DDIT (E) II(2), MUMBAI V. NATIONAL INSTITUTE OF CONSTRUCTION MANAGEMENT AND RESEARCH, MUMBAI

ITA 6088/MUM/2010

• Counselvise Citation: 608819914 RSA 2010
• Duration Of Justice: 1 year(s) 7 month(s) 23 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 30-03-2012
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: B
• Assessment Year: 2007-2008
• Appeal Filed On: 06-08-2010
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: PRAVIN VARMA
• Assessee Lawyers: T K DOCTOR
• Keywords: Depreciation; Charitable institution
• Section: 32; 11

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, MUMBAI BENCH B,MUMBAI BEFORE SHRI D. MANMOHAN (VICE PRESIDENT) & SHRI RAJENDRA (AM) I.T.A.NO. 6088/MUM/2010 (A.Y. 2007-08) DDIT (E)-11(2), R.NO.507, PIRAMAL CHAMBERS, LALBAUG, PAREL, MUMBAI-400012. VS. M/S. NATIONAL INSTITUTE OF CONSTRUCTION MANAGEMENT AND RESEARCH, WALCHAND CENTRE, WALCHAND TERRACE, TARDEO ROAD, MUMBAI- 400 034. PAN: AAATN1348J APPELLANT RESPONDENT APPELLANT BY SHRI PRAVIN VARMA. RESPONDENT BY SHRI T.K. DOCTOR. DATE OF HEARING 27-03-2012 DATE OF PRONOUNCEMENT 30-03-2012 O R D E R PER RAJENDRA, AM : IN THE APPEAL PREFERRED BY THE ASSESSING OFFICER (A O), TWO EFFECTIVE GROUNDS OF APPEAL HAVE BEEN RAISED 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CA SE, AND IN LAW, THE LD. CIT(A), MUMBAI ERRED IN DELETING AN AMOUNT OF RS.1,63,87,142/- ADDED IN THE INCOME OF THE ASSESSE E ON THE GROUNDS THAT THE ASSESSEE HAD EXERCISED ITS OPTION U/S. 11(1) READ WITH EXPLANATION 2 OF THE ACT TO SPEND THIS AM OUNT IN THE SUCCEEDING YEAR AND HAD NOT INCLUDED IN THE INCOME TO BE SPENT DURING THAT SUCCEEDING YEAR. ITA NO.6088/MUM/2010 NATIONAL INSTITUTE OF CONSTRUCTION MGT. & RESEARCH 2 5. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E, AND IN LAW, THE LD. CIT(A), MUMBAI, ERRED IN CONCLUDING AND ALLOWING THE CLAIM OF DEPRECIATION AMOUNTING TO RS.16,27,333/- ON THE ASSETS THE COST OF WHICH STAN DS ALLOWED AS APPLICATION AND ACCORDINGLY DEDUCTED FROM THE IN COME TO ARRIVE AT ANY SURPLUS TO BE TAXED. 2. AR SHRI T.K. DOCTOR ARGUED THAT BOTH THE ISSUES HAV E BEEN DECIDED BY THE JURISDICTIONAL HIGH COURT IN THE CASE OF INSTITUTE OF BANKING PERSONNEL REPORTED IN 264 ITR AT PAGE 110. DR RELIED UPON THE ORDERS OF THE AO. 3. THE HONBLE HIGH COURT OF BOMBAY HAS HELD IN THE ABOVE REFERRED MATTER AS UNDER : NORMAL DEPRECIATION CAN BE CONSIDERED AS A LEGITIM ATE DEDUCTION IN COMPUTING THE