ADIT (E)-II (1), MUMBAI V. G.D. BIORLA MEDICAL RESEARCH & EDUCATION FOUNDATION, MUMBAI

ITA 2807/MUM/2012

• Counselvise Citation: [2013] 120 COUNSELVISE.COM (IT) 3587 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 18 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 13-05-2013
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: G
• Assessment Year: 2007-2008
• Appeal Filed On: 25-04-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: RONAK G DOSHI
• Keywords: Capital asset; Depreciation
• Section: 12A; 32; 11

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, MUMBAI BENCH G, MUMBAI BEFORE SHRI RAJENDRA SINGH, ACCOUNTANT MEMBER AND SHRI AMIT SHUKLA, JUDICIAL MEMBER ITA NO. 2807 & 2808/MUM/2012 ASSESSMENT YEARS : 2007-08 & 2008-09 ASST. DIRECTOR OF INCOME TAX (E)-II(1) ROOM NO.507, PIRAMAL CHAMBERS, LALBAUG, PAREL MUMBAI-12. PAN :AAATG 4151 C VS. M/S. G.D. BIRLA MEDICAL RESEARCH & EDUCATION FOUNDATION C-1, ADITYA BIRLA CENTRE S.K. AHIRE MARG, WORLI MUMBAI-400 030. (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI PAVAN VED RESPONDENT BY : SHRI RONAK G. DOSHI DATE OF HEARING : 13.5.2013 DATE OF PRONOUNCEMENT : 13.5.2013 O R D E R PER BENCH: THESE APPEALS BY THE REVENUE ARE DIRECTED AGAINST D IFFERENT ORDERS BOTH DATED 19.3.2012 OF CIT(A) FOR ASSESSMENT YEARS 2007-08 AND 2008-09. THE IDENTICAL DISPUTE RAISED IN BOTH THE APPEALS IS REGARDING ALLOWABILITY OF CLAIM OF DEDUCTION ON ACCOUNT OF DEPRECIATION IN RE SPECT OF THE ASSETS ACQUIRED AND USED FOR THE PURPOSE OF ACTIVITIES OF THE TRUST. 2. THE FACTS IN BRIEF ARE THAT THE ASSESSEE WHICH I S A SECTION 25 COMPANY AND REGISTERED UNDER SECTION 12A OF THE ACT, WAS CA RRYING ON ACTIVITIES FOR PROVIDING MEDICAL ASSISTANCE TO PATIENTS AND CHARIT ABLE INSTITUTIONS AND ALSO PROVIDING EDUCATION ASSISTANCE. THE ASSESSING OFFIC ER NOTED THAT THE ASSESSEE INCURRED EXPENDITURE ON CONSTRUCTION OF BUILDING WH ICH HAD BEEN TREATED AS ITA NO.2807 & 2808/M/12 A Y .07-08 & 08-09 2 APPLICATION OF INCOME AND THE ASSESSEE HAD ALSO CLA IMED DEPRECIATION ON THOSE ASSETS. THE ASSESSING OFFICER THEREFORE ASKED THE ASSESSEE TO EXPLAIN AS TO WHY THE CLAIM OF DEPRECIATION SHOULD NOT BE DISA LLOWED AS THE SAME AMOUNTED TO DOUBLE DEDUCTION. THE ASSESSEE PLACING RELIANCE ON THE JUDGMENT OF HON'BLE HIGH COURT OF BOMBAY IN THE CAS E OF CIT VS. INSTITUTE OF BANKING PERSONNEL SELECTION (264 ITR 110) IN WHICH THE HON'BLE HIGH COURT HAD ALLOWED THE CLAIM OF DEDUCTION IN RESPECT OF CA PITAL ASSETS ACQUIRED FOR THE PURPOSE OF ACTIVITIES OF THE TRUST ARGUED THAT THE CLAIM WAS ALLOWABLE. THE ASSESSING OFFICER HOWEVER, DID NOT ACCEPT THE CONTE NTIONS RAISED BY ASSESSEE. HE REFERRED TO THE JUDGMENT OF HON'BLE SUPREME COUR T IN THE CASE OF ESCORTS LTD. VS. UNION OF INDIA (199 ITR 43) IN WHICH IT WAS HELD THAT IN RESPECT OF ASSETS ALLOWED AS DEDUCTION UNDER SECTION 35 (1)(IV ), NO DEPRECIATION UNDER SECTION 32 COULD BE ALLOWED AS THE SAME WOULD AMOUN T TO DOUBLE DEDUCTION. THE ASSESSING OFFICER OBSERVED THAT THE SAID JUDGME NT OF HON'BLE SUPREME COURT HAD NOT BEEN BROUGHT TO THE NOTICE OF HON'BLE HIGH COURT OF BOMBAY IN THE CASE OF INSTITUTE OF BANKING PERSONNEL SELECTION (SUPRA). THE ASSESSING OFFICER, THEREFORE, DISALLOWED THE CLAIM OF DEDUCTI ON ON ACCOUNT OF DEPRECIATION. IN APPEAL, CIT(A) DID NOT AGREE WITH THE ORDERS OF ASSESSING OFFICER AND HELD THAT FOLLOWING THE JUDGMENT OF HON 'BLE JURISDICTIONAL HIGH COURT IN CASE OF INSTITUTE OF BANKING PERSONNEL SELECTION (SUPRA) THE CLAIM OF THE ASSESSEE HAS TO BE ALLOWED. ACCORDINGLY CIT(A) DIRECTED THE ASSESSING OFFICER TO ALLOW THE CLAIM OF DEDUCTION. AGGRIEVED BY THE DECISION OF CIT(A), THE REVENUE IS IN APPEAL BEFORE THE TRIBUNAL IN BOT H THE YEARS. 