Loading judgment…
No AI summary yet for this case.
Income Tax Appellate Tribunal, ‘B’ BENCH : BANGALORE
Before: SHRI VIJAY PAL RAO & SHRI G.MANJUNATHA
Per VIJAY PAL RAO, JM :
This appeal by the assessee is directed against the order dated 20/3/2009 of the CIT(A)-14,LTU, Bangalore, for the assessment year 2009-10.
The assessee has raised the following grounds:
1) The order of CIT (Appeals) is opposed to law, facts and Circumstances of the case.
ITA No.703/Bang/2015 Al Ameen Charitable Fund Trust Page 2 of 8 ON 1O(23C) 2) The learned CIT(A) having noticed that the Appellant - Trust has been granted exemption u/s 1 0(23C)(vi) vide order dated 22.6.2009 for the period 2005-06 onwards, ought to have held the Trust is even otherwise eligible for exemption. The CIT(A) ought to have appreciated the spirit of the exemption given to the appellant and in the light of that matter, disposed of the appeal. 3) The learned CIT(A) failed to take into account the 13th proviso to Section 10(23C), which lays down the procedure to be followed in case the Assessing Officer found any violation of the conditions stipulated. The Assessing Officer having not found any violation, the exemption of the income of the Trust continues to be available. 4) The learned 011(A) ought to have observed that the exemption u/s 10(23C) given by DGIT is effective from the asst. year 2005-06 onwards, and asst. year 2006-07 is included and until the receipt of the order of exemption from OGIT, the appellant could not have filed required audit report in Form No.10BB. 5) The learned CIT(A) ought not have negated the claim of the appellant for exemption u/s 10(23C) only because the Assessing Officer has not considered the exemption in the order of assessment, since the powers of CIT(A) is co- extensive with the powers of the Assessing Officer. ON DEPRECIATION 6) The learned CIT(A) erred in upholding the disallowance of depreciation of Rs. 2,66,19,646/- overlooking the decision of the jurisdictional Karnataka High Court in the case of CIT Vs. Society of Sisters of St. Anne (146 ITR 28) and the decision of the ITAT, Bangalore in the appellant's own case in ITA 404/Bang/2009 dated: 21.8.2009 for the assessment year 2005- 06. 7) The learned CIT(A) erred in overlooking the decisions of the Madhya Pradesh and Gujarat High Court which were rendered following the
ITA No.703/Bang/2015 Al Ameen Charitable Fund Trust Page 3 of 8 decision of the Karnataka High Court. 8) The learned CIT(A) ought to have appreciated that the Bombay High Court gave an independent decision de hors the Karnataka High Court's decision in the appellant's favour. Similarly, the Punjab and High Court has also held the issue in appellant's favour. 9) The learned CIT(A) erred in not following the decision of the Karnataka High Court by stating that the amendment brought about to the Income tax Act from 1.4.1989 to Section 11(1)(a) has not been dealt with in the decision, without discussing the impact of the amendment to the term "voluntary contribution" on Depreciation issue, which is the issue under consideration. 10) The learned CIT(A) failed to observe that the decisions of Punjab and Haryana High Court in (I) CIT Vs. Market Committee, Pipli (2011) 330 ITR 16 (P & H) and (ii) CIT Vs. Tiny Tots Educational Society (2011) 330 ITR 21 ( P & H) were for the assessment years 2005-06 which were much after the amendment, but still are in favour of the appellant. The so called amendment cited by the CIT(A) is only a ruse to deny the relief. 11) The learned CIT(A) erred in brushing aside the decision of Punjab and Haryana High Court which was in appellant's favour by just stating that detailed reasons have not been given, little realising that the ratio of the decision is important and not the length of the decision. 12) The learned CIT(A) erred in applying the decision of the Supreme Court in the case of Escorts Ltd (199 ITR 43), though the point of distinction was clearly brought about by the appellant. 13) The learned CIT(A) followed the decision of the Kerala High Court in Lissie Medical Institutions case in preference to the jurisdictional High Court. The overwhelming views of the High Courts of Madhya Pradesh, Gujarat, Bombay and Punjab & Haryana, in favour of the appellant were ignored. 14) The learned CIT(A) failed to observe that in the following cases, the principles of judicial
