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Income Tax Appellate Tribunal, “B” BENCH, MUMBAI
AadoSa / O R D E R महावीर स िंह, न्याययक दस्य/ PER MAHAVIR SINGH, JM:
This appeal filed by the Revenue is arising out of the order of Commissioner of Income Tax (Appeals)-1, Mumbai [in short CIT(A)], Appeal No. CIT(A)-I/IT-E1(119)/2011-12 vide order dated 30.10.2012. The Assessment was framed by the ADIT(E)-1(1), Mumbai (in short ‘ADIT/ ITO 2 / AO’) for the A.Y. 2009-10 vide order dated 14.12.2011 under section 143(3) of the Income Tax Act, 1961 (hereinafter ‘the Act’).
The first issue in this appeal of Revenue is against the order of CIT(A) allowing exemption under section 11A of the Act ignoring the fact that the assessee is a legal authority and cannot be considered as charitable trust within the meaning of section 11 to 13 of the Act and is engaged commercial activity of development and sale of land. For this Revenue has raised the following ground No. 1 and 2: -
1. That on the facts and in the circumstances of the case and in law, the Ld. CIT(A) erred in allowing the exemption under section 11 of the Income Tax, Act 1961, ignoring the fact that the assessee within the meaning of section 11 to 13 of the Income Tax Act in view of the elaborate discussion of the issues made by the AO and facts and circumstances of the case.
2. That on the facts and circumstances of the case and in law, the ld. CIT(A) erred in holding that the activities of the assessee are charitable in nature, not appreciating AO’s findings on facts that the assessee is engaged in the commercial activity of development & sale of land.”
3. At the outset, the learned Counsel for the assessee stated that the issue is covered in assessee’s own case by Tribunals decision in for AY 2006-07 vide order dated 29.06.2012 and also for 3 AY 2007-08 in ITA No 5758/Mum/2010 vide order dated 16.11.2011, wherein Tribunal considered the earlier year decision and allowed the claim of assessee vide Para 3 as under: - “3. We have perused the records and considered the matter carefully. The dispute is regarding allowability of deduction under section 11 of the Income Tax Act in case of the assessee. There is no dispute that the assessee has been registered under section 12AA of the Income tax Act by the DIT(E) which means that charitable character of the assessee is not in dispute. Therefore, exemption under section 11 in case of the assessee can not be denied. We also find that identical dispute had arisen in case of SRA in which the Tribunal in ITA No.5150/Mum/2010 noted that charitable purpose included advancement of any other job of general public utility. Moreover the institution had also been registered under section 12A by the department which also confirmed its charitable status. The Tribunal, therefore, held that exemption under section 11 could not be denied. The facts in case of the assessee are identical, therefore, respectfully following the decision of the Tribunal in the case of SRA (supra), we see no infirmity in the order of CIT(A) allowing the claim of exemption under 4 section 11 to the assessee. Accordingly the order of CIT(A) is upheld.”
The learned Counsel for the assessee also referred to the judgement of Hon’ble Bombay High Court in assessee’s own case in Income Tax Appeal No. 121 of 2013 vide order dated 21.01.2015, wherein Hon’ble High Court has considered the issue vide Para 2 to Para 3 as under: - “2. This appeal relates to Assessment Year 2006-07. The appellant-Revenue has framed the following question of law for our consideration: -
(1) Whether on the facts and in the circumstances of the case and in law, the Tribunal was right in confirming the order of the Commissioner of Income Tax (Appeals) allowing exemption under Section 11 of the Income Tax Act,1961, ignoring the fact that MMRDA continues to be local authority in the eyes of law and it cannot be considered as a valid Trust within the meaning of Sections 11 to 13 of the Income Tax Act in view of the elaborate discussion of the issues made by the Assessing Officer and facts and circumstances of the case ?
The Tribunal by the impugned order dismissed the Revenue's appeal by placing 5 reliance upon the decision of the Supreme Court in the case of “CIT Vs. Gujarat Maritime Board, (295 ITR 56)” and the decisions of Co-ordinate Benches of the Tribunal in the case of Slum Rehabilitation Authority (SRA) and Maharashtra Housing and Area Development Authority (MHADA). In fact, while allowing the appeal, the impugned order records as under:-
“14. The facts of assessee are similar to the other two institutions considered by the Coordinate Bench, as they were also the local authority created by the Govt. of Maharashtra and consequent to the amendment brought out in financial year 2002 to the provision of section 10(20) and 10(20A), the entities become taxable. Subsequently, assessee’s applied for exemption and got registration under section 12AA. Since the facts are similar, respectfully following the Coordinate Bench decision, we uphold the orders of the CIT (A) on this issue and dismiss the Revenue Grounds. Accordingly, the Revenue appeal is dismissed.
3. Mr.Malhotra, learned Counsel for the Revenue very fairly informs us that the Revenue's appeals against the orders of the Tribunal passed in the cases of MHADA and 6 SRA were dismissed by this Court by order dated 8.3.2013 and 8.8.2014 respectively.”
