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Income Tax Appellate Tribunal, BANGALORE BENCH ‘A’, BANGALORE
Before: SMT ASHA VIJAYARAGHAVAN & SHRI ABRAHAM P GEORGE
This appeal has been filed by the revenue against an order dated 04- 12-2014 of CIT(A), Mysore for the assessment year 2008-09.
In this case, the assessee had filed its return of income on 23-10- 2008 declaring total income as nil. Subsequently, the case was selected for scrutiny.
The facts of the case are that the assessee a charitable trust enjoying registration u/s 12A of the IT Act. For the impugned assessment year, the assessee had a gross receipt of Rs.143.49 Crores. Having spent Rs.120.12 Crores towards the objectives of the trust, the assessee had a surplus of Rs.23.36 Crores which was set off, as permitted u/s 11 of the Act, against investment made in infrastructural facilities. Thus, the returned income was nil.
The AO completed the assessment accepting the facts and figures.
However, as a set off, the AO allowed an expenditure of Rs.100.59 Crores as against he claim of the assessee of Rs.120.12 Crores. The AO has not discussed as to the reason for restricting the expenditure. The AO has not permitted the depreciation claimed by the assessee to the extent of Rs.19.53 Crores.
It was submitted before the CIT(A) that the AO had erred in not allowing the claim of depreciation of approximately Rs.19.53 Crores without furnishing any reasons. Without prejudice, even where the AO had undertaken this action on the ground that the capital expenditure on the fixed assets was claimed as application of income in the earlier years, the AO did not consider the rulings of various High Courts which have upheld the position adopted by the assessee including that of the jurisdictional High Court in the case of CIT Vs Society of the Sisters of St.Anne (16 Taxman 400) and the jurisdictional Bangalore ITAT in assessee’s own case in ACIT Vs Shri Adichunchunagiri Shikshana Trust, (ITA Nos.774 & 775(Bang.) 2011) the approach of the assessee is also upheld in an August 2013 ruling of the Bangalore ITAT in the case of DDIT Vs Cutchi Memon Union (38 Taxmann.com 276).
Learned AR further submitted that the stand of the assessee is also supported by the amendment to section 11 by the introduction of sub-section 6 (vide Finance (No.2) Act, 2014) which seeks to specially provide with effect from AY: 2015-16 prospectively that income for the purposes of application shall be determined without any deduction or allowance by way of depreciation in respect of any asset, acquisition of which has been claimed as an application of income under these sections in the same or any other previous year and as such, for the previous years, in the absence of such a provision, the stand of the assessee is not barred by the law.
The learned CIT(A) had agreed with the argument of the assessee that prior to the amendment this is a covered issue and accordingly, he directed the AO to allow the claim of the assessee for the assessment year 2008-09.
The revenue has raised the following grounds of appeal;
“a. The learned CIT(A) has erred in allowing the claim of depreciation by the assessee holding that it is covered issue prior to the amendment by the Finance (No.2) Act, 2014. b. The learned CIT(A) has erred in allowing the claim as the assessee has already availed benefit under section 11 in respect of the entire cost of the assets. Allowing depreciation on the same assets will amount to double benefit for the assessee which is not intended by the law. c. The learned CIT(A) has erred in not appreciating that the amendment only seeks to explain the existing law. This is clear from para-7.5 of Circular No.1 of 2015 issue by the CBDT explaining the provisions of the Finance (No.2) Act, 2014 d. The learned CIT(A) has erred in not appreciating that the department has not accepted the decision of the ITAT in the assessee’s own case for the assessment years 2006-07 & 2007-08 and appeals under section 260A have been filed before the Hon’ble High Court of Karnataka”.
We find that the issue is covered by the decision of the Co- ordinate Bench of this Tribunal in assessee’s own case, wherein it has been held as under;
“ 13. We have heard the rival submissions and perused the materials on record. The Tribunal in the assessee’s own case for the assessment year 2006-07 at paragraph-7 of its order has decided the issue in favour of the assessee. The relevant finding of the Tribunal reads as under; “7. We have heard both parties. We have in the earlier para referred to the findings of the Hon’ble Bombay High Court in the case of Institute of Banking (2003) 264 ITR 110 (Bom.) We have also gone through the decision of the jurisdictional High Court. The Hon’ble jurisdictional High Court held that the amount of depreciation debited to the account of charitable institutions is to be deducted to arrive at an available income from charitable religious purposes.
Following the decision of the jurisdictional High Court, we therefore, hold that the depreciation is to be deducted to arrive at an income available to charitable and religious purposes”.
The above order of the Tribunal has not been reversed by the Hon’ble jurisdictional High Court. The facts for the assessment year 2007-08 and 2008-09 being identical to the facts considered by the Tribunal for the assessment year 2006-07 (ITA No.775/Bang/2009) dated January 29, 2010), we follow the Co-ordinate Bench order of the Tribunal in the assessee’s own case for the assessment year 2006-07 and hold that the Commissioner of Income-tax (A) is justified in directing the AO to grant depreciation in respect of the assessment years 2007-08 and 2008-09”.
Respectfully following the decision of the Co-ordinate Bench of this Tribunal, we dismiss the appeal filed by the revenue.
In the result, the appeal filed by the revenue is dismissed.
Order pronounced in the open Court on the