ITO (EXEMPRION)-1(1) MUMBAI, MUMBAI V. BAI KAKIBAI & HANSRAJ MORARJEE TRUST, MUMBAI

ITA 5142/MUM/2016

• Counselvise Citation: [2017] 128 COUNSELVISE.COM (IT) 0082 (ITAT-MUMBAI)
• Duration Of Justice: 10 month(s) 9 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 21-06-2017
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: J
• Next Hearing Date: 12-04-2017
• Assessment Year: 2010-2011
• Appeal Filed On: 12-08-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: ARJU GARODIA
• Keywords: Depreciation; Charitable institution; Capital expenditure
• Section: 143(3); 12A; 10B; 32

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCHES J MUMBAI BEFORE SHRI C.N. PRASAD (JUDICIAL MEMBER) AND SHRI N.K. PRADHAN (ACCOUNTANT MEMBER) ITA NO. 5142 / MUM/20 16 ASSESSMENT YEAR: 2010 - 11 ITO (EXEMPTION) 1(1) VS. M/S. BAI KAKIBAI & HANSRAJ R. NO. 5 08, 5 TH FLOOR MORARJEE TRUST PIRAMAL CHAMBER 26, BORA BAZAR STREET, FORT LAL BAUG, PAREL MUMBAI 400001 MUMBAI - 400012 PAN NO. AAATB0169K (APPELLANT) (RESPONDENT) REVENUE BY : MS. ARJU GARODIA, D R ASSESSEE BY: MR. SURENDRA NIJSURE, A R DATE OF HEARING : 12 /04/2017 DATE OF PRONOUNCEMENT: 21 /06/2017 ORDER PER N.K. PRADHAN, AM THIS IS AN APPEAL FILED BY THE REVENUE . THE RELEVANT ASSESSMENT YEAR IS 2010 - 11 . THE APPEAL IS DIRECTED AGAINST THE ORDER OF THE COMMISSIONER (APPEALS) 1 , MUMBAI AND ARISES OUT OF ORDER U/S 143(3) OF THE INCOME TAX ACT, 1961 (THE ACT). 2. THE GROUNDS OF APPEAL FILED BY THE REVENUE READ AS UNDER : - I. WHETHER ON THE FACTS OF THE CASE AND IN LAW THE LD. CIT(A) ERRED IN ALLOWING THE APPEAL OF THE ASSESSEE ON ACCOUNT OF DISALLOWING DEPRECIATION ON FIXED ASSETS OF RS. 31,96,739/ - IN CONTRAVENTION OF THE DECISION OF ESCORTS LTD. V S. 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 ITA NO. 5142 /MUM/201 6 2 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 CLAIMI NG A DOUBLE DEDUCTION. II. WHETHER, ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW THE LD. CIT(A) ERRED IN ALLOWING THE APPEAL, WHEN THE DELHI HIGH COURT IN THE CASE OF CHARANJIV CHARITABLE TRUST AND KERALA HIGH COURT IN THE CASE OF LISSIE MEDICA L INSTITUTIONS VS. CIT 76 DTR (KER) 372 HAS DECIDED THE ISSUE IN THE FAVOUR OF THE DEPARTMENT AFTER CONSIDERING THE DECISION OF HON'BLE SUPREME COURT IN THE CASE OF ESCORT LTD. (199 ITR 43). III. WHETHER, ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW THE LD. CIT(A) ERRED IN RELYING THE JUDGMENT OF HON'BLE HIGH COURT IN THE CASE OF CIT V S. INSTITUTE OF BANKING PERSONNEL SELECTION WITHOUT APPRECIATING THE FACT THAT DEPARTMENT HAS NO ACCEPTED THE DECISION ON MERIT AND ALSO WITHOUT APPRECIATING THE FA CT THAT THE HON'BLE HIGH COURT WHILE DECIDING THE ABOVE SAID CASE HAS NOT TAKEN INTO ACCOUNT THE JUDGMENT OF HON'BLE SUPREME COURT IN THE CASE OF ESCORT LTD. W HICH IS IN THE FAVOUR OF DEPARTMENT. 