ITA No.703/Bang/2015 Al Ameen Charitable Fund Trust Page 4 of 8 precedents have been elaborately discussed and the dictum is that the decision of the jurisdictional High Court is binding on the Tribunal and other authorities: a) CIT Vs. Thana Electricity Supply Limited (1994) 206 ITR 727 (Bom) b) Subramanian, ITO Vs. Siemens India Ltd. (1958) 156 ITR 11 (Born) c) State of Andhra Pradesh Vs. CTO (1988) 169 ITR 564 15) The learned CIT(A) erred in not appreciating that even in case there is conflict of decisions, the decision favourable to the assessee must be followed as laid down by the Supreme Court in the case of (a) CIT Vs. Naga Hills Tea Co. Ltd.(1973) 89 ITR 236 (SC) and (b) CIT Vs. Vegetable Products(1973) 88 ITR 192 (SC). 16) The learned CIT(A) erred in following the letter of the Board which was allegedly received by the Standing Counsel of the Kerala High Court from the Board without noticing that the response was not in the nature of Circular but a communication from the Board in respect of a query the contents of which are not available. 17) The learned CIT(A) failed to notice that Depreciation is a notional expenditure and the Trust which follows mercantile system of accounting would also debit certain expenditure to the Profit and Loss Account on accrual basis and claim as application of income. These two items would not immediately affect the cash balance and no correlation with imaginary generation of black money. The whole approach of the learned CIT(A) is fallacious. 18) The learned CIT(A) was influenced by the amendments made by Finance Act, 2014 with effect from 1.4.2015 prospectively and has no bearing on the assessment year involved. The reason for bringing in amendment prospectively proves that the Government wanted to set at rest the controversy in assessees' favour till that time.
ITA No.703/Bang/2015 Al Ameen Charitable Fund Trust Page 5 of 8 19) For these and other reasons that may be urged at the time of hearing, the appellant prays that the order of CIT(A) be set aside and the Assessing Officer be directed to accept the return of income, in the interest of justice.
The assessee has also raised the additional ground as under:
1) The Assessing Officer erred in taxing the income which is exempt u/s 10(23C)(vi) in view of the grant of exemption vide order dated 22.06.2009 passed by Chief Commissioner of Income-tax, Bangalore - I, Bangalore. 2) For these and other reasons that may be urged at the time of hearing, the appeal may be allowed and justice rendered.
The assessee is a charitable trust established under the Indian Trust Act, 1882 on 16/3/1979. The assessee stated to have the main object to establish educational institution in the field of medicine and supportive hospitals to provide clinical facilities for the medical and dental students. The assessee was granted exemption u;/s 10(23C)(iii) of the Income-tax Act, 1961 [hereinafter referred to as 'the Act' for short] vide order dated 22/6/2009 from the assessment year 2005-06 onwards. The AO noted that the assessee has claimed Rs.13,65,68,316/- as capital expenditure which includes Rs.12,62,31,447/- being the amount capitalized during the year. The AO further noted that the amount so capitalized has already been claimed as application of income for the assessment year 2001-02 to 2005-06 and therefore, only the difference of capital expenses of
ITA No.703/Bang/2015 Al Ameen Charitable Fund Trust Page 6 of 8 Rs.1,03,36,869/- was allowed by the AO as application of income. Further, the AO has also disallowed the claim of depreciation on the ground that when the entire cost of the asset was already claimed and allowed as application of income, then it will amount to double deduction. Accordingly, the AO has disallowed the claim of the assessee in respect of both the items of capitalization as well as depreciation.
The assessee challenged the action of the AO before the CIT(A) but could not succeed.
