Mary Immaculate Mission Hospital, Trichur V. The ITO, Trichur

ITA 814/COCH/2013

• Counselvise Citation: [2014] 140 COUNSELVISE.COM (IT) 81342 (ITAT-COCHIN)
• Duration Of Justice: 9 month(s) 17 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 17-10-2014
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB
• Next Hearing Date: 10-09-2014
• Assessment Year: 2007-2008
• Appeal Filed On: 31-12-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: M ANIL KUMAR
• Assessee Lawyers: JOSE POTTOKKARAN
• Keywords: Sale consideration of property below Jantri Value; Capital asset; Depreciation; Charitable institution
• Section: 12AA; 32; 11

Judgement Text

1 ITA NO. 814/COCH/2013 IN THE INCOME TAX APPELLATE TRIBUNAL COCHIN BENCH, COCHIN BEFORE SHRI N.R.S. GANESAN (JM) AND SHRI CHANDRA PO OJARI (AM) I.T.A NO. 814/COCH2013 (ASSESSMENT YEAR 2007-08) MARY IMMACULATE MISSION HOSPITAL VS ITO, WD.1(1) ENGANDIYUR, THRISSUR 680 615 THRISSUR PAN : AAAAM1950C (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI JOSE POTTOKKARAN RESPONDENT BY : SHRI M ANIL KUMAR, CIT DATE OF HEARING : 10-09-2014 DATE OF PRONOUNCEMENT : 17-10-2014 O R D E R PER N.R.S. GANESAN (JM) THIS APPEAL OF THE ASSESSEE IS DIRECTED AGAINST TH E ORDER OF THE CIT(A)-V, KOCHI DATED 17-10-2013 AND PERTAINS TO AS SESSMENT YEAR 2007- 08. 2. SHRI JOSE POTTOKKARAN, THE LD.REPRESENTATIVE FOR THE ASSESSEE SUBMITTED THAT THE ONLY ISSUE ARISES FOR CONSIDERAT ION IS EXEMPTION CLAIMED BY THE ASSESSEE U/S 11(1) OF THE ACT IN RESPECT OF EXPENDITURE INCURRED FOR INSTALLATION OF HIGH TENSION ELECTRIC CONNECTION. ACCORDING TO THE 2 ITA NO. 814/COCH/2013 LD.REPRESENTATIVE, THE ASSESSEE IS A CHARITABLE INS TITUTION ENGAGED ITSELF IN RUNNING A HOSPITAL. THE LD.REPRESENTATIVE SUBMITTE D THAT THE ASSESSEES HOSPITAL IS REGISTERED AS CHARITABLE INSTITUTION U/ S 12AA OF THE ACT. THE HIGH TENSION ELECTRIC CONNECTION INSTALLED BY THE ASSESS EE IS FOR THE PURPOSE OF EFFECTIVE RUNNING OF THE HOSPITAL, THEREFORE, IT IS A CAPITAL ASSET ACQUIRED BY THE ASSESSEE IN THE COURSE OF RUNNING OF THE HOSPIT AL FOR THE PURPOSE OF CHARITABLE ACTIVITY. HENCE, THE EXPENDITURE INCURR ED BY THE ASSESSEE HAS TO BE TREATED AS APPLICATION OF INCOME U/S 11(1) OF THE ACT. REFERRING TO THE ASSESSMENT ORDER, THE LD.REPRESENTATIVE SUBMITTED T HAT THE ASSESSING OFFICER WHILE DISALLOWING THE CLAIM OF THE ASSESSEE U/S 11(1) ALLOWED THE DEPRECIATION @10%. ACCORDING TO THE LD.REPRESENTAT IVE, THE VERY FACT THAT THE ASSESSING OFFICER ALLOWED DEPRECIATION SHOWS TH AT THE GENUINENESS OF THE PURCHASE OF HIGH TENSION ELECTRIC CONNECTION IS ACCEPTABLE. ON A QUERY FROM THE BENCH HOW TWO CLAIMS VIZ. EXEMPTION U/S 11 (1) AND DEPRECIATION U/S 32 COULD BE CLAIMED SIMULTANEOUSLY, THE LD.REPR ESENTATIVE SUBMITTED THAT THE ASSESSMENT ORDER WAS PASSED BEFORE THE JUD GMENT OF THE KERALA HIGH COURT IN LISSY HOSPITAL, THEREFORE, THE ASSESS EE HAS RIGHTLY CLAIMED BOTH THE DEDUCTIONS. THE LD.REPRESENTATIVE FURTHER SUBMITTED THAT IN CASE BOTH THE RELIEFS COULD NOT BE ALLOWED, THE LD.REPRE SENTATIVE SUBMITTED THAT THE EXPENDITURE BE ALLOWED AS APPLICATION OF INCOME US/ 11(1) INSTEAD OF DEPRECIATION. 