3. BEFORE US, THE LD. CIT-DR APPEARING FOR THE REVE NUE ASSAILED THE ORDERS OF CIT(A). IT WAS ARGUED THAT THE ASSET HAVING ALRE ADY BEEN ALLOWED AS ITA NO.2807 & 2808/M/12 A Y .07-08 & 08-09 3 APPLICATION OF INCOME, DEPRECIATION COULD NOT BE AL LOWED AS THE SAME AMOUNTED TO DOUBLE DEDUCTION. IT WAS SUBMITTED THAT THERE WAS AMBIGUITY IN THE PROVISIONS REGARDING ALLOWABILITY OF DEPRECIATI ON AND IN SUCH CASES AS HELD BY HON'BLE SUPREME COURT IN THE CASE OF NOVOPAN INDIA LTD., HYDERABAD VS. COLLECTOR OF CENTRAL EXCISE AND CUSTOMS, HYDERABAD IN THE CIVIL APPEAL NO.3556 OF 1984 DATED 14.9.1984, THE PRINCIPLE THAT IN CASE OF AMBIGUITY TAXING STATUTE SHOULD BE INTERPRETED IN FAVOUR OF T HE ASSESSEE WAS NOT APPLICABLE TO EXEMPTION PROVISIONS WHICH HAD TO BE CONSTRUED STRICTLY. THEREFORE, IT WAS ARGUED THAT THE CLAIM OF DEDUCTIO N ON ACCOUNT OF DEPRECIATION SHOULD NOT BE ALLOWED. THE LD. AR ON T HE OTHER HAND SUBMITTED THAT THE ISSUE WAS COVERED IN FAVOUR OF THE ASSESSE E BY THE JUDGMENT OF HON'BLE JURISDICTIONAL HIGH COURT IN THE CASE OF CIT VS. INSTITUTE OF BANKING PERSONNEL SELECTION (SUPRA). HE ALSO REFERRED TO LATEST JUDGMENT DATED 8.3.2013 OF THE HON'BLE HIGH COURT OF BOMBAY IN THE CASE OF DIT(E) VS. G.K.R CHARITIES (32 TAXMANN.COM 208) IN WHICH IDENTICAL DISPUTE HAD BEEN RAISED BY THE REVENUE CITING JUDGMENT OF HON'BLE SUPREME C OURT IN THE CASE OF ESCORTS LTD. VS. UNION OF INDIA (SUPRA), WHICH HAS BEEN DISMISSED BY THE HON'BLE HIGH COURT AS THE ISSUE WAS COVERED BY THE JUDGMENT IN CASE OF CIT VS. INSTITUTE OF BANKING PERSONNEL SELECTION (SUPRA). 4. WE HAVE PERUSED THE RECORDS AND CONSIDERED THE M ATTER CAREFULLY. THE DISPUTE IS REGARDING ALLOWABILITY OF DEPRECIATION I N RESPECT OF CAPITAL ASSETS ACQUIRED BY THE TRUST FOR CARRYING ON ACTIVITIES OF TRUST. IT IS A SETTLED LEGAL POSITION THAT ACQUISITION OF ASSETS FOR CARRYING ON ACTIVITIES OF THE TRUST IS APPLICATION OF INCOME UNDER SECTION 11(1)(A). FURTH ER THE HON'BLE HIGH COURT OF BOMBAY IN THE CASE OF CIT VS. INSTITUTE OF BANKING PERSONNEL SELECTION ITA NO.2807 & 2808/M/12 A Y .07-08 & 08-09 4 (SUPRA), HAVE HELD THAT INCOME OF THE TRUST IS REQU IRED TO BE COMPUTED UNDER SECTION 11 ON COMMERCIAL PRINCIPLE AFTER PROVIDING FOR ALLOWANCE FOR NORMAL DEPRECIATION AND DEDUCTION THEREOF FROM GROSS INCOM E OF THE TRUST. THUS IN RESPECT OF CAPITAL ASSETS ACQUIRED WHICH HAD BEEN C ONSIDERED AS APPLICATION OF INCOME, DEPRECIATION HAS TO BE ALLOWED. IT IS NOT T HE CASE OF DOUBLE DEDUCTION AS EXPENDITURE INCURRED ON ACQUISITION OF CAPITAL A SSET IS APPLICATION OF INCOME AND SINCE APPLICATION OF INCOME HAS RESULTED INTO C APITAL ASSET WHICH HAS BEEN USED FOR THE PURPOSE OF ACTIVITIES OF THE TRUST, DE PRECIATION HAS TO BE ALLOWED. THE ISSUE IS COVERED BY THE JUDGMENT OF HON'BLE JUR ISDICTIONAL HIGH COURT IN CASE OF CIT VS. INSTITUTE OF BANKING PERSONNEL SELECTION (SUPRA), WHICH HAS TO BE FOLLOWED AND FOLLOWING THE SAME WE DO NOT SEE AN Y INFIRMITY IN THE ORDER OF CIT(A) AND THE SAME IS, THEREFORE, UPHELD. 5. IN THE RESULT BOTH THE APPEALS OF THE REVENUE ST AND DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 13.5.2013. SD/- SD/- (AMIT SHUKLA) JUDICIAL MEMBER (RAJENDRA SINGH) ACCOUNTANT MEMBER MUMBAI, DATED: 13.5.2013. JV. COPY TO: THE APPELLANT THE RESPONDENT THE CIT, CONCERNED, MUMBAI THE CIT(A) CONCERNED, MUMBAI THE DR BENCH TRUE COPY BY ORDER DY/ASSTT. REGISTRAR, ITAT, MUMBAI.