ITO (E) 2(3), MUMBAI V. YASHWANTRAO CHAVAN SHIKSHAN PRASARAK MANDAL, MUMBAI

ITA 6569/MUM/2016

• Counselvise Citation: [2017] 127 COUNSELVISE.COM (IT) 9978 (ITAT-MUMBAI)
• Duration Of Justice: 8 month(s) 1 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 10-07-2017
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: E
• Next Hearing Date: 15-06-2017
• Assessment Year: 2012-2013
• Appeal Filed On: 09-11-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: DR A K NAYAK
• Keywords: Depreciation; Tax effect; Capital expenditure
• Section: 11

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL 'E' BENCH, MUMBAI BEFORE SHRI P K BANSAL, VICE PRESIDENT AND SHRI PAWAN SINGH, JUDICIAL MEMBER ITA NO.6569 /MUM/2016 (ASSESSMENT YEAR: 2012-13) INCOME TAX OFFICER - (E)2(3) VS. SHRI YASHWANTRAO CHAVAN ROOM NO. 513, PIRAMAL CHAMBERS, LAL BAUG, PAREL MUMBAI 400012 SHIKSHAN PRASARAK MANDAL 92/B, GEETA BUILDING, 2ND FLOOR OPP. SION BUS DEPOT, SION (E) MUMBAI 400022 PAN AAETS2060G APPELLANT RESPONDENT APPELLANT BY: DR. A.K. NAYAK RESPONDENT BY: MS. CHAITEE LONDHE DATE OF HEARING: 15.06.2017 DATE OF PRONOUNCEMENT: 10.07.2017 O R D E R PER P.K. BANSAL, VICE PRESIDENT THIS APPEAL HAS BEEN FILED BY REVENUE AGAINST THE O RDER OF THE CIT(A)- 1, MUMBAI DATED 12.08.2016 FOR A.Y. 2012-13. 2. THE GROUNDS RAISED BY THE REVENUE IN THIS APPEAL RE ADS AS UNDER: - 1. WHETHER ON THE FACTS OF THE CASE AND IN LAW THE LD. CIT(A) ERRED IN ALLOWING THE CARRY FORWARD OF DEFICIT OF RS. 5,9 3,48,771/- AND ALLOWING SET OFF AGAINST THE INCOME OF THE SUBSEQUE NT YEARS. 2. WHETHER, ON THE FACTS AND IN THE CIRCUMSTANCES O F 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 PERMI TTING ALLOWANCE OF SUCH CLAIM. 3. WHETHER, ON THE FACTS AND IN THE CIRCUMSTANCES O F THE CASE AND IN LAW, THE LD CIT(A) ERRED IN ALLOWING THE CLAIM O F THE ASSESSEE FOR CARRY FORWARD OF THE SAID DEFICIT BY RELYING UP ON THE JUDGMENT OF HON'BLE BOMBAY HIGH COURT IN THE CASE OF INSTITU TE OF BANKING ITA NO. 6569/MUM/2016 SHRI YASHWANTRAO CHAVAN SHIKSHAN PRASARK MANDAL 2 PERSONNEL SELECTION, IGNORING THE FACT THAT THE DEP ARTMENT HAS NOT ACCEPTED THE SAID DECISION OF THE JURISDICTIONA L HIGH COURT ON MERIT OF THE CASE, BUT DUE TO SMALLNESS OF TAX EFFE CT 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) AS WELL AS IN OTHER CASES AND THE MATTER IS PENDING FOR ADJUDICATION BEFORE THE HON'B LE SUPREME COURT. 4. WHETHER ON THE FACTS OF THE CASE AND IN LAW THE LD.CIT(A) ERRED IN ALLOWING THE APPEAL OF THE ASSESSEE ON ACCOUNT OF D ISALLOWING DEPRECIATION ON FIXED ASSETS OF RS. 2,06,73,822/- I N CONTRAVENTION OF THE DECISION OF ESCORTS LTD. VS. U OI 199 ITR 43 WHEREIN IT WAS HELD THAT SINCE SECTION 11 OF THE IN COME TAX ACT PROVIDES FOR DEDUCTION CAPITAL EXPENDITURE INCURRED ON ASSETS ACQUIRED FOR THE OBJECTS OF THE TRUST AS APPLICATIO N AND DOES NOT SPECIFICALLY & EXPRESSLY PROVIDE FOR DOUBLE DEDUCTI ON ON ACCOUNT OF DEPRECIATION ON THE SAME VERY ASSETS ACQUIRED FR OM 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. 5. WHETHER, ON THE FACTS AND IN THE CIRCUMSTANCES O F THE CASE AND IN LAW THE LD CIT(A) ERRED IN ALLOWING THE APPEAL, WHEN THE DELHI HIGH COURT IN THE CASE OF CHARANJIV CHARITABLE TRUS T AND KERALA HIGH COURT IN THE CASE OF LISSIE MEDICAL INSTITUTIO NS VS CIT 76 DTR (KER) 372 HAS DECIDED THE ISSUE IN THE FAVOUR O F THE DEPARTMENT AFTER CONSIDERING THE DECISION OF HON'BL E SUPREME COURT IN THE CASE OF ESCORTS LTD (199 JTR 43). 