DEPUTY COMMISSIONER OF INCOME-TAX, (EXEMPTION) CIRCLE ,, PUNE vs. VIDYA PRATISHTHAN,, PUNE

In both the appeals, the Revenue raised similar grounds which relate to the correctness of the order of the CIT(A) who directed the Assessing Officer to grant depreciation on the assets already treated as „application of income‟ of the foundation-assessee.

Briefly stated, relevant facts for A.Y. 2008-09 include that the assessee is an educational institution duly registered under the Bombay Public Trust Act, 1950. Assessee is also registered u/s.12A of the I.T. Act, 1961. Assessee filed the return of income declaring Nil income. The assessee acquired assets with the exempt funds of the assessee. The assessee also claimed depreciation on the said assets relying on the Hon‟ble Bombay High Court judgement in the case of CIT vs. Institute of Banking, Personnel Selection (IBPS) [2013] 264 ITR 110 (Bom.). However, the Assessing Officer denied the benefit of claim of depreciation as per the discussion given in para No.5 and 6 of his order.

During the first appellate proceedings, the assessee filed a written submission which is extracted in para 4 of the order of the CIT(A). In the said written submission, the assessee relied on the series of decisions in respect of allowability of claim of depreciation on the assets procured out of application of income of the assessee-Trust. The CIT(A) after considering the written submissions of the assessee and also the series of judgements of the Jurisdictional High Court as well as other High Court allowed the appeal of the assessee. Against the said order of CIT(A), the Revenue is in appeal before the Tribunal with the following grounds (A.Y. 2008-09) :

At the outset the ld. Counsel submitted that this is a case where the issue involved relates to allowability of claim of deduction u/s. 32 of the Act in respect of assets of trust purchased by the assessee out of the funds of trust. Relying on the decision of Hon‟ble Supreme Court judgments and other decisions already extracted by the CIT(A) in para 6, the ld. Counsel mentioned that this is a covered issue. On the other hand, the ld. DR for the Revenue could not controvert the submissions made by the ld. Counsel

On hearing both the sides and the settled nature of the issue on the merits of the core issue, we find it relevant to extract the findings of the CIT(A) given in Para 6 of his order. “6. Ground No. 2 & 3 These grounds relates to challenging the findings of A.O. wherein, the AO has disallowed the depreciation of Rs.2,68,96,785/- by relying on the decision of Kerala High Court in the case of Lissie Medical Institution 348 ITR 349. (i) I have considered the submission of the appellant carefully and gone through the A.O.‟s order. Although, in aforesaid paras, the issue of notice u/s. 148 is held to be bad in Law and accordingly, the impugned grounds have became academic, however, on merit also, these grounds need a proper adjudication. Regarding the claim of double deduction on acquired assets, the impugned issue is settled by several High Courts, wherein, it is unanimously held that in the case of charitable trust double deduction is allowable. These cases are asunder : (a) CIT v. Institute of Banking Personnel Selection (IBPS) (2003) 264 ITR 110 (Bom).

From the above, it is evident that the CIT(A) has rightly granted relief to the assessee considering the binding legal precedents on this very issue. Therefore, on the merits of the core issue, the order of CIT(A) on this issue is fair and reasonable and it does not call for any interference. Accordingly, the relevant grounds stand dismissed.

Another issue raised in ground No. 1 for A.Y. 2008-09 relates to reopening of validity of the assessment. The Revenue is aggrieved with the order of CIT(A) granting relief to the assessee. The CIT(A) held the reopening as bad in law. On hearing the parties, we find that adjudication of this legal issue becomes academic only since the relief granted by the CIT(A) stands approved on merits. Accordingly, the ground No. 1 is dismissed as academic.

In the result, the appeal of the Revenue for A.Y. 2008-09 is dismissed.

Since the grounds for A.Y. 2009-10 are identical to the ground Nos. 2 and 3 of the appeal for A.Y. 2008-09, our decision for A.Y. 2008-09 stands good for A.Y. 2009-10 as well. Accordingly, the grounds for A.Y. 2009-10 are dismissed.

In the result, both the appeals of the Revenue are dismissed.