The Bhardwaj Welfare Trust, New Delhi v. ADIT (E), New Delhi

ITA 667/DEL/2011 | 2006-2007
Pronouncement Date: 18-11-2011 | Result: Partly Allowed

Appeal Details

RSA Number 66720114 RSA 2011
Assessee PAN AAATT0758J
Bench Delhi
Appeal Number ITA 667/DEL/2011
Duration Of Justice 9 month(s) 13 day(s)
Appellant The Bhardwaj Welfare Trust, New Delhi
Respondent ADIT (E), New Delhi
Appeal Type Income Tax Appeal
Pronouncement Date 18-11-2011
Appeal Filed By Assessee
Order Result Partly Allowed
Bench Allotted H
Tribunal Order Date 18-11-2011
Date Of Final Hearing 09-11-2011
Next Hearing Date 09-11-2011
Assessment Year 2006-2007
Appeal Filed On 04-02-2011
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH : H : NEW DELHI BEFORE SHRI I.P. BANSAL JUDICIAL MEMBER AND SHRI K.G. BANSAL ACCOUNTANT MEMBER ITA NOS.667 & 668/DEL/2011 ASSESSMENT YEARS : 2006-07 & 2007-08 THE BHARDWAJ WELFARE TRUST E-18 GREATER KAILASH-I NEW DELHI. PAN : AAATT0758J VS. ADIT (E) TRUST CIRCLE-IV NEW DELHI. (APPELLANT) (RESPONDENT) ASSESSEE BY : SHRI L.K. PADNAM ADVOCATE REVENUE BY : SHRI B.R.R. KUMAR SR.DR ORDER PER I.P. BANSAL JUDICIAL MEMBER BOTH THESE APPEALS ARE FILED BY THE ASSESSEE. THEY ARE DIRECTED AGAINST THE CONSOLIDATED ORDER PASSED BY THE CIT (A) DA TED 29 TH NOVEMBER 2010 FOR ASSESSMENT YEARS 2006-07 & 2007-08. THE GROUNDS OF APPEAL IN BOTH THE APPEALS ARE IDENTICAL AND READ AS UNDER:- 1. THAT THE AUTHORITIES BELOW HAVE FAILED TO APPRECIATE TH AT INCOME FOR THE PURPOSE OF S.11 OF THE INCOME-TAX ACT IS TO BE COMPUTED IN THE NORMAL COMMERCIAL MANNER UNDER WHICH DEPRECIATION IS TO BE ALLOWED TO MAINTAIN CORRECT ACCOUN T. THE IMPUGNED DISALLOWANCE OF DEPRECIATION BEING AGAINST V ARIOUS AUTHORITATIVE JUDICIAL PRONOUNCEMENTS IS UNSUSTAINABLE A ND LIABLE TO BE SET-ASIDE. 2. THAT WITHOUT PREJUDICE TO GROUND NO.1 ABOVE THE LEAR NED CIT (A) HAS FAILED TO APPRECIATE THAT ON THE RATIO OF THE DECI SIONS OF THE HONBLE ITAT DELHI BENCH IN THE CASE OF DY. DIRE CTOR OF INCOME-TAX (E) VS. PRAKASH EDUCATION SOCIETY 620-A F AIZ ROAD KAROL BAGH NEW DELHI 110005 ITA NO.4730 & 4731 ( DEL) OF ITA NOS.667 & 668/DEL/2011 2 2007 AND COCHIN BENCH IN THE CASE OF DY. DIRECTOR OF INCOME-TAX (EXEMPTION) VS. LISSIE MEDICAL INSTITUTIONS REPORTED AT 2 010- TIOL-644-ITAT-COHIN RELIED UPON BY THE LEARNED CIT ( A) IN THE IMPUGNED ORDER THE APPELLANT TRUST IS ENTITLED TO DEPREC IATION ON WDV OF THE ASSETS AS ON 01.04.2005 WHOSE COSTS OF ACQUISITION WERE NEITHER CLAIMED NOR ALLOWED AS APPLI CATION OF INCOME IN THE YEARS IN WHICH THEY WERE ACQUIRED. THE CONCLUSION DRAWN BY THE LEARNED CIT (A) BEING AGAINS T THE FACTS OF THE CASE AND CONTRARY TO THE AFORESAID DECISIONS OF THE ITAT IS WHOLLY ARBITRARY AND LIABLE TO BE SET ASIDE. 