ITO (E) 2(2), MUMBAI V. PARMESHWARIDEVI GORDHANDAS GARODIA CHARITABLE TRUST, MUMBAI

ITA 2661/MUM/2015

• Counselvise Citation: [2017] 128 COUNSELVISE.COM (IT) 9040 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 8 month(s) 6 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 13-01-2017
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: J
• Assessment Year: 2010-2011
• Appeal Filed On: 07-05-2015
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: ANU KRISHNA AGGARWAL
• Assessee Lawyers: RAHUL K HAKANI
• Keywords: Depreciation; Charitable institution; Earning of tax free income; Capital expenditure
• Section: 143(3); 12A; 32; 11

Judgement Text

, TS TSTS TS INCOME TAX APPELLATE TRIBUNAL,MUMBAI - J BENCH , IOU IOUIOU IOU , BEFORE S/SH. RAJENDRA, ACCOUNTANT MEMBER & PAWAN SINGH, JUDICIAL MEMBER /.ITA NO.2661/MUM/2015, /ASSESSMENT YEAR-2010-11 ITO (E)- 2(2), ROOM NO. 4502, 5 TH FLOOR, PIRAMAL CHAMBERS, LALBAUG, PAREL, MUMBAI-4000012. VS. PARMESHWARIDEVI GORDHANDAS GARODIA CHARITABLE TRUST, 153, GARODIA NAGAR, GHATKOPAR (E), MUMBAI-400077 PAN: AAATP0083C ( / APPELLANT) ( / RESPONDENT) / REVENUE BY : SHRI ANU KRISHNA AGGARWAL (DR) ! ! / ASSESSEE BY : SHRI RAHUL K. HAKANI (AR) ' ! / DATE OF HEARING : 02 -01-2017 ! '( / DATE OF PRONOUNCEMENT : 13 -01-2017 , 1961 ' 254(1) #!$! ORDER U/S.254(1)OF THE INCOME-TAX ACT,1961(ACT) PER PAWAN SINGH, J.M. IOU IOUIOU IOU : 1. THE PRESENT APPEAL BY REVENUE U/S 253 OF THE INCOME -TAX ACT, 1961 (FOR SHORT THE ACT) IS DIRECTED AGAINST THE ORDER OF LD. COMMISSIONER OF I NCOME-TAX (APPEALS)-1, MUMBAI (FOR SHORT THE CIT(A) DATED 05.02.2015 FOR ASSESSMENT YE AR(AY) 2010-11. 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 DE PRECIATION ON FIXED ASSETS OF RS. 70,55,379/- IN CONTRAVENTION OF THE DECISION OF ESC ORTS LTD., VS. UOI 199 ITR 43 WHEREIN IT WAS HELD THAT SINCE SECTION 11 OF THE INCOME-TAX ACT PROVIDE S FOR DEDUCTION CAPITAL EXPENDITURE INCURRED ON ASSETS ACQUIRED FOR THE OBJECT OF THE T RUST AS APPLICATION, AND DOES NOT. SPECIFICALLY & EXPRESSLY PROVIDE FOR DOUBLE DEDUCTI ON ON ACCOUNT OF DEPRECIATION ON THE SAME VERY ASSETS ACQUIRED FROM SUCH CAPITAL EXP ENDITURE, NO DEDUCTION 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 CIRCUMSTANCES OF THE CASE AND IN LAW THE LD. OIT(A) ERRED IN ALLOWING THE CAPITAL, WHEN THE DELHI HIGH COURT IN THE CASE OF CHARANJIV CHARITABLE TRUST AND KERLA HIGH COURT IN. THE CASE OF LISSIE MEDICAL INSTITUTIONS U/ S. CIT 76 DTR(KAR)372 HAS DECIDED THE ISSUE IN FAVOUR OF THE DEPARTMENT AFTER CONSIDERING THE DECISION OF HON'BLE SUPREME COURT I N 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 SET OFF OF CARRY FORWARD OF DEFICIT WILL TANTAMOUNT TO DOUBLE DEDUCTION ON ACCOUNT OF EXPENDITURE OUT OF EXEMPT INCOME 4. THE APPELLANT PRAYS THAT THE ORDER OF THE COMMIS SIONER OF INCOME- TAX (APPEALS) 1, MUMBAI BE SET ASIDE AND THAT OF THE ASSESSING OF FICER BE RESTORED. 