DCIT (E) 2(1), MUMBAI V. SUDHIR MADHAVJI LALL WELFARE & EDUCATIONALTRUST, MUMBAI

ITA 824/MUM/2017

• Counselvise Citation: [2017] 128 COUNSELVISE.COM (IT) 0804 (ITAT-MUMBAI)
• Duration Of Justice: 3 month(s) 5 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 09-05-2017
• Appeal Filed By: Department
• Bench Allotted: SMC
• Assessment Year: 2012-2013
• Appeal Filed On: 03-02-2017
• Court: TRIBUNAL
• Department Lawyers: A K KARDA M
• Keywords: Depreciation; Capital expenditure
• Section: 143(3); 12A; 11

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL SMC , BENCH MUMBAI BEFORE SHRI R.C.SHARMA, AM ITA NO. 824 / MUM/20 1 7 ( ASSESSMENT YEAR : 2012 - 13 ) DCIT (E) 2 (1), MUMBAI 400 012 VS. SHRI SUDHIR MADHAVJI LALL WELFARE & EDUCATIONAL TRUST, 3/6A FILKA BUILDING TRUST DAFTARY ROAD, MALAD (WEST), MUMBAI 400 097 PAN/GIR NO. AAETS9844F APPELLANT ) .. RESPONDENT ) REVENUE BY SHRI A.K.KARDAM ASSESSEE BY SHRI ANANT N PAI DATE OF HEARING 09 / 05/ 201 7 DATE OF PRONOUNCEME NT 09 / 05 /201 7 / O R D E R PER R.C.SHARMA (A.M) : THIS IS AN APPEAL FILED BY THE REVENUE AGAINST THE ORDER OF CIT(A) - 1, MUMBAI DATED 17/11/2016 FOR THE A.Y.2012 - 13 IN THE MATTER OF ORDER PASSED U/S.143(3) OF THE IT ACT. 2. THE GRIEVANCE OF REVENUE RE LATES TO DELETING DISALLOWANCE OF DEPRECIATION TO THE ASSESSEE TRUST. 3. RIVAL CONTENTIONS HAVE BEEN HEARD AND RECORD PERUSED. 4. BRIEFL Y THE F ACTS OF THE CASE ARE THAT THE ASSESSEE IS A TRUST REGISTERED WITH DIT (E), MUMBAI U/ S, 12A UNDER REGISTRATION NO. TR/37586 DATED AND ALSO WITH CHARITY COMMISSIONER OF MUMBAI VIDE REGISTRATION NO.E - 11181(MUMBAI). THE ASSESSEE FILED ITS RETURN OF INCOME ON 28.09.2012 ALONG WITH THE INCOME & EXPENDITURE ACCOUNT, BALANCE SHEET AND AUDIT ITA NO. 824/MUM/2017 SHRI SUDHIR MADHAVJI LALL WELFARE & EDUCATIONAL TRUST 2 REPORT IN FORM 10 B DECLARING DEFIC IT OF RS. 43,00,232/ - . HOWEVER, THE A.O COMPLETED THE ASSESSMENT VIDE ORDER DATED 26.03.2015 U/S. 143(3) OF THE L.T. ACT, 19 61 WHEREIN ASSESSEES CLAIM OF DEPRECIATION WAS DISALLOWED BY THE AO. 5. BY THE IMPUGNED ORDER, CIT(A) DELETED THE DISALLOWANCE OF D EPRECIATION AFTER OBSERVING AS UNDER: - 5.2 I HAVE CONSIDERED THE FACTS AND CIRCUMSTANCES OF THE CASE, GONE THROUGH THE ASSESSMENT ORDER OF THE A.O AND THE SUBMISSIONS OF THE APPELLANT AND ALSO DISCUSSED THE CASE WITH THE AR OF THE APPELLANT. THE CONTENTI ONS AND SUBMISSIONS OF THE APPELLANT ARE BEING DISCUSSED AND DECIDED HERE IN UNDER: I. THE ASSESSING OFFICER HAS NOT TREATED THE DEPRECIATION AS APPLICATION OF INCOME ON THE GROUND THAT IT AMOUNTS TO DOUBLE DEDUCTION. APPELLANT HAS SUBMITTED THAT IN A NU MBER OF JUDGMENTS, DEPRECIATION HAD BEEN ALLOWED AS APPLICATION OF INCOME U/S. 11. IN THIS REGARD I FIND THAT THE ISSUE IS DIRECTLY COVERED IN APPELLANT'S FAVOUR BY THE JUDGMENT OF HON'BLE BOMBAY HIGH COURT IN THE CASE OF CIT VS. INSTITUTE OF BANKING PERSO NNEL 264 ITR 110 WHEREIN THE HON'BLE COURT HAS OBSERVED AS UNDER: '4. QUESTION NO. 2 HEREIN IS IDENTICAL TO THE QUESTION WHICH WAS RAISED BEFORE THE BOMBAY HIGH COURT IN THE CASE OF DIRECTOR OF INCOME TAX (EXEMPTION) V. FRAMJEE CAWASJEE INSTITUTE (1993) 109 CTR 463 (BOM). IN THAT CASE, THE FACTS WERE AS FOLLOWS: THE ASSESSEE WAS THE TRUST. IT DERIVED ITS INCOME FROM DEPRECIABLE ASSETS. THE ASSESSEE TOOK INTO ACCOUNT DEPRECIATION ON THOSE ASSETS IN COMPUTING THE INCOME OF THE TRUST. THE INCOME TAX OFFICER HELD THAT