DCIT (E) 1(1), MUMBAI V. DAWAT-E- HADIYAH, MUMBAI

ITA 5599/MUM/2017

• Counselvise Citation: [2019] 115 COUNSELVISE.COM (IT) 4260 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 6 month(s) 8 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 13-03-2019
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: D
• Assessment Year: 2012-2013
• Appeal Filed On: 04-09-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SHRI KUMAR SANJAY
• Assessee Lawyers: FIROZE ANDHYARUJINA
• Keywords: Depreciation; Charitable institution; Tax effect; Capital expenditure
• Section: 143(3); 264; 11

Judgement Text

AAYAK AAYAK AAYAK AAYAKR APILAIYA AIQ R APILAIYA AIQ R APILAIYA AIQ R APILAIYA AIQAKRNA N AKRNA N AKRNA N AKRNA NYAAYAPIZ YAAYAPIZ YAAYAPIZ YAAYAPIZ MAMUBA[ MAMUBA[ MAMUBA[ MAMUBA[- -- - MAO MAOMAO MAO. .. . IN THE INCOME TAX APPELLATE TRIBUNAL D BENCH, MUM BAI BEFORE SRI MAHAVIR SINGH, JM AND SRI MANOJ KUMAR A GGARWAL, AM AAYAKR APILA SA AAYAKR APILA SA AAYAKR APILA SA AAYAKR APILA SAM MM M . / ITA NO.5599/MUM/2017 ( INAQA-ARNA BAYA- / ASSESSMENT YEAR 2012-13) DCIT (E) 1(1), MUMBAI. VS. DAWAT E- HANDIYAH, BADRI MAHAL, 3RD FLOOR, DR.FORT, MUMBAI . ( APILAAQA APILAAQA APILAAQA APILAAQAI II I - -- - / APPELLANT) .. ( P` P`P` P`%YAQAA %YAQAA %YAQAA %YAQAAI II I- -- - / RESPONDENT) PAN NO. AAATD 1489 N REVENUE BY : SHRI ,SHRI KUMAR SANJAY. CIT(DR) ASSESSEE BY : SHRI FIROZE ANDHYARUJINA, AR DATE OF HEARING: 13.3.2019 DATE OF PRONOUNCEMENT : 13- - 03- 2019 AADOSA AADOSA AADOSA AADOSA / O R D E R PER MAHAVIR SINGH, JM: THIS APPEAL BY THE REVENUE IS ARISING OUT OF THE OR DER OF COMMISSIONER OF INCOME TAX (APPEALS)-1 MUMBAI [IN S HORT CIT(A)], IN APPEAL NO.CIT(A)-I/IT/E-1(101)/2015-15 DATED 13.6.. 2017. THE ASSESSMENT WAS FRAMED BY THE ACIT(E)-1(1) (AO) FOR THE A.Y. 2012-13 VIDE ORDER DATED 31.3.2015 UNDER SECTION 143(3) OF THE INCOME TAX ACT, 1961 (HEREINAFTER THE ACT). 2 ITA NO.5599/MUM/2017 ASSESSMENT YEAR 2012-13 2. THE INTERCONNECTED ISSUE IN THE APPEAL OF THE RE VENUE IS AS REGARDS TO THE ORDER OF THE CIT(A) DELETING DISALLO WANCE (I) DEPRECIATION CLAIMED EVEN THOUGH THE ASSESSEES INC OME IS EXEMPT UNDER SECTION.11 OF THE ACT AND THIS TANTAMOUNTS TO DOUBLE DEDUCTION AND (II) ALLOWANCE OF CARRY FORWARD OF LO SS AND ALLOWING SET OFF AGAINST THE INCOME OF SUBSEQUENT YEARS DESP ITE THE FACT THAT THE INCOME OF THE ASSESSEE IS EXEMPT UNDER SECTION. 