The Deputy Commissioner of Income Tax (Exemption) Circle-1, Mangaluru V. M/s The Bethany Educational Society , Mangaluru

ITA 871/BANG/2017

• Counselvise Citation: [2017] 127 COUNSELVISE.COM (IT) 7608 (ITAT-BANGALORE)
• Duration Of Justice: 4 month(s) 18 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 08-09-2017
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: C
• Assessment Year: 2012-2013
• Appeal Filed On: 20-04-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: R N PARBAT
• Keywords: Depreciation; Charitable institution
• Section: 143(3); 12A; 11

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, BANGALORE BENCH 'C' BEFORE SHRI JASON P BOAZ, ACCOUNTANT MEMBER AND SHRI LALIET KUMAR, JUDICIAL MEMBER ITA NO.871/BANG/2017 (ASST. YEAR 2012-13) THE DY. COMMISSIONER OF INCOME-TAX (EXEMPTIONS), CIRCLE-1, MANGALORE. . APPELLANT VS. M/S THE BETHANY EDUCATIONAL SOCIETY, 15-22-1371, BETHANY CONVENT, BENDORE MANGALURU. . RESPONDENT PAN - AAATB3080M. APPELLANT BY : SHRI R.N PARBAT, CIT RESPONDENT BY : NONE DATE OF HEARING : 6-9-2017 DATE OF PRONOUNCEMENT : 8-9-2017 O R D E R PER SHRI JASON P BOAZ, ACCOUNTANT MEMBER: THIS APPEAL BY THE REVENUE IS DIRECTED AGAINST THE ORDER OF THE COMMISSIONER OF INCOME-TAX (APPEALS), MANGAL URU DATED 9/2/2017 FOR ASST. YEAR 2012-13. SINCE NONE WAS PR ESENT FOR THE ITA NO. 871/B/17 2 ASSESSEE WHEN THE CASE WAS CALLED, THIS APPEAL IS D ISPOSED OF WITH THE ASSISTANCE OF THE LD DR FOR REVENUE AND THE MATERIA L ON RECORD. 2. BRIEFLY STATED, THE FACTS OF THE CASE RELEVANT F OR THIS APPEAL ARE AS UNDER:- 2.1 THE ASSESSEE, A TRUST, REGISTERED U/S 12A OF THE INCOME-TAX ACT 1961 (IN SHORT THE ACT), FILED ITS RETURN FOR ASS T. YEAR 2012-13 ON 27/9/2012 DECLARING NIL INCOME. THE CASE WAS TAKEN UP FOR SCRUTINY AND THE ASSESSMENT WAS COMPLETED U/S 143(3) OF THE ACT VIDE ORDER DATED 27/3/2015 WHEREIN THE ASSESSEES INCOME WAS D ETERMINED AT RS.2,58,93,689/-, IN VIEW OF THE FOLLOWING DISALLOW ANCES:- (I) DEPRECIATION ON FIXED ASSETS RS.1,87,96,913/- (II) ACCUMULATION U/S 11(2) RS.80,06 ,718/- (III) FIXED ASSETS ACQUIRED BY UTILIZING BORROWED FUNDS RS.15,73,013/- 2.2 AGGRIEVED BY THE ORDER OF ASSESSMENT DATED 27/3 /2015 FOR ASST. YEAR 2012-13, THE ASSESSEE WENT IN APPEAL BEFORE TH E CIT(A), MANGALORE. THE LD CIT(A) DISPOSED THE APPEAL VIDE THE IMPUGNED ORDER DATED 9/2/2017, ALLOWING THE ASSESSEE PARTIAL RELIEF. ITA NO. 871/B/17 3 3.1 REVENUE, BEING AGGRIEVED BY THE ORDER OF THE CI T(A), MANGALORE DATED 9/2/2017 FOR ASST. YEAR 2012-13, HA S PREFERRED THIS APPEAL BEFORE THE TRIBUNAL, RAISING THE FOLLOWING G ROUNDS:- 1. THE ORDER OF THE LD. CIT (A) IS OPPOSED TO LAW AND FACTS OF THE CASE. 2. THE LD. CIT(A) HAS ERRED IN ALLOWING THE ASSESSE E'S CLAIM OF DEPRECIATION AND NOT CONSIDERING THE JUDGM ENT OF THE HON'BLE KERALA HIGH COURT IN THE CASE OF LISSIE MEDICAL INSTITUTION DT. 17.02.2012. 3. THE LD. CIT(A) HAS ALSO FAILED TO APPRECIATE THE FACT THAT DEPRECIATION IS ADMISSIBLE ONLY IN RESPECT OF ASSET S USED BY THE ASSESSEE FOR THE PURPOSE OF BUSINESS OR PROFESS ION. SINCE THE ASSESSEE IS NOT ENGAGED IN BUSINESS BUT UNDERTAKING CHARITABLE/ RELIGIOUS ACTIVITIES, THE B ENEFIT OF DEPRECIATION SHOULD NOT BE AVAILABLE TO IT. 4. FOR THESE AND SUCH OTHER GROUNDS IT IS URGED THA T THE ORDER OF THE LD. CIT(A), ON THE ABOVE POINTS MAY BE SET ASIDE AND THE ORDER OF THE ASSESSING OFFICER BE RES TORED. 