M/S. Karpagam Charity Trust Sf v. Commissioner Of Income Tax (Exemptions), Chennai

IN THE HIGH COURT OF JUDICATURE AT MADRASDATED : 26.03.2021CORAMTHE HON'BLE MR. JUSTICE M. DURAISWAMYANDTHE HON'BLE MRS. JUSTICE T.V. THAMILSELVI Tax Case Appeal Nos.518, 519, 524 & 525 of 2017 M/s. Karpagam Charity TrustSF No.559, Pollachi Main Road,Eachanari Post,Coimbatore – 641 021... Appellant in TCA No.518/2017 M/s. Karpagam Academy of Higher Education,SF No.559, Pollachi Main Road,Eachanari Post,Coimbatore – 641 021... Appellant in TCA No.519/2017 M/s. Karpagam Academy of Higher Education,SF No.559, Pollachi Main Road,Eachanari Post,Coimbatore – 641 021... Appellant in TCA No.524/2017 M/s. Karpagam Charity TrustSF No.559, Pollachi Main Road,Eachanari Post,Coimbatore – 641 021... Appellant in TCA No.525/2017Vs. Commissioner of Income Tax (Exemptions),Chennai.... Respondent in all 4 TCAs Tax Case Appeals filed under Section 260A of the Income TaxAct, 1961 against the order of the Income Tax AppellateTribunal, Madras "A" Bench, dated 05.12.2016, 05.12.2016,15.03.2017 and 15.03.2017 respectively passed in I.T.A.Nos.2363/Mds/2016fortheassessmentyear2012-13,I.T.A.Nos.2364/Mds/2016 for the assessment year 2012-13,I.T.A.Nos.2738/Mds/2016 for the assessment year 2013-14, andI.T.A.Nos.2739/Mds/2016 for the assessment year 2013-14respectively preferred against the order of the commissioner ofIncomeTax(Appeals)-2,coimbatoredated27.05.2016,27.05.2016,30.06.2016 and 27.06.2016, made in ITA Nos.28/15-16,26/15-16,245/15-16 and 240/15-16 respectively against theorder of the Assistant commissioner of Income Tax(Exemptions)),coimbatore, dated 19.03.2015, 17.03.2015, 29.01.2016 and30.12.2015 made in PAN. Nos. , , and AATK3484C respectively for the assessment years12-13,12-13,13-14 and 13-14. https://hcservices.ecourts.gov.in/hcservices/ For Appellant : Mr.N.V.Balaji,(in all 4 TCAs)For Respondent : Mr.J.Narayanasamy,(in all 4 TCAs) Senior Standing Counsel C O M M O N J U D G M E N T(Delivered by M. DURAISWAMY, J.)Challenging the orders passed by the Income Tax AppellateTribunal, Madras “A” Bench, in I.T.A.No.2363/Mds/2016 dated05.12.2016 in respect of assessment year 2012-13;I.T.A.No.2364/Mds/2016 dated 05.12.2016 in respect of theassessment year 2012-13; I.T.A.No.2738/Mds/2016 dated 15.03.2017inrespectoftheassessmentyear2013-14andI.T.A.No.2739/Mds/2016 dated 15.03.2017 in respect of theassessment year 2013-14, the assessee has filed the aboveappeals. 2. (i) T.C.A.Nos.518, 519 & 524 of 2017 were admitted on20.09.2017 with the following substantial question of law:“Whether depreciation is not allowable if thecost of asset has been allowed as deduction towardsapplication of income?”(ii) T.C.A.No.525 of 2017 was admitted on 28.11.2017 withthe following substantial question of law:“Whether under facts and circumstances of thecase, the Income Tax Appellate Tribunal was right inholding that the depreciation is not allowable as adeduction in computing the income of the appellanttrust for the assessment year 2012-2013?” 3. Mr.N.V.Balaji, learned counsel for the appellantssubmitted that the questions of law that arise for considerationin the above appeals were already decided in favour of theassessee and against the Revenue in Tax Case Appeal Nos.343 to345 and 347 of 2014 by judgment dated 26.02.2021. It would beappropriate to extract the relevant portion of the order whichreads as follows: 2.The Assessing Officer disallowed thedepreciation on the capital assets claimed bythe assessee on the ground that the entire costof the asset has been considered as applicationof income in the year of purchase of asset andthe assessee is not engaged in any business andSection 32 is not applicable to the entitiesclaiming exemption under Section 10 & 11 of theAct. The Assessing Officer, relying on thedecision of the Hon'be Supreme Court in thecase of Escorts Limited reported in 199 ITR 43(SC), held that allowing depreciation on thesame asset will not amount to doubt deduction. 