3. THAT THE ORDER OF THE CIT (A)IS BAD IN LAW AND AGAI NST THE FACTS OF THE CASE. 2. IN THE ASSESSMENT ORDER THERE IS NO DISCUSSION REGARDIN G DISALLOWANCE OF DEPRECIATION CLAIMED BY THE ASSESSEE ON WDV OF ITS ASSETS AS ON 1 ST APRIL 2005. HOWEVER IT IS RECORDED IN BOTH THE ASSESSMENT ORDERS THAT THE ACTIVITIES OF THE ASSESSEE ARE WIT HIN THE AMBIT OF CHARITABLE PURPOSE AS DEFINED IN SECTION 2(1 5) OF THE ACT. IT IS ALSO RECORDED IN THE ASSESSMENT ORDERS THAT THE ASSESSEE TRUST IS REGISTERED U/S 12A OF THE ACT AND THE ASSESSEE HAS ALREADY COMPLIED WITH THE PROVISIONS OF SECTION 11/12 OF THE ACT AND T HERE IS NO VIOLATION OF SECTION 13 OF THE ACT. HAVING OBSERVED SO IN BOTH THE YEARS THE ASSESSING OFFICER HAS COMPUTED THE ASSESSABLE INCOME OF THE ASSESSEE AT NIL. IT WAS THE CASE OF THE ASSESSEE BEFORE THE CIT ( A) THAT DEPRECIATION WITH REGARD TO THE INSTITUTIONS RUN BY I T ON WDV OF THE ASSETS AS ON 1.4.2005 WAS TO BE ALLOWED AND SUCH CLAIM OF THE ASSESSEE HAS BEEN REJECTED BY THE CIT (A) ON THE BASIS OF DECISION OF ITAT COCHIN BENCH IN THE CASE OF DY. DIRECTOR OF INC OME-TAX VS. LISSIE MEDICAL INSTITUTIONS REPORTED IN 2010-TIOL-644-ITAT-C OCHIN WHEREIN THE OBSERVATIONS OF THE ITAT WERE AS UNDER:- IN VIEW OF THE FOREGOING IN OUR CONSIDERED VIEW TH E ASSESSEE SOCIETY IS NOT ELIGIBLE FOR ITS CLAIM OF DEPRECIATION I N RESPECT OF CAPITAL ASSETS THE COST OF WHICH STANDS ALREADY ALLOWED BY WAY OF APPLICATION OF INCOME ON ACCOUNT OF INCURRING THE C APITAL EXPENDITURE TOWARD AND IN FURTHERANCE OF THE OBJECTS OF THE INSTITUTION AS THE SAME AMOUNTS TO A DOUBLE DEDUCTION. T HE SAME WOULD ALSO APPLY TO ASSETS ACQUIRED DURING THE YE AR; THE PREMISE OF THE DISALLOWANCE BEING THE SAME. THE ACTIO N OF THE ITA NOS.667 & 668/DEL/2011 3 A.O. IS THUS CONFIRMED REVERSING THE FINDINGS AND DE CISION OF THE FIRST APPELLATE AUTHORITY. 3. THEREFORE THE MAIN GROUND ON WHICH LEARNED CIT (A) HAS UPHELD THE ORDER OF ASSESSING OFFICER FOR NON-GRANT OF SUCH DEP RECIATION IS THAT THE COST OF THE ASSETS IN RESPECT OF WHICH DEPRECIATION HAS BEEN CLAIMED BY THE ASSESSEE HAS ALREADY BEEN ALLOWED BY WAY OF APPLICATION OF INCOME ON ACCOUNT OF INCURRING THE C APITAL EXPENDITURE. IN THE SUBMISSIONS MADE BEFORE CIT (A) IT WAS CLEARLY M ENTIONED BY THE ASSESSEE THAT THE COST OF ACQUISITION OF THE ASSETS ON W HICH DEPRECIATION HAS BEEN CLAIMED UPTO 31 ST OCTOBER 2005 HAS NEVER BEEN CLAIMED AS APPLICATION OF INCOME AND IT HAS NEVER BEE N ALLOWED AS APPLICATION OF INCOME. WITHOUT GOING INTO SUCH SUBMI SSION OF THE ASSESSEE LEARNED CIT (A) HAS UPHELD THE ACTION OF THE A SSESSING OFFICER. 4. AFTER NARRATING THE FACTS IT WAS SUBMITTED BY THE LEARNED AR THAT THE COST OF THE ASSETS ON WHICH DEPRECIATION HAS BEEN CL AIMED UPTO 31 ST MARCH 2005 HAS NEVER BEEN CLAIMED BY THE ASSESSEE AS APPLICATION OF INCOME AND IT HAS NEVER BEEN ALLOWED BY THE DEPARTMENT. HE DREW OUR ATTENTION TOWARDS THE ASSESSMENT ORDERS PASSED UPTO ASSESSMENT YEAR 2005-06 IN WHICH THE ASSESSEE DID NOT CLAIM COST OF THE ASSETS AS APPLICATION OF INCOME AND ON LY DEPRECIATION HAS BEEN CLAIMED