ADIT (E) II (1), MUMBAI V. GHARDA FOUNDATION, MUMBAI

ITA 6619/MUM/2012

• Counselvise Citation: [2014] 140 COUNSELVISE.COM (IT) 75272 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 2 month(s) 19 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 20-01-2014
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: G
• Next Hearing Date: 20-01-2014
• Assessment Year: 2009-2010
• Appeal Filed On: 31-10-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: B P K PANDA
• Assessee Lawyers: A H DALAL
• Keywords: Capital asset; Depreciation; Charitable institution
• Section: 12A; 32

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL 'G' BENCH, MUMBAI BEFORE SHRI D. MANMOHAN, VICE PRESIDENT AND SHRI N.K. BILLAIYA, ACCOUNTANT MEMBER ITA NO. 6619/MUM/2012 (ASSESSMENT YEAR: 2009-10) A D I T (E) - II(1) M/S. GHARDA FOUNDATION 5TH FLOOR, PIRAMAL CHAMBERS 48, HILL ROAD, GHARDA H OUSE LALBAUG, MUMBAI 400012 VS. BANDRA (E), MUMBAI 400050 PAN - AAATG0260C APPELLANT RESPONDENT APPELLANT BY: SHRI B.P.K. PANDA RESPONDENT BY: SHRI A.H. DALAL DATE OF HEARING: 20.01.2014 DATE OF PRONOUNCEMENT: 20.01.2014 O R D E R PER D. MANMOHAN, V.P. THIS APPEAL BY THE REVENUE IS DIRECTED AGAINST THE ORDER DATED 06.08.2012 PASSED BY THE CIT(A)-1, MUMBAI AND IT PE RTAINS TO A.Y. 2009-10. 2. THE FOLLOWING GROUNDS WERE URGED BY THE REVENUE: - 1. THAT ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD. CIT(A) ERRED IN DIRECTING THE AO TO ALLOW THE C LAIM OF DEPRECIATION AMOUNTING TO RS.2,73,80,195/-, RELYING ON THE DECISION OF THE HON'BLE BOMBAY HIGH COURT IN THE CA SE OF CIT VS. INSTITUTE OF BANKING PERSONNEL SERVICES REPORTED IN 264 ITR 110 (BOM) IGNORING THE RATIO OF JUDGEMENT OF HON'BLE S UPREME COURT IN THE CASE OF ESCORTS LTD. VS. UNION OF INDIA (199 IT R 43) WHEREIN HON'BLE SUPREME COURT HAS HELD THAT DOUBLE DEDUCTIO N CANNOT BE PRESUMED IF THE SAME IS NOT SPECIFICALLY PROVIDED B Y LAW. 2. THAT WITHOUT PREJUDICE TO GROUND NO. 1 ABOVE, TH E LD. CIT(A) OUGHT TO HAVE HELD THAT DEDUCTION OF DEPRECIATION U/S 32 WHICH FALLS UNDER THE HEAD PROFIT AND GAINS OF BUSINESS AND PR OFESSION OF THE INCOME TAX ACT, 1961 WOULD NOT BE AVAILABLE TO THE ASSESSEE TRUST WHOSE INCOME IS OTHERWISE NOT ASSESSABLE UNDE R THE ABOVE HEAD. 3. THAT WITHOUT PREJUDICE TO GROUND NOS. 1AND 2 ABOVE, THE LD. CIT(A) OUGHT TO HAVE REJECTED THE CLAIM OF DEPRECIA TION, SINCE THE WRITTEN DOWN VALUE OF THE ASSET, THE COST OF WHICH HAS ALREADY ITA NO. 6619/MUM/2012 M/S. GHARDA FOUNDATION 2 BEEN ALLOWED AS DEDUCTION ON ACCOUNT OF APPLICATION OF INCOME , WOULD BE TREATED AS NIL FOR THE PURPOSE OF DEPRECIA TION. 3. THE ASSESSEE IS ADMITTEDLY A CHARITABLE TRUST, DULY REGISTERED UNDER SECTION 12A OF THE ACT. IN THE RETURN OF INCOME THE ASSESSEE DECLARED TOTAL INCOME/DEFICIT AT NIL. ASSESSEE HAS CLAIMED AN AMOU NT OF ` 2,74,32,935/- ON ACCOUNT OF DEPRECIATION UNDER SECTION 11(1)(A) OF T HE ACT. THE AO REJECTED THE CLAIM ON THE GROUND THAT THE SAME IS CONTRARY T O THE PRINCIPLES LAID DOWN BY THE APEX COURT IN THE CASE OF ESCORTS LTD. (199 ITR 43), I.E. THAT ALLOWING DEPRECIATION WOULD AMOUNT TO CLAIM OF DOUB LE DEDUCTION. 