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Income Tax Appellate Tribunal, MUMBAI BENCH “I”, MUMBAI
Before: SHRI MAHAVIR SINGH & SHRI RAJESH KUMAR
The above titled appeals have been preferred by the Revenue against the common order dated 31.03.2017 of the Commissioner of Income Tax (Appeals) [hereinafter referred to as the CIT(A)] relevant to various assessment years.
The common issue raised by the Revenue in ground Nos.1, 2 & 3 is against the order of Ld. CIT(A) allowing the depreciation on fixed assets of Rs.1,87,76,175/- which was disallowed by the AO on the ground that the capital expenditure incurred on fixed assets was allowed as deduction as application of income at the time of incurring said expenditure and therefore no deduction under section 32 of the Act was allowable otherwise same would be amounting to claiming double deduction.
The facts in brief are that AO during the assessment proceedings observed that assessee has claimed depreciation of Rs.1,87,76,175/- on the fixed assets which was already allowed as deduction as application of income fully and thus the same amounted to double deduction. The AO also noted that the assessee had claimed the depreciation as per the decision in the case of CIT vs. Institute of Banking Personnel and Selection 264 ITR 110 (Bombay) and finally after
In the appellate proceedings, the Ld. CIT(A) allowed the appeal of the assessee by observing and holding as under: “9.2 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. 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 several 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 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 (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 Tribunal, however, took the view that when the Income Tax Officer stated that full expenditure had been al/owed 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 judgement in case of Director of Income-tax (Exemptions), Mumbai v. Shri Vile Pane 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 4 & Ors. M/s. Maharashtra Industrial Development Corporation 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 vs. Institute of Banking Personnel Selection (IBPS) (2003) 264 ITR 110/131 Taxman 386 (Bom.) is enough.” iii. AO is directed to follow above observations of Hon'ble jurisdictional High Court to allow appellant's claim of depreciation after due verification of facts. iv. For statistical purposes this ground of appeal is allowed.”
5. After hearing the rival submissions and perusing the material on record, we find that the issue is covered squarely in favour of the assessee by the decision of the Hon’ble Bombay High Court in the case of CIT vs. Institute of Banking Personnel and Selection (supra) which has been followed by the Ld. CIT(A) while allowing the appeal of the assessee. The Ld. CIT(A) also referred to the decision of Director of Income Tax (Exemption), Mumbai vs. Shri Vile Parle Kelavani Mandal (2015) 58 taxmann.com 288 wherein the Hon’ble Bombay High Court has held that the depreciation claimed is towards the use of assets and could not be taken to mean as double deduction first by way of allowing the same as application of income and secondly by way of depreciation on the said amount of fixed asset. We, therefore, find no infirmity in the order of Ld. CIT(A) and are inclined to affirm the same by dismissing the grounds raised by the Revenue. Accordingly, the ground Nos.1, 2 & 3 are dismissed.
6. The second issue raised by the Revenue from ground No.4 to 6 is against the decision of Ld. CIT(A) challenging the
The Ld. A.R., at the outset, submitted that the issue is squarely covered in favour of the assessee in it’s own case by the decision of the co-ordinate bench of the Tribunal in & 4778/M/2009 for A.Y. 2004-05 & 2005-06, ITA No.6129/M/2013 for A.Y. 2007-08, ITA No.6752/M/2011 for A.Y. 2008-09 and also by the decision of Jurisdictional High Court for A.Y. 2004-05, 2005-06 & 2007-08.
The Ld. D.R., on the other hand, relied on the order of AO.
We have heard the rival submissions of both the parties and perused the material on record. We find that the Ld. CIT(A) has allowed the appeal of the assessee by following the decision of the Hon’ble Jurisdictional Bombay High Court in the case of CIT vs. Institute of Banking Personnel and Selection (supra). We further note that in assessee’s own case the issue has been settled in favour of the assessee by the decision of the Hon’ble Jurisdictional Bombay High Court in various earlier assessment years in of 2011 for A.Y. 2004-05, ITA No.2652 of 2011 for A.Y. 2005-06 and ITA No.288 of 2016 for A.Y. 2007-08. We, therefore, do not find any infirmity in the order of the Ld. CIT(A) and accordingly affirm the same by dismissing the ground Nos.4 to 6 of the Revenue.
In the result, all the appeals of the Revenue are dismissed.
Order pronounced in the open court on 20.07.2018.