DCIT (E) 2(1), MUMBAI V. MUMBAI EDUCATIONAL TRUST, MUMBAI

ITA 117/MUM/2017

• Counselvise Citation: [2017] 127 COUNSELVISE.COM (IT) 0098 (ITAT-MUMBAI)
• Duration Of Justice: 7 month(s) 26 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 31-08-2017
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: Not Allotted
• Assessment Year: 2011-2012
• Appeal Filed On: 05-01-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: V JUSTIN
• Keywords: Depreciation; Charitable institution; Tax effect; Capital expenditure
• Section: 143(3); 12A

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCH E, MUMBAI BEFORE SHRI G.S. PANNU, ACCOUNTANT MEMBER AND SHRI PAWAN SINGH , JUDICIAL MEMBER ITA NOS. 116 TO 118/MUM/2017, 777 & 778/MUM/2017 : A.YS : 2008 - 09, 2011 - 12, 2012 - 13, 2010 - 11 & 2006 - 07 DCIT (EXEMPTIONS) - 2(1), MUMBAI (APPELLANT) VS. MUMBAI EDUCATIONAL TRUST MET COMPLEX, GEN. A.K. VAIDYA CHOWK, BANDRA RECLAMATION, BANDRA (W), MUMBAI 400 050 PAN : AAATM0985G (RESPONDENT) APPELLANT BY : SHRI V. JUSTIN RESPONDENT BY : NONE DATE OF HEARING : 21 /08/2017 DATE OF PRONOUNCEMENT : 31 /08/2017 O R D E R PER G.S. PANNU , AM : THE CAPTIONED FIVE APPEALS HAVE BEEN PREFERRED BY THE REVENUE AGAINST THE SAME ASSESSEE PERTAINING TO ASSESSMENT YEARS 2006 - 07, 2008 - 09 , 2010 - 11, 2011 - 12 AND 20 12 - 13. SINCE THE APPEALS RELATE TO THE SAME ASSESSEE AND INVOLVE CERTAIN COMMON ISSUES, THEY HAVE BEEN CLUBBED AND HEARD TOGETHER AND A CONSOLIDATED ORDER IS BEING PASSED FOR THE SAKE OF CONVENIENCE AND BREVITY. 2 MUMBAI EDUCATIONAL TRUST ITA NOS. 116 TO 118, 777 & 778 /MUM/2016 2. AT THE TIME OF HEARING, IT WAS NOTICED THAT NONE APPEARED ON BEHALF OF THE RESPONDENT - ASSESSEE INSPITE OF SERVICE OF NOTICE BY RPAD. ON THE OTHER HAND, THE LD. DR APPEARED ON BEHALF OF THE REVENUE. 3. ACCORDINGLY, IN VIEW OF RULE 25 OF THE INCOME TAX (APPELLATE TRIBUNAL) RULES, 1963, THE APPE ALS OF THE REVENUE ARE BEING DISPOSED OFF EX - PARTE THE RESPONDENT - ASSESSEE AFTER HEARING THE APPELLANT - REVENUE ON MERITS. 4. ITA NO. 116/MUM/2017 FOR ASSESSMENT YEAR 2008 - 09 IS DIRECTED AGAINST THE ORDER OF CIT(A) - 1 , MUMBAI DATED 13.10.2016 , WHICH IN TURN HAS ARISEN FROM THE ORDER PASSED BY THE ASSESSING OFFICER, MUMBAI DATED 29 . 12 .201 0 UNDER SECTION 143(3) OF THE INCOME TAX ACT, 1961 (IN SHORT THE ACT). 5 . IN THIS APPEAL, THE REVENUE HAS RAISED THE FOLLOWING GROUNDS OF APPEAL : - 1. WHETHER ON THE FACTS OF THE CASE AND IN LAW THE LD.CIT(A) ERRED IN ALLOWING THE APPEAL OF THE ASSESSEE ON ACCOUNT OF DISALLOWING DEPRECIATION ON FIXED ASSETS OF RS.6,11,46,063/ - IN CONTRAVENTION OF THE DECISION OF ESCORTS LTD. VS. UOI 199 ITR 43 WHEREIN IT WAS HELD THAT SINCE SECTION 11 OF THE INCOME TAX ACT PROVIDES FOR DEDUCTION CAPITAL EXPENDITURE INCURRED ON ASSETS ACQUIRED FOR THE OBJECTS OF THE TRUST AS APPLICATION AND DOES NOT SPECIFICALLY & EXPRESSLY PROVIDE FOR DOUBLE DEDUCTION ON ACCOUNT OF DEPREC IATION ON THE SAME VERY ASSETS ACQUIRED FROM SUCH CAPITAL EXPENDITURE, NO DEDUCTION SHALL BE ALLOWED U/S.32 FOR THE SAME OR ANY OTHER PREVIOUS YEAR IN RESPECT OF THAT ASSET AS IT AMOUNTS TO CLAIMING A DOUBLE DEDUCTION. 