ACIT (EXEMPTION) - 1(1), MUMBAI V. GUJRAT RESEARCH SOCIETY, MUMBAI

ITA 5151/MUM/2016

• Counselvise Citation: [2017] 126 COUNSELVISE.COM (IT) 8731 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 2 month(s) 19 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 31-10-2017
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: J
• Next Hearing Date: 12-04-2017
• Assessment Year: 2011-2012
• Appeal Filed On: 12-08-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: ARJU GARODIA
• Assessee Lawyers: RUPAM J SHUKLA
• Keywords: Capital asset; Depreciation; Charitable institution; Capital expenditure
• Section: 143(3); 32; 10; 11

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCH J MUMBAI BEFORE SHRI SAKTIJIT DEY (JUDICIAL MEMBER) AND SHRI N.K. PRADHAN (ACCOUNTANT MEMBER) ITA NO. 5151/MUM/2016 ASSESSMENT YEAR: 2011 - 12 DCIT - 1(1) ROOM NO. 506, 5 TH FLOOR, PIRAMAL CHAMBER, LALBAUG, MUMBAI - 400012 . VS. GUJRAT RESEARCH SOCIETY DR. MADHURI SHAH C A MPUS, RAM KRISHNA MISSION MARG, MUMBAI - 400052. PAN NO. AAATB1718N APPELLANT RESPONDENT REVENUE BY : MS. ARJU GARODIA , DR ASSESSEE BY : MR. RUPAM J. SHUKLA , AR DATE OF HEARING : 05/09 /2017 DATE OF PRONOUNCEMENT : 31/10/2017 ORDER PER N.K. PRADHAN, A.M. THIS IS AN APPEAL FILED BY THE REVENUE. THE RELEVANT ASSESSMENT YEAR IS 2011 - 12 . THE APPEAL IS DIRECTED AGAINST THE ORDER OF THE COMMISS IONER OF INCOME TAX (APPEALS) - 1 , MUMBAI AND ARISES OUT OF THE ASSESSMENT COMPLETED U/S 143(3) OF THE INCOME TAX ACT 1961, (THE ACT). 2. THE GROUNDS OF APPEAL FILED BY THE REVENUE READ AS UNDER: 1. WHE THER ON THE FACTS OF THE CASE AND IN LAW THE LD. CIT( A) E RRED IN ALLOWING THE APPEAL OF TH E ASSESSEE ON ACCOUNT OF DISALLOWING DEPR ECIATION ON FIXED GUJRAT RESEARCH SOCIETY ITA NO. 5151/MUM/2016 2 ASSETS OF RS.27,21,241/ - IN CO NTRAVENTION OF THE DECISION OF ESCORTS LTD. VS. UOI 199 ITR 43 WHEREIN IT W AS HELD THA T SINCE SECTION 11 OF THE INCOME TAX ACT PROVIDES FOR DEDUCTION CAPITAL EXPENDITURE I N CURRED ON ASSETS ACQUIRED FOR THE OBJECTS OF THE TRUST AS APPLICATION AND DOES NOT SP ECIFICALLY & EXPRESSLY PROVIDE FOR DOUBLE DEDUCTION ON ACCOUNT OF DEPRECIATI ON ON THE SA ME 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 CL AIMING A DOUBLE DEDUCTION. 2. WHETHER, ON THE FACTS AND IN THE CIRCUMST ANCES OF THE CASE AND IN LAW THE ID . CIT(A) ERRED I N ALLOWING THE APPEAL , WHEN THE DELHI HIGH COURT IN TH E CASE OF CHARANJIV CHARITABLE T RUST AND KERALA HIGH COURT IN THE CASE OF L ISSIE MEDICAL INSTITUTIONS VS CI T 76 DTR( KER) 372 HAS DECIDED THE ISSUE IN TH E FAVOUR OF THE DEPARTMENT AFTER CONSIDERING T HE D ECISION OF HON BLE SUPREME COURT IN THE CASE OF ESCORTS LTD (199 ITR 43). 