3 ITA NO. 814/COCH/2013 3. ON THE CONTRARY, SHRI M ANIL KUMAR, THE LD.DR SU BMITTED THAT THE ASSESSEE HAS NOT SUBSTANTIATED THE PURCHASE OF HIGH TENSION ELECTRIC CONNECTION FITTINGS. NO DETAILS WERE FILED BEFORE THE ASSESSING OFFICER TOWARDS THE EXPENDITURE. EVEN THOUGH THE ASSESSEE REPLIED TO THE QUERIES IN RESPECT OF PURCHASE OF LAND AND BUILDING, THE AS SESSEE HAS NOT REPLIED WITH REGARD TO SPECIFIC QUERY RAISED BY THE ASSESSI NG OFFICER IN RESPECT OF PURCHASE OF HIGH TENSION ELECTRIC CONNECTION. THER EFORE, ACCORDING TO THE LD.DR, THE GENUINENESS OF THE PURCHASE OF FITTINGS WAS NOT ESTABLISHED. ON A QUERY FROM THE BENCH, WHEN THE ASSESSING OFFICER ALLOWED DEPRECIATION ON THE HIGH TENSION ELECTRIC CONNECTION HE ACCEPTED THE PURCHASE OF HIGH TENSION ELECTRIC CONNECTION, THE LD.DR SUBMITTED TH AT DEPRECIATION WAS NOT ALLOWED ON HIGH TENSION ELECTRIC CONNECTION BUT IT WAS ALLOWED ONLY ON THE BUILDING. THE LD.DR FURTHER SUBMITTED THAT THE ASS ESSMENT ORDER IS NOT CLEAR ON WHAT MACHINERY / BUILDING THE DEPRECIATION WAS ALLOWED. ACCORDING TO THE LD.REPRESENTATIVE, IN THE ABSENCE OF ANY MATERIAL TO SUBSTANTIATE THE PURCHASE OF HIGH TENSION ELECTRIC CONNECTION, THE ASSESSING OFFICER HAS RIGHTLY DISALLOWED THE CLAIM OF THE ASSESSEE. REFERRING TO PAPER BOOK FILED BY THE ASSESSEE, THE LD.DR SUBMITTED THAT NOW THE ASSESSEE HAS FILED RELEVANT INVOICES FOR PU RCHASE OF HIGH TENSION ELECTRIC CONNECTION BEFORE THIS TRIBUNAL. 4 ITA NO. 814/COCH/2013 4. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS ON EITH ER SIDE AND ALSO PERUSED THE MATERIAL AVAILABLE ON RECORD. FROM THE ORDER OF THE LOWER AUTHORITIES IT APPEARS THAT THE ASSESSEE HAS INCURR ED AN EXPENDITURE OF RS.20,38,218 TOWARDS ADDITION OF HIGH TENSION ELECT RIC CONNECTION. THE ASSESSEE EXPLAINED BEFORE THE ASSESSING OFFICER THA T AN ADDITION OF LAND AND BUILDING WAS MADE TO THE EXTENT OF RS.89,97,225 AND ALSO CLAIMED AN EXPENDITURE OF RS.20,38,218 FOR EXPENSES INCURRED I N HIGH TENSION ELECTRIC CONNECTION WORK. HOWEVER, IT APPEARS THAT NO MATER IAL WAS FILED BEFORE THE ASSESSING OFFICER TOWARDS THE PURCHASE OF HIGH TENS ION ELECTRIC CONNECTION FITTINGS. THE ASSESSING OFFICER ALLOWED DEPRECIATI ON ON HIGH TENSION ELECTRIC CONNECTION TAKING THE WRITTEN DOWN VALUE AT RS.41,6 3,025. IT IS NOT CLEAR FROM THE ASSESSMENT ORDER WHETHER RS.6,41,63,025 IN CLUDES THE ADDITION CLAIMED BY THE ASSESSEE FOR THE YEAR UNDER CONSIDER ATION TO THE EXTENT OF RS.20,38,218. IN CASE THE WRITTEN DOWN VALUE OF RS .41,63,025 INCLUDES THE ADDITION MADE DURING THE YEAR UNDER CONSIDERATION T O THE EXTENT OF