SHUSHRUSA CITIZENS CO. OP HOSPITAL LTD, MUMBAI V. DDIT (E)-I (2), MUMBAI

ITA 5719/MUM/2011

• Counselvise Citation: [2013] 140 COUNSELVISE.COM (IT) 71834 (ITAT-MUMBAI)
• Duration Of Justice: 2 year(s) 3 month(s) 27 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 06-12-2013
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: E
• Next Hearing Date: 13-11-2013
• Assessment Year: 2007-2008
• Appeal Filed On: 10-08-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: ASHOK SURI
• Keywords: Depreciation
• Section: 11

Judgement Text

E IN THE INCOME TAX APPELLATE TRIBUNAL E BENCH, MUMBAI . . , . , BEFORE SHRI I.P. BANSAL, JM AND SHRI KARUNAKARA RAO, AM ./I.T.A. NO.5719/M/2011 ( / ASSESSMENT YEAR: 2007 - 2008) SHUSHRUSA CITIZENS COOP. HOSPITAL LIMITED, 698 - B, RANADE ROAD, DADAR, MUMBAI 400 028. / VS. DY. DIRECTOR OF INCOME TAX (E) - 1(2), PIRAMAL CHAMBERS, LALBAGU, PAREL, MUMB AI 400 012. ./ PAN : AAATS 0257 K ( / APPELLANT) .. ( / RESPONDENT ) / APPELLANT BY : SHRI HERO RAI / RESPONDENT BY : SHRI ASHOK SURI, DR / DATE OF HEARING : 13.11.2013 / DATE OF PRONOUNCEMENT : 06 .12.2013 / O R D E R PER D. KARUNAKARA RAO, AM: THIS APPEAL FILED BY THE ASSESSEE ON 10.8.2011 IS AGAINST THE ORDER OF CIT (A) - 1, MUMBAI DATED 1.3.2011 FOR THE ASSESSMENT YEAR 2007 - 2008. IN THIS APPEAL, ASSESSEE RAISED THE FOLLOWING GROUNDS WHICH READ AS UNDER: 1. THE LD CIT (A) WAS NOT JUSTIFIED IN CONFIRMING THE VIEW OF THE AO WHO HAD DISALLOWED THE CLAIM OF DEPRECIATION OF RS. 75,96,758/ - MADE BY THE APPELLANT WHILE COMPUTING ITS INCOME. THE REASONS GIVEN BY HIM IN THIS REGARD ARE INCORRECT AND INVALID. 2. THE LD CIT (A) WAS NOT JUSTIFIED IN HOLDING THAT THE ADDITIONAL GROUND OF APPEAL RAISED BEFORE HIM DOES NOT EMANATE FROM THE ORDER OF THE AO AND TH US, THE SAME CANNOT BE AGITATED IN THE APPEAL. HE SHOULD HAVE ADMITTED THE SAID ADDITIONAL GROUND WHICH RAISED A PURE LEGAL ISSUE AND DID NOT REQUIRE FRESH INVESTIGATION INTO FACTS. 3. THE LD CIT (A) HAS ALSO ERRED IN HOLDING THAT THE CLAIM RAISED THROUGH THE ADDITIONAL GROUND OF APPEAL IS NOT TENABLE AND HENCE DISMISSED. HE SHOULD HAVE HELD THAT THE AO WAS NOT JUSTIFIED IN NOT CONSIDERING THE APPELLANTS CLAIM OF ALLOWING THE SET OFF OF THE EXCESS OF APPLICATION OF INCOME OF THE EARLIER YEARS AGAINST THE INCOME COMPUTED BY HIM FOR THE ASSESSMENT YEAR UNDER APPEAL. 2. AT THE OUTSET, SHRI HERO RAI, LD COUNSEL FOR THE ASSESSEE MENTIONED THAT THERE ARE COUPLE OF ISSUES THAT ARISE FROM THE ORDER OF THE CIT (A) I.E., (I) ALLOWABILITY 2 OF DEPRECIATION OF RS. 75,9 6,758/ - AND (II) ALLOWABILITY OF THE SET - OFF OF THE EXCESS APPLICATION OF INCOME OF THE EARLIER YEARS AGAINST THE INCOME COMPUTED BY THE AO IN THE YEAR UNDER CONSIDERATION. IN CONNECTION WITH THE ABOVE GROUNDS, LD COUNSEL MENTIONED THAT BOTH THE ISSUES AR E COVERED IN FAVOUR OF THE ASSESSEE. REFERRING TO THE FIRST ISSUE OF ALLOWABILITY OF DEPRECIATION ON THE ASSETS ACQUIRED BY THE TRUST, BY VIRTUE OF APPLICATION OF ITS FUNDS, LD COUNSEL BROUGHT OUR ATTENTION TO VARIOUS BINDING JUDGMENTS VIZ, THE HONBLE BO MBAY HIGH