2014-VIL-915-ITAT-CHE

Income Tax Appellate Tribunal CHENNAI

I.T.A. No.452/Mds/2014.

Date: 08.08.2014

THE DEPUTY DIRECTOR OF INCOME TAX (EXEMPTIONS -1)

Vs

M/s . LAKSHMI SARASWATHI EDUCATIONAL TRUST

For the Petitioner : Smt. Alamelu Lakshminarayanan, JDI(E)
For the Respondent : Shri. A.S. Sriraman, Advocate

BENCH

SHRI A.MOHAN ALANKAMONY, ACCOUNTANT MEMBER & SHRI S.S. GODARA, JUDICIAL MEMBER

JUDGMENT

PER S.S. GODARA, JUDICIAL MEMBER

This Revenue’s appeal for assessment year 2010-11; emanates from order dated 10.10.2013 passed by the Commissioner of Income Tax (Appeals)-VII, Chennai in ITA No.116/2013-14 in proceedings under section 143(3) of the Income Tax Act 1961 [in short the “Act”].

2. The Revenue’s sole ground challenges the CIT(A)’s order deleting disallowance on depreciation of Rs. 60,14,349/- made by the Assessing Officer in assessment order dated 25.03.2013.

3. The assessee is a registered charitable trust since 05.11.1992. It had filed its ‘return’ on 19.4.2011 admitting gross receipts of Rs. 6,78,61,520/- and excess ‘application’ of income of E3,30,238/-. In ‘scrutiny’, the Assessing Officer was of the view that when entire expenditure of assets’ cost was allowed as ‘application’ of income u/s.

11, depreciation claimed of Rs. 60,14,349/- qua very assets amounted to a case of double deduction. In other words, he observed that the assessee’s claim for depreciation is not permissible from business income when it relates to assets whose cost stood claimed as ‘application’ u/s. 11 of the Act. Accordingly, he disallowed/added this sum of Rs. 60,14,349/-.

4. In assessee’s appeal, the CIT(A) has deleted the disallowance as under:-

“I have gone through the view of the Assessing Officer and the above decisions and also a decision of the Income Tax Appellate Tribunal, ‘A’ Bench, Chennai in the case of the ITO, Company Ward – I Vs. M/s. CMS Educational & Charitable Trust, ITA No.2261/Mds/2012 In the cited decision, the Hon’ble Tribunal has considered the decision given by the Hon’ble Kerala High Court in the case of Lissie Medical Institutions, holding depreciation was not available to Charitable trusts on assets considered for application of income. However, the Hon’ble Tribunal followed a decision given by the Hon’ble Supreme Court in the case of CIT Vs. Vegetable Products 88ITR 192 and stated that in case of divergent judicial precedents, the one which favours the assessee has to be adopted and allowed the claim of the assessee Trust for depreciation.

Respectfully following the above decisions, I hold that the appellant is entitled for deprecation on assets purchased even though the cost of assets was considered as application of income and direct the Assessing Officer to allow depreciation of Rs. 60,14,349/-.’’

Therefore, the Revenue is in appeal.

5. We have heard both sides and perused the case file. Admittedly, the CIT(A) has followed order of the ‘tribunal’ holding that a claim of depreciation alike the case involved herein is allowable in case of a charitable trust who has included assets in application/exemption u/s.11A of the Act. The co-ordinate bench has followed the case law of Vegetable Products (supra) to conclude that in case of divergent judicial precedents, the one favouring the assessee has to be adopted. On being granted opportunity, the Revenue neither points out any distinction on facts nor refers to any judgment of the hon’ble jurisdictional high court. In these circumstances, we affirm CIT(A) findings under challenge.

6. The Revenue appeal is dismissed.

Order pronounced on Friday, the 8th of August, 2014, at Chennai.

 

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