5. THE APPELLANT CRAVES LEAVE TO ADD, ALTER OR AMEN D ALL OR ANY OF THE GROUNDS OF APPEAL BEFORE OR AT THE TIME OF THE HEARING OF THE APPEAL. ITA NO. 871/B/17 4 3.2 THE LD DR FOR REVENUE WAS HEARD IN SUPPORT OF T HE GROUNDS RAISED (SUPRA) AND PLACED STRONG RELIANCE ON THE OR DER OF THE AO IN DISALLOWING THE ASSESSEES CLAIM FOR DEPRECIATION O N FIXED ASSETS IN VIEW OF THE DECISION OF THE HONBLE KERALA HIGH COU RT IN THE CASE OF LISSIE MEDICAL INSTITUTIONS (384 ITR 344) (KAR). 3.3.1 ACCORDING TO THE LD AR FOR THE ASSESSEE, THE ISSUE IN RESPECT OF THE CLAIM OF DEPRECIATION IS COVERED BY THE DECI SION OF THE HONBLE KARNATAKA HIGH COURT IN THE CASE OF DIT(E) VS. AL- AMEEN CHARITABLE TRUST AND OTHERS (383 ITR 517) (KA R) VIDE ORDER DATED 22/2/2016. THE LD AR ALSO, INTER ALIA, PLACED RELIANCE ON THE FOLLOWING DECISIONS OF THE CO-ORDINATE BENCH ES OF THIS TRIBUNAL:- (I) MOOGAMBIGAI CHARITABLE TRUST VS. ADDL. CIT (EXEMPTION) IN ITA NO.1224/BANG/2015 DATED 13/7/201 6; (II) ITO EXEMPTION VS. SHARADDHA TRUST IN ITA NO.899/BANG/2016 DATED 7/4/2017, (III) JYOTHI CHARITABLE TRUST VS. DCIT (EXEMPTION) IN ITA NO.622/BANG/2015 DATED 14/8/2015. 3.3.2 IT WAS SUBMITTED THAT THE ISSUE IN DISPUTE I. E CLAIM OF DEPRECIATION IS ALSO COVERED BY THE ABOVE ORDERS OF THE VARIOUS CO- ORDINATE BENCHES OF THIS TRIBUNAL. ITA NO. 871/B/17 5 3.4.1 WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUS ED AND CAREFULLY CONSIDERED THE MATERIAL ON RECORD, INCLUD ING THE JUDICIAL PRONOUNCEMENTS CITED. WE FIND THAT THE ISSUE OF CL AIM OF DEPRECIATION BY A CHARITABLE TRUST U/S 11 OF THE AC T HAS BEEN CONSIDERED AND HELD IN FAVOUR OF THE ASSESSEE BY VA RIOUS CO- ORDINATE BENCHES OF THIS TRIBUNAL AS CITED (SUPRA) AND ALSO BY THE HONBLE KARNATAKA HIGH COURT, IN THE CASE OF DIT(EX EMPTION) VS. AL-AMEEN CHARITABLE FUND TRUST & OTHERS (383 ITR 51 7) (KAR). IN THE CASE OF MOOGAMBIGAI CHARITABLE AND EDUCATION TRUST VS. ADIT (EXEMPTION), THE CO-ORDINATE BENCH IN ITS ORDE R IN ITA NO.1224/BANG/2015 DATED 13/7/2016 AT PARA 11 THEREO F HAS HELD AS UNDER:- ITA NO. 871/B/17 6 ITA NO. 871/B/17 7 3.4.2 RESPECTFULLY FOLLOWING THE DECISION OF THE HO NBLE KARNATAKA HIGH COURT IN THE CASE OF AL-AMEEN CHARIT ABLE FUND TRUST & OTHERS (383 ITR 517), WHEREIN THE HONBLE H IGH COURT HAS DISTINGUISHED THE DECISION OF THE HONBLE KERAL A HIGH COURT IN LISSIE MEDICAL INSTITUTIONS (SUPRA) AND ALSO FOLLOW ING THE DECISION OF THE CO-ORDINATE BENCH IN THE CASE OF M/S MOOGAM BIGAI CHARITABLE & EDUCATIONAL TRUST, IN ITA NO.1224/BANG /2015 DATED 13/7/2016, WE UPHOLD THE DECISION OF THE LD CIT(A) IN ALLOWING THE ASSESSEES CLAIM FOR DEPRECIATION ON FIXED ASSETS F OR ASST. YEAR 2012-13. CONSEQUENTLY, THE GROUNDS RAISED BY REVEN UE (SUPRA) ON THIS ISSUE ARE DISMISSED. ITA NO. 871/B/17 8 4. IN THE RESULT, REVENUES APPEAL FOR ASST. YEAR 2 012-13 IS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 8 TH SEPTEMBER, 2017 . SD/- SD/- (LALIET KUMAR) (JA SON P BOAZ) JUDICIAL MEMBER ACCOUNTANT MEMB ER BANGALORE DATED : /9/2017 VMS COPY TO :1. THE ASSESSEE 2. THE REVENUE 3.THE CIT CONCERNED. 4.THE CIT(A) CONCERNED. 5.DR 6.GF BY ORDER SR. PRIVATE SECRETAR Y, ITAT, BANGALORE.