Saranathan Academy of Higher Education, Trichy V. DCIT, Trichy

ITA 948/CHNY/2011

• Counselvise Citation: [2011] 140 COUNSELVISE.COM (IT) 51732 (ITAT-CHENNAI)
• Duration Of Justice: 2 month(s) 17 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 09-08-2011
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Assessment Year: 2007-2008
• Appeal Filed On: 23-05-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: K E B RENGARAJAN JR
• Assessee Lawyers: V S JAYAKUMAR
• Keywords: Depreciation; Charitable institution; Revenue expenditure; Capital expenditure
• Section: 12AA; 11

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL B BENCH, CHENNAI [BEFORE DR. O.K. NARAYANAN, VICE-PRESIDENT AND SHRI HARI OM MARATHA, JUDICIAL MEMBER] I.T.A NO. 948/MDS/2011 (ASSESSMENT YEAR : 2007-08 ) SARANATHAN ACADEMY OF HIGHER EDUCATION VENKATESWARA NAGAR PANJAPPUR TIRUCHIRAPALLI 620 012 VS THE DY. CIT CIRCLE IV TIRUCHIRAPALLI (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI V.S.JAYAKUMAR, ADVOCATE RESPONDENT BY : SHRI K.E.B RENGARAJAN, JR. STANDING COUNSEL DATE OF HEARING : 09-08-2011 DATE OF PRONOUNCEMENT : 09-08-2011 O R D E R PER HARI OM MARATHA, JUDICIAL MEMBER: THIS APPEAL OF THE ASSESSEE IS DIRECTED AGAIN ST THE ORDER OF THE LD. CIT(A), TIRUCHIRAPALLI, DATED 18.3.2011, PE RTAINING TO ASSESSMENT YEAR 2007-08. ITA 948/11 :- 2 -: 2. THE ONLY ISSUE INVOLVED IN THIS APPEAL IS IN CONNEC TION WITH DISALLOWANCE OF CLAIM OF DEPRECIATION IN COMPUTING INCOME U/S 11(1) OF THE ACT BY THE ASSESSING OFFICER. 3. BRIEFLY STATED, THE FACTS OF THE CASE ARE THAT THE ASSESSEE IS A SOCIETY ENGAGED IN PROVIDING EDUCATION. THE ASSESS EE-SOCIETY FILED ITS RETURN OF INCOME FOR THE ASSESSMENT YEAR 2007-08, O N 26.10.2007, ADMITTING NIL INCOME AFTER CLAIMING EXEMPTION U/S 1 1 OF THE ACT. THE SOCIETY WAS GRANTED REGISTRATION U/S 12AA OF THE AC T BY THE CIT VIDE ORDER NO.C.NO.7162E/(108)/CIT-II/TRY/2004-05 DATED 19.9.2005. THE CASE WAS SELECTED FOR SCRUTINY AND A NOTICE U/S 143 (2) WAS ISSUED ON 25.9.2008 AND 30.11.2009. SUBSEQUENTLY, A QUESTION NAIRE DATED 8.7.2009 WAS ALSO ISSUED IN RESPONSE TO WHICH THE A SSESSEES REPRESENTATIVE ATTENDED AND PRODUCED THE BOOKS OF A CCOUNT AND OTHER DETAILS CALLED FOR BY THE ASSESSING OFFICER. THE AS SESSING OFFICER NOTICED THAT THE ASSESSEE HAS SHOWN NET INCOME OF ` 1,76,30,888/- AFTER CLAIMING DEPRECIATION OF ` 1,65,59,957/-. HE NOTICED TOTAL CLAIM OF EXPENSES AT ` 5,46,49,227/- INCLUDED A SUM OF ` 1,65,59,597/- AS DEPRECIATION ON BUILDING AND OTHER ASSETS. IN ASSE SSING OFFICERS OPINION, DEPRECIATION OF ` 1,65,59,597/- IS NOT LEGALLY PERMISSIBLE BECAUSE CAPITAL EXPENDITURE HAS BEEN FULLY ALLOWED AND FURTHER ALLOWANCE OF DEPRECIATION ON THE SAME WOULD AMOUNT TO DOUBLE DEDUCTION. HE, THEREFORE, DISALLOWED THE CLAIM OF D EPRECIATION. THE LD. ITA 948/11 :- 3 -: CIT(A) HAS ALSO CONFIRMED THE DISALLOWANCE. AGGRIE VED, THE ASSESSEE IS IN SECOND APPEAL BY RAISING THE FOLLOWING GROU NDS: 1. THE ORDER OF THE C OMMISSIONER OF IN C OME TA X ( APPEA LS) TRICHY , IN I . T . A.NO . 416 / 09 - 10 DATED 1 8 -03- 20 11 D I SMISSING T H E CL A IM OF DEPRECIAT I ON CLAIMED BY THE APPELLANT W I THOUT A S PEA KING ORDER IS AGA I NST LAW , FACTS OF THE CASE AND MATER I AL EVIDENCES ON RECORD . 