Loading judgment…
No AI summary yet for this case.
Income Tax Appellate Tribunal, “G” 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/E-II(90)/2015-16 vide order dated 24.08.2017. The Assessment was framed by the Income Tax Officer (E), Ward-2(4) (in 2 short ‘ITO / AO’) for the A.Y. 2012-13 vide order dated 17.03.2015 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 the claim of deprecation on fixes assets, wherein the assessee is claiming the deduction under section 11 of the Act. For this Revenue has raised the following grounds No. 1 to 3: -
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 of Rs.77,43,889/-in contravention of the decision of Escorts Ltd. Vs. UOI 199 ITR 43 wherein it was held that since Section 11 of the Income Tax Act provides for deduction of capital expenditure incurred on assets 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 Id. CIT(A) erred in allowing the appeal, when the Delhi High Court in the case of Charanjiv Charitable Trust and Kerala High Court in the case of Lissie Medical Institutions Vs CIT 76 3 DTR (Ker) 372 has decided the issue in the favour of the department after considering the decision of Hon'ble Supreme Court in the case of Escorts Ltd (199 ITR 43).
3. Whether, on the facts and in the circumstances of the case and in law, the Ld. CIT(A) erred in allowing the depreciation claim of the assessee by relying upon the judgment of Hon'ble Bombay High Court in the case of Institute of Banking Personnel Selection, ignoring the fact that the Department has not accepted the said decision of the jurisdictional High Court on merit of the case, but due to smallness of tax effect appeal was not filed before Hon'ble Supreme Court. Also, the Ld. CIT(A) erred in relying upon the judgment of Hon'ble high Court in the case of CIT vs. Shri Vile-Parle Kelvani Mandal, without appreciating the fact that Department has not accepted the decision on merit and filed SLP, but subsequently withdrawn the same as there was no claim of depreciation on exempted assets. Moreover, the Revenue has filed SLPs on this issue in other cases inclusive the case of G.D. Birla Medical Research & Educational Foundation (S.L.P.(C) No. 24904 of 2016 (C.A.No.8294 of 2016) and in this case leave has been granted by the Hon'ble Apex Court 4 and in all cases issue is pending for adjudication before the Hon'ble Apex Court.”
We have noted that the first issue come up before Tribunal in earlier years in assessee’s own case for AY 2007-08 to 2010-11, wherein ITAT has allowed depreciation. We find that the co-ordinate Bench of this ITAT in assessee’s own case in for AY 2010-11, vide order dated 21.03.2018 following the earlier year order allowed the claim of assessee vide Para 5 and 6 as under: - “5. We have heard both the sides and perused material available on record. We find that the co-ordinate bench of ITAT, Mumbai Bench “E” in ITA No.5646/Mum/2011 for AY 2007-08 has considered a similar issue in the light of decision of Hon’ble Supreme Court in the case of Escorts Ltd vs UOI and by following the decision of Hon’ble Bombay High Court in the case of CIT vs Institute of Banking Personnel Selection 264 ITR 110 (Bom) allowed depreciation claimed on fixed assets. The relevant portion of the order is extracted below: - “4. We have considered submissions of ld. representatives of parties and orders of authorities below. We observe that there is no reason to interfere with the order of ld.CIT(A) on this issue as the income of the trust is required to be computed u/s 11 on commercial principles after providing for allowance for normal 5 depreciation and deduction thereof from gross income of the trust. Ld CIT(A) has rightly observed that the reliance placed by the department in the case of Escorts Ltd (supra) is not applicable to the facts of the assessee’s case. It is also observed that a Coordinate Bench of this Tribunal in assessee’s own case for assessment year 2004-05 by following the decision of Hon’ble Jurisdictional High Court in the case of Institute of Banking Personnel Selection (supra) allowed the claim of depreciation, which is followed by ld CIT(A) in the impugned order. Hence, we uphold his order and reject Ground No.1 of appeal taken by department.
6. In this view of the matter and consistent with the view taken by the co-ordinate bench, we are of the considered view that the assessee is eligible for depreciation on fixed assets even though entire cost of such fixed assets has been claimed as application of income u/s 11 of the Income-tax Act, 1961. The Ld.CIT(A), after considering relevant facts has rightly deleted addition made by the AO. We do not find any error or infirmity in the order of the CIT(A). Hence, we are inclined to uphold the findings of the CIT(A) and reject ground raised by the revenue.”
6 4. In view of the above matter that the facts are undisputed in this year also that the facts are identical, taking a consistent view, we also allow the claim of depreciation on fixed assets even though the entire assets of such fixed assets has been claimed as application of income under section 11 of the Act. Accordingly, we confirm the order of CIT(A) on this issue. This issue of Revenue’s appeal is dismissed.
The next issue in this appeal of Revenue is as regards to the accumulation of income under section 11 of the Act and consequently allowing the carryforward of deficit of earlier years and allowing the same to be set off against the income of succeeding years. For this Revenue has raised the following grounds No 4 and 5 as under: -
4. Whether on the facts of the case and in law the Ld. CIT(A) erred in allowing the carry forward of deficit of earlier years of Rs. 3,99,42,729/- and allowing set off against the income of the succeeding years.
5. Whether, on the facts and in the circumstances of the case and in law, the ld. CIT(A) erred in allowing the claim of the assessee for carry forward of the said deficit, ignoring the fact that there was no express provisions in the IT Act, 1961 permitting allowance of such claim.”
At the outset, it is noticed that this issue is also covered by the Tribunal decision in for AY 2010-11 vide order dated 21.03.2018, wherein the Tribunal vide Para 8 to 10 has decided the issue by following the earlier years and the same reads as under: - 7 “8. In this view of the matter and consistent with the view taken by the co-ordinate bench, we are of the view that the assessee is eligible for accumulation of income to the extent of 15% of gross receipts u/s 11(1)(a) of the Act. The CIT(A) after considering relevant facts has rightly allowed the claim. We do not find any error in the order of the CIT(A). Hence, we are inclined to uphold the findings of CIT(A) and reject ground raised by the revenue.
The next issue that came up for our consideration is carry forward of excess application of income. The Ld.AR for the assessee submitted that the issue is covered in favour of the assessee by the decision of ITAT, in its own case for AY 2007-08, wherein the ITAT has held that the assessee can claim carry forward of excess application of income to subsequent years. We find that the co-ordinate bench of ITAT, in assessee’s own case in for AY 2007-08 has allowed the claim of carry forward of excess application of income to subsequent years. The relevant portion of the order is extracted below: -
9. In regard to Ground No.3 of appeal, we heard ld. Representatives of parties and perused orders of authorities below. We observe that ld CIT(A) by allowing the 8 claim of the assessee has relied on the decision of Hon’ble Bombay High Court in the case of CIT vs Institute of Banking Personnel Selection (supra), wherein it has been stated that income derived from the trust property has to be computed on commercial principles and if commercial principles are applied, then adjustment of expenses incurred by the trust for charitable purposes in the earlier years against the income earned by the trust in the subsequent year will have to be regarded as application of income of the trust for charitable purposes in subsequent year in which such adjustment has been made. Hence, there is no reason to interfere with the order of the ld.CIT(A). Accordingly, we uphold the same by rejecting ground No.3 of appeal taken by revenue.
In this view of the matter and consistent with the view taken by the co-ordinate bench, we direct the AO to allow carry forward of excess application of income u/s 11 of the Income-tax Act, 1961.”