REAL INCOME OF THE ASSESSEE ON GENERA L PRINCIPLES OR UNDER SECTION 11(1)(A) OF THE INCOME-TAX ACT, 1961. INCOM E OF A CHARITABLE TRUST DERIVED FROM BUILDING, PLANT AND MACHINERY AND FURN ITURE IS LIABLE TO BE COMPUTED IN A NORMAL COMMERCIAL MANNER ALTHOUGH THE TRUST MAY NOT BE CARRYING ON ANY BUSINESS AND THE ASSETS IN RESPECT WHEREOF DEPRECIATION IS CLAIMED MAY NOT BE BUSINESS ASSETS. IN ALL SUCH CAS ES, SECTION 32 OF THE ACT PROVIDING FOR DEPRECIATION, FOR COMPUTATION OF INCO ME DERIVED FROM BUSINESS OR PROFESSION IS NOT APPLICABLE. HOWEVER, THE INCOME OF THE TRUST IS REQUIRED TO BE COMPUTED UNDER SECTION 11 ON COMMERC IAL PRINCIPLES AFTER PROVIDING FOR ALLOWANCE FOR NORMAL DEPRECIATION AND DEDUCTION THEREOF FROM THE GROSS INCOME OF THE TRUST. INCOME DERIVED FROM THE TRUST PROPERTY HAS ALSO GOT TO BE COMPUTED ON COMMERCIAL PRINCIPLES AND IF COMMERCIAL PRINCIPLES ARE APPLIED THEN ADJUSTMENT OF EXPENSES INCURRED BY THE TRUST FOR CH ARITABLE AND RELIGIOUS PURPOSES IN THE EARLIER YEARS AGAINST THE INCOME EA RNED BY THE TRUST IN THE SUBSEQUENT YEAR WILL HAVE TO BE REGARDED AS APPLICA TION OF INCOME OF THE TRUST FOR CHARITABLE AND RELIGIOUS PURPOSES IN THE SUBSEQUENT YEAR IN WHICH ADJUSTMENT HAD BEEN MADE HAVING REGARD TO THE BENEV OLENT PROVISIONS CONTAINED IN SECTION 11 OF THE ACT AND SUCH ADJUSTM ENT WILL HAVE TO BE EXCLUDED FROM THE INCOME OF THE TRUST UNDER SECTION 11(1)(A). RESPECTFULLY FOLLOWING THE ORDER OF THE HONBLE HIG H COURT, WE DISMISS THE APPEAL FILED BY THE AO. ITA NO.6088/MUM/2010 NATIONAL INSTITUTE OF CONSTRUCTION MGT. & RESEARCH 3 ORDER PRONOUNCED ON THE 30TH DAY OF MARCH, 20 12. SD/- SD/- (D. MANMOHAN) (RAJENDRA) VICE PRESIDENT ACCOUNTANT MEMBER MUMBAI: 30TH MARCH , 2012. NG: COPY TO : 1. DEPARTMENT. 2. ASSESSEE. 3 CIT(A)-1,MUMBAI. 4 CIT,MUMBAI. 5.DR,B BENCH,MUMBAI. 6.MASTER FILE. (TRUE COPY) BY ORDER, ASST. REGISTRAR, ITAT, MUMBAI. ITA NO.6088/MUM/2010 NATIONAL INSTITUTE OF CONSTRUCTION MGT. & RESEARCH 4 DETAILS DATE INITIALS DESIGNAT ION 1. DRAFT DICTATED ON 27-03-2012 SR.PS/ 2. DRAFT PLACED BEFORE AUTHOR 27-03-2012 SR.PS/ 3. DRAFT PROPOSED & PLACED BEFORE THE SECOND MEMBER JM/AM 4. DRAFT DISCUSSED/APPROVED BY SECOND MEMBER JM/ AM 5. APPROVED DRAFT COMES TO THE SR.PS/PS SR.PS/ 6. KEPT FOR PRONOUNCEMENT ON SR.PS/ 7. FILE SENT TO THE BENCH CLERK SR.PS/ 8. DATE ON WHICH THE FILE GOES TO THE HEAD CLERK 9. DATE ON WHICH FILE GOES TO THE AR 10. DATE OF DISPATCH OF ORDER