ACIT (E) 2(1), MUMBAI V. MANDKE FOUNDATION, MUMBAI

ITA 2551/MUM/2015

• Counselvise Citation: [2017] 128 COUNSELVISE.COM (IT) 8077 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 10 month(s) 2 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 07-03-2017
• Appeal Filed By: Department
• Bench Allotted: D
• Assessment Year: 2010-2011
• Appeal Filed On: 05-05-2015
• Court: TRIBUNAL
• Department Lawyers: SHRIKANT NAMDEO
• Keywords: Depreciation; Charitable institution; Earning of tax free income; Capital expenditure
• Section: 143(3)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCH D , MUMBAI BEFORE SHRI C . N . PRASAD , JUDICIAL MEMBER AND SHRI RAJESH KUMAR , ACCOUNTANT MEMBER ITA NO. 2 5 5 1 /MUM/201 5 : (A.Y : 20 10 - 1 1 ) A CIT (E) 2(1) R.NO.510, PIRAMAL CHAMBERS LALBAUG PAREL MUMBAI 400 0 12 ( / APPELLANT) VS. M/S MANDKE FOUNDATION RAO SAHEB ACHUT RAO PATWARDHAN MARG FOUR BUNGLOW ANDHERI (WEST) MUMBAI - 400 0 53 PAN : A AATM4557G ( / RESPONDENT) / A PPELLANT BY : S HRIKANT NAMDEO / RE SPONDENT BY : SHRI JITENDRA SANGHVI / DATE OF HEARING : 2 8 / 1 2 /201 6 DATE OF PRONOUNCEMENT : 07/ 03 / 2017 / O R D E R PER C.N.PRASAD (J.M.) : THIS APPEAL IS FILED BY THE REVENUE AGAINST THE ORDER OF THE LD. CIT (APPEALS) - 1 , MUMBAI DATED 05 . 0 2 .201 5 FOR THE ASSESSMENT YEAR 20 10 - 1 1 ARISING OUT OF THE ASSESSMENT ORDER PASSED U/S 143(3) OF THE ACT . THE REVENUE HAS RAISED THE FOLLOWING GROUNDS : ' 1. ON THE FACTS OF THE CASE AND IN LAW THE ID. CIT(A) ERRED IN ALLOWING THE APPEAL OF THE ASSESSEE ON ACCOUNT OF DISALLOWING 2 M/S MANDKE FOUNDATION ITA NO.25 51 /MUM/201 5 , A.Y.2010 - 11 DEPRECIATION ON FIXED ASSETS OF RS.58,85, 13,644/ - 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 DEPRECIATIO N 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. 2. WHETHER, ON THE FACTS AND IN THE CIRCU MSTANCES 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 INTUITIONS VS. CIT 76 DTR (KER) 372 HAS DECIDED THE ISSUE I N 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 OF THE CASE AND IN LAW THE LD. CIT(A) ERRED IN ALLOWING THE CARRY FORWARD OF DEFICIT OF RS. 85,28,33,45 0/ - AND ALLOWING SET OFF AGAINST THE INCOME OF THE SUBSEQUENT YEARS, ALLOWING THE DEFICIT WILL TANTAMOUNT TO DOUBLE DEDUCTION ON ACCOUNT OF EXPENDITURE OUT OF EXEMPT INCOME. 4. WHETHER, ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD. CIT(A) ERRED IN ALLOWING TO CARRY FORWARD OF DEFICIT ON ACCOUNT OF EXCESS EXPENDITURE AND DIRECTING THE ASSESSING OFFICER TO ALLOW CARRY FORWARD OF DEFICIT ON ACCOUNT OF EXCESS EXPENDITURE WITHOUT APPRECIATING THE FACT THAT THIS WOULD HAVE THE EFFECT OF G RANTING DOUBLE BENEFIT TO THE ASSESSEE, FIRST AS 'ACCUMULATION 'OF THE INCOME U/S. 11 (1)(A) OR AS CORPUS DONATION U/S. 11 91)(D) IN EARLIER YEARS/CURRENT YEAR AND THEN AS 'APPLICATION' OF INCOME U/S. 1 1(1)9A) IN THE SUBSEQUENT YEARS WHICH WAS LEGALLY NOT PERMISSIBLE.? 