Assistant Commissioner of Income-tax, V. Shri Sadguru Brahma Chaitanya Maharaj Gondwalekar Chaitanya Upasana Trust, Pune

ITA 871/PUN/2015

• Counselvise Citation: [2017] 127 COUNSELVISE.COM (IT) 9540 (ITAT-PUNE)
• Duration Of Justice: 1 year(s) 11 month(s) 7 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 12-05-2017
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: B
• Assessment Year: 2011-2012
• Appeal Filed On: 05-06-2015
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: AMIT BOBATE
• Keywords: Depreciation; Charitable institution; Cost of acquisition; Capital expenditure
• Section: 143(3); 12A

Judgement Text

] IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCH B, PUNE BEFORE SHRI ANIL CHATURVEDI, AM AND SHRI VIKAS AWASTHY, JM . / ITA NO.870 & 871/PUN/2015 [ [ / ASSESSMENT YEARS : 2010-11 & 2011-12 ASST. COMMISSIONER OF INCOME TAX (EXEMPTION) CIRCLE, PUNE, 2 ND FLOOR, B.O. BHAVAN, SECTOR NO.47, PLOT NO.1, PUNE SATARA ROAD, PUNE 411 009. . / APPELLANT V/S SHRI SADGURU BRAHMA CHAITANYA MAHARAJ GONDWALEKAR CHAITANYA UPASANA TRUST, C/O. SHRI S.G. DAMLE, 519, NARAYAN PETH, PUNE. PAN NO.AAATS4677F. . / RESPONDENT ASSESSEE BY : SHRI NIKHIL PATHAK REVENUE BY : SHRI AMIT BOBATE / ORDER PER ANIL CHATURVEDI, AM : THESE TWO APPEALS FILED BY THE REVENUE ARE EMANATING OUT OF TWO SEPARATE ORDERS OF COMMISSIONER OF INCOME-TAX (A)-10, PUNE DT.04.03.2015 FOR THE ASSESSMENT YEARS 2010-11 AND 2011-12. 2. BEFORE US, AT THE OUTSET, LD.AR SUBMITTED THAT THOUGH THE APPEALS FILED BY THE REVENUE ARE FOR DIFFERENT ASSESSMENT YEARS BUT THE FACTS AND ISSUES INVOLVED IN BOTH THE APPEALS ARE IDENTICAL EXCEPT FOR THE ASSESSMENT YEAR AND THE AMOUNTS INVOLVED AND THEREFORE THE SUBMISSIONS MADE BY HIM WHILE ARGUING ONE APPEAL WOULD BE EQUALLY APPLICABLE TO THE OTHER APPEAL ALSO AND THEREFORE, / DATE OF HEARING : 17.04.2017 / DATE OF PRONOUNCEMENT: 12.05.2017 2 BOTH THE APPEALS CAN BE HEARD TOGETHER. THE AFORESAID SUBMISSION OF THE LD.AR HAS NOT BEEN OBJECTED TO BY LD.DR. WE THEREFORE FOR THE SAKE OF CONVENIENCE PROCEED TO DISPOSE OF BOTH THE APPEALS BY A CONSOLIDATED ORDER. HOWEVER, WE PROCEED WITH NARRATING THE FACTS FOR ASSESSMENT YEAR 2010-11. 3. THE RELEVANT FACTS AS CULLED OUT FROM THE MATERIAL ON RECORD ARE AS UNDER :- 3.1 ASSESSEE IS A TRUST STATED TO BE REGISTERED UNDER THE BOMBAY PUBLIC TRUSTS ACT 1950 BY REGISTRATION DATED 24.03.1980. SUBSEQUENTLY IT WAS ALSO REGISTERED U/S 12A OF THE INCOME TAX ACT ON 05.07.1980. ASSESSEE FILED ITS RETURN OF INCOME FOR A.Y. 2010-11 ON 20.08.2010 DECLARING TOTAL INCOME AT RS. NIL. THE CASE WAS SELECTED FOR SCRUTINY AND THEREAFTER ASSESSMENT WAS FRAMED U/S 