ASST CIT (E) I(1), MUMBAI V. HIS HOLINES SYEDNA TAHER SAIFUDDIN MEMORIAL FOUNDATION, MUMBAI

ITA 3424/MUM/2015

• Counselvise Citation: [2016] 132 COUNSELVISE.COM (IT) 2533 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 1 month(s) 15 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 20-07-2016
• Appeal Filed By: Department
• Bench Allotted: B
• Assessment Year: 2005-2006
• Appeal Filed On: 04-06-2015
• Court: TRIBUNAL
• Department Lawyers: NEIL PHILIP
• Assessee Lawyers: JAYESH CHUGH
• Keywords: Depreciation
• Section: 143(3); 12A; 147

Judgement Text

IN THE INC OME TAX APPELLATE TRIBUNAL B BENCH, MUMBAI BEFORE SHRI R.C . SHARMA, A M AND SHRI SANDEEP GOSAIN, JM ./ I.T.A. NO. 2685 &3424 /MUM/2015 ( / ASSESSMENT YEAR: 2009 - 10 & 2005 - 06 ) ASST. CIT (EXEMPTION) - I(1), ROOM NO.5 06, 5 TH FLOOR, PIRAMAL CHAMBER, LALBAUG, M UMBAI - 400 012 . / VS. HIS HOLINESS SYEDNA TAHER SAIFUDDIN MEMORIAL FOUNDATION 1 ST FLOOR, 65, AMATULLAH MANZIL, 65, PERIN NARIMAN STREET, BAZAR GATE STREET, FORT, MUMBAI - 400 001. ./ ./ PAN/ GIR NO. AAATH 0335D ( / APPELLANT ) : ( / RESPONDENT ) / APPELLANT BY : SHRI NEIL PHILIP / RESPONDENT BY : SHRI JAYESH CH UGH / DATE OF HEARING : 20 /07 /2016 / DATE OF PRONOUNCEMENT : 20/07/2016 / O R D E R PER R.C. SHARMA , A. M.: THESE ARE THE APPEALS FILED BY THE REVENUE DIRECTED AGAINST THE ORDER BY THE COMMISSIONER OF INCOME TAX (APPEALS) - 1 , MU MB AI (CIT(A) FOR SHORT) DATED 27 .02 . 2015 FOR THE ASSESSMENT YE AR (A.Y.) 2009 - 10 , IN THE MATTER OF ORDER PASSED U/S 143(3) R.W.S. 147 , U/S 143(3) OF THE I.T. ACT,1961RESPECTIVELY. 2 ITA NO. 2685 & 3424 / M /2015 (A.Y.2009 - 10& 05 - 06 ) ACIT VS. HIS HOLINESS SYEDNA TAHER SAIFUDDIN MEMORIAL 2. IN BOTH THESE APPEALS R EVENUE IS AGGRIEVED FOR DELETING DISALLOWANCE MADE ON ACCOUNT OF DEPRECIATION ON FIXED ASSETS. 3. LD. AR PL ACED ON RECORD ORDER OF TRIBUNAL IN ASSESSEES OWN CASE FOR THE A.Y. 2008 - 09, DATED 30.9.2015 , WHEREIN SIMILAR CLAIM OF DEPRECIATION WAS ALLOWED. PRECISE OBSERVATION OF TRIBUNAL I S AS UNDER: 6. I HAVE HEARD LD REPRESENTATIVES OF BOTH THE PARTIES AND PERUSED THE ORDERS OF THE REVENUE AUTHORITIES AS WELL AS THE RELEVANT MATERIAL PLACED ON RECORD. ON PERUSAL OF THE ORDER OF THE CIT (A) IN GENERAL AND PARAS FROM 3.7 TO 3.10 IN PARTICULAR, I FIND THE SAME ARE RELEVANT IN THIS REGARD. CONSIDERING THE IMPORTANCE OF THE SAID PARAS 3.7 TO 3.10 OF THE IMPUGNED ORDER, THE SAME ARE EXTRACTED