Escorts Cardiac Diseases Hospital ... vs Department Of Income Tax

Asstt. Director of Income Tax (E) Vs. Escorts Cardiac Diseases Hospital TC-II, New Delhi. Society, Okhla Road, New Delhi.

(PAN AAAAE 0049 G)

(Appellant) (Respondent)

Date of hearing : 09.03.2015 Date of Pronouncement : 09.03.2015

Appellant by : Smt. Parwinder Kaur, Sr. D.R. Respondent by: None

ORDER

PER SHRI GEORGE GEORGE K, JM:

1. This appeal, at the instance of the Revenue, is directed against the CIT(A)'s

order dated 26.02.2012. The relevant assessment year is AY 2009-10.

2. The effective ground raised reads as follows:-

" 1. On the facts and circumstances of the case and in law, the Ld CIT(A) has erred in allowing the double deduction as the value of assets has been claimed as application of income.

2. On the facts and circumstances of the case and in law, the Ld CIT(A) has erred in allowing the depreciation to the extent of Rs.51,64,064/- of earlier year as deficit and allowing the set off for the same."

ITA No.73/Del /2013 2 3. Briefly stated the facts of the case are as follows.

The Assessing Officer in the order completed u/s 143(3) of the I.T. Act

(order dated 25.11.2011) disallowed depreciation amounting to Rs.14,92,992/.

According to the AO, the capital cost of asset, on which depreciation is claimed

was allowed as application of income. Therefore, according to AO allowing

depreciation on these assets would tantamount double deduction.

4. The assessee being aggrieved filed an appeal before the First Appellate

Authority. The CIT(A) allowed the appeal of the assessee by granting

depreciation. The CIT(A) followed the judgments of Hon'ble Punjab & Haryana

High Court in the case of CIT Vs. Tiny Tots Education Society reported in 330

ITR 21( P&H), and judgment of Hon'ble jurisdictional Delhi High Court in the

case of Vishwa Jagriti Mission reported in 2012-TIOL-271-HC-DEL-IT. The

CIT(A) also placed reliance on Tribunal order in assessee's own case for AY

2007-08.

5. The Revenue being aggrieved is in appeal before us. The Ld. DR submitted

that the order of the CIT(A) is contrary to the CBDT clarification dated

02.2.2012. It was further submitted that the Judgment of the Hon'ble Kerala High

Court in the case of LISSIE Medical Institution reported in 348 ITR 344 is also in

favour of the Revenue. None was present on behalf of the assessee. ITA No.73/Del /2013 3

6. We have heard Ld. DR and perused the material on record. The CIT(A) has

allowed the appeal of the assessee, by following the judgment of the Hon'ble

jurisdictional Delhi High Court in the case of Vishwa Jagriti Mission (Supra).

The relevant finding of the CIT(A) reads as follows:-

"Para 4.1 I have gone through the findings of the AO in the assessment order and written submission of the Ld.AR of the appellant and his reliance on the judgement of Hon'ble ITA T in the appellant's own case for A. Yr. 2007-08, wherein, Hon 'ble ITAT has allowed the issue in favour of the appellant by relying on the judgement of Hon'ble Punjab & Haryana High Court in the case of CIT Vs. Tiny Tots Education Society. Furthermore, similar issue has been decided by Hon'ble Delhi High Court in the latest judgement in the case of Vishwa Jagriti Mission, wherein, the Hon 'ble Delhi High Court has decided the issue in favour of the appellant (2012- TIOL-271-HC- DEL-IT) by observing as under:-

"13 The judgement of the Supreme Court in Escorts Limited Vs. Union of India (Supra) has been rightly held to be inapplicable to the present case. There are to reasons as to whythe judgement cannot be applied to the present case. Firstly, the Supreme Court was not concerned with the case of a charitable trust/institution involving the question as to whether its income should be computed on commercial principles in order to determine the amount of income available for application to charitable purposes. It was a case where the assessee was carrying on business and the statutory computation provisions of Chapter IV-D of the Act were applicable. In the present case, we are not concerned with the applicability of these provisions. We are concerned only with the concept of commercial income as understood from the accounting point of view. Even under normal commercial accounting principles, there is authority for the proposition that depreciation is a necessary charge in computing the net income.

Secondly, the Supreme Court was concerned with the case where the assessee had claimed deduction of the cost of the asset under section 35(1) of the Act which allowed deduction for capital expenditure incurred on scientific research. The question was whether after claiming deduction in respect of the cost of the asset under section 35(1), can the assessee again claim deduction on account of depreciation in respect of the same asset. The Supreme Court ruled that, under general principles of taxation. not one of this type, as rightly distinguished by the CIT (Appeals)."

"Para 4.2 As the issue is covered by the judgement of Hon'ble ITAT, Delhi in appellant's own case and the judgment of Hon'ble Delhi High Court in the case of Vishwa Jagriti ITA No.73/Del /2013 4

Mission as discussed above, ground No.2 of the appellant is allowed."

7. No doubt judgment of Hon'ble Kerala High Court in the case of LISSIE

Medical Institution (Supra) is in favour of the Revenue, however, we are bound

by the judgment of the Hon'ble jurisdictional Delhi High Court cited supra. The

CIT(A) gave relief to the assessee, by following the dictum laid down by the

jurisdiction High Court in the case of Vishwa Jagriti Mission (supra). Therefore,

we confirm the order of the CIT(A) as correct and in accordance with law and no

interference is called for.

8. In the result, the appeal filed by the Revenue is dismissed.

The decision was pronounced in the open Court on 09th March, 2015.

Sd/- Sd/- (B.C. MEENA) (GEORGE GEORGE K.) Accountant Member Judicial Member

Dated: 09th March, 2015. Aks/-

Copy forwarded to 1. Appellant 2. Respondent 3. CIT 4. CIT(A) 5. DR Asst. Registrar, ITAT, New Delhi