6. WHETHER, ON THE FACTS AND IN THE CIRCUMSTANCES O F THE CASE AND IN LAW THE LD CIT(A) ERRED IN RELYING UPON THE JUDG MENT OF HON'BLE HIGH COURT IN THE CASE OF CIT VS. INSTITUTE OF BANK ING PERSONNEL SELECTION WITHOUT APPRECIATING THE FACT THAT DEPART MENT HAS NOT ACCEPTED THE DECISION ON MERIT, BUT DUE TO SMALLNES S OF TAX EFFECT APPEAL WAS NOT FILED BEFORE HON'BLE SUPREME COURT. ALSO, THE ID CIT(A) ERRED IN RELYING UPON THE JUDGMENT OF HON'BL E HIGH COURT IN THE CASE OF CIT VS. SHRI VILE-PANE KELVANI MANDA L, WITHOUT APPRECIATING THE FACT THAT DEPARTMENT HAS NOT ACCEP TED THE DECISION ON MERIT AND FILED SLP, BUT SUBSEQUENTLY W ITHDRAWN THE SAME AS THERE WAS NO CLAIM OF DEPRECIATION ON EXEMP TED ASSETS. HOWEVER, THE ISSUE IS PENDING FOR ADJUDICATION BEFO RE HON'BLE SUPREME COURT IN OTHER CASES. 3. THE FIRST ISSUE BEFORE US IN THIS APPEAL IS WHETHER THE SURPLUS EARNING DURING THE IMPUGNED ASSESSMENT YEAR CAN BE SET OFF AGAINST THE DEFICIT INCURRED BY THE ASSESSEE IN THE EARLIER YEA R. ITA NO. 6569/MUM/2016 SHRI YASHWANTRAO CHAVAN SHIKSHAN PRASARK MANDAL 3 4. WE HEARD THE RIVAL SUBMISSIONS AND GONE THROUGH THE ORDERS OF THE TAX AUTHORITIES BELOW. WE NOTED THAT THIS ISSUE IS DULY COVERED BY THE DECISION OF THE HON'BLE JURISDICTIONAL HIGH COURT I N THE CASE OF CIT VS. INSTITUTE OF BANKING PERSONNEL SELECTION 264 ITR 11 0 IN WHICH THE HON'BLE HIGH COURT CONCURRING WITH THE DECISION OF THE HON' BLE GUJARAT HIGH COURT IN THE CASE OF CIT VS. SWETAMBER MURTI PUJAK JAIN M ANDAL 211 ITR 293 (GUJ) HELD AS UNDER: - INCOME DERIVED FROM THE TRUST PROPERTY HAS ALSO GO T TO BE COMPUTED ON COMMERCIAL PRINCIPLES AND IF COMMERCIAL PRINCIPL ES ARE APPLIED THEN ADJUSTMENT OF EXPENSES INCURRED BY THE TRUST FOR CH ARITABLE AND RELIGIOUS PURPOSES IN THE EARLIER YEARS AGAINST THE INCOME EARNED BY THE TRUST IN THE SUBSEQUENT YEAR WILL HAVE TO BE RE GARDED AS APPLICATION OF INCOME OF THE TRUST FOR CHARITABLE A ND RELIGIOUS PURPOSES IN THE SUBSEQUENT YEAR IN WHICH ADJUSTMENT HAS BEEN MADE HAVING REGARD TO THE BENEVOLENT PROVISIONS CONTAINED IN S. 11 AND THAT SUCH ADJUSTMENT WILL HAVE TO BE EXCLUDED FROM THE INCOME OF THE TRUST UNDER S. 11(1)(A). 5. NO CONTRARY DECISION WAS BROUGHT TO OUR KNOWLEDGE. WE, THEREFORE, CONFIRM THE ORDER OF THE CIT(A). REVENUES GROUND O N THIS ISSUE IS DISMISSED. 6. THE SECOND ISSUE INVOLVED IN THIS APPEAL RELATES TO ALLOWANCE OF DEPRECIATION ON FIXED ASSETS EVEN THOUGH THE EXPEND ITURE INCURRED ON THE FIXED ASSETS HAVE BEEN CLAIMED AS FOR THE OBJECTIVE S OF THE TRUST. 7. THIS ISSUE IS ALSO DULY COVERED BY THE DECISIONS OF THE HON'BLE BOMBAY HIGH COURT IN THE CASE OF CIT VS. INSTITUTE OF BANKING PERSONNEL SELECTION 264 ITR 110 IN WHICH THE HON'BLE HIGH COU RT HELD AS UNDER: - ..... HOWEVER, THE INCOME OF THE TRUST IS REQUIRED TO BE COMPUTED UNDER S. 11 ON COMMERCIAL PRINCIPLES AFTER PROVIDIN G FOR ALLOWANCE FOR NORMAL DEPRECIATION AND DEDUCTION THEREOF FROM GROS S INCOME OF THE TRUST. IN VIEW OF THE AFORESTATED JUDGMENT OF THE B OMBAY HIGH COURT, WE ANSWER QUESTION NO. 1 IN THE AFFIRMATIVE I.E., I N FAVOUR OF THE ASSESSEE AND AGAINST THE DEPARTMENT. RESPECTFULLY FOLLOWING THE SAID DECISION OF THE HON 'BLE JURISDICTIONAL HIGH COURT WE CONFIRM THE ORDER OF THE CIT(A) ON THIS IS SUE. ITA NO. 6569/MUM/2016 SHRI YASHWANTRAO CHAVAN SHIKSHAN PRASARK MANDAL 4 8. IN THE RESULT, APPEAL FILED BY REVENUE IS DISMISSED . ORDER PRONOUNCED IN THE OPEN COURT ON 10 TH JULY, 2017. SD/ - SD/ - (PAWAN SINGH) (P.K. BANSAL) JUDICIAL MEMBER VICE PRESIDENT MUMBAI, DATED: 10 TH JULY, 2017 COPY TO: 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT(A) -1, MUMBAI 4. THE CIT (EXEMPTIONS) 5. THE DR, E BENCH, ITAT, MUMBAI BY ORDER //TRUE COPY// ASSISTANT REGISTRAR ITAT, MUMBAI BENCHES, MUMBAI N.P.