143(3) VIDE ORDER DT.28.03.2013 AND THE TOTAL INCOME/SURPLUS WAS DETERMINED AT RS.69,86,400/-. AGGRIEVED BY THE ORDER OF AO, ASSESSEE CARRIED THE MATTER BEFORE LD. CIT(A), WHO VIDE ORDER DT.04.03.2015 GRANTED SUBSTANTIAL RELIEF TO THE ASSESSEE. AGGRIEVED BY THE ORDER OF LD. CIT(A), REVENUE IS NOW IN APPEAL BEFORE US AND HAS RAISED THE FOLLOWING GROUNDS : WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD.CIT(A) WAS JUSTIFIED IN ALLOWING DEPRECIATION ON AN ASSETS ALREADY TREATED AS APPLICATION OF INCOME ? 4. DURING THE COURSE OF ASSESSMENT PROCEEDINGS, AO NOTICED THAT ASSESSEE HAD CLAIMED DEPRECIATION OF RS.89,77,834/- ON THE COST OF ASSETS WHICH WAS ALLOWED AS AN APPLICATION OF INCOME. THE CLAIM OF DEPRECIATION WAS DISALLOWED ON THE GROUND THAT IF THE CLAIM OF DEPRECIATION IS ALLOWED AS AN APPLICATION OF INCOME, IT WOULD 3 AMOUNT TO DOUBLE DEDUCTION AND FOR THIS VIEW HE HAD RELIED ON THE DECISION OF HONBLE KERALA HIGH COURT IN THE CASE OF LISSIE MEDICAL INSTITUTE (2012) 81 CCH 067 AND OTHER DECISIONS. AGGRIEVED BY THE ORDER OF AO, ASSESSEE CARRIED THE MATTER BEFORE LD. CIT(A), WHO DECIDED THE ISSUE IN FAVOUR OF THE ASSESSEE BY HOLDING AS UNDER : I HAVE CAREFULLY CONSIDERED THE FACTS OF THE CASE AS WELL AS REPLY OF THE APPELLANT. IT IS SEEN THAT THE DECISION OF HONBLE SUPREME COURT IN THE CASE OF ESCORTS LTD (SUPRA) HAS BEEN GIVEN IN RESPECT OF COMMERCIAL ESTABLISHMENT AND NOT IN CASE OF TRUST AND THEREFORE THE FACTS ARE DISTINGUISHABLE IN THIS CASE. IN FACT, THE ISSUE IS SQUARELY COVERED BY THE DECISION OF HONBLE BOMBAY HIGH COURT IN THE CASE OF CIT VS. INSTITUTE OF BANKING (2003) 264 ITR 110(BOM) AND ALSO IN THE CASE OF CIT VS. FRAMJEE CAWASJEE INSTITUTE (1993) CTR 463(BOM). IN VIEW OF BINDING DECISION OF HONBLE BOMBAY HIGH COURT IN THE ABOVE MENTIONED TWO CASES, IT IS HELD THAT THE ASSESSING OFFICER WAS NOT CORRECT IN DISALLOWING THE CLAIM OF DEPRECIATION AMOUNTING TO RS.89,77,885/-. ACCORDINGLY, THE ASSESSING OFFICER IS DIRECTED TO DELETED THE ADDITION. THUS, THE GROUND IS ALLOWED. AGGRIEVED BY THE ORDER OF LD. CIT(A), REVENUE IS NOW IN APPEAL BEFORE US. 5. BEFORE US, LD. D.R. SUPPORTED THE ORDER OF AO. LD. A.R. ON THE OTHER HAND REITERATED THE SUBMISSIONS MADE BEFORE AO AND LD. CIT(A) AND FURTHER SUBMITTED THAT LD. CIT(A) WHILE DECIDING THE ISSUE IN FAVOUR OF THE ASSESSEE HAD RELIED ON THE DECISION OF HONBLE HIGH COURT IN THE CASE OF CIT VS. INSTITUTE OF BANKING REPORTED IN (2003) 264 ITR 110 (BOM) AND OTHER DECISIONS. HE FURTHER SUBMITTED THAT THE CO-ORDINATE BENCH OF THE TRIBUNAL ON IDENTICAL FACTS AND IN THE CASE OF SHREYASH PRATISTHAN IN ITA NO.1758/PN/2014 DT.05.10.2016 DECIDED THE ISSUE IN FAVOUR OF THE ASSESSEE. HE ALSO PLACED ON RECORD THE COPY OF THE AFORESAID DECISION. HE THUS SUPPORTED THE ORDER OF COMMISSIONER OF INCOME TAX (APPEALS). 