11 OF THE ACT. FOR THIS, THE REVENUE HAS RAISED THE FOLLOWING GROU NDS: 1.1. WHETHER ON THE FACTS OF THE CASE AND IN LAW T HE ID. CIT(A) ERRED IN ALLOWING THE APPEAL OF THE ASSESSEE ON ACCOUNT OF D ISALLOWING DEPRECIATION OF RS.22,16,30,027/-IN CONTRAVENTION O F THE DECISION OF ESCORTS LTD. VS. UOI 199 ' ITR 43 WHEREIN IT WAS HELD THAT SINCE SECTION 11 OF THE INCOME TAX ACT PROVIDES FOR DEDUCTION OF CAPITAL EXPENDITURE INCURRED ON ASSETS ACQUIRED FOR THE OBJECTS OF THE TRUST AS APPLICATIO N AND DOES NOT SPECIFICALLY & EXPRESSLY PROVIDE FOR DOUBL E DEDUCTION ON ACCOUNT OF DEPRECIATION ON THE SAME VERY ASSETS ACQ UIRED 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 CLAIMING A DOUBLE DEDUCTION.' 1.2 'WHETHER, ON THE FACTS AND IN THE CIRCUMSTAN CES OF THE CASE AND IN LAW THE ID. CIT(A) ERRED IN ALLOWING THE APPEAL, WH EN THE DELHI HIGH COURT IN THE CASE OF CHARANJIV CHARITABLE TRUST AND KERALA HIGH COURT IN THE CASE OF LISSIE MEDICAL INSTITUTIONS VS CIT 76 D TR (KER) 372 HAS DECIDED THE ISSUE IN THE FAVOUR OF THE DEPARTMENT A FTER CONSIDERING THE DECISION OF HON'BLE SUPREME COURT IN THE CASE OF ES CORTS LTD (199 ITR 43). 1.3. 'WHETHER, ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD. CIT(A) ERRED IN ALLOWING THE DEPRECIAT ION CLAIM OF THE ASSESSEE BY RELYING UPON THE JUDGMENT OF HON'BLE BO MBAY HIGH COURT IN THE CASE OF INSTITUTE OF BANKING PERSONNEL SELECTIO N, IGNORING THE FACT THAT THE DEPARTMENT HAS NOT ACCEPTED THE SAID DECIS ION OF THE JURISDICTIONAL HIGH COURT ON MERIT OF THE CASE, BUT DUE TO SMALLNESS OF TAX EFFECT APPEAL WAS NOT FILED BEFORE HON'BLE SUPREME COURT. ALSO, THE LD CIT(A) ERRED IN RELYING UPON THE JUDGMENT OF HON'BL E HIGH COURT IN THE CASE OF CIT VS. SHRI VILE-PARLE KELVANI MANDAL, WIT HOUT APPRECIATING THE FACT THAT DEPARTMENT HAS NOT ACCEPTED THE DECISION ON MERIT AND FILED SLP, BUT SUBSEQUENTLY WITHDRAWN THE SAME AS THERE W AS NO CLAIM OF DEPRECIATION ON EXEMPTED ASSETS. MOREOVER, THE REVE NUE HAS FILED SLPS ON THIS ISSUE IN OTHER CASES INCLUSIVE THE CASE OF G.D. BIRLA 3 ITA NO.5599/MUM/2017 ASSESSMENT YEAR 2012-13 MEDICAL RESEARCH &, EDUCATIONAL FOUNDATION (S.L.P.( C) NO. 24904 OF2016(C.A.NO.8294 OF 2016) AND IN THIS CASE LEAVE HAS BEEN GRANTED BY THE HON'BLE APEX COURT AND IN ALL CASES ISSUE IS PENDING FOR ADJUDICATION BEFORE THE HON'BLE APEX COURT. 2.1 'WHETHER ON THE FACTS OF THE CASE AND IN LAW THE LD.CIT(A) ERRED IN ALLOWING THE CARRY FORWARD OF RS.160,76,77,556/- AN D ALLOWING SET OFF AGAINST THE INCOME OF THE SUCCEEDING YEARS.' 