DCIT (E) 2(1), MUMBAI V. SAMUNDRA INSTITUTE OF MARINE STUDIES TRUST, MUMBAI

ITA 206/MUM/2016

• Counselvise Citation: [2017] 126 COUNSELVISE.COM (IT) 8937 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 9 month(s) 14 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 27-10-2017
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: Not Allotted
• Assessment Year: 2011-2012
• Appeal Filed On: 13-01-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: RAM TIWARI
• Assessee Lawyers: DEEPAK THAKKAR
• Keywords: Depreciation; Charitable institution; Tax effect; Capital expenditure
• Section: 32; 11

Judgement Text

1 ITA NO.206/MUM/2016 IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCH E, MUMBAI BEFORE SHRI MAHAVIR SINGH (JUDICIAL MEMBER) AND SHRI G MANJUNATHA (ACCOUNTANT MEMBER) I.T.A NO.206 /MUM/2016 (ASSESSMENT YEAR: 2011-12) THE DCIT(E)-2(1), MUMBAI VS SAMUDRA INSTITUTE OF M ARITIME STUDIES TRUST, 507, 5 TH FLOOR, SAI COMMERCIAL COMPLEX, BKS DEVASHI MARG, GOVANDI, MUMBAI 400 088 PAN : AACTS9557L APPELLANT RESPONDEDNT APPELLANT BY SHRI RAM TIWARI RESPONDENT BY SHRI DEEPAK THAKKAR DATE OF HEARING 26-10-2017 DATE OF PRONOUNCEMENT 27-10-2017 O R D E R PER G MANJUNATHA, AM : THE DEPARTMENT FILED THIS APPEAL BY RAISING THE F OLLOWING GROUNDS OF APPEAL:- I 'WHETHER ON THE FACTS OF THE CASE AND IN LAW THE LD.CIT(A) ERRED IN ALLOWING THE APPEAL OF THE ASSESSEE ON ACCOUNT O F DISALLOWING DEPRECIATION ON FIXED ASSETS OF RS. 96,69,4361- 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 PR OVIDES FOR DEDUCTION CAPITAL EXPENDITURE INCURRED ON ASSETS AC QUIRED FOR THE OBJECTS OF THE TRUST AS APPLICATION AND DOES NOT SP ECIFICALLY & EXPRESSLY PROVIDE FOR DOUBLE DEDUCTION ON ACCOUNT O F DEPRECIATION ON THE SOME VERY ASSETS ACQUIRED FROM SUCH CAPITAL EXPENDITURE, NO 2 ITA NO.206/MUM/2016 DEDUCTION SHALL BE ALLOWED U/S.32 FOR THE SAME OR A NY OTHER PREVIOUS YEAR IN RESPECT OF THAT ASSET AS IT AMOUNTS TO CLAI MING A DOUBLE DEDUCTION. 2 WHETHER, ON THE FACTS AND IN THE CIRCUMSTANCES OF T HE CASE AND IN LAW THE LDCIT(A)ERRED IN ALLOWING THE DEPRECIATI ON, WHEN THE DELHI HIGH COURT IN THE CASE OF CHARANJIV CHARITABL E TRUST AND KERALA HIGH COURT IN THE CASE OF LISSIE MEDICAL INSTITUTIO NS VS CIT 76 DTR (KER) 372 HAS DECIDED THE ISSUE IN THE FAVOUR OF TH E DEPARTMENT AFTER CONSIDERING THE DECISION OF HON'BLE SUPREME C OURT IN THE CASE OF ESCORTS LTD (199 ITR 43). 3 THAT THE DECISION OF HON'BLE BOMBAY HIGH COURT IN T HE CASE OF INDIAN INSTITUTE OF BANKING AND PERSONNEL SELECTION (2003) 264 ITR 110 WAS NOT ACCEPTED BY REVENUE, BUT THE APPEAL WAS NOT FILED DUE TO THE SMALLNESS OF TAX EFFECT. ON THE ISSUES DECID ED IN SAID ORDER ARE CHALLENGED IN APEX COURT IN OTHER CASES HENCE T HE ISSUE OF DOUBLE DEDUCTION ON ACCOUNT OF ALLOWING CLAIM OF DEPRECIAT ION HAVE NOT REACHED FINALITY. 