3 MUMBAI EDUCATIONAL TRUST ITA NOS. 116 TO 118, 777 & 778 /MUM/2016 2. WHETHER, ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW THE LD CIT(A) ERRED IN ALLOWING THE APPEAL , WHEN THE DELHI HIGH COURT IN THE CASE OF CHARANJIV CHARITABLE TRUST AND KERALA HIGH COURT IN THE CASE OF LISSIE MEDICAL INSTITUTIONS VS CIT 76 DTR (KER) 372 HAS DECIDED THE I SSUE IN THE FAVOUR OF THE DEPARTMENT AFTER CONSIDERING THE DECISION OF HON'BLE SUPREME COURT IN THE CASE OF ESCORTS LTD (199 ITR 43). 3. WHETHER, ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW THE LD CIT(A) ERRED IN RELYING UPON THE DECISION OF HON'BLE ITAT WHICH SUBSEQUENTLY UPHELD BY THE HON'BLE HIGH COURT IN ASSESSEE'S OWN CASE FOR AY 2007 - 08, WHICH WAS RENDERED AFTER CONSIDERING THE DECISION IN THE CASE OF CIT VS. INSTITUTE OF BANKING PERSONNEL SELECTION WITHOUT APPRECIATING THE FACT THAT DEPARTMENT HAS NOT ACCEPTED THE DECISION IN THE CASE INSTITUTE OF BANKING PERSONNEL SELECTION ON MERIT BUT DUE TO SMALLNESS OF TAX EFFECT APPEAL WAS NOT FILED BEFORE HON'BLE SUPREME COURT. HOWEVER, IN ASSESSEE'S CASE FOR AY 2007 - 08, SLP ON THIS ISSUE HAS BEEN FILED BY THE DEPARTMENT WHICH IS PENDING FOR ADJUDICATION BEFORE HON'BLE SUPREME COURT. 4. WHETHER ON THE FACTS OF THE CASE AND IN LAW THE LD. CIT(A) ERRED IN ALLOWING THE CARRY FORWARD OF DEFICIT OF RS. 16,36,50,493/ - AND ALLOWING SET OFF AGAINST TH E INCOME OF THE SUBSEQUENT YEARS, 5. WHETHER, ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD CIT(A) ERRED IN ALLOWING THE CLAIM OF THE ASSESSEE FOR CARRY FORWARD OF THE SAID DEFICIT, IGNORING THE FACT THAT THERE WAS NO EXPRESS PROVIS ION IN THE I T ACT, 1961, PERMITTING ALLOWANCE OF SUCH CLAIM. 6. WHETHER, ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD CIT(A) ERRED IN ALLOWING THE CLAIM OF THE ASSESSEE FOR CARRY FORWARD OF THE SAID DEFICIT BY RELYING UPON THE JU DGMENT OF HON'BLE BOMBAY HIGH COURT IN ASSESSEE'S OWN CASE FOR AY 2007 - 08, WHICH WAS RENDERED AFTER CONSIDERING THE DECISION THE CASE OF CIT VS. INSTITUTE OF BANKING PERSONNEL SELECTION WITHOUT APPRECIATING THE FACT THAT DEPARTMENT HAS NOT ACCEPTED THE DECISION ON MERIT, IN THE CASE INSTITUTE OF BANKING PERSONNEL SELECTION BUT DUE TO SMALLNESS OF TAX EFFECT APPEAL WAS NOT FILED BEFORE HON'BLE SUPREME COURT. HOWEVER, IN ASSESSEE'S CASE FOR AY 2007 - 08, SLP ON THIS ISSUE HAS BEEN FILED BY 4 MUMBAI EDUCATIONAL TRUST ITA NOS. 116 TO 118, 777 & 778 /MUM/2016 THE DEPARTMENT WHI CH IS PENDING FOR ADJUDICATION BEFORE HON'BLE SUPREME COURT. 