ITO (EXEMPTION) - 2(4), MUMBAI V. UDASIN KARSHNI ASHARAM TRUST, MUMBAI

ITA 5927/MUM/2016

• Counselvise Citation: [2017] 127 COUNSELVISE.COM (IT) 0028 (ITAT-MUMBAI)
• Duration Of Justice: 10 month(s) 25 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 30-08-2017
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: Not Allotted
• Assessment Year: 2011-2012
• Appeal Filed On: 05-10-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SAURABH DESHPANDE
• Keywords: Depreciation; Charitable institution; 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 AMARJIT SINGH , JUDICIAL MEMBER ITA NO. 5927/MUM/2016 : A.Y : 2011 - 12 ITO (EXEMPTIONS) - 2(4), MUMBAI (APPELLANT) VS. UDASIN KARSHNI ASHARAM TRUST 4/6, SURESH CHANDRA AGARWAL, NAVJEEVAN CO - OP. HSG. SOC., LAMINGTON RD., MUMBAI 400 007 PAN : AAATU1200C (RESPONDENT) APPELLANT BY : SHRI SAURABH DESHPANDE RESPONDENT BY : NONE DATE OF HEARING : 17/08/2017 DATE OF PRONOUNCEMENT : 30 /08/2017 O R D E R PER G.S. PANNU , AM : THE CAPTIONED APPEAL BY THE REVENUE IS DIRECTED AGAINST THE ORDER OF CIT(A) - 1, MUMBAI DATED 21.07.2016 PERTAINING TO THE ASSESSMENT YEAR 2011 - 12 , WHICH IN TURN HAS ARISEN FROM THE ORDER PASSED BY THE ASSESSING OFFICER DATED 17.02.2014 UNDER SECTION 143(3) OF THE INCOME TAX ACT, 1961 (IN SHORT THE ACT). 2. AT THE TIME OF HEARING, IT WAS NOTICED THAT NONE APPEARED ON BEHALF OF THE RESPONDENT - ASSE SSEE INSPITE OF SERVICE OF NOTICE BY RPAD. ON THE OTHER HAND, THE LD. DR APPEARED ON BEHALF OF THE REVENUE. 2 UDASIN KARSHNI ASHARAM TRUST ITA NO. 592 7 /MUM/2016 3. ACCORDINGLY, IN VIEW OF RULE 25 OF THE INCOME TAX (APPELLATE TRIBUNAL) RULES, 1963, THE APPEALS OF THE REVENUE ARE BEING DISPOSED OFF EX - PARTE THE RESPONDENT - ASSESSEE AFTER HEARING THE APPELLANT - REVENUE ON MERITS. 4 . IN ITS APPEAL, REVENUE HAS RAISED THE FOLLOWING GROUNDS OF APPEAL: - 1. WHETHER ON THE FACTS OF THE CASE AND IN LAW THE LD.CIT(A) ERRED IN ALLOWING THE APPEAL OF THE ASSESSEE ON A CCOUNT OF DISALLOWING DEPRECIATION ON FIXED ASSETS OF RS. 30,92,521/ - IN CONTRAVENTION OF 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 CAPITAL EXPENDITURE INCURRED ON ASSETS ACQUIRED FOR THE OBJECTS OF THE TRUST AS APPLICATION AND DOES NOT SPECIFICALLY & EXPRESSLY PROVIDE FOR DOUBLE DEDUCTION ON ACCOUNT OF DEPRECIATION ON THE SAME 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 CLAIMING A DOUBLE DEDUCTION. 2. WHETHER, ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW THE LD CLT(A) ERRED IN ALLOWING THE APPEAL, WHEN THE DELHI HIGH COURT I N THE CASE OF CHARANJIV CHARITABLE TRUST AND KERALA HIGH COURT IN THE CASE OF LISSIE MEDICAL INSTITUTIONS VS CIT 76 DTK (KER) 372 HAS DECIDED THE ISSUE IN THE FAVOUR OF THE DEPARTMENT AFTER CONSIDERING THE DECISION OF HON'BLE SUPREME COURT IN THE CASE OF E SCORTS LTD (199 ITR 43). 