RS.20,38,218, THEN, THE ASSESSING OFFICER ACCEPTED THE GENUINENESS OF THE PURCHASE OF HIGH TENSION ELECTRIC CONNECTION. HOWE VER, IT IS NOT CLEAR FROM THE ASSESSMENT ORDER WHETHER DEPRECIATION WAS NOT G RANTED ON THE VALUE OF THE HIGH TENSION ELECTRIC CONNECTION INCLUDING T HE ADDITION MADE DURING THE YEAR UNDER CONSIDERATION TO THE EXTENT OF RS. 2 0,38,218. THEREFORE, THE MATTER NEEDS TO BE CLARIFIED. MOREOVER, REGARDING APPLICATION OF FUNDS U/S 11(1), THIS TRIBUNAL IS OF THE CONSIDERED OPINION T HAT THE ASSESSEE CAN 5 ITA NO. 814/COCH/2013 CLAIM EITHER EXEMPTION U/S 11(1) AS APPLICATION OF INCOME FOR ACQUIRING CAPITAL ASSET OR DEPRECIATION ON THE CAPITAL ASSET. BOTH CANNOT BE CLAIMED TOGETHER SINCE THE SAME WOULD AMOUNTS TO DOUBLE DED UCTION. MOREOVER, THE CLAIM OF EXEMPTION U/S 11 IS NOT EXAMINED BY TH E ASSESSING OFFICER. FURTHERMORE, FROM THE ORDER OF THE CIT(A) IT APPEAR S THAT THE ASSESSEE HAS NOT CO-OPERATED WITH THE DEPARTMENT AND THE MATERIA LS WITH REGARD TO PURCHASE OF HIGH TENSION ELECTRIC CONNECTION FITTIN GS WAS NOT FURNISHED BEFORE THE LOWER AUTHORITIES. THEREFORE, THE CIT(A ) ALSO HAS NOT EXAMINED THE APPLICABILITY OF SECTION 11(1) OF THE ACT. 5. NOW THE ASSESSEE HAS FILED THE INVOICES FOR PURC HASE OF HIGH TENSION ELECTRIC CONNECTION BEFORE THIS TRIBUNAL. THEREFOR E, THE GENUINENESS OF THE INVOICES NEEDS TO BE EXAMINED AND IT IS TO BE FOUND OUT WHETHER THE COPIES OF THE INVOICES FILED BY THE ASSESSEE RELATE TO HIG H TENSION ELECTRIC CONNECTION IN THE PREMISES OF THE ASSESSEE. THIS T RIBUNAL IS OF THE CONSIDERED OPINION THAT IN VIEW OF THE FACT THAT IT IS NOT CLEAR FROM THE ASSESSMENT ORDER WHETHER THE VALUE OF THE HIGH TENS ION ELECTRIC CONNECTION TAKEN BY THE ASSESSING OFFICER AT RS. 41,63,025 INC LUDES THE ADDITION MADE DURING THE YEAR UNDER CONSIDERATION TO THE EXTENT O F RS.20,38,218 THE ISSUE NEEDS TO BE VERIFIED. ACCORDINGLY, THE ORDERS OF T HE LOWER AUTHORITIES ARE SET SIDE AND THE ISSUE IS REMITTED BACK TO THE FILE OF THE ASSESSING OFFICER. THE ASSESSING OFFICER SHALL RE-EXAMINE THE ISSUE ON THE BASIS OF THE 6 ITA NO. 814/COCH/2013 INVOICES FILED BY THE ASSESSEE WITH REGARD TO CLAIM OF PURCHASE OF HIGH TENSION ELECTRIC CONNECTION FITTINGS AND THEREAFTER DECIDE THE ISSUE IN ACCORDANCE WITH LAW AFTER GIVING REASONABLE OPPORTU NITY TO THE ASSESSEE. 6. IN THE RESULT, THE APPEAL IS ALLOWED FOR STATIST ICAL PURPOSE. ORDER PRONOUNCED IN THE OPEN COURT ON THIS 17 TH OCTOBER, 2014. SD/- SD/- (CHANDRA POOJARI) (N.R.S. GANESAN) ACCOUNTANT MEMBER JUDICIAL MEMBER COCHIN, DT : 17 TH OCTOBER, 2014 PK/- COPY TO: 1. MARY IMMACULATE MISSION HOSPITAL, ENGANDIYUR, TH RISSUR 680 615 2. THE ITO, WD.1(1), THRISSUR 680 001 3. THE COMMISSIONER OF INCOME-TAX, TRICHUR 4. THE COMMISSIONER OF INCOME-TAX(A)-V, KOCHI 5. THE DR (TRUE COPY) BY ORDER ASSTT. REGISTRAR, INCOME-TAX APPELLATE TRIBUNAL, COCHIN BENCH