7. WHETHER, ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD CIT(A) ERRED IN ALLOWING THE CLAIM OF DEPRECIATION AND CARRY FORWARD OF DEFICIT WITHOUT APPRECIATING THE FACT THA T REVENUE HAS FILED SLPS IN OTHER CASES INCLUSIVE THE CASE OF G.D. BIRLA MEDICAL RESEARCH & EDUCATIONAL FOUNDATION (S.L.P.(C) NO. 24904 OF 2016 (C.A.NO.8294 OF 2016) (ISSUE OF DEPRECIATION) AND THE CASE OF MIDC (SLP (CIVIL) 9891 OF 2014) (ISSUE OF DEFICIT) AND IN BOTH THE CASES LEAVE HAS BEEN GRANTED BY THE HON'BLE COURT AND IN ALL CASES ISSUES ARE PENDING FOR ADJUDICATION BEFORE THE HON'BLE APEX COURT. 8. THE APPELLANT PRAYS THAT THE ORDER OF THE COMMISSIONER OF INCOME (APPEALS) - I, MUMBAI BE SET ASIDE AND THAT OF THE ASSESSING OFFICE BE RESTORED. 6 . ALTHOUGH THE REVENUE HAS RAISED MULTIPLE GROUNDS OF APPEAL, BUT THE DISPUTE INVOLVED IN THIS APPEAL IS ON TWO ISSUES. FIRSTLY, THE REVENUE IS AGGRIEVED BY THE DECISION OF THE CIT(A) IN DIRECTING THE ASSESSIN G OFFICER TO ALLOW THE BENEFIT OF DEPRECIATION. SECONDLY, THE GRIEVANCE OF THE REVENUE IS AGAINST THE ACTION OF THE CIT(A) IN ALLOWING THE ASSESSEE THE BENEFIT OF CARRY FORWARD OF THE DEFICIT FOR FUTURE SET - OFF. 7 . AT THE TIME OF HEARING, IT WAS POINTED OUT TO THE LD. DR THAT ON BOTH THE ISSUES, THE CIT(A) HAS FOLLOWED THE DECISION OF HIS PREDECESSOR IN THE ASSESSEES OWN CASE FOR ASSESSMENT YEARS 2007 - 08, WHICH HAD BEEN APPROVED BY THE TRIBUNAL VIDE ORDER DATED 21.3.2013. NOTABLY, THE CIT(A) HAS ALSO OBSERVED THAT THE DECISION OF THE TRIBUNAL DATED 21.3.2013 HAS ALSO BEEN UPHELD BY THE HON'BLE BOMBAY HIGH COURT. 5 MUMBAI EDUCATIONAL TRUST ITA NOS. 116 TO 118, 777 & 778 /MUM/2016 8 . IN THIS BACKGROUND, NOW WE MAY REFER TO THE RELEVANT FACTS. THE RESPONDENT - ASSESSEE IS A CHARITABLE ORGANISATION REGISTERED U/S 12A OF THE ACT AND IS ENGAGED IN CARRYING ON ACTIVITIES OF CHARITABLE NATURE. THE ASSESSING OFFICER NOTICED THAT ASSESSEE HAD CLAIMED DEPRECIATION ALLOWANCE OF RS.6,11,46,063/ - ON THE COST OF FIXED ASSETS, WHEREAS SUCH COST OF FIXED ASSETS HAS ALSO BEEN TAKE N AS AN APPLICATION OF INCOME WHILE COMPUTING THE TOTAL INCOME. ACCORDING TO THE ASSESSING OFFICER, THIS AMOUNTED TO A DOUBLE DEDUCTION AND HE, THEREFORE, DISALLOWED THE ASSESSEES CLAIM FOR DEPRECIATION. THE CIT(A) HAS SINCE ALLOWED THE CLAIM OF THE ASS ESSEE FOLLOWING THE JUDGMENT OF THE HON'BLE BOMBAY HIGH COURT IN THE CASE OF INSTITUTE OF BANKING PERSONNEL SELECTION, 264 ITR 110 (BOM) AS WELL AS IN ASSESSEES OWN CASE . 9 . BEFORE US, THE PLEA OF THE DEPARTMENT IS THAT THE DECISION OF THE HON'BLE BOMBAY HIGH COURT IN THE CASE OF INSTITUTE OF BANKING PERSONNEL SELECTION (SUPRA) HAS NOT BEEN ACCEPTED BY THE DEPARTMENT ON MERITS AND ON A SIMILAR ISSUE, SLP (CIVIL) NO. 9891 OF 20 14 HAS BEEN FILED BEFORE THE HON'BLE SUPREME COURT IN THE CASE OF MAHARASHTRA INDUSTRIAL DEVELOPMENT CORPORATION (MIDC) . FURTHER, IT IS CONTESTED THAT ALLOWING OF DEPRECIATION WOULD AMOUNT TO A DOUBLE DEDUCTION, WHICH WAS IMPERMISSIBLE HAVING REGARD TO TH E JUDGMENT OF THE HON'BLE SUPREME COURT IN THE CASE OF ESCORTS LTD., 199 ITR 43 (SC) . 