2.2 'WHETHER, ON THE FACTS AND IN THE CIRCUMSTANC ES OF THE CASE AND IN LAW, THE LD. CIT(A) ERRED IN ALLOWING THE CLAIM OF THE ASSESSEE FOR CARRY FORWARD OF THE SAID DEFICIT, IGNORING THE FACT THAT THERE WAS NO EXPRESS PROVISION IN THE I T ACT, 1961 PERMITTING ALLOWANCE OF SUCH CLAIM.' 2.3 WHETHER, ON THE FACTS AND IN THE CIRCUMSTANCE S OF THE CASE AND IN LAW, THE LD. CIT(A) ERRED IN ALLOWING THE CLAIM OF THE ASSESSEE FOR CARRY FORWARD OF THE SAID DEFICIT BY RELYING UPON THE JUD GMENT OF HON'BLE BOMBAY HIGH COURT IN THE CASE OF INSTITUTE OF BANKI NG PERSONNEL SELECTION, IGNORING THE FACT THAT THE DEPARTMENT HA S NOT ACCEPTED THE SAID DECISION OF THE JURISDICTIONAL HIGH COURT ON M ERIT OF THE CASE, BUT DUE TO SMALLNESS OF TAX EFFECT APPEAL WAS NOT FILED BEFORE HON'BLE HOWEVER, ON THIS ISSUE THE DEPARTMENT HAS FILED SLP S IN OTHER CASES BEFORE THE HONBLE S.C. HOWEVER, ON THIS ISSUE, TH E DEPARTMENT HAS FILED SLPS IN OTHER CASE OF MIDC (SLP (CIVIL) 9890 1 OF 2014) IN WHICH LEAVE HAS BEEN GRANTED AND THE ISSUE IS PENDING FOR ADJUDICATION BEFORE THE HONBLE SUPREME COURT AND THE CASE HAS NOT REAC HED FINALITY. 3. WE HAVE HEARD THE RIVAL CONTENTIONS AND GONE THROUG H THE FACTS AND CIRCUMSTANCES OF THE CASE. BRIEFLY STATED THE FACT S ARE THAT THE ASSESSING OFFICER DURING THE COURSE OF ASSESSMENT PROCEEDINGS , NOTED THAT THE ASSESSEE HAS CLAIMED DEPRECIATION OF 22,16,30,027/- AND ALSO CLAIMED CARRY FORWARD OF LOSS TO THE EXTENT OF 160,76,77,556/-. ACCORDING TO THE AO, THE ASSESSEE IS CLAIMING EXEMPTION UNDER SECTIO N.11 OF THE ACT AND THEREBY THESE AMOUNTS CANNOT BE ALLOWED AS THE ALLO WANCE OF THE SAME TANTAMOUNTS TO DOUBLE DEDUCTION. ACCORDINGLY, THE AO DISALLOWED THE SAME. AGGRIEVED, THE ASSESSEE PREFERRED APPEAL BEF ORE THE CI(A) ON BOTH THE COUNTS. 4 ITA NO.5599/MUM/2017 ASSESSMENT YEAR 2012-13 4. THE CIT(A) FOLLOWING THE ORDERS OF EARLIER YEARS IN ASSESSEES OWN CASE FOR THE ASSESSMENT YEARS 2010-11 AND 2011-12 I N ITA NO.3421 & 3422/MUM/2015 FOLLOWING THE DECISION OF HONBLE BOM BAY HIGH COURT IN THE CASE OF INSTITUTE OF BANKING PERSONNEL SELECTION (IBPS) (20 03) 264 ITR 110 (BOM) ALLOWED THE CLAIM OF THE ASSESSEE. 