4 6. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL ON RECORD. THE ISSUE IN THE PRESENT CASE IS WHETHER THE ALLOWABILITY OF DEPRECIATION ON THE ASSETS, THE ACQUISITION ON WHICH HAS ALREADY BEEN ALLOWED AS AN APPLICATION OF INCOME, WOULD AMOUNT TO DOUBLE DEDUCTION ? WE FIND THAT LD. CIT(A) WHILE DECIDING THE ISSUE IN FAVOUR OF THE ASSESSEE HAD RELIED ON THE DECISION IN THE CASE OF CIT VS. INSTITUTE OF BANKING (SUPRA) AND CIT VS. FRAMJEE CAWASJEE INSTITUTE (1993) CTR 463 (BOM). BEFORE US, REVENUE HAS NOT PLACED ANY CONTRARY BINDING DECISION. WE FURTHER FIND THAT ON IDENTICAL ISSUE IN THE CASE OF ACIT VS. SREYASH PRATISTHAN (SUPRA), THE CO-ORDINATE BENCH OF THE TRIBUNAL HAS DECIDED THE ISSUE IN FAVOUR OF THE ASSESSEE BY HOLDING AS UNDER : 10. AFTER HEARING BOTH THE SIDES, WE FIND THE AO IN THE INSTANT CASE DISALLOWED THE CLAIM OF DEPRECIATION ON THE GROUND THAT THE COST OF ASSET HAS ALREADY BEEN ALLOWED AS APPLICATION OF INCOME IN PAST ASSESSMENT YEARS AND ALLOWANCE OF DEPRECIATION ON THE SAME WILL AMOUNT TO DOUBLE DEDUCTION. FOR THE ABOVE PROPOSITION, THE AO RELIED ON THE DECISION OF HONBLE SUPREME COURT IN THE CASE OF ESCORTS LTD. AND OTHERS (SUPRA). WE FIND THE LD.CIT(A) RELYING ON VARIOUS DECISIONS ALLOWED THE CLAIM OF DEPRECIATION AND HIS OBSERVATION HAS ALREADY BEEN REPRODUCED IN THE PRECEDING PARAGRAPHS. 11. WE FIND AN IDENTICAL ISSUE HAD COME UP BEFORE THE TRIBUNAL IN THE CASE OF DCIT VS. SANJEEVAN VIDYALAYA TRUST (SUPRA) WHEREIN THE TRIBUNAL AFTER CONSIDERING THE DECISION OF HONBLE SUPREME COURT IN THE CASE OF ESCORTS LTD. AND OTHERS (SUPRA) AND FOLLOWING THE DECISION OF THE HONBLE BOMBAY HIGH COURT IN THE CASE OF DCIT FRAMJEE CAWASJEE INSTITUTE (SUPRA) HAS ALLOWED THE CLAIM OF DEPRECIATION IN CASE OF RELEVANT ASSET WHICH HAS ALREADY BEEN ALLOWED AS APPLICATION OF INCOME FOR CHARITABLE PURPOSES. THE RELEVANT OBSERVATION OF THE TRIBUNAL FROM PARA 4 ONWARDS READ AS UNDER : 4. IN BRIEF, THE FACTS ARE THAT THE RESPONDENT-ASSESSEE IS A TRUST WHICH IS RUNNING EDUCATIONAL INSTITUTIONS AND IS REGISTERED UNDER SECTION 12A(A) OF THE ACT WITH THE COMMISSIONER OF INCOME-TAX. WHILE FINALISING THE ASSESSMENT, THE ASSESSING OFFICER NOTICED THAT THE ASSESSEE HAD CLAIMED DEPRECIATION OF RS 59,44,712/- ON ASSETS WHOSE COST HAD BEEN TREATED AS APPLICATION OF INCOME IN THE PAST YEARS. AS PER THE ASSESSING OFFICER, SUCH DEPRECIATION CLAIM WAS NOT ALLOWABLE, SINCE 100% OF THE CORRESPONDING CAPITAL EXPENDITURE WAS ALREADY ALLOWED AS APPLICATION OF INCOME TO THE ASSESSEE IN EARLIER YEAR. THEREFORE, THE ASSESSEE'S CLAIM OF DEPRECIATION OF RS 59,44,712/- WAS DISALLOWED. 