ITO (E) 1(1), MUMBAI V. CENTRAL CHINMAYA MISSION TRUST, MUMBAI

ITA 8961/MUM/2010

• Counselvise Citation: [2013] 120 COUNSELVISE.COM (IT) 1683 (ITAT-MUMBAI)
• Duration Of Justice: 2 year(s) 2 month(s) 16 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 08-03-2013
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: C
• Next Hearing Date: 17-01-2013
• Assessment Year: 2007-2008
• Appeal Filed On: 22-12-2010
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: CHETAN A KARIA
• Keywords: Depreciation; Capital expenditure
• Section: 143(3); 12A; 11

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCH C, MUMBAI BEFORE SHRI R.K. GUPTA, JUDICIAL MEMBER AND SHRI D. KARUNAKARA RAO, ACCOUNTAT MEMBER I.T.A. NO.8961/M/2010 ASSESSMENT YEAR: 2007-2008 INCOME TAX OFFICER (E)-1(1), R.NO.504, PIRAMAL CHAMBERS, 5 TH FLOOR, PAREL, MUMBAI -400 012. VS. CENTAL CHINMAYA MISSION TRUST, SADEEPANY SANDHANALAYA, SAKI VIHAR ROAD, MUMBAI 400 072. PAN: AAATB 0143 M (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI RAJARSHI DWIVEDY, SR. DR RESPONDENT BY : SHRI CHETAN A KARIA DATE OF HEARING: 17.1.2013 DA TE OF ORDER: 8.3.2013 O R D E R PER D. KARUNAKARA RAO, AM: THIS APPEAL FILED BY THE REVENUE ON 22.2.2010 IS AG AINST THE ORDER OF CIT (A)- 1, MUMBAI 27.8.2010 FOR THE ASSESSMENT YEAR 2007-20 08. 2. IN THIS APPEAL, REVENUE RAISED THE FOLLOWING GROU NDS WHICH READ AS UNDER: 1. ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND I N LAW, THE LD CIT (A) ERRED IN DIRECTING THE AO TO ALLOW DEPRECIATION ON FIXED ASSETS WITHOUT APPRECIATING THE FACT THAT THE CAPITAL EXPENDITURE INCURRED ON ACQUIRING THE ASSETS HAS ALREADY BEEN CLAIMED AS APPLICATION OF INCOME U/S 11 OF THE INCOME TAX ACT, 1961 IN THE CURRENT OR PAST YEARS. 2. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E, AND IN LAW, THE LD CIT (A) ERRED IN NOT APPRECIATING THE FACTS THAT ALLOWING OF DEPRECIATION WILL RESULT IN DOUBLE DEDUCTION WHICH IS CONTRARY TO THE RATIO LAID DOWN BY THE HO NBLE SUPREME COURT IN THE CASE OF ESCORTS LTD. VS. UNION OF INDIA (199 ITR 43 ) AND J.K. SYNTHETICS LTD. VS. UNION OF INDIA (1992) 65 TAXMAN 420. 3. BRIEFLY STATED RELEVANT FACTS OF THE CASE ARE TH AT THE ASSESSEE IS A TRUST REGISTERED U/S 12A OF THE IT ACT, 1961 AND FILED IT S RETURN DECLARING INCOME OF RS. NIL AFTER CLAIMING THE EXEMPTION U/S 11 OF THE IT AC T. AO PROCESSED THE SAME U/S 143(3) OF THE ACT AND MADE AN ADDITION OF RS. 33,36 ,269/- ON ACCOUNT OF DISALLOWANCE OF DEPRECIATION ON THE ASSETS BY RELYI NG ON THE LAW LAID DOWN BY THE HONBLE SUPREME COURT IN THE CASE OF ESCORTS LIMITE D VS. UOI (199 ITR 43). AGGRIEVED, ASSESSEE FILED AN APPEAL BEFORE THE FIRS T APPELLATE PROCEEDINGS. 