5. AFTER CONSIDERING THE RIVAL SUBMISSIONS AND PERU SING THE ORDERS OF THE LOWER AUTHORITIES, WE FIND THAT THIS ISSUE HAS ALREADY BEEN ANSWERED BY THE HONBLE BOMBAY HIGH COURT IN THE CASE OF INSTITUTION OF BANKING PERSONNEL SELECTION (IBPS) (SUPRA), WHEREIN, THE HO NBLE HIGH COURT HAS OBSERVED AS UNDER: 4. QUESTION NO. 2 HEREIN IS IDENTICAL TO THE QUESTI ON WHICH WAS RAISED BEFORE THE BOMBAY HIGH COURT IN THE CASE OF DIRECTOR OF INCOME TAX (EXEMPTION) V. FRAMJEE CAWASJEE INSTITUT E (1993) 109 CTR 463 (BOM). IN THAT CASE, THE FACTS WERE AS FOLLOWS: THE ASSESSEE WAS THE TRUST. IT DERIVED ITS INCOME FROM DEPRECIABLE ASSETS. THE ASSESSEE TOOK INTO ACCOUNT DEPRECIATION ON THOSE ASSETS IN COMPUTING THE INCOME OF THE TRUST. THE IN COME TAX OFFICER HELD THAT DEPRECIATION COULD NOT BE TAKEN I NTO ACCOUNT BECAUSE, FULL CAPITAL EXPENDITURE HAD BEEN ALLOWED IN THE YEAR OF ACQUISITION OF THE ASSETS. THE ASSESSEE WENT IN APP EAL BEFORE THE ASSISTANT APPELLATE COMMISSIONER. THE APPEAL WAS RE JECTED. THE TRIBUNAL, HOWEVER, TOOK THE VIEW THAT WHEN THE INCO ME TAX OFFICER STATED THAT FULL EXPENDITURE HAD BEEN ALLOW ED IN THE YEAR OF ACQUISITION OF THE ASSETS, WHAT HE REALLY MEANT WAS THAT THE AMOUNT SPENT ON ACQUIRING THOSE ASSETS HAD BEEN TRE ATED AS 'APPLICATION OF INCOME' OF THE TRUST IN THE YEAR IN WHICH THE INCOME WAS SPENT IN ACQUIRING THOSE ASSETS. THIS DID NOT M EAN THAT IN COMPUTING INCOME FROM THOSE ASSETS IN SUBSEQUENT YE ARS, DEPRECIATION IN RESPECT OF THOSE ASSETS CANNOT BE T AKEN INTO ACCOUNT. THIS VIEW OF THE TRIBUNAL HAS BEEN CONFIRM ED BY, THE BOMBAY HIGH COURT IN THE ABOVE JUDGMENT. HENCE, QUE STION NO. 2 IS COVERED BY THE DECISION OF THE BOMBAY HIGH COU RT IN THE ABOVE JUDGMENT. CONSEQUENTLY, QUESTION NO. 2 IS ANS WERED IN THE AFFIRMATIVE I.E., IN FAVOUR OF THE ASSESSEE AND AGAINST, THE DEPARTMENT. 5 ITA NO.5599/MUM/2017 ASSESSMENT YEAR 2012-13 6. AS THE ISSUE IS SQUARELY COVERED BY THE DECISION OF HONBLE BOMBAY HIGH COURT IN THE CASE OF INSTITUTE OF BANKING PERSONNEL SELECTION (SUPRA) IN FAVOUR OF THE ASSESSEE, RESPECTFULLY FOLLOWING THE SAME, WE A RE OF THE VIEW THAT THE CIT(A) HAS RIGHTLY DELETED THE DISALLOWANCE MADE BY THE AS SESSING OFFICER AND, ACCORDINGLY, WE AFFIRM THE SAME. 7. IN THE RESULT, THE APPEAL OF THE REVENUE IS DISMISS ED. ORDER PRONOUNCED IN THE OPEN COURT ON 13-03- 2019. AADOSA KI AADOSA KI AADOSA KI AADOSA KI G GG GAAO AAOAAO AAOYANAA KULAO MAO IDNAMK YANAA KULAO MAO IDNAMK YANAA KULAO MAO IDNAMK YANAA KULAO MAO IDNAMK 15. 03.2019 KAO KI KAO KI KAO KI KAO KI GA GAGA GA SD/- (MANOJ KUMAR AGGARWAL) (MAHAVIR S INGH) ACCOUNTANT MEMBER JUDICIAL MEMBER MUMBAI, DATED: 13- - 03- 2019 BKP/SR.PS COPY OF THE ORDER FORWARDED TO : BY ORDER, ASSISTANT 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//