DCIT (E) 1(1), MUMBAI V. KARAMSHI JETHABHAI SOMAIYA TRUST, MUMBAI

ITA 5436/MUM/2016

• Counselvise Citation: [2018] 126 COUNSELVISE.COM (IT) 0538 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 4 month(s) 23 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 30-01-2018
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: Not Allotted
• Assessment Year: 2011-2012
• Appeal Filed On: 06-09-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: RAJESH KUMAR YADAV
• Assessee Lawyers: AARATI VISSANJI
• Keywords: Depreciation; Tax effect; Capital expenditure
• Section: 143(3); 12A; 11

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCH A, MUMBAI BEFORE SHRI G.S.PANNU, ACCOUNTANT MEMBER AND SHRI RAM LAL NEGI, JUDICIAL MEMBER ITA NO. 5436/MUM/2016 (ASSESSMENT YEAR 2011-12) THE DCIT (EXEMPTION)-1(1), ROOM NO.506, 5 TH FLOOR, PIRAMAL CHAMBER, LALBAUG, MUMBAI 400 012 ...... APPELLANT VS. KARAMSHI JETHABHAI SOMAIYA TRUST, SOMAIYA BHAVAN, 45/47, M.G.ROAD, FORT, MUMBAI 400 001 PAN: AAATK0474C .... RESPONDENT APPELLANT BY : SHRI RAJESH KUMAR YADAV RESPONDENT BY : MS.AARATI VISSANJI DATE OF HEARING : 02/11/2017 DATE OF PRONOUNCEMENT : 30/ 01/2018 ORDER PER G.S.PANNU,A.M: THE CAPTIONED APPEAL FILED BY THE REVENUE PERTAIN ING TO ASSESSMENT YEAR 2011-12 IS DIRECTED AGAINST AN ORDE R PASSED BY CIT(A)-I, MUMBAI DATED 20/06/2016, WHICH IN TURN AR ISES OUT OF AN ORDER PASSED BY THE ASSESSING OFFICER UNDER SECTION 143(3) OF THE INCOME TAX ACT, 1961 (IN SHORT THE ACT) DATED 21/ 03/2014. 2 ITA NO. 5436/MUM/2016 (ASSESSMENT YEAR 2011-12) 2. IN THIS APPEAL REVENUE HAS RAISED THE FOLLOWING GROUNDS OF APPEAL:- 1. 'WHETHER ON THE FACTS OF THE CASE AND IN LAW THE ID.CIT(A) ERRED IN ALLOWING THE APPEAL OF THE ASSESSES ON ACCOUNT OF DISALLOWING DEPRECIATION ON FIXED ASSETS OF RS. 1,3 8,75,973/- IN CONTRAVENTION OF THE DECISION OF ESCORTS LTD. VS. UOI 199 ITR 43 WHEREIN IT WAS HELD THAT SINCE SECTION 11 OF THE IN COME TAX ACT PROVIDES FOR DEDUCTION CAPITAL EXPENDITURE INCURRED ON ASSETS ACQUIRED FOR THE OBJECTS OF THE TRUST AS APPLICATIO N AND DOES NOT SPECIFICALLY & EXPRESSLY PROVIDE FOR DOUBLE DEDUCTI ON ON ACCOUNT OF DEPRECIATION ON THE SAME VERY ASSETS ACQUIRED FROM SUCH CAPITAL EXPENDITURE, NO DEDUCTION SHALL BE ALLOWED U/S.32 F OR THE SAME OR ANY OTHER PREVIOUS YEAR IN RESPECT OF THAT ASSET AS IT AMOUNTS TO CLAIMING A DOUBLE DEDUCTION.'. 2. 'WHETHER, ON THE FACTS AND IN THE CIRCUMSTANCE S OF THE CASE AND IN LAW THE LD CIT(A)ERRED IN ALLOWING THE DEPRECIAT ION, WHEN THE DELHI HIGH COURT IN THE CASE OF CHARANJIV CHARITABL E TRUST AND KERALA HIGH COURT IN THE CASE OF LISSIE MEDICAL INS TITUTIONS VS CIT 76 DTR (KER) 372 HAS DECIDED THE ISSUE IN THE FAVOU R OF THE DEPARTMENT AFTER CONSIDERING THE DECISION OF HON'BL E SUPREME COURT IN THE CASE OF ESCORTS LTD (199 ITR 43).' 