10 . WE FIND THAT THE DECISION IN THE CASE OF ESCORTS LTD. (SUPRA) BEING RELIED UPON BY THE REVENUE BEFORE US HAS BEEN CONSIDERED BY THE HON'BLE DELHI HIGH COURT IN THE C ASE OF INDRAPRASTHA CANCER SOCIETY, (2014) 112 DTR 345 DATED 18.11.2014, WHEREIN IT HAS BEEN OPINED THAT 6 MUMBAI EDUCATIONAL TRUST ITA NOS. 116 TO 118, 777 & 778 /MUM/2016 THE ALLOWANCE OF DEPRECIATION IN SIMILAR SITUATION WOULD NOT AMOUNT TO A DOUBLE DEDUCTION. FURTHER, THE HON'BLE DELHI HIGH COURT IN THE CASE OF VISHWA JAGRITI MISSION, ITA NO. 140/2012 DATED 29.3.2012 ALSO ALLOWED A SIMILAR CLAIM AFTER ANALYSING THE JUDGMENT OF THE HON'BLE SUPREME COURT IN THE CASE OF ESCORTS LTD. (SUPRA) , WHICH IS BEING RELIED UPON BY THE REVENUE. IT IS ALSO NOTICED THAT THE HON'BLE S UPREME COURT HAS ALSO DISMISSED THE SLP FILED BY THE DEPARTMENT AGAINST THE SAID DECISION OF THE HON'BLE DELHI HIGH COURT VIDE SLP NO. 19321 OF 2013. WE FIND THAT THE HON'BLE BOMBAY HIGH COURT SUBSEQUENT TO THE DECISION IN THE CASE OF INSTITUTE OF BANKING PERSONNEL SELECTION (SUPRA) CONSIDERED A SIMILAR ARGUMENT OF THE REVENUE IN THE CASE OF M/S. MUMBAI EDUCATION TRUST, ITA NO. 11/2014 DATED 3.5.2016 AND ALLOWED THE CLAIM OF THE ASSESSEE. IN FACT, THE GROUNDS OF APPEAL URGED BY THE REVENUE BEFORE THE HON' BLE HIGH COURT, WHICH READ AS UNDER : - (A) WHETHER ON THE FACTS AND IN THE CIRCUMSTANCE OF THE CASE AND IN LAW, THE TRIBUNAL WAS JUSTIFIED IN CONFIRMING THE ORDER OF THE CIT(A) TO ALLOW THE CLAIM OF DEPRECIATION RELYING ON THE DECISION OF THIS COURT IN T HE CASE OF CIT V/S. INSTITUTE OF BANKING PERSONNEL SERVICES REPORTED IN 264 ITR 110 (BOM) IGNORING THE RATIO OF HON'BLE SUPREME COURT JUDGMENT IN THE CASE OF ESCORTS LTD. V/S. UNION OF INDIA (199 ITR 43) WHEREIN HON'BLE SUPREME COURT HAS HELD THAT DOUBLE DEDUCTION CANNOT BE PRESUMED IF THE SAME IS NOT SPECIFICALLY PROVIDED BY LAW, IN ADDITION TO NORMAL DEDUCTION? (B) WHETHER ON THE FACTS AND IN THE CIRCUMSTANCE OF THE CASE AND IN LAW, THE TRIBUNAL WAS JUSTIFIED IN CONFIRMING THE ORDER OF THE CIT(A) TO ALL OW TO CARRY FORWARD OF DEFICIT OF EARLIER YEARS RELYING ON THE DECISION OF THIS COURT IN THE CASE OF CIT V/S. INSTITUTE OF BANKING PERSONNEL SERVICES REPORTED IN 264 ITR 110 (BOM) WHILE THE REVENUE DID NOT FILE SLP AGAINST THE CASE OF CIT V/S. INSTITUTE OF BANKING 7 MUMBAI EDUCATIONAL TRUST ITA NOS. 116 TO 118, 777 & 778 /MUM/2016 PERSONNEL SERVICES REPORTED IN 264 ITR110 (BOM) DUE TO LOW TAX EFFECT?. STAND ON THE SAME FOOTING AS ARE BEING CANVASSED BEFORE US IN THE INSTANT CASE. THUS, THERE IS NO ERROR ON THE PART OF THE CIT(A) IN FOLLOWING THE DECISION OF THE HON'BLE