3. WHETHER , ON THE FACTS AND IN THE CIRCUMSTANCES OF TH E CASE AND IN LAW THE ID . CIT(A) ERRED I N RELYIN G UPON THE JUDGMENT OF HON'BLE HIGH COURT IN THE CASE OF CI T VS. INSTITUTE OF B ANKING PERSONNEL SELECTION WITHOUT APPRECIATING THE FACT THAT DEPARTMENT HAS NOT ACCEPTED THE DECISION ON MERIT AND ALSO WITHOUT APPRECIATING THE FACT THAT THE HON' B LE HIGH COURT WHILE DECIDING THE ABOVE SAID C ASE HAS NOT TAKEN INTO ACCOUNT T HE JUDGMENT OF HON'BLE SUPREME COUR T IN THE CASE OF ESCORT LTD. W HICH IS IN THE FAVOUR OF DEPARTMENT. 4. W HETHER ON THE FACTS OF THE CASE AND IN LAW THE LD.CIT(A) ERRED IN ALLOWING THE CARRY FOR WARD OF DEFICIT OF RS.38,84,703 / - AND ALLOWING SET OFF AGAINST THE INCOME OF THE SUBSEQUENT YEARS. 5. WHETHER, ON THE FACTS AND IN THE CIRCU MSTANCES OF THE CASE AND IN LAW , THE LD . CI T (A) ERRED IN ALLOWING THE CLAIM OF THE ASSESSEE FOR CARRY FORWARD OF THE SAID DEFICIT, IGNORING THE FACT T HAT THERE WAS NO EXPRESS PROVISION IN THE I T ACT, 1961 PERM ITTING ALLOWANCE OF SUCH CLAIM. 6. WHETHER, ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD. CIT(A) ERRED IN ALLOWING THE CLAIM OF THE ASSESSEE FOR CARRY FORWARD OF THE GUJRAT RESEARCH SOCIETY ITA NO. 5151/MUM/2016 3 SAID DEFI CIT BY RELYI NG UPON THE JUDGMENT OF HON'BLE BOMBAY HIGH COURT IN THE CASE OF INSTITUTE OF BANKING PERSONNEL SELECTION, IGNORING THE FACT THAT THE DEPARTMENT HAS NOT ACCEPTED THE SAID DECISION OF THE JURISDICTIONAL HIGH COURT ON MERIT OF THE CASE. 7. THE APPELLANT PRAYS THAT THE ORDER OF THE COMMISSIONER OF INCOME TAX (APPEALS) - I, MUMBAI BE SET ASIDE AND THAT OF THE ASSESSING OFFICER BE RESTORED. 3. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE RELEVANT MATERIALS ON RECORD. BRIEFLY STATED, THE ISSUES IN THE INSTANT CASE ARE SUMMARIZED AS UNDER: I. IS DEPRECIATION AN APPLICATION OF INCOME? II. WHETHER EXCESS APPLICATION IN AN EARLIER YEAR MAY BE SET OFF AGAINST NEXT YEARS INCOME? 3.1 WE BEGIN WITH THE 1 ST QUESTION IS DEPRECIATION AN APPLICATION OF INCOME? THE EXISTING SCHEME OF SECTION 11 AS WELL AS SECTION 10 (23C) PROVIDES EXEMPTION IN RESPECT OF INCOME WHEN IT IS APPLIED TO ACQUIRE A CAPITAL ASSET. SUBSEQUENTLY, WHILE COMPUTING THE INCOME FOR PURPOSES OF THESE SECTIONS, NORMAL DEDUCTION BY WAY OF DEPRE CIATION IS CLAIMED AND SUCH AMOUNT OF NOTIONAL DEDUCTION REMAINS TO BE APPLIED FOR