DEPRECIATION COULD NOT BE TAKEN INTO ACCOUNT BECAUSE; FULL CAPITAL EXPENDITURE HAD BEEN ALLOWED IN THE YEAR OF ACQUISITION OF THE ASSETS. THE ASSESSEE WENT IN APPEAL BEFORE THE ASSISTANT APPELLATE COMMISSIONER. THE APPEAL WAS REJECTED. THE TRIBUN AL, HOWEVER, TOOK THE VIEW THAT WHEN THE INCOME TAX OFFICER STATED THAT FULL EXPENDITURE HAD BEEN ALLOWED IN THE YEAR OF ACQUISITION OF THE ASSETS, WHAT HE REALLY MEANT WAS THAT THE AMOUNT SPENT ON ACQUIRING THOSE ASSETS HAD BEEN TREATED AS 'APPLICATION OF INCOME' OF THE TRUST IN THE YEAR IN WHICH THE INCOME WAS SPENT IN ACQUIRING THOSE ASSETS. THIS DID NOT MEAN THAT IN COMPUTING INCOME FROM THOSE ASSETS IN SUBSEQUENT YEARS, DEPRECIATION IN RESPECT OF THOSE ASSETS CANNOT BE TAKEN INTO ACCOUNT. THIS VIEW OF THE TRIBUNAL HAS BEEN CONFIRMED BY, ITA NO. 824/MUM/2017 SHRI SUDHIR MADHAVJI LALL WELFARE & EDUCATIONAL TRUST 3 THE BOMBAY HIGH COURT IN THE ABOVE JUDGMENT. HENCE, QUESTION NO. 2 IS COVERED BY THE DECISION OF THE BOMBAY HIGH COURT IN THE ABOVE JUDGMENT. CONSEQUENTLY, QUESTION NO. 2 IS ANSWERED IN THE AFFIRMATIVE I .E., IN FAVOUR OF THE ASSESSEE AND AGAINST, THE DEPARTMENT. II. IN A RECENT JUDGEMENT IN CASE OF DIRECTOR OF INCOME - TAX (EXEMPTIONS), MUMBAI V. SHRI VILE PARLE KELAVANI MANDAL [2015] 58 TAXMANN.COM 288 HON'BLE BOMBAY HIGH COURT HELD: 'AS FAR AS QUESTION NO.4 IS CONCERN ED, THIS COURT HAS REPEATEDLY HELD THAT THERE IS NOTHING LIKE DOUBLE DEDUCTION. WHEN THE ASSESSEE HAS ACQUIRED AN ASSET FROM THE INCOME OF THE TRUST AND THEREAFTER THE AMOUNT THAT IS CLAIMED IS THE DEPRECIATION ON THE USE OF THE ASSETS, SUCH DEPRECIATION C LAIM DOES NOT MEAN DOUBLE DEDUCTION. THE DEDUCTION EARLIER CLAIMED IS TOWARDS TOWARDS APPLICATION OF FUNDS OF THE TRUST FOR ACQUIRING ASSETS. THE LATTER IS DEPRECIATION AND IT IS PERMISSIBLE DEDUCTION CONSIDERING THE USE OF THE ASSETS. THIS HAS BEEN CLARIF IED REPEATEDLY BY THIS COURT. IF ANY REFERENCE IS REQUIRED THEN THE CASE OF CIT V. INSTITUTION OF BANKING PERSONNEL SELECTION (IBPS) [2003] 264 ITR 110/131 TAXMAN 386 (BOM.) IS ENOUGH. III. RESPECTFULLY FOLLOWING THE ABOVE OBSERVATIONS OF HON'BLE JURISDIC TIONAL HIGH COURT, THE ASSESSING OFFICER IS DIRECTED TO ALLOW THE CLAIM OF DEPRECIATION AS APPLICATION OF INCOME U/S. 11 OF THE LT. ACT AFTER DUE VERIFICATION OF FACTS. IV. GROUND OF APPEAL NO. 1 IS THEREFORE AL LOWED 6. RIVAL CONTENTIONS HAVE BEEN HE ARD AND RECORD PERUSED. THE ISSUE UNDER CONSIDERATION IS SQUARELY COVERED BY THE DECISION OF BOMBAY HIGH COURT IN CASE OF INSTITUTE OF BANKING PERSONNEL 264 ITR 110 AND SHRI VILE PARLE KELAVANI MANDAL [2015] 58 TAXMANN.COM 288 . THE TRIBUNAL HAVE CONSISTENT LY FOLLOWED THIS DECISION. RESPECTFULLY FOLLOWING THE ORDER OF BOMBAY HIGH COURT IN CASE OF INSTITUTE OF BANKING PERSONNEL (SUPRA) AND SHRI VILE PARLE KELAVANI MANDAL [SUPRA], I DO NOT FIND ANY REASON TO INTERFERE IN THE ORDER OF CIT(A) DELETING T HE DISALL OWANCE OF DEPRECIATION TO ASSESSEE - TRUST. ITA NO. 824/MUM/2017 SHRI SUDHIR MADHAVJI LALL WELFARE & EDUCATIONAL TRUST 4 7. IN THE RESULT, APPEAL OF REVENUE IS DISMISSED. O RDER PRONOUNCED IN THE OPEN COURT ON THIS 09 / 05 /2017 S D/ - ( R.C.SHARMA ) ACCOUNTANT MEMBER MUMBAI ; DATED 15 / 05 /201 7 KARUNA SR. PS C OPY OF THE ORDER FORWARDED TO : BY ORDE R, ( ASSTT. REGISTRAR) ITAT, MUMBAI 1. THE APPELLANT 2. THE RESPONDENT. 3. THE CIT(A), MUMBAI. 4. CIT 5. DR, ITAT, MUMBAI 6. GUARD FILE. //TRUE COPY//