Since, the issue is exactly identical and decided by Hon’ble Bombay High court that assessee is entitled for exemption under section 11 of the Act. We find no infirmity in the order of CIT(A) and hence, this issue of revenue’s appeal is dismissed.
The next issue in this appeal of Revenue is against the order of CIT(A) allowing the claim of deprecation. For this Revenue has raised the following ground No. 3: -
3. That on the facts and circumstances of the case and in law, the ld. CIT(A) erred in directing the AO to allow the claim of depreciation amounting to ₹ 4,21,17,930/- relying on the decision of the Hon’ble Bombay High Court in the case of CIT vs. Institute of Banking Personnel Services reported in 264 ITR 110 (Bom) ignoring the ratio of judgement of Hon’ble Supreme Court has held that double deduction cannot be presumed if the same is not specifically provided by law, in addition to normal deduction.”
At the outset, the learned Counsel for the assessee stated that the CIT(A) has considered the decision of Hon’ble Bombay High Court in the case of CIT vs. Institute of Banking Personnel Selection (2003) 264 ITR 110 (Bom) and allowed the claim of depreciation vide Para 6.2 and 6.3 as under: - 7 “6.2 I have carefully considered the assessment order and the contentions of the AR and find that the similar ground was already discussed at length in the appellate order for the AY 2008-09 in which the ground of appeal was allowed in view of the decision of the Jurisdictional High court in the case of CIT vs. Institute of Banking Personnel Selection 264 ITR 110 (Bom) wherein it was held that depreciation is allowable as although capital expenditure has already been allowed.
6.3 I have considered the facts of the case and find that this ground of appeal also needs to be allowed in this year because the fact are identical in the year under reference. This ground of appeal is allowed.”
8. We find that this issue is squarely covered by the decision of Hon’ble Bombay High court in the case of Institute of banking Personnel Selection (supra), wherein it is held that the assessee could claim depreciation of assets even though the costs of which had been fully allowed as an application of income under section 11 of the Act in the past years. Respectfully following the Hon’ble Bombay High Court, we confirm the order of CIT(A) and dismiss this ground of Revenue’s appeal.
9. The next issue in this appeal of Revenue is against the order of CIT(A) deleting the addition made by AO of receipts of lease premium as income being revenue receipt. For this Revenue has raised the following ground No. 4: - 8
4. That on the facts and circumstances of the case and in law, the Ld. CIT(A) erred in not appreciating that the additional lease premium of ₹ 229,52,07,885/- should have been declared as income being a revenue receipt as the assessee has been held to be engaged in the commercial activity of development & sale of land by the AO based on detailed finding of facts.”
Briefly stated facts are that a survey was conducted by the ITO(TDS) on 10.02.201 and during the course of survey, it was found by the department that the assessee received lease premium against the property from different parties amounting to ₹ 229,52,07,885/-. The assessee contended that lease premium received during the year is not included in computation of total income as the same is payable to Govt. of Maharashtra and accordingly, the same is liability. The AO has not accepted the contention of the assessee by stating the reason that the assessee itself admitted that it has received lease premium totaling to ₹ 229,52,886/- but amount payable has been shown to the Govt. of Maharashtra in the immediately preceding year at ₹ 8,169.94 crores and this year it is ₹ 8303.18 crores. According to AO, the additional lease premium for the year under consideration is payable to the Govt. of Maharashtra is ₹ 133.24 crores. According to him, the assessee has not shown the payment of lease premium to the Govt. of Maharashtra. According to AO, the assessee is neither shown the lease premium of ₹ 229,52,07,886/- as liability to the Govt. of Maharashtra nor as income under the head business the receipt of lease. Accordingly, he added this 9 income. Aggrieved, assessee preferred the appeal before CIT(A). The CIT(A) deleted the addition by observing in Para 7.2 as under: - “7.2 I have carefully considered the assessment order, submission of the appellant and the relevant case laws cited by the appellant. On careful perusal of the same I find that lease rental premium were received by the appellant on behalf of Government of Maharashtra and the appellant was under an obligation to pay the same to Govt. of Maharashtra. I have considered the same and find that there is merit in the contention of the appellant. The AO has not appreciated the figures appe5ng in the balance sheet and arrived at an erroneous conclusion that lease premium received were not recorded in the books of the appellant. As per the balance sheet submitted by the appellant before me at page 39 of the paper book, under the head Current Liabilities and Provisions - Lease Premium, the increase in amount payable to the Government of Maharashtra rose o Rs.83031846534/- from Rs.81699405175/- in the earlier year. This is only he tease premium received from Bandra Kuria Complex by the appellant. I therefore hold that the lease premium received by the appellant was ultimately payable to the Government only and therefore correctly 10 recorded as a liability in the books of the appellant. It is further seen that ground lease rental income of Rs.I6,61,31,838/- is already considered as an income of the appellant for the year under appeal. I am therefore of the opinion that the addition of Rs,229,52,07,886/- is not called for as mentioned above. This ground of appeal is allowed.”
Aggrieved, Revenue came in appeal before Tribunal.