3. WHETHER, ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW THE LD CIT(A) ERRED IN RELYING UPON THE JUDGMENT OF HON'BLE HIGH COURT IN THE CASE OF CIT VS. INSTITUTE OF BANKING PERSONNEL SELECTION WITHOUT APPRECIATING T HE FACT THAT DEPARTMENT HAS NOT ACCEPTED THE DECISION ON MERIT, BUT DUE TO SMALLNESS OF TAX EFFECT APPEAL WAS NOT FILED BEFORE HON'BLE SUPREME COURT. HOWEVER, THE ISSUE IS PENDING FOR ADJUDICATION BEFORE HON'BLE SUPREME COURT IN OTHER CASES. 3 UDASIN KARSHNI ASHARAM TRUST ITA NO. 592 7 /MUM/2016 4. WHETHER ON THE FACTS OF THE CASE AND IN LAW THE LD. CLT(A) ERRED IN ALLOWING THE CARRY FORWARD OF DEFICIT OF RS. 1,63,99,503/ - AND ALLOWING SET OFF AGAINST THE INCOME OF THE SUBSEQUENT YEARS. 5. 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 SAID DEFICIT, IGNORING THE FACT THAT THERE WAS NO EXPRESS PROVISION IN THE I T ACT, 1961 PERMITTING ALLOWANCE OF SUCH CLAIM. 6. WHETHER, ON THE FACTS AND IN THE CIRCUMSTAN CES 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 JUDGMENT OF HON'BLE BOMBAY HIGH COURT IN THE CASE OF INSTITUTE OF BANKING PERSONNEL SELECTION, IGNORING THE FAC T THAT THE DEPARTMENT HAS NOT ACCEPTED THE SAID DECISION 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. HOWEVER, ON THIS ISSUE THE DEPARTMENT HAS FILED SLP BEFORE THE APEX COURT IN THE CASE OF MIDC (SPL (CIVIL) 9891 OF 2014) AND THE MATTER IS PENDING BEFORE THE HON'BLE SUPREME COURT. 7. THE APPELLANT PRAYS THAT THE ORDER OF THE COMMISSIONER OF INCOME TAX (APPEALS) - I, MUMBAI BE SET ASIDE AND THAT OF THE ASSESSING O FFICER BE RESTORED. 5 . ALTHOUGH THE REVENUE HAS RAISED MULTIPLE GROUNDS OF APPEAL, BUT THE DISPUTE INVOLVED IN THIS APPEAL IS ON TWO ISSUES. FIRSTLY, THE REVENUE IS AGGRIEVED BY THE DECISION OF THE CIT(A) IN DIRECTING THE ASSESSING OFFICER TO ALLOW THE BENEFIT OF DEPRECIATION. SECONDLY, THE GRIEVANCE OF THE REVENUE IS AGAINST THE ACTION OF THE CIT(A) IN ALLOWING THE ASSESSEE THE BENEFIT OF CARRY FORWARD OF THE DEFICIT FOR FUTURE SET - OFF. 6 . IN THIS BACKGROUND, NOW WE MAY REFER TO THE RELEVANT FACTS. THE RESPONDENT - ASSESSEE IS A CHARITABLE ORGANISATION REGISTERED U/S 12A OF 4 UDASIN KARSHNI ASHARAM TRUST ITA NO. 592 7 /MUM/2016 THE ACT AND IS ENGAGED IN CARRYING ON ACTIVITIES OF CHARITABLE NATURE. THE ASSESSING OFFICER NOTICED THAT ASSESSEE HAD CLAIMED DEPRECIATION ALLOWANCE OF RS.30,92,521/ - ON THE COST OF FIXED ASSETS, WHEREAS SUCH COST OF FIXED ASSETS HAS ALSO BEEN TAKEN AS AN APPLICATION OF INCOME WHILE COMPUTING THE TOTAL INCOME. 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 JUDGMENT OF THE HON'BLE BOMBAY HIGH COURT IN THE CASE OF INSTITUTE OF BANKING PERSONNEL SELECTION, 264 IT R 110 (BOM) . 7 . BEFORE US, THE ONLY PLEA OF THE DEPARTMENT IS THAT THE 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 ON MERITS AND ON SIMILAR ISSUE, A SLP NO. 9891 OF 2014 HAS BEEN FILED BEFORE THE HON'BLE SUPREME COURT IN THE CASE OF MAHARASHTRA INDUSTRIAL DEVELOPMENT CORPORATION (MIDC) . FURTHER, IT IS CONTESTED THAT ALLOWING OF DEPRECIATION WOULD AMOUNT TO A DOUBLE DEDUCTION, WHICH WAS IMPERMISSIBLE HAVIN G REGARD TO THE JUDGMENT OF THE HON'BLE SUPREME COURT IN THE CASE OF ESCORTS LTD., 199 ITR 43 (SC) . 