We have heard the learned AR of the assessee as well as the learned Departmental Representative and considered the relevant material on record. At the outset, we not that an identical issue came before this Tribunal in assessee’s own case for the assessment years 2007-08 to 2011-12, vide its order dated 18/9/2015 in ITA Nos.154 to 1548/Bang/2014 remitted the matter to the record of the AO for fresh consideration in paras.7 and 8 as under:
“7. We have carefully considered the rival submissions, perused the relevant case records and also the documentary evidences produced by the learned AR in the form of a paper book. As seen from the relevant records, we find that the assessee - trust was granted exemption u/s 10(23C) (vi) of the Act by the DGIT (E), Kolkatta vide order F. No. DGIT/KT3/10(23C)(vi)/2002 dated 7.10.2002 for the assessment years 200203 to 2004-05. Subsequently, based on the provisions of s. 10(23C) (vi) introduced by the Finance Act, 1998, the assessee-trust furnished an application in Form 56D on 18.08.2005 for the succeeding three assessment years i.e., 2005-06,
ITA No.703/Bang/2015 Al Ameen Charitable Fund Trust Page 7 of 8 2006-07 and 2007-08. Acting On the assessee-trust's application dated 18.8.2005 and 3.6.2008, the CCIT, Bangalore - 1, vide his order dated 22.06.2009 accorded approval to the assessee - trust for purpose of s. 10(23C) (vi) of the Act for the assessment year 2005-06 and onwards [Source: P 11 of P.8 - A.R]. It appears that the assessee -trust had not contravened any of the conditions as prescribed in the CCIT's order (supra) warranting non-exemption of its entire income u/s 10(23C)(vi) of the Act. It is seen from the order of the CIT (A)-LTU under consideration, even though she had mentioned about the availability of the order of exemption to the assessee - trust, her finding was silent as to whether the assessee-trust was entitled to avail exemption of its entire income u/s 10(23C)(vi) of the Act or otherwise for the AYs under consideration. Moreover, when the provisions of s. 10(23C) of the Act were in force, all the receipts from educational institutions were entitled for exemption and thus, the assessment orders of this nature were irrelevant. Neither the AOs nor the CIT(A)-LTU have considered the contentions of the assessee - trust that the provisions of s.10(23C) were in force in its case. We are, therefore, of the view that the matter needs to be remanded back to the AO to examine as to whether the receipts were from educational activities of the assessee - trust and if so, the asssessee - trust was entitled to exemption u/s 10 (23C) of the Act. To facilitate the AO to carry out the above direction, the issue for all the AYs under consideration is restored on the file of the AO. While doing so, the AO shall afford a reasonable opportunity to the assessee -trust of being heard. It is ordered accordingly. 8. We have since remanded back the main issue raised by the assessee trust to the AO for fresh consideration, the other issues raised by the assessee - trust in all the appeals are not adjudicated.” Thus, as far as the entitlement to exemption u/s 10(23C) of the Act is concerned, the issue was remitted to the record of the AO and at the same time, the other issue raised by the assessee including the issue of disallowance of depreciation was left open being consequential to the issue of exemption. Following the earlier order of this Tribunal in the assessee’s own case, we set
ITA No.703/Bang/2015 Al Ameen Charitable Fund Trust Page 8 of 8 aside this matter to the record of the AO with similar directions to the AO for fresh consideration of the issue of exemption u/s 10(23C) of the Act and the other issues raised by the assessee are left open.
In the result, the appeal of the assessee is allowed for statistical purposes.
Pronounced in the open court on 16th October, 2015.
sd/- sd/- (G.Manjunatha) (Vijay Pal Rao) ACCOUNTANT MEMBER JUDICIAL MEMBER eksrinivasulu,sps Copy to: 1. Appellant 2. Respondent 3. CIT 4. CIT(A) 5. DR, ITAT, Bangalore. 6. Guard file By order
Assistant Registrar Income-tax Appellate Tribunal Bangalore