5 5. IN APPEAL BEFORE THE COMMISSIONER OF INCOME-TAX (APPEALS), THE ASSESSEE JUSTIFIED THE CLAIM, INTER ALIA, BY RELYING UPON THE JUDGMENT OF THE HON'BLE BOMBAY HIGH COURT IN THE CASE OF DIT(E) V FRAMJEE CAWASJEE INSTITUTE 109 CTR 463 (BOM). THE COMMISSIONER OF INCOME-TAX (APPEALS) RELYING UPON THE AFORESAID DECISION OF THE JURISDICTIONAL HIGH COURT ALLOWED THE CLAIM OF THE ASSESSEE FOR DEPRECIATION. AGAINST THE AFORESAID, REVENUE IS IN APPEAL BEFORE US. 6. AS NOTED EARLIER, THE ONLY PLEA AGITATED BEFORE US BY THE REVENUE IS BASED ON THE PROPOSITION THAT THE ALLOWANCE OF DEPRECIATION WOULD RESULT IN DOUBLE DEDUCTION, SINCE IN THE PAST YEARS THE CAPITAL EXPENDITURE ON THE RELEVANT ASSET HAS ALREADY BEEN ALLOWED AS APPLICATION OF INCOME. IN RESPONSE TO SUCH PLEA, THE LEARNED COUNSEL, APPEARING FOR THE RESPONDENT-ASSESSEE, POINTED OUT THAT SIMILAR ARGUMENT FROM THE SIDE OF THE REVENUE WAS CONSIDERED BY THE HON'BLE BOMBAY HIGH COURT IN THE CASE OF CIT V INSTITUTE OF BANKING 264 ITR 110 (BOM) WHEREIN THE ISSUE WAS DECIDED IN FAVOUR OF THE ASSESSEE, FOLLOWING THE EARLIER JUDGMENT IN THE CASE OF FRAMJEE CAWASJEE INSTITUTE (SUPRA). MOREOVER, THE PUNE BENCH OF THE TRIBUNAL IN THE CASE OF ACIT V SHRI AGMODHARAK DEVARDHI JAIN AGAM MANDIT TRUST VIDE HAS FOLLOWED THE JUDGMENT OF THE HON'BLE BOMBAY HIGH COURT IN THE CASE OF INSTITUTE OF BANKING (SUPRA) IN UPHOLDING THE STAND SIMILAR TO THAT OF THE ASSESSEE. 7. IN THIS BACKGROUND, WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AND FIND OURSELVES UNABLE TO UPHOLD THE STAND CANVASSED BY THE REVENUE, INASMUCH AS THE COMMISSIONER OF INCOME-TAX (APPEALS) HAS DECIDED THE ISSUE FOLLOWING THE JUDGMENT OF THE HON'BLE JURISDICTIONAL HIGH COURT IN THE CASE OF FRAMJEE CAWASJEE INSTITUTE (SUPRA) WHICH HAS BEEN SUBSEQUENTLY FOLLOWED BY THE HON'BLE HIGH COURT IN THE CASE OF INSTITUTE OF BANKING (SUPRA). AS PER THE HON'BLE HIGH COURT, MERELY BECAUSE THE COST OF ACQUISITION OF AN ASSET HAS BEEN CLAIMED AS AN APPLICATION OF INCOME FOR CHARITABLE PURPOSES IN THE PAST YEARS, THE ASSESSEE COULD NOT BE DENIED DEPRECIATION IN RESPECT OF SUCH ASSETS IN A SUBSEQUENT YEAR. 8. IN SO FAR AS THE RELIANCE PLACED BY THE LEARNED DEPARTMENTAL REPRESENTATIVE IN THE CASE OF ESCORTS LTD. (SUPRA) IS CONCERNED, THE SAME, IN OUR VIEW, DOES NOT HELP THE CASE OF THE REVENUE. THE HONBLE HIGH COURT OF PUNJAB & HARYANA IN ITS DECISION IN THE CASE OF CIT, KARNAL V. MARKET COMMITTEE, VIDE ITA NO 535/09 DATED 5.7.2010 CONSIDERED AN IDENTICAL ISSUE AND ALSO DEALT WITH