8 . 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 SIMILAR SITUAT ION WOULD NOT AMOUNT TO 5 UDASIN KARSHNI ASHARAM TRUST ITA NO. 592 7 /MUM/2016 A DOUBLE DEDUCTION. FURTHER, AT THE TIME OF HEARING, THE LEARNED REPRESENTATIVE FOR THE RESPONDENT - ASSESSEE POINTED OUT THAT 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 JUDGMENT OF THE HON'BLE SUPREME COURT IN THE CASE OF ESCORTS LTD. (SUPRA) , WHICH IS BEING RELIED UPON BY THE REVENUE. IT WAS ALSO POINTED OUT THAT THE HON'BLE SUPREME COURT HAS ALSO DISMISSED THE SLP FILED BY TH E DEPARTMENT AGAINST THE SAID DECISION OF THE HON'BLE DELHI HIGH COURT VIDE SLP NO. 19321 OF 2013. WE FIND THAT THE HON'BLE BOMBAY HIGH COURT SUBSEQUENT TO THE DECISION IN THE CASE OF INSTITUTE OF BANKING PERSONNEL SELECTION (SUPRA) CONSIDERED A SIMILAR A RGUMENT 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 FACT, THE GROUNDS OF APPEAL URGED BY THE REVENUE BEFORE THE HON'BLE HIGH COURT, WHICH READ AS UNDER : - (A) WHETHE R 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 BANKING PERSONNEL SERVICES REPORTED IN 264 ITR 110 (BOM) IGNORING THE RATIO OF HON'BLE SUPREME COURT JUDGMENT IN THE CASE OF ESCORTS LTD. V/S. UNION OF INDIA (199 ITR 43) WHEREIN HON'BLE SUPREME COURT HAS HELD THAT DOUBLE DEDUCTION CANNOT BE PRESUMED IF THE SAME IS NOT SPEC IFICALLY PROVIDED BY LAW, IN ADDITION TO NORMAL DEDUCTION? (B) 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 TO CARRY FORWARD OF DEFICIT OF EARLIER YEARS RELYING ON THE DECISION OF THIS COURT IN THE CASE OF CIT V/S. INSTITUTE OF BANKING PERSONNEL SERVICES REPORTED IN 264 ITR 110 (BOM) WHILE THE REVENUE 6 UDASIN KARSHNI ASHARAM TRUST ITA NO. 592 7 /MUM/2016 DID NOT FILE SLP AGAINST THE CASE OF CIT V/S. INSTITUTE OF BANKING PERSONNEL SERVICES REPORTED IN 264 ITR1 10 (BOM) DUE TO LOW TAX EFFECT?. STAND ON SAME FOOTING AS ARE BEING CANVASSED BEFORE 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 COURT 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 HO N'BLE BOMBAY HIGH COURT IN THE CASE 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 RAISED BY THE REVENUE AND THE SAME IS ACCORDINGLY DISMISSED. 9 . SIMILARLY, THE SECOND ISSUE RAISED BY THE REVENUE IS WITH REGARD TO CARRY FORWARD OF THE DEFICIT OF RS.1,63,99,503/ - TO BE SET - OFF AGAINST THE FUTURE INCOME. ON THIS ASPECT ALSO, CIT(A) HAS ALLOWED THE CLAIM FOLL OWING 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. 7 UDASIN KARSHNI ASHARAM TRUST ITA NO. 592 7 /MUM/2016 10 . RESULTANTLY, APPEAL OF THE REVENUE IS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 3 0 T H AUGUST, 2017 . SD/ - SD/ - ( AMARJIT SINGH ) JUDICIAL MEMBER (G.S. PANNU) ACCOUNTANT MEMBER MUMBAI, DATE : 3 0 T H AUGUST , 201 7 *SSL* COPY TO : 1) THE APPELLANT 2) THE RESPONDENT 3) THE CIT(A) CONCERNED 4) THE CIT CONCERNED 5) THE D.R, A BENCH, MUMBAI 6) GUARD FILE BY ORDER DY./ASSTT. REGISTRAR I.T.A.T, MUMBAI