WHICH HAS BEEN ALLOWED. HE SUBMITTED THAT FROM ASSESSMENT YEAR 2006-07 ONWARDS THE ASSESSING OFFICER HAS CONSIDERED THE ADDITION TO THE COST OF ASSETS AS APPLICAT ION OF INCOME. THEREFORE HE PLEADED THAT ON WDV OF THESE ASSETS AS ON 1.4.2005 THE ASSESSEE IS ELIGIBLE FOR DEPRECIATION AND THEREFORE TH E SAME HAS WRONGLY BEEN DISALLOWED BY THE ASSESSING OFFICER AND IT HAS WRONGLY BEEN UPHELD BY CIT (A) WITHOUT GOING INTO THE FACTS OF THE CASE. THEREFORE HE PLEADED THAT THE CLAIM OF THE ASSESSEE SHO ULD BE ALLOWED AND FOR THIS PURPOSE HE HAS PLACED RELIANCE ON THE D ECISION IN THE ITA NOS.667 & 668/DEL/2011 4 CASE OF DY. DIRECTOR OF (E) INV. CIRCLE NEW DELHI VS. PRAKASH EDUCATION SOCIETY (ITA NO.4730 & 4731/DEL/2007). 5. ON THE OTHER HAND THE LEARNED DR RELIED ON THE ORDER OF ASSESSING OFFICER AND CIT (A). 6. WE HAVE CAREFULLY CONSIDERED THE RIVAL SUBMISSIONS IN THE LIGHT OF MATERIAL PLACED BEFORE US. IT HAS ALREADY BEEN MENTI ONED THAT THERE IS NO DISCUSSION IN THE ASSESSMENT ORDER OF REJECTION OF IMPU GNED CLAIM OF THE ASSESSEE. ONLY FROM THE ORDER PASSED BY THE CIT (A ) IT CAN BE SEEN THAT SUCH CONTENTIONS WERE RAISED BY THE ASSESSEE. HO WEVER SUCH CONTENTIONS OF THE ASSESSEE HAVE BEEN REJECTED BY LE ARNED CIT (A) RELYING UPON THE DECISION IN THE CASE OF DY. DIRE CTOR OF INCOME-TAX (E) VS. LISSIE MEDICAL INSTITUTIONS (SUPRA). IN OUR OPIN ION IF THE FACTS OF THE ASSESSEE AS STATED BY LD. COUNSEL ARE CORRECT THEN T HE SAID DECISION CANNOT BE APPLIED TO REJECT THE CLAIM OF TH E ASSESSEE AS IN THE SAID DECISION ITSELF IT HAS BEEN MENTIONED THAT THE DEP RECIATION CANNOT BE ALLOWED ON THE ASSETS THE COST OF WHICH STANDS ALREADY ALLOWED BY WAY OF APPLICATION OF INCOME. IT HAS BEEN THE CASE O F THE ASSESSEE THAT THE COST OF SUCH ASSETS WAS NEVER CLAIMED BY THE ASSESSEE AS APPLICATION OF INCOME AND IT HAS NEVER BEEN ALLOWED BY THE DEPARTMENT AS APPLICATION OF INCOME. IF IT IS SO THEN THE RATI O WHICH WILL GOVERN THE PRESENT CASE WILL BE THE DECISION OF ITAT IN THE C ASE OF DY. DIRECTOR OF INCOME-TAX (E) VS. PRAKASH EDUCATION SOCIETY (SUPRA ). THE COPY OF THE SAID DECISION HAS BEEN ENCLOSED BY THE ASSESSEE AT PAGE 82-84 OF THE PAPER BOOK IN WHICH THE OBSERVATIONS OF THE TRIBU NAL ARE AS UNDER:- WE HAVE HEARD BOTH THE PARTIES AND PERUSED THE MATERIAL AVAILABLE ON RECORD. FROM THE ORDERS OF THE TRIBUNAL FOR ASSESSMENT YEARS 1997-98 AND 1998-99 IN ITA NOS.872 AND 873 (DEL) OF 2003 WE FIND THAT DEPRECIATION HAS BEEN ALLO WED TO THE ASSESSEE IN THESE ASSESSMENT YEARS. IN ASSESSMENT YEA R 2003- 04 FROM COMPUTATION OF INCOME WE FIND THAT FOR THE PURP OSES OF WORKING OUT OF INCOME APPLIED FOR THE OBJECTS OF THE TRU ST THE ASSESSING OFFICER HAS ALLOWED CAPITAL EXPENDITURE FOR PURCHASE OF LAND AT RS.1 33 12 121/-. LIKEWISE IN ASSESSMEN T YEAR 2004- ITA NOS.667 & 668/DEL/2011 5 05 THE ASSESSING OFFICER HAS DEDUCTED THE COST OF BUIL DING CONSTRUCTED AT RS.1 