Income Tax Appellate Tribunal - Chennai
National College Council, Trichy vs Assessee on 9 August, 2011
IN THE INCOME TAX APPELLATE TRIBUNAL
'B' BENCH, CHENNAI
[BEFORE DR. O.K. NARAYANAN, VICE-PRESIDENT AND
SHRI HARI OM MARATHA, JUDICIAL MEMBER]
I.T.A No.949/Mds/2011
(Assessment year : 2007-08 )
National College Council vs The ACIT
P.B.No.369, Chatram Bus Stand Triruchirapalli
Teppakulam
Trichy 620 002
[PAN - AAATT6266H ]
(Appellant) (Respondent)
Appellant by : Shri V.S.Jayakumar
Respondent by : Shri K.E.B Rengarajan, Jr. Standing
Counsel
Date of Hearing : 09-08-2011
Date of Pronouncement : 09-08-2011
ORDER
PER HARI OM MARATHA, JUDICIAL MEMBER:
This appeal of the assessee, for assessment year 2007-08, is directed against the order of the ld. CIT(A), dated 11.3.2011.
2. Briefly stated, the facts of the case are that the assessee- society was established to promote the advancement of education especially to Mahila section of the society thereby enlightening the society to eradicate the prevalence of illiteracy among them. The :- 2 -: ITA 949/11 assessee-society was initially started with the opening of an institution named as 'National College of Higher Secondary School'. Later, it widened its activities to provide education especially to ladies by establishing an Arts and Science College, with the names 'Srimathy Indra Gandhi College' and also 'Sri Jeyandra Matriculation Higher Secondary School'. It is the contention of the assessee that it was forced to construct one shopping complex some 25 years ago in the un-utilized area opposite to Chatram Bus Stand and adjacent to ladies hostel of Srimathy Indra Gandhi College. Construction of this complex was necessitated because this vacant land was misused by the passersby for urination purposes and also during nights by the unsocial elements to enjoy hard drinks. So, this open space had become a continuous nuisance as well as insecurity for the inmates of the hostel. For the safety of the women folk this shopping complex was constructed and when this shopping complex was rented out, the rent received was utilized for achieving its objects. But, the ACIT, Trichy, vide order dated 29.12.2009, has made the following additions:
(i) By rejecting the claim of depreciation
(ii) By not considering the revised Form No.10 for accumulation of surplus.
(iii) Taxing the rental income received on let out shops as business income.:- 3 -: ITA 949/11
3. Although the ld. CIT(A) has partly accepted the appeal of the assessee, yet the assessee is further aggrieved and has raised the following grounds:
"1. The order of the Commissioner of Income Tax (Appeals) Trichy, in I.T.A.NO.381/09-10 dated 11-03-2011 dismissing the claim of depreciation claimed by the appellant without a speaking order is against law, facts of the case and material evidences on record.
2. The Commissioner of Income Tax (Appeals) failed to appreciate the difference between the revenue deduction in the computation of income and a special exemption granted by the Act based on application of such income for charitable purposes and that various High Courts have held that depreciation is a proper deduction in computing income of a charitable institution.
3. The Commissioner of Income Tax (Appeals) ought to have appreciated that the parliament gave effect to the decisions of the Supreme Court in Escorts Ltd., Vs. Union of India (1992) 199 ITR 43 (sc) and Commissioner of Income Tax Vs. Hico Products P.Ltd. (1999) 247 ITR 797 (SC) by inserting sub-clause (iv) in section 35(2). The said section as well as the said decisions has no application to a charitable institution assessed under the special provisions of Sections 11 and 13.
4. The Commissioner of Income (Appeals) Ought to have appreciated that the Bombay High Court in Commissioner of Income Tax Vs. Institute of Banking 264 ITR 110 upheld the allowance of depreciation claim to charitable institution even after pronouncement of the above decisions by the Supreme Court.
5. The Honorable D bench of Income Tax Appellate Tribunal, Chennai in the case of Sri Mariamman Educational Health and Charitable Trust Vs. The Assistant Commissioner of Income Tax, Company Circle-II, Trichy in I.T.A.Nos.142, 143 and 144/Mds/2010; dated 02/02/2011 for the Assessment years 2005-2006; 2006-2007 and 2007-2008 has upheld that the claim of depreciation as an item of revenue expenditure is in accordance with law :- 4 -: ITA 949/11
6. For the above and such other reasons, that may be adduced either before or at the time of hearing, appellant prays that the Honourable Tribunal may be pleased to allow the appeal and render justice."
4. While hearing the appeal, it was noticed that the ld. CIT(A) has not passed his order by way of a speaking order and simply after discussing the arguments put forth on behalf of the assessee, he has abruptly given his decision and that too without the support of any reasons. This Tribunal, being the final fact finding body, is duty bound to cull out the full and final facts of a case. Consequently, we deem it fit to restore the appeal to the file of the ld. CIT(A) with a direction to pass a fresh speaking order after giving opportunity of hearing to the assessee. After setting aside the finding of the ld. CIT(A) which are qua the subject matter of this appeal, we remand back the same to his file as directed above.
5. In the result, the appeal is allowed for statistical purposes.
Order pronounced in the open court on 09-08-2011.
Sd/- Sd/-
(DR. O.K. NARAYANAN) (HARI OM MARATHA)
VICE-PRESIDENT JUDICIAL MEMBER
Dated: 9th August, 2011
RD
Copy to: Appellant/Respondent/CIT(A)/CIT/DR