Income Tax Appellate Tribunal - Mumbai
Ito (E) 2(3), Mumbai vs Shree Kashi Math Samsthan , Varanasi, ... on 31 August, 2017
IN THE INCOME TAX APPELLATE TRIBUNAL
MUMBAI BENCH "D", MUMBAI
BEFORE SHRI G.S. PANNU, ACCOUNTANT MEMBER AND
SHRI C.N. PRASAD, JUDICIAL MEMBER,
ITA.No.3808/MUM/2016 (A.Y: 2011-12)
Office of the ITO(Exemp)-2(3) v. Shree Kashi Math Samsthan
513, 5th Floor, Piramal Chambers Regd.Off:- 85, Banaganga Road,
Lalbaug, Mumbai - 400 012 Walkeshwar Shree Kashi Math,
Walkeshwar, Mumbai 400 006
PAN: AAETS 5451 R
(Appellant)` (Respondent)
Assessee by : None
Revenue by : Shri Purushotam Kumar
Date of Hearing : 01.08.2017
Date of Pronouncement : 31.08.2017
ORDER
PER C.N. PRASAD (JM)
1. This appeal is filed by the revenue against the order of the Ld. Commissioner of Income-tax (Appeals), Mumbai-1 dated 14.03.2016 for the Assessment Year 2011-12. The revenue in its appeal has raised the following grounds.
1. 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 disallowing depreciation on fixed assets of ₹.2,61,46,916/- in contravention of the decision of Escorts Ltd. v. UOI 199 ITR 43 wherein it was held that since section 11 of the Income Tax Act provides for deduction capital expenditure incurred on assets 2 ITA.No.3808/MUM/2016 (A.Y: 2011-12) Shree Kashimath Samsthan acquired for the objects of the trust as application and does not specifically & expressly provide for double deduction on account of depreciation on the same very assets acquired from 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.
2. Whether, on the facts and in the circumstances of the case and in law the Ld.CIT(A) erred in allowing the depreciation, when the Delhi High Court in the case of Charanjiv Charitable Trust and Kerala High Court in the case of Lissie Medical Institutions v. CIT 76 DTR (Ker) 372 has decided the issue in the favour of the department after considering the decision of the Hon'ble Supreme Court in the case of Escorts Ltd (199 ITR 43).
3. That the decision of the Hon'ble Bombay High Court in the case of Indian Institute of Banking and Personnel Selection (2003) 264 ITR 110 was not accepted by Revenue, but the appeal was not filed due to the smallness of tax effect. On the issues decided in said order are challenged in Apex court in the case of The Watch Tower Bible & Tract Society of India (2015) and other cases hence the issue of double deduction on account of allowing claim of depreciation have not reached finality.
4. The Appellant prays that, to the extent of above grounds, the order of the Commissioner of Income Tax (Appeals)-1, Mumbai be set aside and that of the Assessing Officer be restored.
5. The appellant craves leave to amend or alter any ground or add a new ground which may be necessary.
2. On a perusal of the grounds it is noticed that the issue in appeal is, as to whether the assessee is entitled for the depreciation on assets and also can be considered such cost of assets as application of the income u/s 11 of the Act and this issue is decided in favour of the assessee by the Jurisdictional High Court and several other High Courts. The Ld.CIT(A) followed the order of the jurisdictional High Court and decided the issue in favour of the assessee.
3ITA.No.3808/MUM/2016 (A.Y: 2011-12) Shree Kashimath Samsthan
3. At the time of hearing none appeared on behalf of the assessee nor any adjournment was sought. Since the issue is settled by the Jurisdictional High Court we proceed to dispose off this appeal on hearing the Ld.DR. The Ld. DR placed reliance on the order of the Assessing Officer.
4. We have heard the Ld. DR perused the order of the Ld.CIT(A). The Ld.CIT(A) followed the decision of the Jurisdictional High Court and directed the Assessing Officer to allow the claim for depreciation as application of income u/s 11 of the Act 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 contentions and submissions of the appellant are being discussed and decided here in under:
i. In grounds of appeal no. 1 and 2 the appellant has challenged disallowance of depreciation by Assessing Officer. In the submissions the appellant has reiterated its submissions made before Assessing Officer, relied upon several judgments including the judgment of Hon'ble Bombay High Court in the case of CIT vs. Institute of Banking 264 ITR 110 and has also dealt with the observations of the Assessing Officer contained in assessment order distinguishing the case laws relied upon therein. 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 Personnel 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 (Born). In that case, the facts were as follows: The 4 ITA.No.3808/MUM/2016 (A.Y: 2011-12) Shree Kashimath Samsthan 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 Tribunal, 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, 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 judgment 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 concerned, 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 claim does not mean double deduction. The deduction earlier claimed is 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 clarified 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 (Born.) is enough."
Respectfully following the above observations of Hon'ble jurisdictional High Court, the Assessing Officer is directed to allow the claim of depreciation as application of income u/s. 11 of the I. T. Act.
5ITA.No.3808/MUM/2016 (A.Y: 2011-12) Shree Kashimath Samsthan iii. Accordingly, Ground of Appeal No. 1 and 2 of appeal are allowed.
iv. With reference to grounds 3 of appeal the appellant has mentioned that the Assessing Officer has allowed the application of income vide order u/s. 154 dated 27.8.2014 and hence this ground of appeal becomes infructuous and dismissed.
v. The appellant also filed additional grounds of appeal. During the course of appellate proceedings, it was submitted (as recorded in the note-sheet dated 8.3.2016) that the additional grounds are covered by the order of AO u/s. 154 dated 27.8.2014 against which appeal is being filed separately. Accordingly, the additional grounds raised are not being admitted since the appellant is opting for the alternate remedy available in the form of appeal against order u/s.
154."
5. Therefore, since the Ld.CIT(A) followed the decision of the Jurisdictional High Court and decided the issue in favour of the assessee we do not see any infirmity in the order passed by the Ld.CIT(A) in allowing the claim of the assessee hence the ground of appeal of revenue is dismissed.
6. In the result appeal of the revenue is dismissed.
Order pronounced in the open court on the 31st August, 2017.
Sd/- Sd/-
(G.S. PANNU) (C.N. PRASAD)
ACCOUNTANT MEMBER JUDICIAL MEMBER
Mumbai / Dated 31/08/2017
VSSGB, SPS
6
ITA.No.3808/MUM/2016 (A.Y: 2011-12)
Shree Kashimath Samsthan
Copy of the Order forwarded to:
1. The Appellant
2. The Respondent.
3. The CIT(A), Mumbai.
4. CIT
5. DR, ITAT, Mumbai
6. Guard file.
//True Copy//
BY ORDER,
(Asstt. Registrar)
ITAT, Mum