73 18 350/- TOWARDS APPLICATION OF I NCOME FOR THE OBJECTS OF THE TRUST. THEREFORE IT IS INCORRECT ON THE PART OF THE ASSESSEE THAT CAPITAL EXPENDITURE IS NOT TREATED TOW ARDS INCOME APPLIED UNDER SECTION 11 (1) OF THE ACT. THE DEPRECIATION IS AVAILABLE ON THE ASSETS WHICH ARE NOT C LAIMED AS DEDUCTION IN EARLIER YEARS AS INCOME APPLIED FOR THE OBJECTS OF THE TRUST. IN A CASE WHERE THE CAPITAL EXPENDITURE HAS B EEN TREATED TO HAVE BEEN APPLIED FOR THE OBJECTS OF THE TRUST ALLOWANCE OF DEDUCTION ON ACCOUNT OF DEPRECIATION WILL AMOUNT TO DOUBLE DEDUCTION. THE ASSESSEE WITHOUT INCURRING AN Y EXPENDITURE WILL CLAIM THE AMOUNT EQUIVALENT TO DEPRECIA TION AS APPLIED WHICH IS NOT PERMISSIBLE IN LAW. SINCE THE D ETAILS OF THE ASSETS AND DEPRECIATION CLAIMED ARE NOT AVAILABLE BEFO RE US AND THE ASSESSING OFFICER HAS ALSO NOT EXAMINED THE ISSUE WE SET ASIDE THE MATTER TO THE FILE OF THE ASSESSING OFFICER WITH THE DIRECTIONS TO VERIFY WHETHER THE COST OF ASSETS WAS TREATED AS APPLICATION OF INCOME IN EARLIER YEARS. IF NO CLAIM WAS MADE AS CONTENDED BY THE LD. AR OF THE ASSESSEE THE ASSESSING OFFICER WILL ALLOW THE CLAIM AFTER PROPER VERIFICATION IN VIEW OF THE DISCUSSION MADE AS ABOVE. WE ACCORDINGLY SET ASIDE THE ISSUE TO THE FILE OF THE ASSESSING OFFICER IN BOTH THE ASSESSM ENT YEARS. 6. AS IT CAN BE SEEN FROM THE ABOVE OBSERVATIONS OF THE TRIBUNAL IT HAS BEEN DIRECTED THAT IF NO CLAIM WAS MADE AS CONTEND ED BY THE AR OF THE ASSESSEE THE ASSESSING OFFICER WILL ALLOW THE CLAIM AF TER PROPER VERIFICATION IN VIEW OF THE DISCUSSION MADE AS ABOVE. THEREFORE WE CONSIDER IT JUST AND PROPER TO RESTORE THIS ISSUE TO THE FILE OF THE ASSESSING OFFICER WITH THE SIMILAR DIRECTIONS AS HAVE BEEN GIVEN BY ITAT IN THE CASE OF DY. DIRECTOR OF INCOME-TAX (E) V S. PRAKASH EDUCATION SOCIETY (SUPRA). AFTER VERIFICATION OF THE CLAIM OF THE ASSESSEE THE ASSESSING OFFICER IS DIRECTED TO ALLOW THE CLAIM AS PER A FOREMENTIONED DECISION OF THE TRIBUNAL IN THE CASE OF DY. DIRECTOR OF INCOME-TAX (E) VS. PRAKASH EDUCATION SOCIETY (SUPRA). 7. IT MAY BE MENTIONED HERE THAT IN GROUND NO.1 FO R BOTH THE YEARS THE GRIEVANCE OF THE ASSESSEE IS AGAINST GRANT OF DEPRECI ATION IN RESPECT OF YEARS UNDER CONSIDERATION ON THE COST OF ASSET S WHICH HAVE ALREADY BEEN CONSIDERED AS APPLICATION OF INCOME. AT THE TIME OF HEARING THE LEARNED AR DID NOT ARGUE THIS GROUND AN D HAD RESTRICTED ITA NOS.667 & 668/DEL/2011 6 HIS ARGUMENTS ONLY TO GROUND NO.2 THEREFORE GROUND NO.1 IS DISMISSED. 8. IN THE RESULT THE APPEALS FILED BY THE ASSESSEE ARE P ARTLY ALLOWED FOR STATISTICAL PURPOSES IN THE MANNER AFORESAID. THE ORDER PRONOUNCED IN THE OPEN COURT ON 18.11.20 11. SD/- SD/- [K.G. BANSAL] [I.P. BANSAL] ACCOUNTANT MEMBER JUDICIAL MEMBER DATED 18.11.2011. DK COPY FORWARDED TO: - 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(A) 5. DR ITAT TRUE COPY BY ORDER DEPUTY REGISTRAR ITAT DELHI BENCHES