2. BRIEF FACTS ARE THAT THE ASSESSEE IS A CHARITABLE T RUST REGISTERED WITH THE CHARITY COMMISSIONER, MUMBAI. THE ASSESSEE IS ALSO HAVING R EGISTRATION U/S 12A OF THE ACT. THE 2 ITA NO. 2661/M/2015 M/S PARMESHWARIDEVI GORDHANDAS GARODIA CHARITABLE TRUST. ASSESSEE FILED RETURN OF INCOME FOR RELEVANT AY ON 27.09.2010. IN THE RETURN OF INCOME, THE ASSESSEE CLAIMED THE DEPRECIATION OF RS. 70,55,379/ -. THE ASSESSMENT WAS COMPLETED U/S 143(3) ON 28.02.2013. THE ASSESSING OFFICER (AO) DI SALLOWED THE DEPRECIATION. ON APPEAL BEFORE THE LD. CIT(A), THE DEPRECIATION WAS ALLOWED . BEING AGGRIEVED BY THE ORDER OF LD. CIT(A), THE REVENUE FILED THE PRESENT APPEAL BEFORE US. 3. WE HAVE HEARD LD. DEPARTMENTAL REPRESENTATIVE (DR) FOR THE REVENUE AND LD. AUTHORIZED REPRESENTATIVE (AR) OF THE ASSESSEE. THE LD. DR FOR THE REVENUE RELIED UPON THE ORDER OF AO. ON THE OTHER HAND, LD. AR OF THE ASSESSEE SUBMI TS THAT THE GROUNDS OF APPEAL RAISED BY REVENUE ARE COVERED IN FAVOUR OF ASSESSEE BY THE DE CISION OF CO-ORDINATE BENCH IN ASSESSEES OWN CASE FOR AY 2009-10 IN ITA NO. 5987/ MUM/2012 . IT WAS FURTHER ARGUED THAT THE AGAINST THE DECISION OF TRIBUNAL FOR AY 20 09-10, THE REVENUE FILED APPEAL BEFORE THE HONBLE HIGH COURT AND THE SAME WAS DISMISSED O N 20.10.2016. THE LD. AR OF THE ASSESSEE PLACED ON RECORD THE COPY OF DECISION OF T RIBUNAL IN ASSESSEES OWN CASE FOR AY 2009-10 AND THE ORDER OF HONBLE BOMBAY HIGH COURT DATED 20.10.2016. 4. WE HAVE CONSIDERED THE CONTENTIONS OF THE BOTH THE PARTIES AND SEEN THAT THE ORDER OF CO- ORDINATE BENCH IN ASSESSEES OWN CASE FOR AY 2009-1 0, WHEREIN THE TRIBUNAL WHILE RELYING UPON THE DECISION OF EARLIER IN ASSESSEES OWN CASE FOR AY 2007-08 AND PASSED THE FOLLOWING ORDER: 2. AT THE TIME OF HEARING BEFORE US, THE AR POINTE D OUT THAT GROUNDS NO. 1, 2 & 3 ARE COVERED BY THE ORDER OF THE COORDINATE BENCHES MUMBAI IN ITA N O. 4108/MUM/2010 IN THE ASSESSEE'S OWN CASE IN ASSESSMENT YEAR 2007-08 AND ALSO BY THE ORD ER OF HON'BLE BOMBAY HIGH COURT IN THE CASE OF DIT(EXMP) VS GKR CHARITIES IN ITA NO. 2060 OF 20 12 DATED 08.03.2013. THE AR POINTED OUT THAT THE COORDINATE BENCH HELD, WE HAVE CAREFULLY CONSIDERED THE FACTS AND THE RIVA L CONTENTIONS. IN CIT VS. INSTITUTE OF BANKING (SUPRA), THE BOMBAY HIGH COURT HELD THAT WHILE COM PUTING THE INCOME OF A TRUST, BOTH THE CAPITAL EXPENDITURE ON ACQUISITIO N OF ASSETS AND THE DEPRECIATION ON THE SAID ASSETS WERE ALLOWABLE, THE CAPITAL EXPENDITURE BEING ALLOWED AS APPLICATION OF INCOME OF THE TRUST AND DEPRECIATION BEING ALLOWABL E AS A LEGITIMATE DEDUCTION IN COMPUTING THE REAL INCOME OF THE ASSESSEE ON GENERA L PRINCIPLES. IN COMING TO THIS CONCLUSION THE HIGH COURT FOLLOWED ITS EARLIER DECI SION IN CIT VS MUNISUVARAT JAIN (1994) TAX LAW REPORTER 1084 (BOM). THE SUPREME CO URT IN THE JUDGMENT CITED SUPRA HELD THAT IT IS A FUNDAMENTAL AND UNWRITTEN A XIOM THAT NO LEGISLATURE COULD HAVE INTENDED A DOUBLE DEDUCTION IN REGARD TO THE SAME B USINESS OUTGOING AND IF IT IS SO INTENDED, IT WILL BE CLEARLY EXPRESSED. ON THIS BAS IS THE SUPREME COURT REFUSED TO ALLOW A DEDUCTION OF DEPRECIATION ON ASSETS USED