DCIT (E) 1(1), MUMBAI V. COSMOPOLITAN EDUCATION SOCIETY, MUMBAI

ITA 4041/MUM/2017

• Counselvise Citation: [2017] 126 COUNSELVISE.COM (IT) 8865 (ITAT-MUMBAI)
• Duration Of Justice: 4 month(s) 21 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 23-10-2017
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: SMC
• Assessment Year: 2012-2013
• Appeal Filed On: 02-06-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: N HEMALATHA
• Assessee Lawyers: V G GINDE
• Keywords: Depreciation
• Section: 143(3); 12A; 10B

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL SMC , BENCH MUMBAI BEFORE SHRI R.C.SHARMA, AM ITA NO. 4041 / MUM/20 17 & 4042/MUM/2017 ( ASSESSMENT YEAR : 2012 - 13 & 2013 - 14 ) DCIT (E)1(1) R.NO.506, 5 TH FLOOR PIRAMAL CHAMBERS LALBAUG MUMBAI 400 012 VS. COSMOPOLITA N EDUCATION SOCIETY, D.N. NAGAR LINK ROAD, ANDHERI (W) MUMBAI 400 057 PAN/GIR NO. AAATC1726E APPELLANT ) .. RESPONDENT ) CO NO. 165/ MUM/20 17 & 166/MUM/2017 (ARISING OUT OF ITA NO.4041/MUM/2017 AND 4042/MUM/2017) ( ASSESSMENT YEAR : 2 012 - 13 & 2013 - 14 ) COSMOPOLITAN EDUCATION SOCIETY, D.N. NAGAR LINK ROAD, ANDHERI (W) MUMBAI 400 057 VS. DCIT (E)1(1) R.NO.506, 5 TH FLOOR PIRAMAL CHAMBERS LALBAUG MUMBAI 400 012 PAN/GIR NO. AAATC1726E APPELLANT ) .. RESPONDENT ) ASSESSEE BY SHRI V.G. GINDE REVENUE BY MS. N HEMALATHA DATE OF HEARING 05 / 10 /201 7 DATE OF PRONOUNCEME NT 23 / 10 /201 7 / O R D E R PER R.C.SHARMA (A.M) : THESE ARE THE APPEALS FILED BY THE REVENUE AND CROSS OBJECTION BY THE ASSESSEE AGAINST THE ORDER OF CIT(A) - 1, MUMBAI FOR A.Y.2012 - 13 & 2013 - 14 IN THE MATTER OF ORDER PASSED U/S.143(3) OF THE IT ACT. 2. IN THESE APP EALS, REVENUE IS AGGRIEVED FOR DISALLOWANCE OF DEPRECIATION. ITA NO. 4041/MUM/2017 & 4042/MUM/2017 CO NO.165/MUM/2017 AND 166/MUM/2017 COSMOPOLITAN EDUCATION SOCEITY 2 3. RIVAL CONTENTIONS HAVE BEEN HEARD AND RECORD PERUSED. BRIEFLY THE FACTS OF THE CASE ARE THAT THE ASSESSEE IS A TRUST REGISTERED WITH CIT (E), MUMBAI U/S.12A UNDER REGISTRATION NO. INS/6863 DATE D 27.2.1976. THE ASSESSEE FILED ITS RETURN OF INCOME ON 27.9.2012 ALONG WITH THE INCOME & EXPENDITURE ACCOUNT, BALANCE SHEET AND AUDIT REPORT IN FORM 10B DECLARING TOTAL INCOME AT RS. NIL. A.O COMPLETED THE ASSESSMENT VIDE ORDER DATED 19.3.2015 U/S. 143(3) OF THE I.T. ACT, I961 , WHEREIN ASSESSEES CLAIM OF DEPRECIATION WAS DISALLOWED. 4. BY THE IMPUGNED ORDER, CIT(A) AFTER FOLLOWING THE DECISION OF THE JURISDICTIONAL HIGH COURT ALLOWED ASSESSEES CLAIM. I FOUND THAT ISSUE IS COVERED BY THE ORDER OF THE TR IBUNAL IN ASSESSEES OWN CASE DATED 23/09/2015 IN ITA NO. 3772 AND 3773/MUM/2015 FOR THE A.Y. 2010 - 11 AND 2011 - 12. THE PRECISE OBSERVATION OF TRIBUNAL WAS AS UNDER: - 7. 