Lissy Medical Institution v. Ita 199/2012

IN THE HIGH COURT OF KERALA AT ERNAKULAMPRESENT THE HONOURABLE MR.JUSTICE K.VINOD CHANDRAN & THE HONOURABLE MR. JUSTICE ASHOK MENON FRIDAY ,THE 26TH DAY OF OCTOBER 2018 / 4TH KARTHIKA, 1940 ITA.No. 199 of 2012 AGAINST THE ORDER/JUDGMENT IN ITA 237/2009 ofI.T.A.TRIBUNAL,COCHIN BENCH DATED 27-04-2012 APPELLANT/S: THE MARTHOMA CHURCH EDUCATIONAL SOCIETY,ST.THOMAS NAGAR, MUKKOLAKKAL, TRIVANDRUM-695043, REPRESENTED BY ITS SECRETARY, SHRI.P.M.ABRAHAM. BY ADVS.SRI.T.M.SREEDHARAN (SR.)SMT.DIVYA RAVINDRANSRI.V.P.NARAYANAN RESPONDENT/S: THE COMMISSIONER OF INCOME TAXAAYAKAR BHAVAN, KOWDIAR, THIRUVANANTHAPURAM-695003. BY ADVS.SRI.P.K.R.MENON,SENIOR COUNSEL, GOI(TAXES)SRI.JOSE JOSEPH SC FOR INCOME TAX OTHER PRESENT: THIS INCOME TAX APPEAL HAVING COME UP FOR ADMISSION ON 26.10.2018,THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING: JUDGMENT Vinod Chandran, J. The issue arising herein is as to whether anassessee, a charitable institution, having claimedexpenditure for acquisition of assets as application ofincome of the charitable trust for charitable purpose, isfurther entitled to claim depreciation on the same. In Lissy Medical Institution v. Commissioner of Income Tax,(2012) 348 ITR 344 (Ker), a Division Bench of this Courtanswered the question against the assessee. In thepresent case, a charitable institution established foreducational purposes claimed depreciation on fixedassets, the cost of acquisition of which was allowed fullexemption as application of income for charitablepurposes. The claim of depreciation was disallowed by theTribunal following the decision of the jurisdictionalHigh Court. The decision challenged before the Hon'bleSupreme Court in Civil Appeal No. 1591/2013 was affirmed.2. On the very next day, the very same Benchconsidered a similar issue arising from a judgment of the High Court of Bombay and many other High Courts. Thedecision of the Bombay High Court as also the decision ofthe Hon'ble Supreme Court is reported as Commissioner of Income Tax v. Rajasthan and Gujarati CharitableFoundation, [2018] 402 ITR 441 (SC). We herein extract the following paragraphs:- “After hearing the learned counsel for theparties, we are of the opinion that theaforesaid view taken by the Bombay High Courtcorrectly states the principles of law and thereis no need to interfere with the same. It may be mentioned that most of the HighCourts have taken the aforesaid view with onlyexception thereto by the High Court of Keralawhich has taken a contrary view in LissieMedical Institutions v. CIT. It may also be mentioned at this stage thatthe Legislature, realising that there was nospecific provision in this behalf in theIncometax Act, has made amendment in section11(6) of the Act vide Finance (No.2) Act of 2014which became effective from the assessment year2015- 2016. The Delhi High Court has taken theview and rightly so, that the said amendment isprospective in nature.” 3. The aforesaid decision of the Hon'ble SupremeCourt is dated 13.12.2017. It is to be noticed that in the Civil Appeal of Lissy Medical Institution the learnedJudges of the Hon'ble Supreme Court specifically observedthat they are not going into the merits of the case. In the later judgment, however, the merits were looked intoand the claim of the assessee was allowed. It is alsospecifically noticed that Section 11(6) of the Act hasonly prospective effect from the assessment year 2015-16.The subject assessment years in the present appeals areprior to the assessment year 2015-16. Following thebinding precedent, we have to allow the appeal answeringthe questions of law in favour of the assessee and against the Revenue. The I.T.Appeal is allowed. No orderas to costs. Sd/- K.VINOD CHANDRAN JUDGE Sd/- ASHOK MENONJUDGE APPELLANT(S)' ANNEXURES : APPENDIX the later judgment, however, the merits were looked intoand the claim of the assessee was allowed. It is alsospecifically noticed that Section 11(6) of the Act hasonly prospective effect from the assessment year 2015-16.The subject assessment years in the present appeals areprior to the assessment year 2015-16. Following thebinding precedent, we have to allow the appeal answeringthe questions of law in favour of the assessee and against the Revenue. The I.T.Appeal is allowed. No orderas to costs. Sd/- K.VINOD CHANDRAN JUDGE Sd/- ASHOK MENONJUDGE APPELLANT(S)' ANNEXURES : APPENDIX ANNEXURE ACOPY OF ASSESSMENT ORDER DATED 20.10.2008 PASSED BYTHE ASSESSING OFFICER FOR THE AY 2006-07.THE ASSESSING OFFICER FOR THE AY 2006-07.ANNEXURE BCOPY OF THE ORDER IN ITA 30/T/08-09 DATED04.02.2009 PASSED BY THE CIT(A)-II, KOCHI.04.02.2009 PASSED BY THE CIT(A)-II, KOCHI.ANNEXURE CCOPY OF THE ORDER IN ITA NO.237/COCH/2009 DATED27.04.2009 ISSUED BY THE APPELLATE TRIBUNAL27.04.2009 ISSUED BY THE APPELLATE TRIBUNAL