FO R SCIENTIFIC RESEARCH, SINCE THE ACQUISITION OF THE ASSETS THEMSELVES WERE ALLOWABLE AS DEDUCTION, EVEN THOUGH THE EXPENDITURE REPRESENTED CAPITAL EXPENDITURE. BOTH T HESE JUDGMENTS HAVE BEEN CONSIDERED BY THE PUNJAB & HARYANA HIGH COURT IN A RECENT DECISION IN CIT VS MARKET COMMITTEE, PIPLI (2011) 330 ITR 16 (P & H). IN THIS CASE THE ASSESS EE WAS A TRUST REGISTERED UNDER THE INCOME TAX ACT AS A CHARITABLE TRUST. THE ASSESSING OFFICER 3 ITA NO. 2661/M/2015 M/S PARMESHWARIDEVI GORDHANDAS GARODIA CHARITABLE TRUST. DISALLOWED DEPRECIATION ON THE ASSETS ON THE GROUND THAT SINCE THE INCOME WAS EXEMPT, ALLOWING DEPRECIATION TO ASCERTAIN WHETHER THE REQU IRED PERCENTAGE OF FUNDS WERE APPLIED FOR THE PURPOSES OF THE TRUST WOULD AMOUNT TO CONFERRING DOUBLE BENEFIT. HIS VIEW WAS AFFIRMED BY THE CIT(A) BUT THE TRIBUNAL AL LOWED THE ASSESSEE'S APPEAL. ON FURTHER APPEAL BY THE REVENUE TO THE HIGH COURT, IT WAS HELD THAT THE INCOME OF THE ASSESSEE BEING EXEMPT, THE ASSESSEE WAS ONLY CLAIMI NG THAT DEPRECIATION SHOULD BE REDUCED FROM THE INCOME FOR DETERMINING THE PERCENT AGE OF FUNDS WHICH HAD TO BE APPLIED FOR THE PURPOSES OF THE TRUST. THERE WAS TH US NO DOUBLE DEDUCTION CLAIMED BY THE ASSESSEE. IN COMING TO THIS CONCLUSION THE PUNJ AB & HARYANA HIGH COURT, INTER ALIA, FOLLOWED THE JUDGMENT OF THE HON'BLE BOMBAY H IGH COURT CITED ABOVE AND DISTINGUISHED THE JUDGMENT OF THE SUPREME COURT CIT ED SUPRA. IN THIS VIEW OF THE MATTER, AND RESPECTFULLY FOLLOWING THE JUDGMENT OF THE PUNJAB & HARYANA HIGH COURT AND THE BOMBAY HIGH COURT CITED ABOVE, WE AFFIRM TH E DECISION OF THE 3 PARMESHWARDEVI GORDHANDAS GARODIA CHARITABLE TRUST ITA 5987/MUM/2012 CIT(A) AND DISMISS THE APPEAL FILED BY THE REVENUE WITH NO ORDER AS TO COSTS'. 3. THE DR ACCEPTED THE FACTUAL POSITION, HOWEVER, H E PLACED RELIANCE ON THE ORDER OF THE AO. 4. AFTER GOING THROUGH THE ORDERS AS CITED BY THE A R, WE ARE OF THE OPINION THAT THE ISSUE RAISED IN THE GROUNDS ARE FULLY COVERED. WE, THEREFORE, RESPE CTFULLY FOLLOWING THE DECISION OF THE COORDINATE BENCH IN THE ASSESSEE'S OWN CASE AND THE DECISION O F THE HON'BLE BOMBAY HIGH COURT IN THE CASE OF GKR CHARITIES, DO NOT FIND ANY REASON TO DISTURB THE FINDINGS AND ORDER OF THE CIT(A). 5. THUS, RESPECTFULLY FOLLOWING THE DECISION OF CO-ORD INATE BENCH, WHICH WAS CONFIRMED BY HONBLE BOMBAY HIGH COURT, WE DO NOT FIND ANY REASO N TO DISTURB THE ORDER OF LD. CIT(A). AS A RESULT APPEAL FILED BY TH E REVENUE STANDS DISMISSED. ' JKTLO , - ! ./ UK 0 ! ' 1 . ORDER PRONOUNCED IN THE OPEN COURT ON 13 TH JANUARY,2017. 3 ! 4 5 13 ( , 201 7 ! ./ 9 SD/- SD/- ( / RAJENDRA ( IOU IOUIOU IOU / PAWAN SINGH)) ( / ACCOUNTANT MEMBER # ( / JUDICIAL MEMBER / /MUMBAI, 5 /DATE: 13.01.2017 SK ' )!*+ ,+! / COPY OF THE ORDER FORWARDED TO : 1. ASSESSEE / 2. RESPONDENT / 3. THE CONCERNED CIT(A)/ ,: ( ;' , 4. THE CONCERNED CIT / ,: ;' 5. DR J BENCH, ITAT, MUMBAI / <=. '>: TS TSTS TS , . . . / 6. GUARD FILE/ . / <' ' //TRUE COPY// 3 / BY ORDER, / DY./ASST. REGISTRAR ( >: , / /ITAT, MUMBAI