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 3.2 TO 3.4 IN PARTICULAR, I FIND THE SAME ARE RELEVANT IN THIS REGARD. CONSIDERING THE IMPORTANCE OF THE SAID PARAS 3.2 AND 3.4 OF THE IMPUGNED ORDER, THE SAME ARE EXTRACTED AS UNDER: '3.2. I H AVE CONSIDERED THE ABOVE SUBMISSIONS OF THE APPELLANT AS WELL AS THE FACTS OF THE CASE. I HAVE J. ALSO GONE THROUGH THE DOCUMENTS FILED BY THE APPELLANT IN TILLS REGARD. FROM THE RECORDS OF THE CASE, IT IS EVIDENT THAT THE AO RELIED ON THE JUDGMENT OF HON BL E SUPREME COURT IN THE CASE OF ESCORTS LTD VS. UOI, 199 TTR 43 AND CONCLUDED T H AT THE SAME W/FF PREVAIL, WHICH SPECIFICALLY LAID DOWN THE LAW TH AT IN NO CI RCUMSTANCES THE BENEF IT OF DOUBLE DEDUCTION CAN BE CLAIMED AND ALLOWED. IT IS SEEN THAT THE ISSUE UNDER CONSIDERATION IS COVERED IN FAVOUR OF THE APPELLANT AND IT HAS BEEN HELD BY VARIOUS COURTS THAT DEPREDATION IS TO BE ALLOWED EVEN I F THE ENTIRE COST OF THE ASSET WAS TREA TED AS APPLICATION / EXPENDITURE IN THE YEAR OF PURCHASE. 3.3. THE DECISION OF THE HON B L E SUPREME COURT IN THE CASE OF ESCORTS LTD (SUPRA) WILL NOT APPLY TO A CHARITABLE ORGANIZATION AS IT PERTAINS TO CLAIM OF DEPREDATION UNDER ANO THER SECTION OF THE ITA NO. 4041/MUM/2017 & 4042/MUM/2017 CO NO.165/MUM/2017 AND 166/MUM/2017 COSMOPOLITAN EDUCATION SOCEITY 3 ACT WHEN 100 % OR MORE DEPREDATION HAD ALREADY BEEN PROVIDED U/S 35. THE HONBLE SUPREME COURT IN THAT CASE WAS DEALING WITH A CASE RELATING TO TWO DEDUCTIONS BOTH UNDER SECTIONS 10(2)(VI) AND 10(2)(XIV) OF THE 1922 ACT OR BOTH UNDER SECTION 32(L)(II) AND 35(I)(IV) OF THE ACT. THE ASSESSES THEREIN HAD INCURRED EXPENDITURE OF A CAPITAL NATURE ON SCIENTIFIC RESEARCH RELATING TO TH E B USINESS WHICH RESULTED INTO ACQUISITION OF AN ASSET. THE ASSESSES HAD SOUGH T TO CL AIM A SPECIFIC PERCENTAGE OF THE WRITT EN DOWN VALUE OF THE ASSET AS DEPREDATION AND AT THE SAME TIME CLAIMED DEDUCTION, IN FIVE CO NSECUTIVE YEARS OF THE . EXPENDITURE INCURRED ON THE ACQUISITION OF THE ASSET. TH E JUDGMENT OF THE HON BLE SUPREME COURT IN ESCORTS LTD IS THUS DISTINGUISHABLE FOR THE ABOVE REASONS. MOREOVER, THE SUPREME COURT DECISION HAS BEEN DISTINGUISHED INTER ALIA 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 CH ENNAI TRIBU NALS IN T/IE CASES LISTED ABOVE,' 3.4. FUR TH ER, HON BLE BOMBAY HIGH COURT IN THE CASE OF DIT (E) VS. FRAMJEE CAWASFEE INSTITUTE '(SUPRA), HAS HE L D THAT EVEN IF THE AMOU NT SPENT ON ACQUIRING DEPRECIABLE ASSET WAS TREATED AS APPLICATION OF INCOME OF THE TRUST IN T H E YEAR OF ACQUISITION, DEPREDATION WOULD STI LL BE ALLOWABLE IN SUBSEQUENT YEARS. TILLS DECISION OF THE HONBL E BOMBAY HIGH COURT WAS FOLLOWED IN CIT VS. IN STITUTE OF BANKING PERSONNEL SELECTION (SUPRA) AND CIT VS. SANJEEVAN V ID YALAYA TRUST (SUPRA). HENCE, I DIRECT T H E AO TO DELETE THE DISALLOWANCE OF DEPREDATION OF RS . L,14,71,022/ - I N AY 2010 - 2011 AND RS. 68 F 89,365/ - IN AY 2011 - 2012.' 