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Income Tax Appellate Tribunal, “A” BENCH : BANGALORE
Before: SHRI N.V. VASUDEVAN & SHRI ABRAHAM P. GEORGE
Per N.V. Vasudevan, Judicial Member
This appeal by the revenue is against the order dated 29.10.2013 of the CIT(Appeals), Mysore relating to assessment year 2009-10.
The assessee is an AoP (Trust). It filed return of income for the AY 2009-10 declaring NIL income. The order of assessment was completed u/s. 143(3) of the Act dated 28.11.2011. The CIT, in exercise of his powers u/s. 263 of the Act held that the aforesaid order of the AO was erroneous and prejudicial to the interests of revenue for the reason that the assessee had claimed capital expenditure of Rs.1,78,87,478 on acquisition of depreciable assets which was considered as application of income. On the very same depreciable asset depreciation amounting to Rs.1,13,93,492/- was also considered as application of funds towards the objects of trust for the A.Y. 2009-10. According to the CIT allowing the capital expenditure on purchase of depreciable assets as application of funds for charitable purpose and again allowing depreciation on the depreciable assets would amount to allowing double deduction and contrary to the decision of the Hon’ble Supreme Court in the case of Escorts Ltd. & Anr. v. UOI, 199 ITR 43 wherein it was held when deduction u/s. 35(2)(iv) is allowed in respect of capital expenditure on scientific research, no depreciation is allowable u/s. 32 on the same asset.
Consequent to the order of ld. CIT, the AO passed an order dated 15.2.2013 disallowing depreciation of assets amounting to Rs.1,13,93,492 and revising the total income accordingly.
Aggrieved by the aforesaid order, the AO preferred appeal before the CIT(Appeals).
Before the CIT(Appeals), it was pointed out that as against the order of CIT passed u/s. 263 of the Act dated 21.12.2012, assessee preferred appeal before the Tribunal in and the Tribunal by its order dated 09.10.2013 quashed the order of the CIT u/s. 263 of the Act.
The assessee accordingly submitted that addition made by the AO cannot be sustained as the very basis on which the AO passed the order viz., order u/s. 263 of the Act by the CIT no longer survived. The CIT(A) accepted the contention put forth by the assessee and accordingly annulled order of assessment passed by the AO.
Aggrieved by the order of CIT(Appeals), revenue has preferred the present appeal before the Tribunal. The sum and substance of the grounds of appeal of the revenue is that order of the Tribunal quashing the order u/s. 263 of the Act is not correct. In our view, such contentions cannot be raised in this appeal by the revenue. Since the order u/s. 263 of the Act has been quashed by the Tribunal, proceedings pursuant to the order u/s. 263 of the Act cannot survive. Accordingly, we hold that the ld. CIT(Appeals) was right in annulling the order of assessment passed by the AO.
In the result, appeal of the revenue is dismissed. 7.
Pronounced in the open court on this 9th day of January, 2015.