National College Council, Trichy V. ACIT, Trichy

ITA 949/CHNY/2011

• Counselvise Citation: 94921714 RSA 2011
• 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: Business income; Depreciation; Charitable institution; Revenue expenditure

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.949/MDS/2011 (ASSESSMENT YEAR : 2007-08 ) NATIONAL COLLEGE COUNCIL P.B.NO.369, CHATRAM BUS STAND TEPPAKULAM TRICHY 620 002 VS THE ACIT TRIRUCHIRAPALLI [PAN AAATT6266H ] (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI V.S.JAYAKUMAR 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, FOR ASSESSMENT YE AR 2007-08, IS DIRECTED AGAINST THE ORDER OF THE LD. CIT(A), DATED 11.3.2011. 2. BRIEFLY STATED, THE FACTS OF THE CASE ARE THAT T HE ASSESSEE- SOCIETY WAS ESTABLISHED TO PROMOTE THE ADVANCEMENT OF EDUCATION ESPECIALLY TO MAHILA SECTION OF THE SOCIETY THEREBY ENLIGHTENING THE SOCIETY TO ERADICATE THE PREVALENCE OF ILLITERACY A MONG THEM. THE ITA 949/11 :- 2 -: ASSESSEE-SOCIETY WAS INITIALLY STARTED WITH THE OPE NING OF AN INSTITUTION NAMED AS NATIONAL COLLEGE OF HIGHER SECONDARY SCH OOL. LATER, IT WIDENED ITS ACTIVITIES TO PROVIDE EDUCATION ESPECIA LLY TO LADIES BY ESTABLISHING AN ARTS AND SCIENCE COLLEGE, WITH THE NAMES SRIMATHY INDRA GANDHI COLLEGE AND ALSO SRI JEYANDRA MATRIC ULATION HIGHER SECONDARY SCHOOL. IT IS THE CONTENTION OF THE AS SESSEE THAT IT WAS FORCED TO CONSTRUCT ONE SHOPPING COMPLEX SOME 25 YE ARS AGO IN THE UN-UTILIZED AREA OPPOSITE TO CHATRAM BUS STAND AND ADJACENT TO LADIES HOSTEL OF SRIMATHY INDRA GANDHI COLLEGE. CONSTRUCT ION OF THIS COMPLEX WAS NECESSITATED BECAUSE THIS VACANT LAND WAS MISUS ED BY THE PASSERSBY FOR URINATION PURPOSES AND ALSO DURING NI GHTS BY THE UNSOCIAL ELEMENTS TO ENJOY HARD DRINKS. SO, THIS OPEN SPAC E HAD BECOME A CONTINUOUS NUISANCE AS WELL AS INSECURITY FOR THE I NMATES OF THE HOSTEL. FOR THE SAFETY OF THE WOMEN FOLK THIS SHOPPING COMP LEX WAS CONSTRUCTED AND WHEN THIS SHOPPING COMPLEX WAS RENT ED OUT, THE RENT RECEIVED WAS UTILIZED FOR ACHIEVING ITS OBJECTS. BUT, THE ACIT, TRICHY, VIDE ORDER DATED 29.12.2009, HAS MADE THE FOLLOWING ADDITIONS: (I) BY REJECTING THE CLAIM OF DEPRECIATION (II) BY NOT CONSIDERING THE REVISED FORM NO.10 FOR ACCUMULATION OF SURPLUS. (III) TAXING THE RENTAL INCOME RECEIVED ON LET OUT SHOPS AS BUSINESS INCOME. ITA 949/11 :- 3 -: 3. ALTHOUGH THE LD. CIT(A) HAS PARTLY ACCEPTED THE AP PEAL OF THE ASSESSEE, YET THE ASSESSEE IS FURTHER AGGRIEVED AND HAS RAISED THE FOLLOWING GROUNDS: 1. THE ORDER OF THE C OMMISSIONER OF IN C OME TA X ( APPEA LS) TRICHY , IN I . T . A.NO . 381 / 09 - 10 DATED 1 1 -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 ITA 949/11 :- 4 -: 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. 4. WHILE HEARING THE APPEAL, IT WAS NOTICED THAT THE LD. CIT(A) HAS NOT PASSED HIS ORDER BY WAY OF A SPEAKING ORDER AND SIMPLY AFTER DISCUSSING THE ARGUMENTS PUT FORTH ON BEHALF OF THE ASSESSEE, HE HAS ABRUPTLY GIVEN HIS DECISION AND THAT TOO WITHOUT TH E SUPPORT OF ANY REASONS. THIS TRIBUNAL, BEING THE FINAL FACT FIN DING BODY, IS DUTY BOUND TO CULL OUT THE FULL AND FINAL FACTS OF A CAS E. CONSEQUENTLY, WE DEEM IT FIT TO RESTORE THE APPEAL TO THE FILE OF TH E LD. CIT(A) WITH A DIRECTION TO PASS A FRESH SPEAKING ORDER AFTER GIVI NG OPPORTUNITY OF HEARING TO THE ASSESSEE. AFTER SETTING ASIDE THE F INDING OF THE LD. CIT(A) WHICH ARE QUA THE SUBJECT MATTER OF THIS APP EAL, WE REMAND BACK THE SAME TO HIS FILE AS DIRECTED ABOVE. 5. IN THE RESULT, THE APPEAL IS ALLOWED FOR STATISTIC AL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON 09 -08-2011. 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