2. ALL THE ABOVE THREE GROUNDS RAISED BY THE REVENUE R EVOLVES AROUND A NARROW COMPASS AS TO WHETHER, THE ASSESSEE, A CHARI TABLE ORGANIZATION, WOULD BE ENTITLED FOR DEPRECIATION ON ITS FIXED ASSETS, W HEN THE INVESTMENT ITSELF WAS ALLOWED U/S 11 AT THE APPLICATION STAGE. 3. UPON HEARING THE PARTIES AND ON PERUSAL OF MATERIAL PLACED BEFORE US, WE FIND THAT THE ISSUE IS SQUARELY COVERED IN FAVOUR O F THE ASSESSEE BY THE DECISION OF THE TRIBUNAL IN ASSESSEES OWN CASE FOR AY 2010- 11 ORDER DATED 18-07-2016, WHEREIN IT HAS BEEN HELD AS UNDER:- 5. WE HAVE HEARD BOTH THE PARTIES AND PERUSED THE ORDERS OF THE REVENUE AUTHORITIES AS WELL AS THE CI TED JUDGMENTS OF HON'BIE HIGH COURT OF BOMBAY IN THE CASE OF CIT VS. INSTITUTE OF BANKING, WHEREIN IT WAS HELD 'THAT THE TRIBUNAL WAS RIGHT TH LAW IN DIRECT THE ASSESS/HG OFFICER TO ALLOW DEPRECIATI ON ON THE 3 ITA NO.206/MUM/2016 ASSETS 1 THE COST OF WHICH HAD BEEN FULLY ALLOWED AS APPLIC ATION OF INCOME UNDER SECTION 11 IN THE PAST YEARS. CONSIDER ING THE BINDING NATURE OF THE JUDGMENTS AND THE COVERED NATURE ON T HE ISSUE, WE ARE OF THE OPINION THAT THE ISSUE OF ALLOWABILITY OF DE PRECIATION ON DEPRECIABLE ASSETS SHOULD BE DECIDED IN FAVOUR OF T HE ASSESSEE. ACCORDINGLY, THE DECISION TAKEN BY THE CI T (A) BY ALLOWING THE ASSESSEES CLAIM IN ALL THE APPEALS UN DER CONSIDERATION IS FAIR AND REASONABLE AND THE SAME D OES NOT CALL FOR ANY INTERFERENCE. THUS, ALL THE GROUND S RAISED BY THE REVENUE IN ALL THE APPEALS UNDER CONSIDERATION ARE DISMISSED. WE ALSO FIND THAT IN YET ANOTHER ORDER IN ASSESSEE S OWN CASE, VIDE ORDER DATED 16-09-2015 FOR AY 2009-10, THE E BENCH OF THE TRI BUNAL DECIDED THE VERY SAME ISSUE IN THE FOLLOWING MANNER:- 5. THE ISSUES RAISED BY GROUND NO. 1 HAVE BEEN CONSID ERED BY THE TRIBUNAL IN ITA NO. 5760/M/2010 AT PARA 9.6 ON PAGE-12 OF ITS ORDER AND IN ITA NO. 2668/M/12 IN A.Y. 2008-09 AT PARA-5 OF ITS ORDER. THE RELEVANT FINDING OF THE TRIBUNAL IN ITA NO. 5760/M/10 IN A.Y. 2007-08 READS AS UNDER: 'WE , FIND THE DELHI BENCH OF THE TRIBUNAL IN THE CASE OF S.R.M FOUNDATION OF INDIA 'SUPRA) WHILE DECIDING THE ISSUE U/S. 10(22) OF THE LT ACT HAS HELD THAT T HERE IS NO REQUIREMENT PRESCRIBED U/S. 10(22) THAT THE INSTITU TION SHOULD BE RECOGNIZED BY AN UNIVERSITY OR STATE OR C ENTRAL GOVERNMENT. THE TRIBUNAL IN THE SAID DECISION HELD 33 LESSONS OF WHAT IS TERMED AS SCIENCE OF CREATIVE INTELLIGENCE ('SC?) WHICH ARE IN THE NATURE OF YOGA CLASSES AS EDUCATION. THE TRIBUNAL WHILE DECIDING THE ISSUE HAS CONSIDERED THE DECISION QF THE HON'BIE SUPREME COUR T IN THE CASE OF SOLE TRUSTEE, LOK SHIKSHAN TRUST (SUPRA ). WE FIND