DCIT (E) 1(1), MUMBAI vs. KARAMSHI JETHABHAI SOMAIYA TRUST, MUMBAI

ORDER PER G.S.PANNU,A.M:

The captioned appeal filed by the Revenue pertaining to assessment year 2011-12 is directed against an order passed by CIT(A)-I, Mumbai dated 20/06/2016, which in turn arises out of an order passed by the Assessing Officer under section 143(3) of the Income Tax Act, 1961 (in short ‘the Act’) dated 21/03/2014.

(Assessment Year 2011-12) 2. In this appeal Revenue has raised the following Grounds of appeal:-

1. "Whether on the facts of the case and in law the Id.CIT(A) erred in allowing the appeal of the assesses on account of disallowing depreciation on fixed assets of Rs. 1,38,75,973/- 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 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 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 vs CIT 76 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 relying upon the judgement of the Hon'ble Bombay High Court in the case of CIT Vs Institute of Banking Personnel Services without appreciating the fact that Department has not accepted the decision on merit and also without appreciating the fact that the Hon'ble Supreme Court while deciding the above said case has not taken into account the Judgment of Hon'ble Supreme Court in the case of Escort Ltd. which is in the favour of department. 4. "Whether on the facts of the case and in law the Id.CIT(A) erred in allowing the carry forward of deficit of Rs. 1,38,75,973/- and allowing set off against the income of the subsequent 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 assesses for carry forward of the said deficit, ignoring the fact that there was no express provision in the I T Act, 1961 permitting allowance of such claim."

6. "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 assesses for carry forward of the said deficit by relying upon the judgment of (Assessment Year 2011-12) 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.” 7. “The appellant prays that the order of the Commissioner of Income Tax (appeals)-I, Mumbai be set aside and that of the Assessing Officer be restored”

4. In this background, now we may refer to the relevant facts. The respondent-assessee is a charitable organisation registered u/s 12A of the Act and is engaged in carrying on activities of charitable nature. The Assessing Officer noticed that assessee had claimed depreciation allowance of Rs.1,38,75,973/- on the cost of fixed assets, whereas such cost of fixed assets has also been taken as an application of income while computing the total income. According to the Assessing Officer, this amounted to a double deduction and he, therefore, disallowed the assessee’s claim for depreciation. The CIT(A) has since allowed the claim of the assessee following the (Assessment Year 2011-12) judgment of the Hon'ble Bombay High Court in the case of Institute of Banking Personnel Selection, 264 ITR 110 (Bom).

5. Before us, the plea of the Department is that the decision of the Hon'ble Bombay High Court in the case of Institute of Banking Personnel Selection (supra) has not been accepted by the Department. Further, it is contested that allowing of depreciation would amount to a double deduction, which was impermissible having regard to the judgment of the Hon'ble Supreme Court in the case of Escorts Ltd., 199 ITR 43 (SC).

“(a) Whether on the facts and in the circumstance of the case and in law, the Tribunal was justified in confirming the order of the CIT(A) to allow the claim of depreciation relying on the decision of this Court in the case of CIT v/s. Institute of Banking Personnel Services reported in 264 ITR 110 (Bom) ignoring the ratio of Hon'ble Supreme Court judgment in the case of Escorts Ltd. V/s. Union of India (199 ITR 43) wherein 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?

(b) Whether on the facts and in the circumstance of the case and in law, the Tribunal was justified in confirming the order of the CIT(A) to allow to carry forward of deficit of earlier years relying on the decision of this Court in the case of CIT v/s. Institute of Banking Personnel Services reported in 264 ITR 110 (Bom) while the revenue did not file SLP against the case of CIT v/s. Institute of Banking Personnel Services reported in 264 ITR110 (Bom) due to low tax effect?”. stand on the same footing as are being canvassed before us in the instant case. Thus, there is no error on the part of the CIT(A) in following the decision of the Hon'ble Bombay High Court in the case of Institute of Banking Personnel Selection (supra) and allowing the stand of the assessee. The other argument taken by the Revenue that its SLP filed before the Hon'ble Supreme Court is pending on a similar issue is of no consequence inasmuch as the binding judgments of the Hon'ble Bombay High Court in the case of Institute of Banking Personnel Selection (supra) as well as in the case of M/s. Mumbai Education Trust (supra) continue to subsist. Therefore, in this background, we find no merit in the Ground Nos. 1 to 3 raised by the Revenue and the same are accordingly dismissed.

(Assessment Year 2011-12) 7. Similarly, the second issue raised by the Revenue is with regard to carry forward of the deficit of Rs.3,52,50,787/- (wrongly stated in the Ground No.4 as Rs.1,38,75,973/-) to be set-off against the future income. On this aspect also, CIT(A) has allowed the claim following the decision of the Tribunal in the case of assessee for assessment year 2005-06 and the judgment of the Hon'ble Bombay High Court in the case of Institute of Banking Personnel Selection (supra); in fact, similar situation has been further affirmed by the Hon'ble Bombay High Court in the case of M/s. Mumbai Education Trust (supra). Therefore, on this aspect also, we find no error on the part of the CIT(A) in allowing the claim of the assessee, which we hereby affirm.