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 3 M/S MANDKE FOUNDATION ITA NO.25 51 /MUM/201 5 , A.Y.2010 - 11 CARRY FORWARD OF THE SAID DEFICIT, IGNORING THE FACT. THAT THERE WAS NOT EXPRESS PROVISION IN THE LT. A CT, 1961 PERMITTING ALLOWANCE OF SUCH CLAIM' 2. AT THE OUTSET, THE LD. COUNSEL FOR THE ASSESSEE SUBMITS THAT GROUND NUMBERS 1 AND 2 RELA TE TO THE CLAIM FOR DEPRECIATION ON ASSETS IN ARRIVING AT THE APPLICATION OF INCOME U/S 11 OF THE ACT WHICH WAS DENIED BY THE ASSESS ING OFFICER ON THE GROUND THAT IT AMOUNTED TO DOUBLE DEDUCTION. THAT IS FIRST BY WAY OF APPLICATION OF INCOME A ND SECOND BY WAY OF CLAIM FOR DEPRECIATION. THE LD. COUNSEL SUBMITS THAT THIS ISSUE HAS BEEN DECIDED IN ASSESSEES OWN CASE FOR THE ASSESSMENT YEAR 2009 - 10 IN FAVOUR OF THE ASSESSEE BY THE CO - ORDINATE BENCH OF THIS TRIBUNAL IN ITA NO. 3837/MUM/2015 DATED 29.02.2016. A COPY OF THE ORDER IS PLACED BEFORE US. 3. SIMILARLY, THE LD.COUNSEL FOR THE ASSESSEE SUBMITS THAT GROUND NUMBERS 3 TO 5 RELATING TO CARRY FORWARD OF DEFICIT AND ALLOW ING SET OFF AGAINST INCOME OF SUBSEQUENT YEARS WAS ALSO DECIDED BY THE CO - ORDINATE BENCH BY FOLLOWING THE DECISION OF THE JURISDICTIONAL HIGH COURT IN THE CASE OF CIT VS. INSTITUTE OF BAN KING PERSONNEL SELECTION [ 264 ITR 110 ] . THEREFORE PLACING RELIANCE ON THE ORDERS OF THE CIT (APPEALS) AND THE CO - ORDINATE BENCH DECISION, THE LD. COUNSEL FOR THE ASSESSEE SUBMITS THAT THE APPEAL OF THE REVENUE MAY BE DISMISSED. 4 . THE LD. DR SUPPORT ED THE ORDERS OF THE ASSESSING OFFICER. 5 . WE HAVE HEARD THE RIVAL SUBMISSIONS, PERUSED THE ORDERS OF THE AUTHORITIES BELOW AND THE DECISIONS RELIED ON. IDENTICAL ISSUES WERE DECIDED BY THE CO - 4 M/S MANDKE FOUNDATION ITA NO.25 51 /MUM/201 5 , A.Y.2010 - 11 ORDINATE BENCH WHILE DISPOSING OF THE REVENUES APPEAL FOR THE ASSESSMENT Y EAR 2009 - 10 IN ITA NO. 3837/MUM/2015 DATED 29.02.2016 HOLDING THAT THE ASSESSEE IS ENTITLED FOR THE CLAIM FOR DEPRECIATION ON ASSETS AND ALSO CARRY FORWARD OF CURRENT YEARS ASSE SSED DEFICIT SHOULD BE SET OFF IN THE SUBSEQUENT YEARS OBSERVING AS UNDER : THE CAPTIONED APPEAL IS PREFERRED BY THE REVENUE AND IS DIRECTED AGAINST THE IMPUGNED ORDER DATED 27/03/2015 OF CIT (A) - 7 MUMBAI, PERTAINING TO THE ASSESSMENT YEAR 2009 - 10, WHICH IN TURN HAS ARISEN FROM AN ORDER PASSED BY THE ASSESSING OFFICER D ATED 05/12/2011 UNDER SECTION 143(3) OF THE INCOME TAX ACT, 1961( IN SHORT THE ACT). 2. IN THIS APPEAL, ALTHOUGH THE REVENUE HAS RAISED MULTIPLE GROUNDS OF APPEAL, THE ESSENTIAL DISPUTE REVOLVES AROUND TWO ISSUES, WHICH SHALL BE DEALT WITH IN SERIATIM. 