2 4. DURING THE PROCEEDINGS BEFORE THE FIRST APPELLAT E AUTHORITY, THE ASSESSEE RELIED ON VARIOUS DECISIONS IN SUPPORT OF ITS CONTE NTION THAT THE DISALLOWANCE MADE BY THE AO IS CONTRARY TO LAW AND SUBMITTED THAT THE DEPRECIATION MAY BE ALLOWED. THE DECISIONS RELIED ON BY THE ASSESSEE ARE (I) CIT VS. INSTITUTE OF BANKING PERSONNEL SELECTION (IBPS) BOMBAY HIGH COURT 264 ITR 110- 185 CTR 492 (2) DIT (E) VS. FRAMJEE CAWASJEE INSTITUTE BOMBAY HIGH COURT (109 CTR 463) (BOM) AND (3) EIGHTH INCOME TAX OFFICER VS. TRUSTEES OF MARATHI M ISSION AND VICE VERSA BOM TRIBUNAL-001 ITD 539. ON CONSIDERING ALL THE ALL S UBMISSIONS OF THE ASSESSEE, CIT (A) DIRECTED THE AO TO ALLOW THE DEPRECIATION AS CL AIMED BY THE ASSESSEE AND THE RELEVANT PARA 4.3 IS REPRODUCED HERE UNDER. 4.3. I HAVE CONSIDERED THE APPELLANT SUBMISSIONS AS WELL AS THE ORDER OF THE AO . I HAVE ALSO GONE THROUGH WITH THE CASE LAWS CITED BY THE APPELLANT TRUST AS WELL AS THE AO. CONSIDERING THE SUBMISSION OF THE APPELLANT AS WELL AS THE ORDER OF THE AO, I FIND MERITS IN THE ARGUMENTS OF THE APPELLANT THAT THE D EPRECIATION IS ALLOWABLE ON THE ASSETS OF THE TRUST FOLLOWING THE JUDGMENT OF BOMBA Y HIGH COURT IN THE CASE OF CIT VS. INSTITUTE OF BANKING PERSONNEL SELECTION (IBPS) 2 64 ITR 110, IN SPITE OF THE COST OF WHICH HAS BEEN FULLY ALLOWED AS APPLICATION OF INCO ME U/S 11 IN CURRENT OR PAST YEARS. HENCE, THE INCOME OF THE TRUST IS REQUIRED TO BE CO MPUTED U/S 11 ON COMMERCIAL PRINCIPLES AFTER PROVIDING FOR ALLOWANCE FOR NORMAL DEPRECIATION AND DEDUCTION THEREOF FROM GROSS INCOME OF THE TRUST. IT IS ALSO APPEARS THAT IN THE CASE OF ESCORTS LTD. VS. UNION OF INDIA 199 ITR 43, THE ISSUE WAS COMPLETELY DIFFERENT FROM THE CASE OF THE APPELLANT. THE AR HAS ALSO ARGUED THAT IN THE SAID CASE IT WAS NEITHER REFERRED BY THE DEPARTMENT NOR THE LEARNED JUDGES OF THE BOMBAY HIG H COURT, WHILE DECIDING THE CASE OF CIT VS. INSTITUTE OF BANKING PERSONNEL (264 ITR 110) (BOM.). THEREFORE, AFTER CAREFUL CONSIDERATION OF THE FACTS OF THE CASE, I C ONSIDER IT PROPER AND APPROPRIATE TO DIRECT AO TO ALLOW THE DEPRECIATION AS CLAIMED BY T HE APPELLANT TRUST AS APPLICATION TO THE OBJECT OF THE TRUST RELYING ON T HE JUDGMENT OF JURISDICTIONAL HIGH COURT IN THE CASE OF CIT VS. IN STITUTE OF BANKING PERSONNEL SELECTION (264 ITR 110) . ACCORDINGLY, THE APPEAL OF THE APPELLANT IS ALLOWED. 5. ON PERUSAL OF THE JUDGMENT IN THE CASE OF ESCORT S LTD, SUPRA, WE FIND THE SAME IS NOT DECIDED IN THE CONTEXT OF THE PROVISION S OF SECTION 11 OF THE ACT. ON THE OTHER HAND, THE JUDGMENT OF HONBLE HIGH COURT IN TH E CASE OF INSTITUTE OF BANKING PERSONNEL, SUPRA IS BINDING ON US. CONSIDERING THE ABOVE SETTLED NATURE OF THE ISSUE, WE ARE OPINION THAT THE DIRECTION GIVEN TO THE AO B Y THE CIT (A) TO ALLOW THE DEPRECIATION AS CLAIMED BY THE APPELLANT IS PROPER AND IT DOES NOT CALL FOR ANY INTERFERENCE. ACCORDINGLY, GROUNDS RAISED BY THE R EVENUE ARE DISMISSED . 6. IN THE RESULT, APPEAL OF THE REVENUE IS DISMISSED . 3 ORDER PRONOUNCED IN THE OPEN COURT ON THIS 8 TH DAY OF MARCH, 2013. SD/- SD/- (R.K. GUPTA) (D. KARUNAKARA RAO) JUDICIAL MEMBER ACCOUNTANT MEMBER DATE : 8.3.2013 AT :MUMBAI OKK COPY TO : 1. THE APPELLANT. 2. THE RESPONDENT. 3. THE CIT (A), CONCERNED. 4. THE CIT CONCERNED. 5. THE DR C, BENCH, ITAT, MUMBAI. 6. GUARD FILE. // TRUE COPY// BY ORDER ASSISTANT REGISTRAR ITAT, MUMBAI BENCHES, MUMBAI