AS UNDER: 3.7. I HAVE ALSO PERUSED THE ORDER IN THE CASE OF THE APPELLANT FOR THE A Y 2005 - 06 VIDE APPEAL NO. CIT (A) - 1/I T - E1(81)/2011 - 12, WHEREIN LD ERR (A) HAS ALLOWED DEPRECIATION AS WELL AS CA RRY FORWARD OF LOSSES: SIMILAR DECISION HAS BEEN GIVEN BY THE LD CIT (A) IN THE CASE OF THE APPELLANT FOR AY 2009 - 2010 VIDE APPEAL NO. CIT(A) - 1/IT - E1(6)12011 - 12. SINCE, THE FACTS IN THE CURRENT YEAR ARE IDENTICAL, I FIND NO REASON TO DIFFER FROM THE ABOVE DECISIONS OF THE LD CIT (A). 3.8 FURTHER, IT IS SEEN THAT THE I SSUE UNDER CONSIDERATION IS COVERED IN FAVOUR OF THE ASSESSEE BY OTHER DECISIONS AND ALSO IT HAS BEEN HELD BY VARIOUS COURTS THAT DEPREDATION IS TO BE ALLOWED EVEN IF THE ENTIRE COST OF THE AS SET WAS TREATED AS APPLICATION /EXPENDITURE IN THE YEAR OF PURCHASE. 3 ITA NO. 2685 & 3424 / M /2015 (A.Y.2009 - 10& 05 - 06 ) ACIT VS. HIS HOLINESS SYEDNA TAHER SAIFUDDIN MEMORIAL 3.3. THE DECISION OF THE HON'BLE SUPREME COURT IN THE CASE OF ESCORTS LTD (SUPRA) WILL NOT APPLY TO A CHARITABLE ORGANIZATION AS IT PERTAINS TO CLAIM OF DEPRECIATION UNDER ANOTHER SECTI ON OF THE ACT WHEN 100% OR MORE DEPRECIATION HAD ALREADY BEEN PROVIDED U/S 35. THE HON'BLE SUPREME COURT IN THAT CASE WAS DEALING WITH A CASE RELATING TO TWO DEDUCTIONS BOTH UNDER SECTIONS 10(2)(VI) AND 10(2)(XI V) OF THE 1922 AD OR BOTH UNDER SECT ION 32(L) (II ) AND ,. 35 (1)(I V) OF THE ACT THE ASSESSEE THEREIN HAD INCURRED EXPENDITURE OF A CAPITAL NATURE ON SCIENTIFIC RESEARCH RELATING TO THE BUSINESS WHICH RESULTED INTO ACQUISITION OF AN ASSET. THE ASSESSEE HAD SOUGHT TO CLAIM A SPECIFIC PERCENTAGE OF THE WR ITTEN DOWN VALUE OF THE ASSET AS DEPRECIATION AND AT THE SAME TIME CLAIMED DEDUCTION, IN FIVE CONSECUTIVE YEARS OF THE EXPENDITURE I NCURRED ON THE ACQUISITION OF THE ASSET THE JUDGMENT OF THE HON'BLE SUPREME COURT IN ESCORTS LTD THUS DISTINGUISHABLE FOR TH E ABOVE REASONS. MOREOVER, THE SUPREME COURT DECISION HAS BEEN DISTINGUISHED INTER AIIA BY THE PUNJAB & HARYANA HIGH COURT IN THE CASE OF MARKET COMMITTEE PIPLI AND TINY TOTS EDUCATION SOCIETY (BOTH SUPRA) AS WELL AS MUMBAI AND CHENNAI TRIBUNALS IN THE CAS ES LISTED ABOVE. FURTHER, HON'BLE BOMBAY HIGH COURT IN THE CASE OF DIT (E) VS. FRAMJEE CAWASJEE INSTITUTE ( SUPRA), HAS HELD THAT EVEN I F THE AMOUNT SPENT ON ACQUIRING DEPRECIABLE ASSET WAS TREATED AS APPLICATION OF INCOME OF THE TRUST I N THE YEAR OF ACQUI SITION, DEPRECIATION WOULD