B OMBAY HIGH COURT IN THE ASSESSEES OWN CASE AND IN THE CASE OF INSTITUTE OF BANKING PERSONNEL SELECTION (SUPRA) AND ALLOWING THE STAND OF THE ASSESSEE. THE OTHER ARGUMENT TAKEN BY THE REVENUE THAT ITS SLP FILED BEFORE THE HON'BLE SUPREME COURT IS PENDING ON A SIMILAR ISSUE IS OF NO CONSEQUENCE INASMUCH AS THE BINDING JUDGMENTS OF THE HON'BLE BOMBAY HIGH COURT IN THE CASE OF THE ASSESSEE AND INSTITUTE OF BANKING PERSONNEL SELECTION (SUPRA) AS WELL AS IN THE CASE OF M/S. MUMBAI EDUCATION TRUST (SUPRA) CONTIN UE TO SUBSIST. THEREFORE, IN THIS BACKGROUND, WE FIND NO MERIT IN THE GROUND RAISED BY THE REVENUE AND THE SAME IS ACCORDINGLY DISMISSED. 11 . SIMILARLY, THE SECOND ISSUE RAISED BY THE REVENUE IS WITH REGARD TO CARRY FORWARD OF THE DEFICIT OF RS.16,36,50, 493/ - TO BE SET - OFF AGAINST THE FUTURE INCOME. ON THIS ASPECT ALSO, CIT(A) HAS ALLOWED THE CLAIM FOLLOWING THE JUDGMENT OF THE HON'BLE BOMBAY HIGH COURT IN THE ASSESSEES OWN CASE AND IN THE CASE OF INSTITUTE OF BANKING PERSONNEL SELECTION (SUPRA) ; IN FAC T, SIMILAR SITUATION HAS BEEN FURTHER AFFIRMED BY THE HON'BLE BOMBAY HIGH COURT IN THE CASE OF M/S. MUMBAI EDUCATION TRUST (SUPRA). THEREFORE, ON THIS ASPECT ALSO, WE FIND NO ERROR ON THE PART OF THE CIT(A) IN ALLOWING THE CLAIM OF THE ASSESSEE, WHICH WE HEREBY AFFIRM. 8 MUMBAI EDUCATIONAL TRUST ITA NOS. 116 TO 118, 777 & 778 /MUM/2016 1 2 . IN THE RESULT, APPEAL OF THE REVENUE FOR ASSESSMENT YEAR 2008 - 09 IS DISMISSED. 1 3 . INSOFAR AS APPEALS IN ITA NOS. 778/MUM/2017, 777/MUM/2017, 117/MUM/2017 AND 118/MUM/2017 PERTAINING TO ASSESSMENT YEARS 2006 - 07, 2010 - 11, 2011 - 12 AND 2012 - 13 RESPECTIVELY ARE CONCERNED, A LTHOUGH THE REVENUE HAS RAISED MULTIPLE GROUNDS OF APPEAL, BUT THE SOLITARY DISPUTE INVOLVED IN THIS APPEAL IS AGAINST THE ACTION OF THE CIT(A) IN DIRECTING THE ASSESSING OFFICER TO ALLOW THE BENEF IT OF DEPRECIATION. 1 4 . AS THE FACTS AND CIRCUMSTANCES IN ITA NOS. 778/MUM/2017, 777/MUM/2017, 117/MUM/2017 AND 118/MUM/2017 PERTAINING TO ASSESSMENT YEARS 2006 - 07, 2010 - 11, 2011 - 12 AND 2012 - 13 RESPECTIVELY WITH REGARD TO THE ISSUE OF ALLOWING THE BENEFIT OF DEPRECIATION TO TH E ASSESSEE ARE PARI MATERIA TO THOSE CONSIDERED BY US IN ITA NO. 116/MUM/2017 FOR ASSESSMENT YEAR 2008 - 09, THEREFORE, OUR DECISION THEREIN SHALL APPLY MUTATIS MUTANDIS TO THE SAID APPEAL S ALSO. 1 5 . RESULTANTLY, ALL THE APPEALS OF THE REVENUE ARE DISMISSED . ORDER PRONOUNCED IN THE OPEN COURT ON 3 1 S T AUGUST, 2017 SD/ - SD/ - ( PAWAN SINGH ) JUDICIAL MEMBER (G.S. PANNU) ACCOUNTANT MEMBER MUMBAI, DATE : 3 1 S T AUGUST , 201 7 *SSL* 9 MUMBAI EDUCATIONAL TRUST ITA NOS. 116 TO 118, 777 & 778 /MUM/2016 COPY TO : 1) THE APPELLANT 2) THE RESPONDENT 3) THE CIT(A) CONCERNED 4) THE CIT CONCERNED 5) THE D.R, E BENCH, MUMBAI 6) GUARD FILE BY ORDER DY./ASSTT. REGISTRAR I.T.A.T, MUMBAI