DCIT (E) 2(1), MUMBAI V. SAIFEE HOSPITAL TRUST, MUMBAI

ITA 3318/MUM/2016

• Counselvise Citation: [2018] 126 COUNSELVISE.COM (IT) 0781 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 8 month(s) 8 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 19-01-2018
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: Not Allotted
• Assessment Year: 2009-2010
• Appeal Filed On: 11-05-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: R P MEENA
• Assessee Lawyers: D V LAKHANI
• Keywords: Depreciation; Charitable institution; Benefit of exemption; Capital expenditure
• Section: 12A; 32; 12; 2; 11

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCHES A , MUMBAI BEFORE S HRI G.S. PANNU (AM) AND SHRI RAM LAL NEGI (JM) ITA NO. 3318 /MUM/20 1 6 ASSESSMENT YEAR: 2009 - 10 THE DEPUTY COMMISSIONER OF INCOME TAX (EXEMPTIONS) - 2(1), 510, 5 TH FLOOR, PIRAMAL CHAMB ERS, LALBAUG, MUMBAI - 400012 VS. M/S SAIFEE HOSPITAL TRUST, 15/17, MAHARSHI KARVE MARG, CHARNI ROAD RAILWAY STATION (WEST), MUMBAI 400004 PAN: AABTS7800D (APPELLANT) (RESPONDENT) REVENUE BY : SHRI R.P. MEENA ( CIT D R) ASSESSEE BY : SHRI D.V. LAKHANI (A R) DATE OF HEARING: 23/10 /201 7 DATE OF PRONOUNCEMENT: 19 / 01 /201 8 O R D E R PER RAM LAL NEGI, JM THIS APPEAL HAS BEEN FILED BY THE REVENUE AGAINST ORDER DATED 25/02/2016 PASS ED BY THE LD. COMMISSIONER OF INCOME TAX (APPEALS) - 7 , MUMBAI , FOR THE A S S ESSMENT YEAR 2009 - 10 , WHEREBY THE LD. CIT (A) HAS ALLOWED THE APPEAL FILED BY THE ASSESSEE AGAINST ASSESSMENT ORDER PASSED U/S 143 (3) OF THE INCOME TAX ACT, 1961 (FOR SHORT THE A CT ). 2. BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE REGISTERED AS A CHARITABLE ORGANIZATION WITH DIT (E ), MUMBAI U/S 12A AND WITH THE C HARITY COMMISSIONER, MUMBAI ENGAGED IN THE CHARITABLE ACTIVITIES, FILED ITS RETURN OF INCOME ALONG WITH THE INCOME AND E XPENDITURE ACCOUNT, BAL ANCE SHEET AND AUDIT REPORT IN FORM N O. 10 - B DECLARING NIL INCOME FOR ASSESSMENT YEAR UNDER CONSIDERATION. SINCE, THE CASE WAS SELECTED FOR SCRUTINY, NOTICES U/S 143 (2) 2 ITA NO. 3318 /MUM/2016 ASSESSMENT YEAR: 2009 - 10 AND 142 (1) WERE SERVED UPON THE ASSESSEE AND AFTER HEARING THE ASSESSEE, ASSESSMENT U/S 143 WAS COMPLETED ASSESSING THE TOTAL INCOME AT NIL AFTER REJECTING THE CLAIM OF EXEMPTION U/S 10 (23C) ( VI A) AND REJECTING THE BENEFIT OF EXEMPTION U/S 11 OF THE ACT HOLDING THAT THE TRUST NEED WAS AMENDED BY THE ASSESSEE WITHOUT INFORMING THE DIRECTOR OF INCOME TAX, WHO HAD ISSUED A CERTIFICATE U/S 12 OF THE ACT. CONSEQUENTLY, THE AO TREATED THE DONATION OF RS. 12,04,578/ - RECE IVED, AS INCOME OF THE ASSESSEE. THE AO FURTHER DISALLOW THE CLAIM OF DEPRECIATION AMOUNTING TO RS. 15,2 2,51,456/ - AND ADDED THE SAME TO THE TOTAL INCOME OF THE ASSESSEE. 3. THE ASSESSEE CHALLENGED THE ASSESSMENT ORDER BEFORE THE LD. CIT (A) ON BOTH THE ISSUES. THE LD. CIT (A) AFTER HEARING THE ASSESSEE DECIDED IN FAVOUR OF THE ASSESSEE RELYING ON THE DECI SION OF ITAT, MUMBAI IN ASSESSEES OWN CASE FOR THE A.Y. 2008 - 09 RENDERED IN ITA NO. 5686/MUM/2011, VIDE ORDER DATED 06.03.2013. THE REVENUE IS IN APPEAL AGAINST THE SAID FINDINGS OF THE LD. CIT (A) BEFORE THE TRIBUNAL. 4 . T HE REVENUE HAS PREFERRED THE PRESENT APPEAL BEFORE THE TRIBUNAL ON THE FOLLOWING EFFECTIVE GROUNDS: - 1. WHETHER ON THE FACTS OF THE CASE AND IN LAW THE LD. CIT (A) ERRED IN ALLOWING THE EXEMPTION CLAIM U/S 10(23C)(VIA) EVEN THOUGH ASSESSEE HAS VIOLATED CONDITIONS OF SEC 11 OF I.T. ACT . 