STILL BE ALLOWABLE IN SUBSEQUENT YEARS. THIS DECISION OF THE HON'BLE BOMBAY HIGH COURT WAS FOLLOWED I N CIT VS, INSTITUTE OF BANKING PERSONNEL SELECTION (SUPRA) AND CIT VS. SANJEEVAN V IDYALAYA TRUST (SUPRA). HENCE, I DIRECT THE AO TO DELETE THE DISALLOWANCE OF DEPRECIATION OF RS.1,14,71,022/ - IN AY 2010 - 2011 AND RS.68,89,365/ - IN AY 2011 - 2012. FROM ABOVE, IT IS VERY CLEAR THAT THE JUDGMENT OF APEX COURT IN THE CASE OF ESCORTS LTD.( SUP RA) RELIED ON BY THE AO WHILE MAKING THE DISAL LOWANCE IS NOT APPLICABLE TO A CHARITABLE ORGANIZATION, LIKE THE ASSESSEE IN THE PRESENT 4 ITA NO. 2685 & 3424 / M /2015 (A.Y.2009 - 10& 05 - 06 ) ACIT VS. HIS HOLINESS SYEDNA TAHER SAIFUDDIN MEMORIAL CASE WHICH IS REGISTERED U/S 12A OF THE ACT, SINCE IT PERTAINS TO THE CLAIM OF DEPRECIATION UNDER THE PROVISIONS OF SECTION 35 OF THE ACT. FURTHER, AS PER THE PROPOSIT ION LAID DOWN BY THE HONBLE JURISDICTIONAL HIGH COURT IN THE CASE OF DIT(E) VS. FRAMJEE CAWASJEE INSTITUTE (SUPRA) EXPENDITURE ON ACQUISITION OF DEPRECIABLE ASSET WAS TREATED AS APP LICATION OF INCOME OF THE TRUST IN THE YEAR ACQUISITION, DEPRECIATION IS A LLOWABLE IN SUBSEQUENT YEARS. THE SAID JUDGMENT OF THE HONBLE JURISDICTIONAL HIGH COURT IS BINDING ON THE TRIBUNAL. CONSIDERING THE ABOVE PROPOSITIONS, IN MY OPINION, CIT(A) HAS RIGHTLY ADJUDICATED THE ISSUE AND D ELETED THE DISALLOWANCE MADE BY THE AO. I N MY CONSIDERED OPINION, THE DECISION TAKEN BY THE CIT(A) IN ALLOWING THE ASSESSEES APPEAL IS FAIR AND REASONABLE AND IT DOES NOT CALL FOR ANY INTERFERENCE. ACCORDINGLY, GROUND NOS.1 &2 RAISED BY THE REVNEUE ARE DISMISSED 4. AS THE FACTS AND CIRCUMSTANCES IN BOTH THE YEARS UNDER CONSIDERATION ARE SAME, RESPECTFULLY FOLLOWING THE ORDER OF THE TRIBUNAL IN ASSESSEES OWN CASE WE DO NOT FIND ANY INFIRMITY IN THE ORDER OF THE CIT(A) DELETING THE DISALLOWANCE OF DEPRECATION . 8. IN THE RESULT, BOTH THE APPEA LS OF THE REVENUE ARE DISMISSED. ORDER PRONOU NCED IN THE OPEN COURT ON 20 TH JULY , 201 6 SD/ - SD/ - ( SANDEEP GOSAIN ) ( R.C. SHARMA) / JUD I C I AL MEMBER / ACCOUNTANT MEMBER MUMBAI ; DATED : 20 . 0 7 .201 6 PS. ASHWINI 5 ITA NO. 2685 & 3424 / M /2015 (A.Y.2009 - 10& 05 - 06 ) ACIT VS. HIS HOLINESS SYEDNA TAHER SAIFUDDIN MEMORIAL / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT 3. ( ) / THE CIT(A) 4. / CIT - CONCERNED 5. , , / DR, ITAT, MUMBAI 6. / GUARD F ILE / BY ORDER, / (DY./ASSTT. REGISTRAR) , / ITAT, MUMBA I.