THE VARIOUS OTHER DECISIONS RELIED ON BY THE L D. COUNSEL FOR THE ASSESSEE ALSO SUPPORT ITS CASE. THE DECISION IN THE CASE OF BIHAR INSTITUTE OF MINING A ND 4 ITA NO.206/MUM/2016 MINE SURVEYING (SUPRA) IN OUR OPINION, IS NOT APPLI CABLE TO THE FACTS OF THE PRESENT CASE. IN THAT CASE IT WAS COACHING OF STUDENTS FOR PARTICULAR EXAMINATION, FOR WHICH IT W AS HELD THAT COACHING INSTITUTION IS NOT A CHARITABLE INSTITUTION THE MEANING OF SECTION 2(15), HOWEVER, IN THE INSTANT CASE THE ASSESSEE IS GIVING TRAINING IN THE AREA OF PRE SEA AND POST SEA TO SEA MEN. THE VARIOUS OTHER DECISIONS RELIED ON BY THE AO ARE ALSO DISTINGUISHABLE AND NOT APPLICABLE TO THE FACTS OF THE PRESENT CASE. IN OUR OPINION, MERELY BECAUSE THE CO URSES ARE NOT APPROVED B Y THE DG SHIPPING OR MERELY BECAUSE THERE IS HUGE SURPLUS IN THE NON- APPROVED COURSES THAN THE APPROVED COURSES CANNOT BE A GROUND FOR DENIAL OF EXEMPTION U/S.1 AS LONG AS THE TRUST IS IMPARTING EDUCATION AS PER THE OBJECTS OF THE TRUST. IN THIS VIEW OF THE MATTER AND IN VIEW OF THE DETAILED OBSERVATIONS GIVEN BY THE LD. CIT(A) ON THIS ISSUE WE DO NOT FIND ANY INFIRMITY IN THE SAME AND ACCORDINGLY THE SAME IS UPHELD. THE GROUNDS RAISED BY THE REVENUE ARE ACCORDINGLY DISMISSED.' RESPECTFULLY FOLLOWING THE FINDINGS OF THE CO-ORDIN ATE BENCH, GROUND NO. 1 IS DISMISSED. 7. THE ISSUE RELATING TO THE CLAIM OF DEPRECIATION HAS BEEN DECIDED IN FAVOUR OF THE ASSESSEE AND AGAINST THE R EVENUE BY THE DECISION OF THE HON'BLE HIGH COURT OF BOMBAY IN THE CASE OF INSTITUTE OF BANKING PERSONNEL SERVICES 264 ITR 110 WHEREIN THE HON'BIE HIGH COURT HAS INTER ALIA HELD AS UNDER: 'IN ALL SUCH CASES, SECTION 32 OF THE INCOME-TAX AC T PROVIDING FOR DEPRECIATION FOR COMPUTATION OF INCOM E DERIVED FROM BUSINESS OR PROFESSION IS NOT APPLICAB LE. HOWEVER, THE INCOME OF THE TRUST IS REQUIRED TO BE COMPUTED UNDER SECTION 11 ON COMMERCIAL PRINCIPLES AFTER PROVIDING FOR ALLOWANCE FOR NORMAL DEPRECIATION AND DEDUCTION THEREOF FROM GROSS INCOME OF THE TRUST. 5 ITA NO.206/MUM/2016 8. AS THE CIT(A) HAS ALLOWED THE RELIEF FOLLOWING THE ORDER OF THE HONBLE HIGH COURT OF BOMBAY, WE DO NOT FIND ANY R EASON TO INTERFERE WITH THE LD. CIT(A). GROUND NO. 2 IS ACCORDINGLY DI SMISSED. 4. CONSISTENT WITH THE EARLIER DECISIONS OF THE TRIBUN AL IN EARLIER ASSESSMENT YEARS, WE DO NOT SEE ANY MERIT IN THE AP PEAL FILE BY THE REVENUE. 5. IN THE RESULT, THE APPEAL FILED BY THE REVENUE IS D ISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 27 TH OCTOBER, 2017. SD/- SD/- (MAHAVIR SINGH) (G MANJUNATHA) JUDICIAL MEMBER ACCOUNTANT MEMBER MUMBAI, DT : 27 TH OCTOBER, 2017 PK/- COPY TO : 1. APPELLANT 2. RESPONDENT 3. CIT(A) 4. CIT 5. DR /TRUE COPY/ BY ORDER ASSTT. REGISTRAR, ITAT, MUMBAI