2. WHETHER ON THE FACTS OF THE CASE AND IN LAW THE LD. CIT (A) ERRED IN ALLOWING THE EXEMPTION CLAIM U/S 11 EVEN THOUGH ASSESSEEE HAS NOT MAINTAINED SEPARATE BOOKS OF ACCOUNTS FOR OTHER COMMERCIAL ACTIVITY OF GYMNASIUM, CAFETERIA, PHARMACY. 3. WHETHER ON THE FACTS OF THE CASE AND IN LAW THE LD. CIT (A) ERRED IN ALLOWING THE EXEMPTION U/S 11, WHEN 12A REGISTRATION 3 ITA NO. 3318 /MUM/2016 ASSESSMENT YEAR: 2009 - 10 CEASED TO BE OPERATIVE, BEING TRUST DEED AMENDED ON 07.01.2005 NOT INFORMED TO THE DIT (E). 4. WHETHER ON THE FACTS OF THE CASE AND IN LAW THE LD. CI T (A) ERRED IN ALLOWING THE APPEAL OF THE ASSESSEE ON ACCOUNT OF DISALLOWING DEPRECIATION ON FIXED ASSETS OF RS. 15,22,51,456/ - 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 DEPRECIATION 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. 5. WHETHER ON THE FACTS OF THE CASE AND IN LAW THE LD. CIT (A) ERRED IN ALLOWING THE DEP RECIATION, WHEN THE DELHI HIGH COURT IN THE CASE OF CHARANJIV CHARITABLE TRUST AND KERALA HIGH COURT IN THE CASE OF LISSIE MEDICAL INSTITUTIONS VS CIT 76 DTR (KER) 372 HAS DECIDED THE ISSUE IN THE FAVOUR OF THE DEPARTMENT AFTER CONSIDERING THE DECISION OF HONBLE SUPREME COURT IN THE CASE OF ESCORTS LTD. (199 ITR 43). 5. WE NOTICE THAT THE LD. CIT (A) HAS DECIDED BOTH THE ISSUES IN FAVOUR OF THE ASSESSEE AND AGAINST THE REVENUE BY FOLLOWING THE DECISION OF THE COORDINATE BENCH PASSED IN ASSESSEES OWN CA SE FOR THE A.Y. 2008 - 09, ITA NO. 5686/MUM/2011 (SUPRA). THE ISSUE PERTAINING TO REJECTION OF EXEMPTION U/S 10 (23C) (VI A) OF THE ACT BY FOLLOWING THE RATIO LAID DOWN BY THE HONBLE JURISDICTIONAL HIGH COURT IN THE CASE OF BAUN FOUNDATION TRUST VS. CIT IN W HICH THE HONBLE HIGH COURT HAS DECIDED THE SIMILAR ISSUE IN FAVOUR OF THE ASSESSEE. SIMILARLY, THE LD. CIT (A) HAS DECIDED THE ISSUE PERTAINING TO DENIAL OF EXEMPTION U/S 11 OF THE ACT IN FAVOUR OF THE ASSESSEE BY RELYING UPON THE DECISION OF THE COORDIN ATE BENCH RENDERED IN THE ASSESSEES OWN CASE FOR A.Y. 2008 - 09 AFORESAID AND THE DECISION OF HONBLE HIGH COURT IN THE CASE OF 4 ITA NO. 3318 /MUM/2016 ASSESSMENT YEAR: 2009 - 10 INSTITUTE OF BOMBAY PERSONNEL SECTION 264 ITR 110. WE FURTHER NOTICE THAT THE COORDINATE BENCH HAS DECIDED THE SAID ISSUE RELYING UPON THE JUDGMENT OF THE HONBLE BOMBAY HIGH COURT IN THE CASE OF INSTITUTE OF BOMBAY PERSONNEL SECTION (SUPRA). SINCE, THE ISSUES INVOLVED IN THIS CASE ARE IDENTICAL TO THE ISSUES INVOLVED IN THE ASSESSEES OWN CASE FOR THE A.Y. 2008 - 09 (SUPRA) AND THE C OORDINATE BENCH HAS DECIDED BOTH THE ISSUES IN FAVOUR OF THE ASSESSEE, WE RESPECTFULLY FOLLOWING THE DECISION RENDERED BY THE COORDINATE BENCH IN ASSESSEES OWN CASE FOR A.Y. 2009 - 10, WE UPHOLD THE FINDINGS OF THE LD. CIT (A) ON BOTH THE ISSUES AND DISMISS ALL THE GROUNDS OF APPEAL OF THE REVENUE. IN THE RESULT, APPEAL FILED BY THE REVENUE FOR A SSESSMENT YEAR 2009 - 2010 IS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 19 TH JANUARY, 2018 . SD/ - SD/ - ( G.S. PANNU ) ( RAM LAL NEGI ) ACCOUNTANT MEMBER JUDICIAL MEMBER MUMBAI ; DATED: 19 / 01/2018 ALINDRA, PS / COPY OF THE ORDER FORW ARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT. 3. ( ) / THE CIT(A) - 4. / CIT 5. , , / DR, ITAT, MUMBAI 6. / GUARD FILE . 5 ITA NO. 3318 /MUM/2016 ASSESSMENT YEAR: 2009 - 10 / BY ORDER, //TRUE COPY// / (DY./ASSTT. REGISTRAR) , / ITAT, MUMBAI