3 . BRIEFLY STATED, THE FACTS OF THE CASE ARE THAT THE ASSESSEE IS A TRUST REGISTERED WITH DIT (E), MUMBAI U/S 12A UNDER REGISTRATION NO. BMY/TR/K (A)/86/74 - 75 DATED 08.08.1974 AND WITH CHARITY COMMISSIONER, MUMBAI VIDE REGISTRATION NO. E - 585. THE ASSESSEE FILED ITS RETURN OF INCOME ON 11.03.2011 ALONG WITH TH E INCOME & EXPENDITURE ACCOUNT, BALANCE SHEET AND AUDIT REPORT IN FORM 10B DECLARING TOTAL INCOME AT RS. NIL. HOWEVER, THE A.O. COMPLETED THE ASSESSMENT VIDE ORDER DATED 26.03.2013 U/S 143(3) OF THE I.T. ACT, 1961 AT TAXABLE INCOME OF RS.13,36,071/ - . THE A SSESSEE PREFERRED APPEAL BEFORE THE LD. CIT(A) ON THE ISSUES RESULTING IN ASSESSED INCOME AS ABOVE. THE ASSESSEE CONTESTED THE DISALLOWANCE OF ITA NO. 5142 /MUM/201 6 3 DEPRECIATION MADE BY THE A.O. ALSO IT CONTESTED THE DISALLOWANCE OF SET OFF OF DEFICIT OF EARLIER YEARS. WE FIND THAT THE LD. CIT(A) HAS FOLLOWED THE ORDER OF THE ITAT IN THE CASE OF THE ASSESSEE FOR THE A.Y. 2009 - 10 AND ALLOWED THE APPEAL. 4. BEFORE US, THE LD. DR RELIES ON THE ORDER PASSED BY THE A.O. ON THE OTHER HAND, THE LD. COUNSEL OF THE ASSESSEE RELIES ON THE DECISION IN THE CASE OF CIT VS. INSTITUTE OF BANKING PERSONNEL SELECTION [2003] 131 TAXMAN 386 (BOM.) AND THE ORDER IN THE CASE OF THE ASSESSEE BY THE HON'BLE BOMBAY HIGH COURT IN WP NO. 55 OF 2011 DATED 15.02.2011 AND THE ORDER BY THE TRIBUNAL FOR THE A.Y. 2007 - 08 (ITA NO. 2019/MUM/2011), A.Y. 2008 - 09 (ITA NO. 5842/MUM/2011) AND A.Y . 2009 - 10 (ITA NO. 5312/MUM/2012). 5. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE RELEVANT MATERIAL ON RECORD. WE FIND THAT IN THE CASE OF INSTITUTE OF BANKING PERSONNEL SELECTION (SUPRA), THE HON'BLE BOMBAY HIGH COURT HAS HELD THAT (I) THE ASSES SEE TRUST COULD CLAIM DEPRECIATION ON ASSETS, COST OF WHICH HAD BEEN FULLY ALLOWED AS APPLICATION OF INCOME U/S 11 IN PAST YEARS, (II) THE ASSESSEE COULD CLAIM DEPRECIATION ON ASSETS WHICH IT RECEIVED ON ACCOUNT OF TRANSFER AND COST OF ACQUIRING OF WHICH W AS NOT INCURRED BY THE ASSESSEE AND (III) THE ASSESSEE COULD CARRY FORWARD DEFICIT OF EARLIER YEARS AND SET IT OFF AGAINST SURPLUS OF SUBSEQUENT YEARS. THE ABOVE DECISION HAS BEEN REFERRED BY THE HON'BLE BOMBAY HIGH COURT IN THE CASE OF THE ASSESSEE IN WP NO. 55 OF 2011 DATED 15.02.2011 WE ALSO FIND THAT THE ISSUE S RAISED BY THE REVENUE IN THE GROUNDS OF APPEAL ARE COVERED IN FAVOUR OF THE ASSESSEE BY THE ORDER OF THE CO - ITA NO. 5142 /MUM/201 6 4 ORDINATE BENCH FOR THE A.Y. 2007 - 08 (ITA NO. 2019/MUM/2011), A.Y. 2008 - 09 (ITA NO. 5842/MUM/2011) AND A.Y. 2009 - 10 (ITA NO. 5312/MUM/2012). FACTS BEING SIMILAR, WE FOLLOW THE RATIO LAID DOWN BY THE HON'BLE BOMBAY HIGH COURT AND THE ORDER OF THE CO - ORDINATE BENCH FOR EARLIER ASSESSMENT YEARS AND UPHOLD THE ORDER OF THE LD. CIT(A) . 6. IN THE RESULT, THE APPEAL FILED BY THE REVENUE IS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 21 /06/2017 SD/ - SD/ - ( C.N. PRASAD ) (N.K. PRADHAN) JUDICIAL MEMBER ACCOUNTANT MEMBER MUMBAI : DATED: 21 /06/2017 RAHUL SHARMA , SR. P.S. COPY OF THE ORDER FORWARDED TO : 1. THE APPELLANT 2. THE RESPONDENT. 3. THE CIT(A) - 4. CIT 5. DR, ITAT, MUMBAI 6. GUARD FILE . BY ORDER, //TRUE COPY// (DY./ASSTT. REGISTRAR) ITAT, MUMBAI