ITO (E) 1(1), MUMBAI V. THE BOMMANJI DINSHAW PETIT PARSEE GENERAL HOSPITAL, MUMBAI

ITA 3259/MUM/2011

• Counselvise Citation: 325919914 RSA 2011
• Duration Of Justice: 10 month(s) 25 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 20-03-2012
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: B
• Assessment Year: 2007-2008
• Appeal Filed On: 25-04-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SASMITA MISRA
• Assessee Lawyers: F B ANDHYARUJINA
• Keywords: Gift; Depreciation; Charitable institution; Assessment record
• Section: 143(3); 142(1); 80G; 12A; 10; 11

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCHES, B, MUMBAI BEFORE HONBLE PRESIDENT SHRI G.E.VEERABHADRAPPA AND SHRI D.K.AGARWAL (JM) ITA NO.3259/MUM/2011 (ASSESSMENT YEAR:2007-08) INCOME TAX OFFICER (E)I(1), ROOM NO.503, PIRAMAL CHAMBERS, 5 TH FLOOR, PAREL, MUMBAI-400012. M/S BOMMANJI DINSHAW PETIT PARSEE GENERAL HOSPITAL, BOMANJI PETIT ROAD, CUMBALA HILL, MUMBAI-400036 PAN: AAATB3553H APPELLANT V/S RESPONDENT APPELLANT BY : MS.SASMITA MISR A RESPONDENT BY : SHRI F.B. ANDHYARU JINA O R D E R PER D.K.AGARWAL (JM) THIS APPEAL PREFERRED BY THE REVENUE IS DIRECTED A GAINST THE ORDER DATED 15.11.2010 PASSED BY THE LD. CIT(A ) FOR THE ASSESSMENT YEAR 2007-08. 2. BRIEFLY STATED FACTS OF THE CASE ARE THAT THE A SSESSEE COMPANY IS A CHARITABLE TRUST, FILED RETURN DECLARI NG LOSS OF RS.9,96,83,553/- AFTER CLAIMING EXEMPTION U/S 11 OF THE INCOME TAX ACT, 1961 (THE ACT). SUBSEQUENTLY, A REVISED DATE OF HEARING : 20.2.2012 DATE OF PRONOUNCEMENT : 20.3.2012 ITA NO.3259/MUM/2011 (ASSESSMENT YEAR:2007-08) 2 RETURN WAS ALSO FILED DECLARING A LOSS OF RS.9,73,4 5,636/-. AFTER PROCESSING OF THE RETURN 143(1) OF THE ACT THE CASE WAS SELECTED FOR SCRUTINY. ACCORDINGLY, STATUTORY NOTIC ES U/S. 143(2) AND 142(1) OF THE ACT WERE ISSUED AND DULY SERVED O N THE ASSESSEE. IN COMPLIANCE WITH THE STATUTORY NOTICES THE ASSESSEES AUTHORIZED REPRESENTATIVE ATTENDED FROM TIME TO TIME AND SUBMITTED VARIOUS DETAILS AND EXPLANATIONS . ON PERUSAL OF THE ASSESSMENT RECORD, THE AO OBSERVED T HAT THE OBJECTS OF THE TRUST REMAIN UNCHANGED. THE TRUST IS REGISTERED WITH THE CHARITY COMMISSIONER, MUMBAI AND ALSO REGI STERED U/S 12A OF THE ACT. CERTIFICATE U/S 80G OF THE ACT HAS ALSO BEEN GRANTED BY THE DIT(E), MUMBAI. THE AO FURTHER OBS ERVED THAT CERTAIN ISSUES WHICH HAVE CROPPED UP WILL HAVE IMPA CT ON THE INCOME OF THE ASSESSEE TRUST. SUCH ISSUES ARE (A) CORPUS DONATION & ITS APPLICATION, (B) APPLICATION OF CAPI TAL NATURE AND CLAIM OF DEPRECIATION THEREON AND (C ) DEFICIT. TH E ASSESSEE TRUST WAS ASKED TO PROVIDE THE DETAILS AND TO EXPLA IN. THE AO AFTER CONSIDERING THE ASSESSEES REPLY AND THE MA TERIAL AVAILABLE ON RECORD, HOWEVER, COMPLETED THE ASSESSM ENT AT AN INCOME OF RS.NIL VIDE ASSESSMENT ORDER DATED 20.1 1.2009 PASSED U/S 143(3) (II) OF THE ACT AS UNDER : ITA NO.3259/MUM/2011 (ASSESSMENT YEAR:2007-08) 3 DEFICIT AS PER COMPUTATION OF INCOME (-)RS.9,96,83,553/- ADD: DISALLOWANCES (I) APPLICATION OF GIFT RECEIVED FROM M/S SHAPOORJI PALLONJI RS.5,66,68,898 /- (II) DEPRECIATION RS.1,16,26, 771/- RS.6,82,95,669/- ------------------ DEFICIT- NOT ALLOWED TO BE C/F (-)RS.3,13,87,884/- TOTAL ASSESSED INCOME NIL ------------------- 3. ON APPEAL, THE LD. CIT(A) AFTER CONSIDERING THE APPROVAL U/S 10(23C) (VIA) DIRECTED THE AO TO ALLOW THE EX EMPTION U/S 10 (23C) (VIA) OF THE ACT TO THE ASSESSEE. 