3. BRIEFLY PUT, THE RELEVANT FACTS ARE THAT THE RESPONDENT ASSESSEE IS A TRUST REGISTERED UNDER SECTION12A OF THE ACT AND IS ENGAGED IN RUNNING MULTI - SPECIALITY TERTIARY CARE HOSPITAL WITH SPECIAL EMPHASIS ON CARDIOLOGY, REHABILITATION, ETC. THE ASSESSING OF FICER FINALIZED THE ASSESSMENT UNDER SECTION 143(3) AT A LOSS/DEFICIT OF RS.10,79,22,100/ - AS AGAINST THE RETURNED DEFICIT/LOSS OF RS.42,56,37,595/ - . IN THE COURSE OF ASSESSMENT PROCEEDINGS, THE ASSESSING OFFICER DENIED THE ASSESSEES CLAIM FOR DEPRECIATION ON ASSETS ON THE GROUND THAT IT AMOUNTED TO DOUBLE DEDUCTION I.E. FIRST BY WAY OF APPLICATION OF INCOME IN YEAR OF PURCHASE AND SECOND BY WAY OF THE CLAIM OF DEPRECIATION. THIS CLAIM HAS SINCE BEEN ALLOWED BY THE CIT(APPEALS) FOLLOWING THE RATIO OF THE JU DGMENT OF THE HONBLE BOMBAY HIGH COURT IN THE CASE OF CIT VS. INSTITUTE OF BANKING PERSONNEL SECTION, 264 ITR 110 (BOM). THIS ACTION OF THE CIT(APPEALS) HAS BEEN DISPUTED BY THE REVENUE BEFORE ME. 4. AT THE TIME OF HEARING , LD. DEPARTMENTAL REPRESENTATIVE FOR THE REVENUE QUITE FAIRLY POINTED OUT THAT THE DECISION OF THE CIT(APPEALS) WAS BASED ON THE BINDING JUDGMENT OF THE HONBLE JURISDICTIONAL HIGH COURT IN THE CASE OF INSTITUTE OF BANKING PERSONNEL SELECTION (SUPRA). FURTHER, THE LD. REPRESENTATIVE FOR THE ASSESSEE ALSO POINTED OUT THAT THE FOLLOWING DECISIONS ALSO SUPPORT THE PROPOSITION APPROVED BY 5 M/S MANDKE FOUNDATION ITA NO.25 51 /MUM/201 5 , A.Y.2010 - 11 THE HONBLE BOMBAY HIGH COURT: - 1. ITO VS. BAI KABIBAI & HANSRAJ MORAJI CHARITY TRUST, ITA NO.5842/M/2011. 2. DIT VS. FRAMJEE CAWASJEE INSTITUTE - 49 TAXMANN .COM 22 (BOMBAY HC) 3. ACIT VS. SHRI ADICHUNCHANAAGIRI SHIKSHANA TRUST, 19 ITR (T) 828 4. CIT VS. MARKET COMMITTEE 330 ITR 16 (P&H, HC) FOR THE REASON THAT THE DECISION OF THE CIT(APPEALS) IS BASED ON THE JUDGMENT OF THE HONBLE BOMBAY HIGH COURT, NO INTERFERENCE IS CALLED FOR AND ACCORDINGLY, REVENUE FAILS ON THIS ISSUE. 5. THE SECOND ISSUE RAISED BY THE REVENUE IS WITH REGARD TO THE DECISION OF THE CIT(APPEALS) IN DIRECTING THE ASSESSING OFFICER TO ALLOW CARRY FORWARD OF THE CURRENTS ASSESSED DEFICIT FOR SET - OFF IN THE SUBSEQUENT YEARS. 6. IN MY CONSIDERED VIEW, THE SAID DIRECTION OF THE CIT(APPEALS) IS VERY MUCH IN LINE WITH THE DECISION OF THE HONBLE BOMBAY HIGH COURT IN THE CASE OF INSTITUTE OF BANKING PERSONNEL SELECTION (SUPRA) AND ON THIS ASPECT ALSO NO ERROR CAN BE FOUND WITH THE DECISION OF THE CIT(A PPEALS), WHICH I HEREBY AFFIRM. 6 . FACTS AND CIRCUMSTANCES IN THIS YEAR ARE BEING IDENTICAL TO THE ASSESSMENT YEAR 2009 - 10 RESPECTFULLY FOLLOWING THE SAID DECISION OF THE CO - ORDINATE BENCH WE UPHOLD THE ORDER THE LD. CIT (APPEALS) AND REJECT THE GROUNDS OF THE REVENUE. 7 . IN THE RESULT, APPEAL OF THE REVENUE IS DISMISSED . 6 M/S MANDKE FOUNDATION ITA NO.25 51 /MUM/201 5 , A.Y.2010 - 11 ORDER PRONOUNCED IN THE OPEN COURT ON THE 7 TH DAY OF MARCH 2017 . SD/ - SD/ - RAJESH KUMAR C.N.PRASAD / / ACCOUNTANT MEMBER JUDICIAL MEMBER / MUMBAI; / DATED 07 / 0 3 / 2017 LR, SPS / COPY OF THE ORDER FORWARDED TO : / BY ORDER , ( ASSTT. REGISTRAR) , / ITAT, MUM 1. / THE APPELLANT 2. / THE RESPONDENT. 3. ( ) / THE CIT(A), MUMBAI. 4. / CIT 5. , , / DR, ITAT, MUMBAI 6. / GUARD FILE. // TRUE COPY / /