3. 'WHETHER, ON THE FACTS AND IN THE CIRCUMSTANCE S OF THE CASE AND IN LAW THE LD CIT(A) ERRED RELYING UPON THE JUDGEME NT OF THE HON'BLE BOMBAY HIGH COURT IN THE CASE OF CIT VS INS TITUTE OF BANKING PERSONNEL SERVICES WITHOUT APPRECIATING THE FACT THAT DEPARTMENT HAS NOT ACCEPTED THE DECISION ON MERIT A ND ALSO WITHOUT APPRECIATING THE FACT THAT THE HON'BLE SUPR EME COURT WHILE DECIDING THE ABOVE SAID CASE HAS NOT TAKEN INTO ACC OUNT THE JUDGMENT OF HON'BLE SUPREME COURT IN THE CASE OF ES CORT LTD. WHICH IS IN THE FAVOUR OF DEPARTMENT. 4. 'WHETHER ON THE FACTS OF THE CASE AND IN LAW T HE ID.CIT(A) ERRED IN ALLOWING THE CARRY FORWARD OF DEFICIT OF RS. 1,3 8,75,973/- AND ALLOWING SET OFF AGAINST THE INCOME OF THE SUBSEQUE NT YEARS' 5. 'WHETHER, ON THE FACTS AND IN THE CIRCUMSTANCE S OF THE CASE AND IN LAW, THE LD CIT(A) ERRED IN ALLOWING THE CLAIM O F THE ASSESSES FOR CARRY FORWARD OF THE SAID DEFICIT, IGNORING THE FAC T THAT THERE WAS NO EXPRESS PROVISION IN THE I T ACT, 1961 PERMITTING A LLOWANCE OF SUCH CLAIM.' 6. 'WHETHER, ON THE FACTS AND IN THE CIRCUMSTANCE S OF THE CASE AND IN LAW, THE LD CIT(A) ERRED IN ALLOWING THE CLAIM O F THE ASSESSES FOR CARRY FORWARD OF THE SAID DEFICIT BY RELYING UPON T HE JUDGMENT OF 3 ITA NO. 5436/MUM/2016 (ASSESSMENT YEAR 2011-12) HON'BLE BOMBAY HIGH COURT IN THE CASE OF INSTITUTE OF BANKING PERSONNEL SELECTION, IGNORING THE FACT THAT THE DEP ARTMENT HAS NOT ACCEPTED THE SAID DECISION OF THE JURISDICTIONAL HI GH COURT ON MERIT OF THE CASE. 7. THE APPELLANT PRAYS THAT THE ORDER OF THE COMMI SSIONER OF INCOME TAX (APPEALS)-I, MUMBAI BE SET ASIDE AND THA T OF THE ASSESSING OFFICER BE RESTORED 3. THOUGH THE REVENUE HAS RAISED MULTIPLE GROUNDS O F APPEAL, BUT SUBSTANTIVELY SPEAKING TWO ISSUES HAVE BEEN RAI SED. FIRSTLY, IN TERMS OF GROUND OF APPEAL NO.1 TO 3, THE GRIEVANCE OF REVENUE IS AGAINST THE DECISION OF THE CIT(A) IN DIRECTING THE ASSESSING OFFICER TO ALLOW THE BENEFIT OF DEPRECIATION ON ASSETS IN RESP ECT OF THE FACT THAT THE EXPENDITURE INCURRED ON SUCH ASSETS HAS ALREADY BEEN ALLOWED AS AN APPLICATION OF INCOME. THE SECOND GRIEVANCE PRO JECTED IN GROUNDS OF APPEAL NO. 4 TO 6 IS WITH REGARD TO THE DECISION OF THE CIT(A) IN ALLOWING THE ASSESSEE THE BENEFIT OF CARR Y FORWARD OF THE DEFICIT FOR SET OFF IN FUTURE YEAR. 4. IN THIS BACKGROUND, NOW WE MAY REFER TO THE REL EVANT FACTS. THE RESPONDENT-ASSESSEE IS A CHARITABLE ORGANISATIO N REGISTERED U/S 12A OF THE ACT AND IS ENGAGED IN CARRYING ON ACTIVI TIES