8. FROM ABOVE, IT I S VERY DEAR THAT THE JUDGMENT OF APEX COURT IN THE CASE OF ESCORTS LTD (SUPRA) RELIED ON BY THE AO WHILE MAKING THE DISALLOWANCE IS NOT APPLICABLE TO A CHARITABLE ORGANIZATION, LIKE THE ASSESSEE IN THE PRESENT CASE WHICH IS REGISTERED U/S 12A OF THE ACT, S INCE IT PERTAINS TO THE CLAIM OF DEPRECIATION UNDER THE PROVISIONS PF SECTION 35 OF THE ACT. FURTHER, AS PER THE PROPOSITION LAID DOWN BY THE HON'BLE JURISDICTIONAL HIGH COURT IN THE CASE OF DIT (E) VS. FRAMJEE CAWASJEE INSTITUTE (SUPRA) EXPENDITURE ON ACQ UISITION OF DEPRECIABLE ASSET WAS TREATED AS APPLICATION OF INCOME OF TIIE TRUST IN THE YEAR OF ACQUISITION, DEPREDATION IS ALLOWABLE IN SUBSEQUENT YEARS. THE SAID JUDGMENT IS BINDING ON THE MUMBAI BENCHES OF THE TRIBUNAL. CONSIDERING THE ABOVE PROPOSITION S, IN MY OPINION, CIT (A) HAS RIGHTLY ADJUDICATED THE ISSUE AND DELETED THE DISALLOWANCE MADE BY THE AO. IN MY CONSIDERED OPINION, THE DECISION TAKEN BY THE IT (A) IN ALLOWING THE ASSESSEE'S APPEAL IS FAIR AND REASONABLE AND IT DOES NOT CAFL FOR ANY INTER FERENCE. ACCORDINGLY, GROUNDS RAISED BY THE REVENUE ARE DISMISSED. ITA NO. 4041/MUM/2017 & 4042/MUM/2017 CO NO.165/MUM/2017 AND 166/MUM/2017 COSMOPOLITAN EDUCATION SOCEITY 4 9. REGARDING THE APPEAL I TA N0.3773/M/2015 (AY 2011 - 2012), THE REVENUE HAS RAISED THE IDENTICAL GROUNDS TO THAT OF THE ONES ADJUDICATED BY ME WHILE ADJUDICATING THE APPEAL FOR THE AY 2010 - 2 011. CONSIDERING THE COMMONALITY OF THE ISSUES RAISED IN THE INSTANT APPEAL, MY DECISION GIVEN ON THE REVENUE'S APPEAL FOR THE AY 2010 - 11, IN THE ABOVE PARAGRAPHS OF THIS ORDER, SQUARELY APPLIES TO THE PRESENT APPEAL TOO. CONSIDERING THE SAME, GROUNDS RA ISED BY THE REVENUE ARE DISMISSED. 5 . I HAVE GONE THROUGH THE ORDER OF THE TRIBUNAL IN ASSESSEES OWN CASE AND FOUND THAT FACTS AND CIRCUMSTANCES DURING THE YEARS UNDER CONSIDERATION ARE SAME, THEREFORE, RESPECTFULLY FOLLOWING THE ORDER OF THE TRIBUNAL, I DO NOT FIND ANY INFIRMITY IN THE ORDER OF CIT(A) FOR ALLOWING ASSESSEES CLAIM OF DEPRECIATION. 6 . AS I HAVE DISMISSED THE REVENUES APPEAL, THE CROSS OBJECTION FILED BY THE ASSESSEE HAS BECOME INFRUCTUOUS. 7 . IN THE RESULT, BOTH THE APPEALS OF REVENUE AS WELL AS CROSS OBJECTION BY THE ASSESSEE ARE DISMISSED. O RDER PRONOUNCED IN THE OPEN COURT ON THIS 23 / 10 /2017 S D/ - ( R.C.SHARMA ) ACCOUNTANT MEMBER MUMBAI ; DATED 23 / 10 /201 7 KARUNA SR. PS ITA NO. 4041/MUM/2017 & 4042/MUM/2017 CO NO.165/MUM/2017 AND 166/MUM/2017 COSMOPOLITAN EDUCATION SOCEITY 5 COPY OF THE ORDER FORWARDED TO : BY ORDER, ( ASSTT. REGISTRAR) ITAT, MUMBAI 1. THE APPELLANT 2. THE RESPONDENT. 3. THE CIT(A), MUMBAI. 4. CIT 5. DR, ITAT, MUMBAI 6. GUARD FILE. //TRUE COPY//