DR.MOHANLAL PIRAMAL CHARITABLE TRUST, MUMBAI V. INCOME TAX OFFICER (EXEMPTION) 2(1), MUMBAI

ITA 7100/MUM/2017

• Counselvise Citation: [2018] 126 COUNSELVISE.COM (IT) 0310 (ITAT-MUMBAI)
• Duration Of Justice: 2 month(s) 8 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 22-02-2018
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Assessment Year: 2012-2013
• Appeal Filed On: 14-12-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: ARJU GORADIA
• Keywords: Depreciation; Charitable institution
• Section: 12A; 11

Judgement Text

THE INCOME TAX APPELLATE TRIBUNAL SMC BENCH, MUMBAI BEFORE SHRI B.R. BASKARAN (AM) I.T.A. NO. 7100 /MUM/ 2017 (ASSESSMENT YEAR 20 12 - 13 ) DR. MOHANLAL PIRAMAL CHARITABLE TRUST 401 - 404, B WING NEELAM CENTRE HIND CYCLE ROAD WORLI, MUMBAI - 400 030. PAN : A AATM0167E V S . ITO (EXEMPTION) - 2(1) PIRAMAL CHAMBERS LALBAGUG PAREL MUMBAI - 400 012. ( APPELLANT ) ( RESPONDENT ) ASSESSEE BY SHRI RONAK DOSHI DEPARTMENT BY MS. ARJU GORADIA DATE OF HEARING 2 2 . 2 . 201 8 DATE OF PRONOUNCEMENT 22 . 2 . 201 8 O R D E R THE APPEAL FILED BY THE ASSESSEE IS DIRECTED AGAINST THE ORDER DATED 1.9.2017 PASSED BY THE LEARNED CIT(A) - 1, MUMBAI AND IT RELATES TO A.Y. 2012 - 13. THE ASSESSEE IS AGGRIEVED BY THE DECISION OF THE LEARNED CIT(A) IN CONFIRMING THE DISALLOWANCE OF DE PRECIATION CLAIM OF RS. 5,71,121/ - , WHICH WAS CLAIMED BY TRANSFERR ING THE AMOUNT TO SINKING FUND. 2. I HEARD THE PARTIES AND PERUSED THE RECORD. THE ASSESSEE IS A TRUST REGISTERED U/S. 12A OF THE I.T. ACT. THE ASSESSEE FILED ITS RETURN OF INCOME DECLARING TOTAL INCOME AT NIL BY AVAILING EXEMPTION U/S. 11 OF THE ACT. THE ASSESSING OFFICER, HOWEVER, COMPLETED THE ASSESSMENT BY DETERMINING TOTAL INCOME AT RS. 13.03 LAKHS. THE ASSESSEE HAD CLAIMED SET OFF DEFICIT OF EARLIER YEARS AS DEDUCTION. THE ASSESSEE HAD ALSO CLAIMED DEPRECIATION OF RS. 6.18 LAKHS AND ALSO DEPRECIATION BY WAY OF TRANSFER OF SINKING FUND OF RS. 5.71 LAKHS AS APPLICATION OF INCOME. THE ASSESSING OFFICER DID NOT ALLOW SET OFF DEFICIT OF EARLIER YEARS. THE ASSESSING OFFICER ALSO DID NOT ALLOW BOTH DR. MOHANLAL PIRAMAL CHARITABLE TRUST 2 DEPRECIATION CLAIM S BY HOLDING THAT THE SAME WOULD AMOUNT TO DOUBLE DEDUCTION. 3. IN THE APPEAL FILED BEFORE THE LEARNED CIT(A), THE FIRST APPELLATE AUTHORITY ALLOWED THE CLAIM OF SET OFF DEFICIT OF EARLIER YEARS BY FOLLOWING DECISION RENDERED BY H ON'BLE BOMBAY HIGH COURT IN THE CASE OF CIT VS. INSTITUTE OF BANKING PERSONNEL SE LECTION (264 ITR 110). THE LEARNED CIT(A) ALSO ALLOWED THE DEPRECIATION CLAIM OF RS. 6.18 LAKHS BY FOLLOWING THE DECISION RENDERED IN THE CASE OF INSTITUTE OF BANKING PERSONNE L SELECTION (SUPRA). WITH REGARD TO CLAIM OF RS. 5.71 LAKHS, WHICH WAS CLAIMED BY WAY OF TRANSFER OF SINKING FUND, THE LEARNED CIT(A) TREATED THE SAME AS PROVISION FOR REPLACEMENT OF ASSET AND ACCORDINGLY CONFIRMED THE DISALLOWANCE OF THE SAME. THE ASSESS EE IS AGGRIEVED BY THE SAID DECISION OF LD CIT(A). 