THE PLEA OF THE REVENUE BASED ON THE JUDGMENT OF THE HON'BLE SUPREME COURT IN THE CASE OF ESCORTS LTD. (SUPRA). AS PER THE HON'BLE PUNJAB & HARYANA HIGH COURT, THE JUDGMENT OF THE HON'BLE SUPREME COURT IN THE CASE OF ESCORTS LTD. (SUPRA) WAS DISTINGUISHABLE, INASMUCH AS THERE WAS NO CASE OF THE ASSESSEE CLAIMING DOUBLE DEDUCTION ON ACCOUNT OF DEPRECIATION. FOLLOWING THE AFORESAID JUDGMENT OF THE HON'BLE PUNJAB & HARYANA HIGH COURT, WE, THEREFORE, FIND NO MERIT IN THE PLEA RAISED BY THE REVENUE BASED ON THE JUDGMENT IN THE CASE OF ESCORTS LTD. (SUPRA). 9. IN THE RESULT, FOLLOWING THE JUDGMENT OF THE HON'BLE JURISDICTIONAL HIGH COURT, WE HEREBY AFFIRM THE ORDER OF THE COMMISSIONER OF INCOMETAX (APPEALS). 12. SINCE THE FACTS OF THE INSTANT CASE ARE IDENTICAL TO THE FACTS OF THE CASE DECIDED BY THE TRIBUNAL IN THE CASE OF SANJEEVAN VIDYALAYA TRUST (SUPRA), THEREFORE, IN ABSENCE OF ANY CONTRARY MATERIAL BROUGHT TO OUR NOTICE AGAINST THE SAID OF THE TRIBUNAL, WE FIND NO INFIRMITY IN THE ORDER OF CIT(A) ALLOWING THE CLAIM OF DEPRECIATION ON ASSET, THE COST OF WHICH HAS ALREADY BEEN ALLOWED AS APPLICATION OF INCOME FOR CHARITABLE 6 PURPOSES. ACCORDINGLY, THE ORDER OF CIT(A) IS UPHELD AND THE GROUNDS RAISED BY THE REVENUE ARE DISMISSED. 7. BEFORE US, REVENUE COULD NOT POINT OUT ANY DISTINGUISHING FEATURE IN THE FACTS OF THE PRESENT CASE AND THE RATIO OF DECISION RELIED UPON BY LD. COMMISSIONER OF INCOME TAX (APPEALS) NOR COULD POINT OUT ANY FALLACY IN THE FINDING OF LD. COMMISSIONER OF INCOME TAX (APPEALS). IN VIEW OF THE AFORESAID FACTS, WE FIND NO REASON TO INTERFERE WITH THE ORDER OF LD. CIT(A) AND THUS THE GROUND OF REVENUE IS DISMISSED. 8. IN THE RESULT, THE APPEAL OF REVENUE FOR A.Y. 2010-11 IS DISMISSED. 9. AS FAR AS APPEAL FOR A.Y. 2011-12 IS CONCERNED, SINCE BOTH THE PARTIES BEFORE US HAVE SUBMITTED THAT THE GROUNDS RAISED IN A.Y. 2011-12 ARE IDENTICAL TO THAT OF A.Y. 2010-11, WE THEREFORE FOR THE REASONS GIVEN HEREIN ABOVE WHILE DECIDING THE ISSUE IN THE CASE OF ASSESSEE FOR A.Y. 2010-11 AND FOR SIMILAR REASONS, FIND NO REASON TO INTERFERE WITH THE DECISION OF LD. CIT(A) AND THUS, THE GROUND RAISED BY THE REVENUE IN A.Y. 2011-12 IS ALSO DISMISSED. 10. IN THE RESULT, BOTH THE APPEALS ARE DISMISSED . ORDER PRONOUNCED ON THE 12 TH DAY OF MAY, 2017. SD/- SD/- ( VIKAS AWASTHY ) ( ANIL CHATURVEDI ) / JUDICIAL MEMBER / ACCOUNTANT MEMBER PUNE; DATED : 12 TH MAY, 2017. YAMINI 7 / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT 3 . 4. 5. 6. CIT(A)-10, CIT(EXEMPTIONS), PUNE. , , / DR, ITAT, B PUNE; [ / GUARD FILE. / BY ORDER, // // TRUE COPY // // TRUE COPY // / ASSISTANT REGISTRAR, , / ITAT, PUNE.