Whether On The Facts And In The Circumstances Of The Case, Thelearned Tribunal Erred In Law In Not Considering The Decision Ofescorts Limited & Anr v. Union Of India, Reported In 199 Itr43(Sc) Which Squarely Applies In The Facts And Circumstances Of Theinstant Case ?

OD-6 IN THE HIGH COURT AT CALCUTTASPECIAL JURISDICTION (INCOME TAX)ORIGINAL SIDE ITAT/276/2017IA NO. GA/2/2017 (Old No:GA/2531/2017COMMISSIONER OF INCOME TAX (EXEMPTION), KOLKATAVersusINTEGRATED EDUCATION AND RESEARCH CENTRE FORENGINEERING AND MANAGEMENT BEFORE : THE HON’BLE JUSTICE T.S. SIVAGNANAMAndTHE HON’BLE JUSTICE BIVAS PATTANAYAKDate : 28[th] July, 2022 Appearance : Mr. Soumen Bhattacharjee, Adv. ….for AppellantMr. Dwip Raj Basu, Adv.…for Respondent The Court :- This appeal by the revenue filed under Section 260A ofthe Income Tax Act, 1961 (the Act, for brevity) is directed against the orderdated 1s[t ]June, 2016, passed by the Income Tax Appellate Tribunal “C”Bench, Kolkata in ITA No. 620/Kol/2016 for the assessment year 2012-13. The revenue has raised the following substantial questions of law forconsideration. i)Whether on the facts and in the circumstances of the case, theLearned Tribunal erred in law in not considering that allowingdepreciation in respect of a depreciable asset for which the assesseeLearned Tribunal erred in law in not considering that allowingdepreciation in respect of a depreciable asset for which the assessee has already claimed deduction under section 35(2)(iv) of the IncomeTax Act being acquired for charitable purpose is permissible undersection 32 of the Act and whether the same would amount to doublededuction ? ii) Whether on the facts and in the circumstances of the case, theLearned Tribunal erred in law in not considering the decision ofEscorts Limited & Anr. Versus Union of India, reported in 199 ITR43(SC) which squarely applies in the facts and circumstances of theinstant case ? iii) Whether on the facts and in the circumstances of the case, theLearned Tribunal was right in holding that exercise of jurisdictionunder Section 263 of the Act by the Commissioner of Income Tax(Exemption) was proper and in accordance with law ? We have heard Mr. Soumen Bhattacharjee, learned standing Counselappearing for the appellant/revenue and Mr. Dwip Raj Basu, learnedCounsel appearing for the respondent/assessee. We take it for consideration the substantial question of law no.3 and if the said question is answered against the revenue, the necessity to answerthe question of law nos.1 and 2 may not arise. In the event we have to holdthat substantial question of law no.3 is to be answered in favour of therevenue, then the need will arise to decide question nos.1 and 2. The assessee is a charitable trust, filed its return of income for theassessment year under consideration 2012-13 declaring the total income asnil. The Income Tax Officer (Exemption) – 1, Kolkata, who was the assessing We have heard Mr. Soumen Bhattacharjee, learned standing Counselappearing for the appellant/revenue and Mr. Dwip Raj Basu, learnedCounsel appearing for the respondent/assessee. We take it for consideration the substantial question of law no.3 and if the said question is answered against the revenue, the necessity to answerthe question of law nos.1 and 2 may not arise. In the event we have to holdthat substantial question of law no.3 is to be answered in favour of therevenue, then the need will arise to decide question nos.1 and 2. The assessee is a charitable trust, filed its return of income for theassessment year under consideration 2012-13 declaring the total income asnil. The Income Tax Officer (Exemption) – 1, Kolkata, who was the assessing officer, completed the assessment under Section 143(3) determining the totalincome of the assessee at Rs.41,615/-. In the return of income the assesseeclaimed depreciation of Rs.68,43,455/- is allowable expenditure againstreceipts of the assessee during the previous year. The assessing officer hasallowed the claim made by the assessee while completing the assessment byorder dated 30[th] June, 2014. The Commissioner of Income Tax (Exemption)[CIT(E)] exercised his power under Section 263 of the Act and issued showcause notice dated 28[th] October 2015 on the ground that when deductionunder Section 35(2)(iv) is allowed in respect of capital expenditure on assetsused for scientific research, no depreciation is allowable under Section 32 onthe same assets. The assessee submitted the reply to the show cause noticeby placing reliance on several decisions of various High Courts and inparticular, the decision in the case of CIT Vs. SOCIETY OF SISTERS OFANNE.; 146 ITR 28 (Kar.); CIT Vs. TINY TOTS EDUCATION SOCIETY, (2011)330 ITR 21 (P&H), which followed the decision in CIT Vs. MARKETCOMMITTEE, PIPLI (2011) 330 ITR 16 (P&H), as also the decision of thisCourt in JYOTIRMAI CLUB, ITA No. 647 of 2004 dated 10[th] November, 2014.Reliance was also placed on the decision in the case of CIT Vs. RCAOBAHADUR CALAVALA CUNNAN CHETTY CHARITIES, (1982) ITR 485 (Mad.) The CIT did not agree with the stand taken by the assessee, primaryon the ground that intention of the legislature was never to give doublededuction for the same outgoing and there was the amendment by insertionof Section 11(6) of the Act, which was merely clarificatory. Accordingly, the CIT held that the assessment order allowing the claim for depreciation iserroneous in so far as it is prejudicial to the interest of the revenue. Aggrieved by such order the assessee filed appeal before the Tribunaland relied on various decisions, some of which have been referred to above.With regard to the exercise of power by the CIT under Section 263 of the Act,the assessee contended that the CIT accepts that two views are possible inthe matter and also noted that the assessee had followed the decision of thisCourt which is the jurisdictional High Court and, therefore, the assumptionof jurisdiction under Section 263 was erroneous. This submission wasconsidered by the Tribunal, referred to the decision in Malabar IndustrialCompany, 243 ITR 83 and pointed out that it is clear from the order passedby the CIT that two divergent views have been expressed by the High Courtsin the matter and the decision of this Court which being the jurisdictionalHigh Court was noted by the assessing officer and relief was granted to theassessee and, therefore, it cannot be held to be a case where the assessmentorder was erroneous in so far as it is prejudicial to the interest of revenue. In our considered view, the order passed by the Tribunal rightlyreflects the legal position and when two views are possible and the assessingofficer had accepted the assessee’s claim for depreciation by placing relianceon the decision of this Court, the order cannot be reversed by the CITbranding the same as being erroneous in so far as it is prejudicial to theinterest of revenue. Therefore, we find that there is no error committed bythe Tribunal in holding that the exercise of jurisdiction under Section 263was not proper and justified. In the light of the above substantial question of law No. 3 is answeredagainst the revenue. In the light of our conclusion, that substantial question of law No. 3 isto be answered against the revenue and in favour of the assessee, therewould not be any necessity to answer substantial questions of law Nos. 1and 2. For the above reasons the appeal stands dismissed. With the dismissal of the appeal, the stay application also standsdismissed. (T.S. SIVAGNANAM, J.) (BIVAS PATTANAYAK, J.)