Madras High Court
Commissioner Of Income Tax vs Tuticorin Port Trust on 28 March, 2022
TCA.No.326 of 2013
IN THE HIGH COURT OF JUDICATURE AT MADRAS
DATED : 28.03.2022
CORAM :
THE HONOURABLE MR. JUSTICE R. MAHADEVAN
and
THE HONOURABLE MR. JUSTICE J.SATHYA NARAYANA PRASAD
TCA.No.326 of 2013
Commissioner of Income Tax
Madurai. ...
Appellant
Vs
Tuticorin Port Trust
Harbour Estate,
Tuticorin 628 004,
PAN: AAALT0206D
...
Respondent
Appeal preferred under Section 260A of the Income Tax Act, 1961,
against the order of the Income Tax Appellate Tribunal, “C” Bench, Chennai,
dated 08.01.2013 in I.TA.No.1060/Mds/2012.
For Appellant : Mr.J.Narayanaswamy
Senior Standing Counsel
For Respondent : No appearance
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TCA.No.326 of 2013
JUDGMENT
(Judgment of the Court was delivered by R.MAHADEVAN, J.)
This tax case appeal has been filed by the appellant / Revenue,
challenging the order dated 08.01.2013 passed by the Income Tax Appellate
Tribunal, 'C' Bench, Chennai, in I.TA.No.1060/Mds/2012, relating to the
assessment year 2008-2009.
2. By order dated 13.08.2013, this court admitted the aforesaid tax case
appeal on the following substantial question of law:
“Whether on the facts and in the circumstances of the
case, the Appellate Tribunal was right in allowing the
depreciation on the fixed assets when the entire capital
expenditure incurred by the assessee had already been
considered as application of income for charitable purpose
under Section 11(1)(a)?"
3.When the matter was taken up for consideration, the learned counsel
for the appellant / Revenue fairly submitted that a Co-ordinate Bench of this
court by judgment dated 13.02.2020 in T.C.A.Nos. 192 to 196 of 2013 in
respect of the assessee's own case, decided the identical question of law against
the Revenue. The relevant passage of the said judgment can profitably be
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TCA.No.326 of 2013
extracted below:
"3. Learned counsel at Bar on both sides submit fairly that
the issue has now been put to rest and is no longer res integra in
view of the recent decision of the Supreme Court of “Commissioner
of Income Tax -Vs- Rajasthan and Gujarati Charitable Foundation”
decided on 13.12.2017 reported in [2018] 402 ITR 441 (SC) where
the Honourable Supreme Court has noticed that various High Courts
has decided the said controversy in favour of the Assessee and only
the Kerala High Court had taken a contrary view in the case of
“Lissie Medical Institutions -Vs- C.I.T. [2012-TIOL-303-HC-
Kerala-IT],” whereas the Bombay High Court has taken a view in
favour of the Assessee in case of “DIT (Exemption) -Vs- Framjee
Cawasjee Institute [1993] 109 CTR (Bom) 463. The relevant
portion of the judgment of the Honourable Supreme Court affirming
the view taken by the Bombay High Court is quoted below for ready
reference.
"Question No. 2 herein is identical to the question which
was raised before the Bombay High Court in the case of DIT
(Exemption) v. Framjee Cawasjee Institute [1993] 109 CTR
(Bom) 463 . In that case, the facts were as follows : The
assessee was a trust. It derived its income from depreciable
assets. The assessee took into account depreciation on those
assets in computing the income of the trust. The Income-tax
Officer held that depreciation could not be taken into account
because, full capital expenditure had been allowed in the year
of acquisition of the assets. The assessee went in appeal before
the Assistant Appellate Commissioner. The appeal was rejected.
The Tribunal, however, took the view that when the Income-tax
Officer stated that full expenditure had been allowed in the
year of acquisition of the assets, what he really meant was that
the amount spent on acquiring those assets had been treated as
'application of income' of the trust in the year in which the
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TCA.No.326 of 2013
income was spent in acquiring those assets. This did not mean
that in computing income from those assets in subsequent
years, depreciation in respect of those assets cannot be taken
into account. This view of the Tribunal has been confirmed by
the Bombay High Court in the above judgment. Hence,
question No. 2 is covered by the decision of the Bombay High
Court in the above judgment. Consequently, question No. 2 is
answered in the affirmative i.e., in favour of the assessee and
against the Department."
2. After hearing the learned counsel for the parties, we are of
the opinion that the aforesaid view taken by the Bombay High
Court correctly states the principles of law and there is no need
to interfere with the same.
3. It may be mentioned that most of the High Courts have taken
the aforesaid view with only exception thereto by the High
Court of Kerala which has taken a contrary view in Lissie
Medical Institutions v. CIT*.
4. It may also be mentioned at this stage that the Legislature,
realising that there was no specific provision in this behalf in
the Income-tax Act, has made amendment in section 11(6) of
the Act vide Finance (No. 2) Act of 2014 which became effective
from the assessment year 2015-2016. The Delhi High Court
has taken the view and rightly so, that the said amendment is
prospective in nature.
5. It also follows that once the assessee is allowed depreciation,
he shall be entitled to carry forward the depreciation as well.
6. For the aforesaid reasons, we affirm the view taken by the
High Courts in these cases and dismiss these matters."
4. In view of the aforesaid settled legal position, the question
of law raised in these appeals deserves to be answered in favour of
the Assessee and against the Revenue. We hereby do so. The appeals
are disposed of accordingly. No costs."
4.Following the aforesaid decision, the substantial question of law
raised in this appeal is answered in favour of the assessee and against the
Revenue. Accordingly, the present tax case appeal is dismissed. No costs.
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TCA.No.326 of 2013
[R.M.D., J.] [J.S.N.P., J.]
av 28.03.2022
Index : yes/no
To
1. The Income Tax Appellate Tribunal,
“C” Bench, Chennai,
2. The Commissioner of Income Tax
Madurai.
3. The Assistant Commissioner of Income Tax,
Circle I, Tuticorin.
4. The Commissioner of Income Tax (Appeals) I,
Madurai.
https://www.mhc.tn.gov.in/judis
TCA.No.326 of 2013
R. MAHADEVAN, J.
and
J.SATHYA NARAYANA PRASAD, J.
av
TCA.No.326 of 2013
28.03.2022
https://www.mhc.tn.gov.in/judis