2. TH E C OMM I SS I ONE R OF INCOME TAX ( APPEALS ) F A I LED TO A P PR E CIATE THE D I FFERENCE BETWEEN THE REVENUE DEDUCTION I N T HE C O M P UTATION OF I NCOME AND A SPEC I AL EXEMPTION G R ANTED B Y THE ACT BASED ON APPLICATION OF SUCH INCOME FOR CHARITABLE PURPOSES A ND THA T VARIOUS H I GH CO U RTS HAVE HE L D THAT DEP R E CI A TI O N I S A P R O P E R DEDUCTION I N COMPUTING INCOME O F A CHAR I TABLE INSTITUTION . 3. T H E COMM I SS I ONE R OF IN COME TAX (A PP E A LS) OU G HT TO HAVE APPRECIATED THAT THE PARLIAMENT GAVE EFFECT TO THE D ECI SI ONS OF THE SUP R E M E COURT I N ESCORTS LTD . , VS . UN I O N OF I ND I A (1 99 2) 199 ITR 43 ( SC ) AND COMM I SSIONER OF INCOME T AX V S . H IC O PRO D UC T S P.LTD . (1999) 24 7 ITR 797 ( SC ) BY I NSERT I NG SUB -CL A U SE (IV) IN S E CTION 35(2) . THE SA I D SECTION AS WE LL AS THE SA I D DE CISI ONS HAS NO APPLICATION TO A C HA R ITABLE I NSTITUTION ASSESSED UNDER TH E S PE CIAL P ROVISIO N S OF SECTIONS 1 1 AND 1 3 . 4. TH E C OMM I SS I ONER O F INCOME ( APPE ALS) OU G HT TO HAVE APPRECIATED THA T THE BO M BAY H I GH COURT I N COM M ISS I O N E R OF INCOME TAX VS . INSTI T UTE O F BANK I NG 264 ITR 1 10 UPHELD THE A L LOWA NCE OF DEPRECIATION CL A I M TO CHAR I TABLE I NSTITUT I ON EVEN AFTE R P R ONOU NC E M E NT OF THE ABOVE DEC I SIONS BY THE SUPREME COURT . 5. THE HONORABLE D BENCH OF INCOME TAX APPELLATE TRIBUNAL, CHENNAI IN THE CASE OF SRI MARIAMMAN EDUCATIONAL HEALTH AND CHARITABLE TRUST VS. THE ASSISTANT COMMISSIONER OF INCOME TAX, COMPANY CIRCLE-II, TRICHY IN I.T.A.NOS.142, 143 AND 144/MDS/2010; DATED 02/02/2011 FOR THE ASSESSMENT YEARS 2005-2006; 2006-2007 AND 2007-2008 HAS UPHELD THAT THE CLAIM O F DEPRECIATION AS AN ITEM OF REVENUE EXPENDITURE IS I N ACCORDANCE WITH LAW 6. FOR THE ABOVE AND SUCH OTHER REASONS, THAT MAY BE ADDUCED EITHER BEFORE OR AT THE TIME OF HEARING, APPELLANT PRAYS THAT THE HONOURABLE TRIBUNAL MAY BE PLEASED TO ALLOW THE APPEAL AND RENDER JUSTICE. ITA 948/11 :- 4 -: 4. IT WAS FOUND THAT THE LD. CIT(A) HAS NOT DECIDED TH E IMPUGNED ISSUES BY WAY OF A SPEAKING ORDER. THE ISSUE INVO LVED IN THIS APPEAL IS VERY IMPORTANT BUT HE, AFTER DISCUSSING THE ARG UMENTS PUT FORTH ON BEHALF OF THE ASSESSEE, HAS PRONOUNCED HIS VERDICT IN ONE SENTENCE. THE TRIBUNAL BEING A FINAL FACT FINDING BODY IS DUT Y BOUND TO CULL OUT FULL AND FINAL FACTS INVOLVED IN A CASE. BUT WE AR E UNABLE TO DO SO AS WE DO NOT HAVE THE BENEFIT OF REASONS OF THE LD. CI T(A) FOR HIS DECISION. HENCE, WE DEEM IT FIT TO RESTORE THE AP PEAL TO THE FILE OF THE LD. CIT(A) WITH A DIRECTION THAT HE SHALL DECIDE IT BY A SPEAKING ORDER AFTER GIVING CLEAR OPPORTUNITY OF HEARING TO THE AS SESSEE. AFTER SETTING ASIDE THE FINDING OF THE LD. CIT(A), QUA THE SUBJEC T MATTER OF THIS APPEAL, WE REMAND BACK THE ENTIRE APPEAL TO HIS FIL E AS DIRECTED ABOVE. 5. IN THE RESULT, THE APPEAL IS ALLOWED FOR STATISTICA L PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON 9.8.2011. SD/- SD/- (DR. O.K. NARAYANAN) VICE-PRESIDENT (HARI OM MARATHA) JUDICIAL MEMBER DATED: 9 TH AUGUST, 2011 RD COPY TO: APPELLANT/RESPONDENT/CIT(A)/CIT/DR