OF CHARITABLE NATURE. THE ASSESSING OFFICER NOTICED THAT ASSESSE E HAD CLAIMED DEPRECIATION ALLOWANCE OF RS.1,38,75,973/- ON THE C OST OF FIXED ASSETS, WHEREAS SUCH COST OF FIXED ASSETS HAS ALSO BEEN TAKEN AS AN APPLICATION OF INCOME WHILE COMPUTING THE TOTAL INC OME. ACCORDING TO THE ASSESSING OFFICER, THIS AMOUNTED TO A DOUBLE DEDUCTION AND HE, THEREFORE, DISALLOWED THE ASSESSEES CLAIM FOR DEPRECIATION. THE CIT(A) HAS SINCE ALLOWED THE CLAIM OF THE ASSESSEE FOLLOWING THE 4 ITA NO. 5436/MUM/2016 (ASSESSMENT YEAR 2011-12) JUDGMENT OF THE HON'BLE BOMBAY HIGH COURT IN THE CA SE OF INSTITUTE OF BANKING PERSONNEL SELECTION, 264 ITR 110 (BOM) . 5. BEFORE US, THE PLEA OF THE DEPARTMENT IS THAT TH E DECISION OF THE HON'BLE BOMBAY HIGH COURT IN THE CASE OF INSTITUTE OF BANKING PERSONNEL SELECTION (SUPRA) HAS NOT BEEN ACCEPTED BY THE DEPARTMENT. FURTHER, IT IS CONTESTED THAT ALLOWIN G OF DEPRECIATION WOULD AMOUNT TO A DOUBLE DEDUCTION, WHICH WAS IMPER MISSIBLE HAVING REGARD TO THE JUDGMENT OF THE HON'BLE SUPREM E COURT IN THE CASE OF ESCORTS LTD., 199 ITR 43 (SC) . 6. WE FIND THAT THE DECISION IN THE CASE OF ESCORTS LTD. (SUPRA) BEING RELIED UPON BY THE REVENUE BEFORE US HAS BEEN CONSIDERED BY THE HON'BLE DELHI HIGH COURT IN THE CASE OF INDRAPRASTHA CANCER SOCIETY, (2014) 112 DTR 345 DATED 18.11.2014, WHEREIN IT HAS BEEN OPINED THAT THE ALLOWANCE OF DEPRECIATION IN SIMILA R SITUATION WOULD NOT AMOUNT TO A DOUBLE DEDUCTION. FURTHER, THE HON 'BLE DELHI HIGH COURT IN THE CASE OF VISHWA JAGRITI MISSION, ITA NO. 140/2012 DATED 29.3.2012 ALSO ALLOWED A SIMILAR CLAIM AFTER ANALYSING THE J UDGMENT OF THE HON'BLE SUPREME COURT IN THE CASE OF ESCORTS LTD. (SUPRA) , WHICH IS BEING RELIED UPON BY THE REVENUE. IT IS A LSO NOTICED THAT THE HON'BLE SUPREME COURT HAS ALSO DISMISSED THE SLP FI LED BY THE DEPARTMENT AGAINST THE SAID DECISION OF THE HON'BLE DELHI HIGH COURT VIDE SLP NO. 19321 OF 2013. WE FIND THAT THE HON'B LE BOMBAY HIGH COURT SUBSEQUENT TO THE DECISION IN THE CASE OF INSTITUTE OF BANKING PERSONNEL SELECTION (SUPRA) CONSIDERED A SIMILAR ARGUMENT OF THE REVENUE IN THE CASE OF M/S. MUMBAI EDUCATION TRUST, ITA NO. 11/2014 DATED 3.5.2016 AND ALLOWED THE CLAIM OF THE ASSESSEE. IN 5 ITA NO. 5436/MUM/2016 (ASSESSMENT YEAR 2011-12) FACT, THE GROUNDS OF APPEAL URGED BY THE REVENUE BE FORE THE HON'BLE HIGH COURT, WHICH READ AS UNDER :- (A) WHETHER ON THE FACTS AND IN THE CIRCUMSTANCE OF THE CASE AND IN LAW, THE TRIBUNAL WAS JUSTIFIED IN CONFIRMING THE ORDER OF THE CIT(A) TO ALLOW THE CLAIM OF DEPRECIATION RELYING ON THE DECISION OF THIS COURT IN THE CASE OF CIT V/S. INSTITUTE OF BAN KING PERSONNEL SERVICES REPORTED