4. BEING AGGRIEVED BY THE ORDER OF THE LD. CIT(A), THE REVENUE IS IN APPEAL BEFORE US TAKING THE FOLLOWING GROUNDS : 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE C ASE, AND IN LAW, THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) ERRED IN LAW AND FACTS BY ALLOWING EXEMPT ION U/S 10(23C) (VIA) TO THE ASSESSEE, WHEN NO SUCH CLAIM W AS MADE BY THE ASSESSEE IN THE RETURNED INCOME. 2. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CA SE, AND IN LAW, THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) ERRED IN LAW AND FACTS BY NOT APPRECIATIN G THE FACT THAT THE ASSESSEE WAS WRONGLY ENJOYING DOUBLE DEDUCTION VIZ., DEDUCTION U/S 11(1)(D) FOR THE RECE IPTS OF DONATION (IN KIND) TOWARDS CORPUS FUND OF RS.5,66,6 8,898/- COMPRISING OF OLD AGE HOME BUILDING, LIFT, FURNITUR E, KITCHENWARE, ETC. RECEIVED FROM SHAPPORJI PALLONJI TRUST THE ITA NO.3259/MUM/2011 (ASSESSMENT YEAR:2007-08) 4 COST OF WHICH WAS NIL TO THE ASSESSEE TRUST, AND CL AIMING THE VALUE OF THE SAME ASSETS AS EXPENDITURE FOR PUR CHASE AND APPLICATION OF INCOME, WHEN NO SUCH INCOME WAS TAKEN INTO ACCOUNT AND AS SUCH DOUBLE DEDUCTION AS CLAIME D IS CONTRARY TO THE LEGAL PRINCIPLES AS LAID DOWN IN TH E DECISION OF HONBLE SUPREME COURT IN THE CASE OF ESCORTS LTD . V/S UNION OF INDIA 199 ITR 43. 3. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CA SE, AND IN LAW, THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) ERRED IN LAW AND FACTS BY ALLOWING EXEMPT ION U/S 10(23C)(VIA), WHEN THE ASSESSEE IS NOT SATISFYING T HE CONDITIONS LAID DOWN IN SEC. 10(23C)(VIA), AS FAR A S INCOME RECEIVED BY GIFT OF RS.5,66,68,898/- IS CONCERNED W HICH IS FOR OLD AGE HOME PURPOSE, WHICH IS NOT COVERED UNDE R THE ACTIVITY COVERED UNDER 10(23C)(VIA). 4. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CA SE, AND IN LAW, THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) ERRED IN NOT APPRECIATING THE FACT THAT A LLOWING OF DEPRECIATION WILL RESULT IN DOUBLE DEDUCTION WHICH IS CONTRARY TO THE RATIO LAID DOWN BY THE HONBLE SUPR EME COURT IN THE CASE OF ESCORTS LTD. V/S UNION OF INDI A 199 ITR 43 AND J.K.SYNTHETICS V/S UNION OF INDIA (1992) 65 TAXMAN 420. 5. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CA SE, AND IN LAW, THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) ERRED IN NOT APPRECIATING THE FACT THAT T HE DEFICIT ARISES OUT OF EXPENDITURE OUT OF INCOME ON WHICH EXEMPTION HAS ALREADY BEEN CLAIMED AND ALLOWING OF SET OFF OF DEFICIT OF EARLIER YEAR AGAINST INCOME OF CURREN T YEAR WILL RESULT IN DOUBLE DEDUCTION WHICH IS CONTRARY TO THE RATIO LAID DOWN BY THE HONBLE SUPREME COURT IN THE CASE OF ESCORTS LTD V/S UOI 199 1TR 43 AND J.K. SYNTHETICS V/S UNION OF INDIA (1992) 65 TAXMAN 420. 6. THE APPELLANT PRAYS THAT THE ORDER OF THE COMMISSIONER OF INCOME-TAX (APPEALS)-1, MUMBAI BE S ET ASIDE AND THAT OF THE ASSESSING OFFICER BE RESTORED . 7. THE APPELLANT CRAVES LEAVE TO AMEND OR ALTER AN Y GROUND OR ADD A NEW AROUND WHICH MAY BE NECESSARY. ITA NO.3259/MUM/2011 (ASSESSMENT YEAR:2007-08) 5 5. AT THE TIME OF HEARING, THE LD.DR SUBMITS THAT I N VIEW OF THE PLEA TAKEN IN THE GROUNDS OF APPEAL, THE ORDER PASSED BY THE LD. CIT(A) BE REVERSED AND THAT OF AO BE RESTO RED. 6. ON THE OTHER HAND, THE LD. COUNSEL FOR THE ASSES SEE SUBMITS THAT SINCE THE APPROVAL HAS BEEN GRANTED U /S 10(23C) (VIA) OF THE ACT BY THE PRESCRIBED AUTHORITY I.E. C BDT, THE ORDER PASSED BY THE LD. CIT(A) BE UPHELD. 