4. THE LEARNED AR SUBMITTED THAT THE ASSESSEE HAS FOLLOWED TWO DIFFERENT METHODS OF CLAIMING DEPRECIATION. IN RESPECT OF MOVABLE ASSETS, IT HA S CL AIMED DEPRECIATION AND DEDUCTED THE SAME FROM THE WDV VA LUE OF ASSETS. HOWEVER, IN RESPECT OF IMMOVABLE PROPERTIES, THE ASSESSEE HAS CREATED SINKING FUND AND HENCE DEPRECIATION PERTAINING TO IMMOVABLE PROPERTY HAS BEEN CREDITED TO SINKING FUND ACCOUNT INSTEAD OF REDUCING THE SAME FROM COST OF ASSET. THE LEARNED AR SUBMITTED THAT SINKING FUND METHOD OF CLAIMING DEPRECIATION IS ALSO ONE OF THE RECOGNIZED METHOD S OF CHARGING DEPRECIATION UNDER ACCOUNTING PRINCIPLES . A CCORDINGLY HE SUBMITTED THAT THE DECISION RENDERED BY HON'BLE BOMBAY HIGH COURT IN THE CASE OF INST ITUTE OF BANKING PERSONNEL SELECTION (SUPRA) WOULD EQUALLY APPLY TO THIS CLAIM ALSO. HE FURTHER SUBMITTED THAT THE DECISION RENDERED BY HON'BLE BOMBAY HIGH COURT HAS S INCE BEEN APPROVED BY HON'BLE SUPREME COURT IN THE CASE OF RAJASTHAN AND GUJARAT I CHARITA BLE F OU ND ATION P OONA (CIVIL APPEAL NO. 7186 OF 2014 DATED 13.12.2017). 5. ON THE CONTRARY, LEARNED DR SUPPORTED THE ORDER PASSED BY THE LEARNED CIT(A). DR. MOHANLAL PIRAMAL CHARITABLE TRUST 3 6. HAVING HEARD THE RIVAL CONTENTIONS, I AM OF THE VIEW THAT THERE IS MERIT IN THE CONTENTION S OF TH E ASSESSEE. A P ERUSAL OF THE FINANCIAL STATEMENT S FURNISHED BY THE ASSESSEE WOULD SHOW THAT THE ASSESSE E HAS CLAIMED DEPRECIATION ON MOVABLE ASSETS BY REDUCING AMOUNT OF DEPRECIATION FROM THE WDV VALUE OF THE ASSET. HOWEVER, IN RESPECT OF IMMOVABLE ASSET S , THE ASSESSEE HAS CREDITED DEPRECIATION AMOUNT TO THE SINKING FUND INSTEAD OF REDUCING THE SAME FROM THE COST OF ASSET. AS SUBMITTED BY LEARNED AR, SINKING FUND METHOD OF DEPRECIATION IS ALSO ONE OF THE RECOGNIZED METHOD S OF DEPRECIATION UNDER ACCOUNTING PRINCIPLES U NDER THIS METHOD, THE DEPRECIATION AMOUNT IS CREDITED TO SINKING FUND ACCOUNT INSTEAD OF REDUCING THE SAME FROM THE COST OF ASSETS. H ENCE THERE IS MERIT IN THE CONTENTIONS OF THE ASSESSEE THAT THE DECISION RENDERED BY HON'BLE HIGH COURT IN THE CASE OF INSTITUTE OF BANKING PERSONNEL SELECTION (SUPRA), WHICH HAS SINCE BEEN APPROVED BY HON'BLE SUPREME COURT IN THE CASE OF RAJASTHAN AND GUJARATI CHARITABLE FOUNDATION POONA (SUPRA) , WOULD APPLY TO THE DEPRECIATION CLAIM OF RS. 5.71 LAKHS CLAIMED AGA INST IMMOVABLE PROPERTY. ACCORDINGLY, I SET ASIDE THE ORDER PASSED BY THE LEARNED CIT(A) AND DIRECT THE ASSESSING OFFICER TO TREAT THE CLAIM OF RS. 5.71 LAKHS AS APPLICATION OF INCOME U/S. 11 OF THE ACT. 7. IN THE RESULT, APPEAL FILED BY THE ASSESSEE IS A LLOWED. ORDER HAS BE EN PRONOUNCED IN THE COURT ON 2 2 .2. 201 8 . SD/ - (B.R.BASKARAN) ACCOUNTANT MEMBER MUMBAI ; DATED : 2 2 / 2 / 20 1 8 COPY OF THE ORDER FORWARDED TO : 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT(A) 4. CIT 5. DR, ITAT, MUMBAI DR. MOHANLAL PIRAMAL CHARITABLE TRUST 4 6. GUARD FILE. BY ORDER, //TRUE COPY// ( SENIOR P RIVATE S ECRETARY ) PS ITAT, MUMBAI