CHARITABLE PURPOSE. THEREFORE, DOUBLE BENEFIT IS CLAIMED BY THE TRUSTS AND INSTITUTIONS UNDER THE EXISTING LAW. DEPRECIATION HAS BEEN HELD TO BE AN APPLICATION OF INCOME IN THE FOLLOWING JUDGMENTS: I. CIT VS. INSTITUTE OF BANKING PERSONNEL SELECTION (IBPS) (2003) 264 ITR 110 (BOM.) II. CIT VS. MARKET COMMITTEE, PIPLI (2011) 330 ITR 16 (P&H). GUJRAT RESEARCH SOCIETY ITA NO. 5151/MUM/2016 4 III. CIT VS. TINY TOTS EDUCATION SOCIETY (2011) 330 ITR 21 (P&H). IV. DIT VS. VISHWA JAGRITI MISSION (2012) INCOME TAX REVIEW SEPT P. 83 (DEL). V. ESCORTS CARDIAC DISEASES HOSPITAL SOCIETY VS. ASST. DIT (2012) 18 TAXMANN.COM 104 (ITAT - DEL). VI. CIT VS. SHRI GUJARATI SAMAJ (REGD.) (2011) 64 DTR 76 (MP). VII. DIT (EXEMPTION) VS. INDRAPRASTHA CANCER SOCIETY (2015) 53 TAXMANN.COM 463 (DEL): (2015) 229 TAXMAN 93 (DEL). VIII. CIT VS. SHETH MANILAL RANCHHODDAS VISHRAM BHAVAN TRUST (1992) 198 ITR 598 (GUJ) IX. CIT VS. BHORUKA PUBLIC WELFARE TRUST (1999) 240 ITR 513 (CAL). 3.2 NOW WE COME TO THE 2 ND ISSUE WHETHER EXCESS APPLICATION IN AN EARLIER YEAR MAY BE SET OFF AGAINST NEXT YEARS INCOME? WHEN A TRUST O R INSTITUTION HAD SPENT IN EXCESS OF ITS INCOME FOR THE CURRENT YEAR RESULTING IN A DEFICIT WHICH WAS CARRIED FORWARD TO THE NEXT YEAR, IT WAS HELD THAT IN CONSIDERI NG THE APPLICATION OF INCOME FOR THE NEXT YEAR, THE CARRIED FORWARD DEFICIT WAS FIRST TO SET OFF AGAINST THE INCOME OF THE SUBSEQUENT YEAR. IT HAS BEEN HELD SO IN THE FOLLOWING JUDGMENTS: I. CIT VS. INSTITUTE OF BANKING PERSONNEL SELECTION (IBPS) (2003) 264 I TR 110 (BOM.) II. CIT VS. THE TRUSTEES OF SETH MERWARJEE FRAMJI PANDAY CHARITABLE FUND (2003) 177 TAXATION 19, 20 (BOM) III. CIT VS. SHRI PLOT SWETAMBER MURTI PUJAK JAIN MANDAL (1995) 211 ITR 293 (GUJ) IV. RAGHUVANSHI CHARITABLE TRUST AND OTHERS VS. DIT (2011) 221 TA XATION 250 (DEL) V. CIT VS. SHRI GUJ A RATI SAMAJ (REGD.) (2011) 64 DTR 76 (MP). VI. CIT VS. PUNJAB MANDI BOARD (2014) 98 DTR 267 (P&H) GUJRAT RESEARCH SOCIETY ITA NO. 5151/MUM/2016 5 VII. CIT VS. KRISHI UPAJ MANDI SAMITI, RAISINGH N AGAR (2016) 69 TAXMANN.COM 425 (RAJ). VIII. CIT VS. MATRISEVA TRUST (2000) 242 ITR 20 (MAD) 4. AS NARRATED HEREINBEFORE BOTH THE ABOVE ISSUES ARE SQUARELY COVERED IN FAVOUR OF THE ASSESSEE. THUS WE UPHOLD THE ORDER OF THE LD. CIT(A). 5. IN THE RESULT, THE APPEAL IS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 31/10/2017. SD/ - SD/ - ( SAKTIJIT DEY ) (N.K. PRADHAN) JUDICIAL MEMBER ACCOUNTANT MEMBER MUMBAI ; DATED: 31/10/2017 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