7. WE HAVE CAREFULLY CONSIDERED THE SUBMISSIONS OF THE RIVAL PARTIES AND PERUSED THE MATERIAL AVAILABLE ON RECOR D. WE FIND THAT THE FACTS ARE NOT IN DISPUTE. WE FURTHER FIN D THAT THE ASSESSEE HOSPITAL HAS RECEIVED AN ORDER U/S 10(23C) (VIA) DATED 31.3.2009 BEARING F.NO. CCIT/MUM/10(23C)(VIA)/235/2 008- 09, GOVERNMENT OF INDIA, MINISTRY OF FINANCE, DEPA RTMENT OF REVENUE, CHIEF COMMISSIONER OF INCOME TAX, MUMBAI, EXEMPTING THE HOSPITAL U/S 10(23C) (VIA) FROM ASSE SSMENT YEAR 2000-01 AND ONWARDS UNTIL WITHDRAWN. WE FURTH ER FIND THAT EARLIER THE HOSPITAL HAS ALSO RECEIVED ORDER D ATED 23.8.2004 BEARING NO. F.NO.197/32/2004-ITA-1, GOVER NMENT OF INDIA, MINISTRY OF FINANCE, DEPARTMENT OF REVENU E, CENTRAL BOARD OF DIRECT TAXES EXEMPTING THE HOSPITAL U/S 10 (23C) (VIA) FOR ASSESSMENT YEAR 1999-2000. WE FURTHER FIND THA T THE ITA NO.3259/MUM/2011 (ASSESSMENT YEAR:2007-08) 6 ASSESSEES AUTHORISED REPRESENTATIVE HAS DULY INTIM ATED TO THE AO VIDE THEIR LETTER DATED 7.4.2009, THAT THE APPR OVAL HAS BEEN RECEIVED FOR THE ASSESSMENT YEAR 2007-08. 8. THAT BEING SO AND KEEPING IN VIEW THAT THE ISSU E IS FULLY COVERED IN FAVOUR OF THE ASSESSEE AND AGAINST THE R EVENUE BY THE RECENT JUDGMENT OF THE HONBLE PUNJAB AND HARYA NA HIGH COURT IN CIT V/S MARKET COMMITTEE, PIPLI (2011) 330 ITR 16 (P&H) WHEREIN THEIR LORDSHIPS AFTER CONSIDERING VAR IOUS DECISIONS INCLUDING THE DECISION IN CIT V/S INSTITU TE OF BANKING PERSONNEL SELECTION (2003) 264 ITR 110 (BOM) HAVE H ELD AS UNDER: '9. IN THE PRESENT CASE, THE ASSESSEE IS NOT CLAIMI NG DOUBLE DEDUCTION ON ACCOUNT OF DEPRECIATION AS HAS BEEN SUGGESTED BY LEARNED COUNSEL FOR THE REVENUE. THE I NCOME OF THE ASSESSEE BEING EXEMPT, THE ASSESSEE IS ONLY CLAIMING THAT DEPRECIATION SHOULD BE REDUCED FROM T HE INCOME FOR DETERMINING THE PERCENTAGE OF FUNDS WH ICH HAVE TO BE APPLIED FOR THE PURPOSES OF THE TRUST. T HERE IS NO DOUBLE DEDUCTION CLAIMED BY THE ASSESSEE AS CANV ASSED BY THE REVENUE. THE JUDGMENT OF THE HON'BLE SUPREME COURT IN ESCORTS LTD. [1993] 199 ITR 43 IS DISTINGU ISHABLE FOR THE ABOVE REASONS. IT CANNOT BE HELD THAT DOUBL E BENEFIT IS GIVEN IN ALLOWING CLAIM FOR DEPRECIATION FOR COMPUTING INCOME FOR PURPOSES OF SECTION 11. THE QUESTIONS PROPOSED HAVE, THUS, TO BE ANSWERED AGAIN ST THE REVENUE AND IN FAVOUR OF THE ASSESSEE.' RESPECTFULLY FOLLOWING THE ABOVE DECISION AND THE C ONSISTENT VIEW OF THE TRIBUNAL, WE ARE OF THE VIEW THAT THERE IS NO DOUBLE DEDUCTION CLAIMED BY THE ASSESSEE AND HENCE THE LD. CIT(A) ITA NO.3259/MUM/2011 (ASSESSMENT YEAR:2007-08) 7 WAS FULLY JUSTIFIED IN ALLOWING THE CLAIM OF THE AS SESSEE. THE GROUNDS TAKEN BY THE REVENUE ARE, THEREFORE, REJECT ED. 9. IN THE RESULT, REVENUES APPEAL STANDS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 20TH MARC H,2012. SD SD (G.E.VEERABHADRAPPA) (D.K.AGARWAL) PRESIDENT JUDICIAL MEMBER MUMBAI, DATED 20TH MARCH, 2012. SRL: COPY TO: 1. APPELLANT 2. RESPONDENT 3. CIT CONCERNED 4. CIT(A) CONCERNED 5. DR CONCERNED BENCH 6. GUARD FILE. BY ORDER TRUE COPY ASSTT. 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