IN 264 ITR 110 (BOM) IGNORING THE RATI O OF HON'BLE SUPREME COURT JUDGMENT IN THE CASE OF ESCORTS LTD. V/S. UNION OF INDIA (199 ITR 43) WHEREIN HON'BLE SUPREME C OURT HAS HELD THAT DOUBLE DEDUCTION CANNOT BE PRESUMED IF THE SAME IS NOT SPECIFICALLY PROVIDED BY LAW, IN ADDITION TO NORMAL DEDUCTION? (B) WHETHER ON THE FACTS AND IN THE CIRCUMSTANCE OF T HE CASE AND IN LAW, THE TRIBUNAL WAS JUSTIFIED IN CONFIRMING THE ORDER OF THE CIT(A) TO ALLOW TO CARRY FORWARD OF DEFICIT OF EARLIER Y EARS RELYING ON THE DECISION OF THIS COURT IN THE CASE OF CIT V/S. I NSTITUTE OF BANKING PERSONNEL SERVICES REPORTED IN 264 ITR 110 (BOM) WHILE THE REVENUE DID NOT FILE SLP AGAINST THE CASE OF CIT V/S . INSTITUTE OF BANKING PERSONNEL SERVICES REPORTED IN 264 ITR110 (BOM) DUE TO LOW TAX EFFECT?. STAND ON THE SAME FOOTING AS ARE BEING CANVASSED BE FORE US IN THE INSTANT CASE. THUS, THERE IS NO ERROR ON THE PART OF THE CIT(A) IN FOLLOWING THE DECISION OF THE HON'BLE BOMBAY HIGH C OURT IN THE CASE OF INSTITUTE OF BANKING PERSONNEL SELECTION (SUPRA) AND ALLOWING THE STAND OF THE ASSESSEE. THE OTHER ARGUMENT TAKEN BY THE REVENUE THAT ITS SLP FILED BEFORE THE HON'BLE SUPREME COURT IS PENDING ON A SIMILAR ISSUE IS OF NO CONSEQUENCE INASMUCH AS THE BINDING JUDGMENTS OF THE HON'BLE BOMBAY HIGH COURT IN THE C ASE OF INSTITUTE OF BANKING PERSONNEL SELECTION (SUPRA) AS WELL AS IN THE CASE OF M/S. MUMBAI EDUCATION TRUST (SUPRA) CONTINUE TO SUBSIST. THEREFORE, IN THIS BACKGROUND, WE FIND NO MERIT IN THE GROUND NOS . 1 TO 3 RAISED BY THE REVENUE AND THE SAME ARE ACCORDINGLY DISMISSED. 6 ITA NO. 5436/MUM/2016 (ASSESSMENT YEAR 2011-12) 7. SIMILARLY, THE SECOND ISSUE RAISED BY THE REVENU E IS WITH REGARD TO CARRY FORWARD OF THE DEFICIT OF RS.3,52,50,787/- (WRONGLY STATED IN THE GROUND NO.4 AS RS.1,38,75,973/-) TO BE SET-OFF AGAINST THE FUTURE INCOME. ON THIS ASPECT ALSO, CIT(A) HAS ALLOWED TH E CLAIM FOLLOWING THE DECISION OF THE TRIBUNAL IN THE CASE OF ASSESSE E FOR ASSESSMENT YEAR 2005-06 AND THE JUDGMENT OF THE HON'BLE BOMBAY HIGH COURT IN THE CASE OF INSTITUTE OF BANKING PERSONNEL SELECTION (SUPRA) ; IN FACT, SIMILAR SITUATION HAS BEEN FURTHER AFFIRMED BY THE HON'BLE BOMBAY HIGH COURT IN THE CASE OF M/S. MUMBAI EDUCATION TRUST (SUPRA). THEREFORE, ON THIS ASPECT ALSO, WE FIND NO ERROR ON THE PART OF THE CIT(A) IN ALLOWING THE CLAIM OF THE ASSESSEE, WHICH WE HEREBY AFFIRM. 8. IN THE RESULT, APPEAL OF THE REVENUE IS DISMISSE D. ORDER PRONOUNCED IN THE OPEN COURT ON 30/01/2018. SD/- SD/- (RAM LAL NEGI) (G.S. PANNU) JUDICIAL MEMBER ACCOCUNTANT MEMBER MUMBAI, DATED 30/01/2018 VM , SR. PS 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