ASST CIT (E) 1(1), MUMBAI V. HIS HOLINESS DR. SYEDNA TAHER SAIFUDDIN MEMORIAL FOUDNATON, MUMBAI

ITA 5447/MUM/2015

• Counselvise Citation: [2016] 131 COUNSELVISE.COM (IT) 2595 (ITAT-MUMBAI)
• Duration Of Justice: 10 month(s) 1 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 28-09-2016
• Appeal Filed By: Department
• Bench Allotted: SMC
• Assessment Year: 2011-2012
• Appeal Filed On: 27-11-2015
• Court: TRIBUNAL
• Department Lawyers: NANTHA KUMAR
• Assessee Lawyers: JAYESH R CHUGH
• Keywords: Depreciation
• Section: 12A

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL H , BENCH MUMBAI BEFORE : SHRI R.C.SHARMA, AM & SHRI PAWAN SINGH , JM ITA NO. 5447 /M UM/201 5 ( ASSESSMENT YEAR : 20 11 - 20 12 ) ACIT(E)1(1), MUMBAI 400001 VS. HIS HOLINESS DR. SYEDNA TAHER SAIFUDDIN MEMORIAL FOUND ATION 1 ST FLOOR, 65, AMATULLAH MANZIL, 65, PERIN NARIMAN STREET, BAZAR GATE STREET, FORT, MUMBAI - 400 001. PAN/GIR NO. : AAATN2486 R ( APPELLANT ) .. ( RESPONDENT ) REVENUE BY : SHRI NANTHA KUMAR ASSESSEE BY : SHRI JAYESH R. CHUGH / DATE OF HEARING : 28 /0 9 /2016 / DATE OF PRONOUNCEMENT 28 / 09 /2016 / O R D E R PER R.C.SHARMA (A.M) : THIS IS AN APPEAL FILED BY THE REVENUE AGAINST THE ORDER OF CIT(A) FOR THE ASSESS MENT YEAR 2011 - 2012. REVENUE IS AGGRIEVED BY THE ACTION OF THE CIT(A) FOR ALLOWING THE CLAIM OF DEPRECIATION ON FIXED ASSETS. 2 . AT THE OUTSET LEARNED AR PLACED ON RECORD ORDER OF THE TRIBUNAL IN ASSESSEES OWN CASE FOR THE ASSESSMENT YEAR 2009 - 2010 DATED 20/07/2016 AND FOR THE ASSESSMENT Y EAR 2008 - 2009 DATED 30/09/2015. THE TRIBUNAL IN THE ORDER DATED 20/07/2016 WHILE DECIDING THE SIMILAR CLAIM OF DEPRECIATION HAS OBSERVED 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: ITA NO.5447/MUM/2015 ACIT VS DR. SYEDNA TAHER 2 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/IT - E1(81)/2011 - 12, WHEREIN LD ERR (A) HAS ALLOWED DEPRECIATION AS WELL AS CARRY 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 ISSUE 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 ASSET WAS TREATED AS APPLICATION /EXPENDITURE IN THE YEAR OF PURCHASE. 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 ANO THER SECTION 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)(XIV) OF THE 1922 AD OR BOTH UNDER SEC TION 32(L)(II) AND ,. 35(1)(IV) 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 WRITTEN DOWN VALUE OF THE ASSET AS DEPRECIATION AND AT THE SAME TIME CLAIMED DEDUCTION, IN FIVE CONSECUTIVE YEARS OF THE EXPENDITURE INCURRED ON THE ACQUISITION OF THE ASSET THE JUDGMENT OF THE HON'BLE SUPREME COURT IN ESCORTS LTD THUS DISTINGUISHA BLE FOR THE 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 CASES LISTED ABOVE. FURTHER, HON'BLE BOMBAY HIGH COURT IN THE CASE OF DIT (E) VS. FRAMJEE CAWASJEE INSTITUTE (SUPRA), HAS HELD THAT EVEN IF THE AMOUNT SPENT ON ACQUIRING DEPRECIABLE ASSET WAS TREATED AS APPLICATION OF INCOME OF THE TRUST IN THE YEA R OF ACQUISITION, DEPRECIATION WOULD STILL BE ALLOWABLE IN SUBSEQUENT YEARS. THIS DECISION OF THE HON'BLE BOMBAY HIGH COURT WAS FOLLOWED IN CIT VS, INSTITUTE OF BANKING PERSONNEL SELECTION (SUPRA) AND CIT VS. SANJEEVAN VIDYALAYA TRUST (SUPRA). HENCE, I DIR ECT 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.( 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, SINCE IT PERTAINS TO THE CLAIM OF DEPRECIATION UNDER THE PROVISIONS OF SECTION 35 OF THE ACT. FURTHER, AS PER TH E PROPOSITION LAID DOWN BY THE HONBLE JURISDICTIONAL HIGH COURT IN THE CASE OF ITA NO.5447/MUM/2015 ACIT VS DR. SYEDNA TAHER 3 DIT(E) VS. FRAMJEE CAWASJEE INSTITUTE (SUPRA) EXPENDITURE ON ACQUISITION OF DEPRECIABLE ASSET WAS TREATED AS APPLICATION OF INCOME OF THE TRUST IN THE YEAR ACQUISITION, DEPRECI ATION IS ALLOWABLE 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 DELETED THE DISALLOWANCE MADE BY THE AO. IN 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 RE VNEUE ARE DISMISSED 4. AS THE FACTS AND CIR CUMSTANCES 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 SO MADE. 5 . IN THE RESULT, B OTH THE APPEALS OF THE REVENUE ARE DISMISSED. 3. AS THE FACTS AND CIRCUMSTANCES UNDER THE YEAR 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) DELETIN G THE DISALLOWANCE OF DEPRECATION SO MADE. 4 . IN THE RESULT, THE APPEAL OF THE REVENUE IS D ISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON THIS 28/09 /201 6 . SD/ - ( PAWAN SINGH ) SD/ - (R.C.SHARMA) / JUDIC IAL MEMBER / ACCOUNTANT MEMBER MUMBAI ; DATED 28/09 /201 6 K ARUNA , SR. PS / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT. 3. ( ) / THE CIT(A), MUMBAI. 4. / CIT ITA NO.5447/MUM/2015 ACIT VS DR. SYEDNA TAHER 4 / BY ORDER, / ( ASSTT. REGISTRAR) , / ITAT, MUMBAI 5. , , / DR, ITAT, MUMBAI 6. / GUARD FILE. //TRUE COPY//