COURT IN THE CASE OF CIT VS. INSTITUTE OF BANKING, BOMBAY STOCK EXCHANGE LTD VS. DEPUTY DIRECTOR OF INCOME TAX (EXEMPTION) & ORS , JUDGMENT OF THE BOMBAY HIGH COURT IN THE CASE OF DIRECTOR OF INCOME TAX (EXEMPTION) VS. FRAMJEE CAWASJEE INSTITUTE [ 1999] 109 CTR (BOM) 463; JUDGMENT OF HONBLE PUNJAB AND HARYANA HIGH COURT IN THE CASE OF CIT VS. MARKET COMMITTEE, PIPLI [2011] 330 ITR 16 (P&H) AND ANOTHER JUDGMENT OF PUNJAB AND HARYANA HIGH COURT IN THE CASE OF CIT VS. TINY TOTS EDUCATION SOCIETY [2011 ] 330 ITR 21. IN THIS REGARD HE READ OUT THE CONCLUSION GIVEN IN THE CASE OF DIRECTOR OF INCOME TAX (EXEMPTION) VS. FRAMJEE CAWASJEE INSTITUTE WHICH READS AS UNDER: CONCLUSION : DEPRECIATION ON DEPRECIABLE ASSETS HAD TO BE TAKEN INTO ACCOUNT IN COMPUTING INCOME OF TRUST ALTHOUGH THE AMOUNT SPEND ON ACQUIRING SUCH ASSETS HAD BEEN TREATED AS APPLICATION OF INCOME OF TRUST IN THE YEAR IN WHICH ASSETS WERE ACQUIRED; ANSWER BEING SELF - EVIDENT, REFERENCE DECLINED. 2.1. FURTHER, LD COUNSEL BROUGHT OUR ATTENTIO N TO THE BINDING JUDGMENT IN THE CASE OF CIT VS. INSTITUTE OF BANKING , WHEREIN IT WAS HELD THAT THE TRIBUNAL WAS RIGHT IN LAW IN DIRECT THE ASSESSING OFFICER TO ALLOW DEPRECIATION ON THE ASSETS, THE COST OF WHICH HAD BEEN FULLY ALLOWED AS APPLICATION OF INCOME UNDER SECTION 11 IN THE PAST YEARS . SIMILARLY, ON THE ISSUE OF ALLOWABILIY OF EXCESS APPLICATION OF THE INCOME OF THE EARLIER YEARS AGAINST THE INCOME OF THE CURRENT YEAR, LD COUNSEL BROUGHT OUR ATTENTION TO PAGE 5 OF THE PAPER BOOK WHICH A COPY OF THE JUDGMENT OF THE HIGH COURT IN THE CASE OF CIT VS. INSTITUTE OF BANKING, 264 ITR 110 AND MENTIONED THAT SUCH SET OFF OF EXCESS APPLICATION OF INCOME OF THE EARLIER YEARS AGAINST THE CURRENT INCOME OF THE ASSESSEE IS ALLOWABLE AND THE RELEVANT PORTIONS FROM PAGE 112 OF THE SAID JUDGMENT READS AS UNDER: 3 (III) THAT THE TRIBUNAL WAS JUSTIFIED IN LAW IN ALLOWING CARRY FORWARD OF THE DEFICIT OF EARLIER YEARS AND SET OFF AGAINST THE SURPLUS OF THE SUBSEQUENT YEAR. 3. ON THE OTHER HAND, LD DR RELIED ON THE OR DERS OF THE REVENUE AUTHORITIES. 4. WE HAVE HEARD BOTH THE PARTIES AND PERUSED THE ORDERS OF THE REVENUE AUTHORITIES AS WELL AS THE CITED JUDGMENTS OF HONBLE HIGH COURT OF BOMBAY AS WELL AS THE PUNJAB AND HARYANA HIGH COURT. CONSIDERING THE BINDING NATUR E OF THE JUDGMENTS AND THE COVERED NATURE OF THE ISSUES, WE ARE OF THE OPINION THAT THE TWO ISSUES UNDER CONSIDERATION I.E., (I) ALLOWABILITY OF DEPRECIATION ON DEPRECIABLE ASSETS AND (II) ALLOWABILIY OF EXCESS APPLICATION OF THE INCOME OF THE EARLIER YEAR S AGAINST THE INCOME OF THE CURRENT YEAR SHOULD BE DECIDED IN FAVOUR OF THE ASSESSEE. ACCORDINGLY, GROUNDS RAISED BY THE ASSESSEE ARE ALLOWED. 5. IN THE RESULT, APPEAL FILED BY THE ASSESSEE IS ALLOWED. ORDER PR ONOUNCED IN THE OPEN COURT ON 0 6 T H DECEMBER, 2 013. S D / - S D / - ( I.P. BANSAL) (D. KARUNAKARA RAO ) / JUDICIAL MEMBER / ACCOUNTANT MEMBER MUMBAI ; 6 .12.2013 . . ./ OKK , 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 //TRUE COPY// / BY ORDER, / (DY./ASSTT. REGISTRAR) , / ITAT, MUMBAI