE WHICH IS BINDING ON ME, THE APPELLANTS APPEAL IS A LLOWED. 7. FOR SIMILAR REASON, THE CIT(A) ALLOWED THE APPE AL OF THE ASSESSEE FOR THE ASSESSMENT YEAR 2008-09. 8. THE REVENUE BEING AGGRIEVED IS IN APPEAL BEFORE US. PAGE 4 OF 6 ITA NOS.774 & 775 /BANG/2011 4 9. THE LEARNED DR SUBMITTED THAT THE ABOVE ISSUE W AS DECIDED IN FAVOUR OF REVENUE BY THE ORDER OF THE COCHIN BENCH O F THE TRIBUNAL IN THE CASE OF DY.DIT(EXEMPTIONS) V LISSIE MEDICAL INSTITU TIONS (2010) 8 TAXMANN.COM 82 (COCHIN ITAT). IT WAS SUBMITTED THA T THE ABOVE ORDER OF THE TRIBUNAL WAS AFFIRMED BY THE HONBLE KERALA HIGH COURT VIDE ITS JUDGEMENT DATED 17 TH FEBRUARY, 2012 IN ITA NO.42/2011. IT WAS SUBMITTED THAT THE HONBLE COCHIN BENCH OF THE TRIBUNAL HAS E LABORATELY CONSIDERED THE ISSUE AND DISTINGUISHED THE JUDGMENT OF THE HON BLE JURISDICTIONAL HIGH COURT IN THE CASE OF CIT V SOCIETY OF THE SISTERS OF ST. ANNE 146 ITR 28 ON WHICH THE BANGALORE BENCH OF ITAT HAS PLACED STRONG RELIANCE WHILE DECIDING THE ISSUE IN FAVOUR OF APPELLANT FOR THE ASSESSMENT YEAR 2006-07. 10. THE LEARNED AR SUBMITTED THAT THE ISSUE IN QUE STION IS SQUARELY COVERED BY THE ORDER OF THE TRIBUNAL IN ASSESSEES O WN CASE FOR THE IMMEDIATELY PRECEDING ASSESSMENT YEAR 2006-07 IN ITA NO.775/BANG/2009, WHEREIN THE TRIBUNAL HAS CATEGORICALLY HELD THAT THE APPELLANT IS ENTITLED TO DEPRECIATION ON AN ASSET, THOUGH THE INVESTMENT ON THE SAME WAS ALLOWED AS AN APPLICATION OF INCOME TO THE EXTENT REQUIRED TO FULFILL THE CONDITIONS PRESCRIBED UNDER SECTION 11(2) OF THE ACT. THE LEA RNED AR RELIED ON THE JUDGMENT OF THE PUNJAB & HARYANA HIGH COURT IN THE C ASE OF CIT V TINY TOTS EDUCATION SOCIETY REPORTED IN 330 ITR 21 (P&H). 11. IN THE REJOINDER, THE LEARNED DR SUBMITTED TH AT THE JUDGMENT OF PUNJAB AND HARYANA HIGH COURT RELIED ON BY THE ASS ESSEE IN THE CASE OF CIT V TINY TOTS EDUCATION SOCIETY (SUPRA) HAS BEEN C ONSIDERED IN THE LATEST ORDER OF THE COCHIN BENCH OF THE TRIBUNAL IN THE CA SE OF DEPUTY DIRECTOR OF PAGE 5 OF 6 ITA NOS.774 & 775 /BANG/2011 5 INCOME TAX (EXEMPTIONS) V ADI SANKARA TRUST REPORTE D IN 143 TTJ (COCH) 234, WHEREIN IT WAS HELD THAT THE DEPRECIATION CLAI MED BY THE ASSESSEE TRUST UNDER SECTION 32(1), IN RESPECT OF AN ASSET, THE EN TIRE COST OF WHICH STANDS ALLOWED BY WAY OF APPLICATION OF INCOME UNDER SECTION 11(1), IS NOT ALLOWABLE. IT WAS SUBMITTED THAT THE ORDER OF THE TRIBUNAL IN ASSESSEES OWN CASE FOR THE ASSESSMENT YEAR 2006-07 HAS NOT ATTAINED FINALIT Y AND THE SAME IS PENDING BEFORE THE HONBLE JURISDICTIONAL HIGH COUR T UNDER SECTION 260A OF THE ACT. 12. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSE D THE MATERIALS ON RECORD. THE TRIBUNAL IN ASSESSEES OWN CASE FOR THE ASSESSMENT YEAR 2006-07 AT PARA 7 OF ITS ORDER HAS DECIDED THE ISSU E IN FAVOUR OF THE ASSESSEE. THE RELEVANT FINDING OF THE TRIBUNAL REA DS AS FOLLOWS:- 7. WE HAVE HEARD BOTH THE PARTIES. WE HAVE IN THE EARLIER PARA REFERRED TO THE FINDINGS OF THE HONBL E BOMBAY HIGH COURT IN THE CASE OF INSTITUTE OF BANKIN G (SUPRA). WE HAVE ALSO GONE THROUGH THE DECISION OF THE JURISDICTIONAL HIGH COURT. THE HONBLE JURISDICTIO NAL HIGH COURT HELD THAT THE AMOUNT OF DEPRECIATION DEBITED TO THE ACCOUNT OF CHARITABLE INSTITUTIONS IS TO BE DED UCTED TO ARRIVE AT AN AVAILABLE INCOME FROM CHARITABLE OR RELIGIOUS PURPOSES. FOLLOWING THE DECISION OF THE JURISDICTIONAL HIGH COURT, WE THEREFORE, HOLD THAT THE DEPRECIATION IS TO BE DEDUCTED TO ARRIVE AT AN INCO ME AVAILABLE TO CHARITABLE AND RELIGIOUS PURPOSES. 12.1 THE ABOVE ORDER OF THE TRIBUNAL HAS NOT BEEN REVERSED BY THE HONBLE JURISDICTIONAL HIGH COURT. THE FACTS FOR T HE ASSESSMENT YEAR 2007- 08 AND 2008-09 BEING IDENTICAL TO THE FACTS CONSIDE RED BY THE TRIBUNAL FOR THE ASSESSMENT YEAR 2006-07, (ITA NO.775/BANG/2009 D T.29.1.2010), WE PAGE 6 OF 6 ITA NOS.774 & 775 /BANG/2011 6 FOLLOW THE COORDINATE BENCH ORDER OF THE TRIBUNAL I N ASSESSEES OWN CASE FOR THE ASSESSMENT YEAR 2006-07 AND HOLD THAT THE CIT(A) IS JUSTIFIED IN DIRECTING THE ASSESSING OFFICER TO GRANT DEPRECIATI ON IN RESPECT OF ASSESSMENT YEARS 2007-08 AND 2008-09. 13. IN THE RESULT, THE APPEALS FILED BY THE DEPARTM ENT ARE DISMISSED. THE ORDER PRONOUNCED ON THE 3 RD DAY OF AUGUST, 2012 AT BANGALORE. SD/- SD/- (N BARATHVAJA SANKAR) (GEORGE GEORGE K) VICE PRESIDENT JUDICIAL MEMBER COPY TO : 1. THE REVENUE 2. THE ASSESSEE 3. THE CIT CONCERNE D. 4. THE CIT(A) CONCERNED. 5. DR 6. GF MSP/ BY ORDER SENIOR PRIVATE SECRETARY, ITAT, BANGALORE.