4. AGGRIEVED, ASSESSEE CONTENDED BEFORE THE CIT(A) THA T EXPENDITURE ON PURCHASE OF ASSETS IS NOT CLAIMED AS REVENUE EXPEND ITURE AND ONLY DEPRECIATION IS CLAIMED. HE ALSO RELIED ON THE DECI SION OF THE HON'BLE BOMBAY HIGH COURT IN THE CASE OF INSTITUTE OF BANKI NG 264 ITR 114 IN SUPPORT OF HIS CONTENTION. THE LEARNED CIT(A) FOLLO WED THE DECISION OF THE HON'BLE BOMBAY HIGH COURT (SUPRA) AND ALLOWED THE C LAIM OF DEPRECIATION. AGGRIEVED, REVENUE IS IN APPEAL BEFORE US. 5. THE LEARNED D.R. SUBMITTED THAT THE REVENUE HAS NOT ACCEPTED THE DECISION OF THE HON'BLE BOMBAY HIGH COURT IN THE CA SE OF CIT VS. INSTITUTE OF BAKING AND FURTHER SUBMITTED THAT THE ISSUE FALLS W ITHIN THE RATIO LAID DOWN BY THE APEX COURT IN THE FOLLOWING CASES: - I. ESCORTS LIMITED VS. UNION OF INDIA 199 ITR 43 II. J.K. SYNTHETICS LTD. VS. UNION OF INDIA 65 TAXMAN 4 20 6. ON THE OTHER HAND, THE LEARNED COUNSEL FOR THE ASSE SSEE SUBMITTED THAT THE ASSESSEE HAS NOT CLAIMED ANY DOUBLE DEDUCT ION SINCE THE EXPENDITURE INCURRED ON PURCHASE OF CAPITAL ASSETS WAS NOT TREATED AS APPLICATION OF INCOME FOR CHARITABLE PURPOSE; IN FA CT ONLY DEPRECIATION ON THE COST OF ASSETS WAS CLAIMED AS DEDUCTION. AT ANY RAT E, THE ISSUE IS EVEN OTHERWISE COVERED BY THE DECISION OF THE HON'BLE BO MBAY HIGH COURT (SUPRA). 7. WE HAVE CAREFULLY CONSIDERED THE RIVAL SUBMISSIONS AND PERUSED THE RECORD. IT MAY BE NOTICED THAT IN THE GROUNDS OF AP PEAL FILED BEFORE THE LEARNED CIT(A) THE ASSESSEE RAISED A SPECIFIC ISSUE (SEE GROUND NO. 2.2) TO CONTEND THAT THE APPELLANT HAD ONLY CLAIMED DEPRECI ATION ON FIXED ASSETS ITA NO. 6619/MUM/2012 M/S. GHARDA FOUNDATION 3 AND HAD NOT CLAIMED ANY DEDUCTION IN RESPECT OF ACT UAL COST OF FIXED ASSETS EXPENDED BY IT AND THUS THE QUESTION OF DOUBLE DEDU CTION DOES NOT ARISE. EVEN OTHERWISE THE ISSUE STANDS SQUARELY COVERED BY THE DECISION OF THE HON'BLE BOMBAY HIGH COURT. UNDER THESE CIRCUMSTANCE S I DO NOT FIND ANY INFIRMITY IN THE ORDER PASSED BY THE LEARNED CIT(A) . 8. IN THE RESULT, APPEAL OF THE REVENUE IS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 20 TH JANUARY, 2014. SD/- SD/- (N.K. BILLAIYA) (D. MANMOHAN) ACCOUNTANT MEMBER VICE PRESIDENT MUMBAI, DATED: 20 TH JANUARY, 2014 COPY TO: 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT(A) I, MUMBAI 4. THE DIRECTOR OF INCOME TAX (E), MUMBAI 5. THE DR, G BENCH, ITAT, MUMBAI BY ORDER //TRUE COPY// ASSISTANT REGISTRAR ITAT, MUMBAI BENCHES, MUMBAI N.P.