2.The Assessing Officer disallowed thedepreciation on the capital assets claimed bythe assessee on the ground that the entire costof the asset has been considered as applicationof income in the year of purchase of asset andthe assessee is not engaged in any business andSection 32 is not applicable to the entitiesclaiming exemption under Section 10 & 11 of theAct. The Assessing Officer, relying on thedecision of the Hon'be Supreme Court in thecase of Escorts Limited reported in 199 ITR 43(SC), held that allowing depreciation on thesame asset will not amount to doubt deduction. Aggrieved by the assessment order, the assesseefiled appeals before the CIT (Appeals), whoallowed the appeals in favour of the assesseeholding that the assessee is entitled fordepreciation claim on the assets. Aggrieved bythe order of CIT (Appeals), the Revenue filedappeals before the Income Tax AppellateTribunal and the Tribunal, by following theassessee's own case for the earlier year inI.T.A.Nos.402 & 403/Mds/2010, allowed theappeals holding that the assessee can claimdepreciation. Aggrieved over the orders passedby the Income Tax Appellate Tribunal, theRevenue has filed the above appeals.3.The above appeals were admitted on thefollowing substantial question of law :"Whether on facts and in the circumstancesof the case, the Income Tax Appellate Tribunalwas right in holding that the assessee isentitled to claim depreciation on the assets,in the form of, application of income, eventhough the cost of purchase of asset wastreated as application of income under Section11?”4.When the appeals were taken up forhearing, Mr.J.Narayanasamy, learned SeniorStanding Counsel appearing for the appellant –Revenue in all the appeals, fairly submittedthat the substantial question of law, which hasbeen framed in these appeals, have beenanswered against the Revenue by the Hon'bleSupreme Court in CIT Vs. Rajasthan and GujaratiCharitable Foundation reported in [2018] 402ITR 441 (SC). Further, the learned SeniorStanding Counsel submitted that following thedecision of the Hon'ble Supreme Court, theHon'ble Division Bench of this Court, byjudgmentdated26.08.2019,madeinT.C.A.Nos.680 & 681 of 2011 [Commissioner ofIncome Tax – I, Tiruchirapalli Vs. M/s.NationalCollege Council, P.B.No.369, Chatram Bus Stand,Teppakulam, Tiruchirapalli – 620 002] dismissedthe appeals and answered the substantialquestions of law against the Revenue. Theappeals in T.C.A.Nos.680 & 681 of 2011 relatesto the very same assessee. Hence, followingthe judgment of the Hon'ble Supreme Courtreported in [2018] 402 ITR 441 (SC) and thejudgment of the Hon'ble Division Bench of this Court made in T.C.A.Nos.680 & 681 of 2011, thesubstantial question of law is answered againstthe Revenue and the appeals are dismissed. Nocosts. 4. Mr.J.Narayanasamy, learned Senior Standing Counselappearing for the respondent fairly submitted that the questionsof law that arise for consideration in the present appeals arecovered by the decision of the Division Bench of this Courtdated 26.02.2021 made in Tax Case Appeal Nos.343 to 345 and 347of 2014 and that the questions of law were decided in favour ofthe appellant and against the Revenue. 5. In view of the submissions made by the learned counselon either side, following the judgment dated 26.02.2021 made inT.C.A.Nos.343 to 345 and 347 of 2014, the questions of law aredecided in favour of the assessee and against the Revenue. Accordingly,the orders passed by the Commissioner of Income Tax(Appeals) andthe Income Tax Appellate Tribunal are set aside and the Tax CaseAppeals are allowed. No costs. Sd/- Assistant Registrar(CS VII) /TRUE COPY/ Sub-Assistant Registrar vsiTo1)The Income Tax Appellate Tribunal, Madras "A" Bench 2)The Commissioner of Income Tax(Appeals)-2,Coimbatore 3)The Assistant Commissioner of Income Tax(Exemptions)Coimbatore CP(CO)KKN 23.04.2021