DCIT (E) 2(1), MUMBAI vs. SAIFEE HOSPITAL TRUST, MUMBAI

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ITA 3318/MUM/2016Status: DisposedITAT Mumbai19 January 2018AY 2009-105 pages
AI SummaryDismissed

What did the Tribunal hold?

The Tribunal upheld the CIT(A)'s decision, following the coordinate bench's ruling in the assessee's own case for the previous assessment year. The issues regarding exemption and depreciation were decided in favor of the assessee.

What were the facts?

The Assessing Officer rejected the assessee's claim for exemption under Section 10(23C)(via) and Section 11 of the Income Tax Act, treating donations as income and disallowing depreciation. The CIT(A) allowed the assessee's appeal, relying on previous ITAT decisions.

What were the issues?

Whether the assessee is eligible for exemption under Section 10(23C)(via) and Section 11 despite alleged violations, and whether depreciation is allowable on assets acquired for charitable objects.

Which sections of the Income-tax Act were involved?

Section 10(23C),Section 11,Section 143(3),Section 32

AI-generated summary — verify with the full judgment below

Cases cited in this judgment(2)Show list

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Income Tax Appellate Tribunal, MUMBAI BENCHES “A”, MUMBAI

Before: SHRI G.S. PANNU (AM) & SHRI RAM LAL NEGI (JM)

For Appellant: Shri D.V. Lakhani (AR)
For Respondent: Shri R.P. Meena (CIT DR), Shri D.V. Lakhani (AR)
Hearing: 23/10/2017Pronounced: 19/01/2018

O R D E R

PER RAM LAL NEGI, JM

1.

1. This appeal has been filed by the revenue against order dated 25/02/2016 passed by the Ld. Commissioner of Income Tax (Appeals)-7, Mumbai, for the assessment year 2009-10, whereby the Ld. CIT (A) has allowed the appeal filed by the assessee against assessment order passed u/s 143 (3) of the Income Tax Act, 1961 (for short ‘the Act’).

2.

Brief facts of the case are that the assessee registered as a charitable organization with DIT (E), Mumbai u/s 12A and with the Charity Commissioner, Mumbai engaged in the charitable activities, filed its return of income along with the income and expenditure account, balance sheet and audit report in Form No. 10-B declaring nil income for assessment year under consideration. Since, the case was selected for scrutiny, notices u/s 143 (2)

2 Assessment Year: 2009-10 and 142 (1) were served upon the assessee and after hearing the assessee, assessment u/s 143 was completed assessing the total income at nil after rejecting the claim of exemption u/s 10 (23C) (via) and rejecting the benefit of exemption u/s 11 of the Act holding that the trust need was amended by the assessee without informing the Director of Income Tax, who had issued a certificate u/s 12 of the Act. Consequently, the AO treated the donation of Rs. 12,04,578/- received, as income of the assessee. The AO further disallow the claim of depreciation amounting to Rs. 15,22,51,456/- and added the same to the total income of the assessee.

3. The assessee challenged the assessment order before the Ld. CIT (A) on both the issues. The Ld. CIT (A) after hearing the assessee decided in favour of the assessee relying on the decision of ITAT, Mumbai in assessee’s own case for the A.Y. 2008-09 rendered in vide order dated 06.03.2013. The revenue is in appeal against the said findings of the Ld. CIT

(A) before the Tribunal.

4.

The revenue has preferred the present appeal before the Tribunal on the following effective grounds:-

1.

“Whether on the facts of the case and in law the ld. CIT (A) erred in allowing the exemption claim u/s 10(23C)(via) even though assessee has violated conditions of Sec 11 of I.T. Act.

2. Whether on the facts of the case and in law the ld. CIT (A) erred in allowing the exemption claim u/s 11 even though assesseee has not maintained separate books of accounts for other commercial activity of Gymnasium, Cafeteria, Pharmacy.

3.

Whether on the facts of the case and in law the ld. CIT (A) erred in allowing the exemption u/s 11, when 12A registration 3 Assessment Year: 2009-10 ceased to be operative, being trust deed amended on 07.01.2005 not informed to the DIT (E).

4. 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 Rs. 15,22,51,456/- 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. 5. Whether on the facts 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).”

5.

We notice that the Ld. CIT (A) has decided both the issues in favour of the assessee and against the revenue by following the decision of the coordinate Bench passed in assessee’s own case for the A.Y. 2008-09, (supra). The issue pertaining to rejection of exemption u/s 10 (23C) (via) of the Act by following the ratio laid down by the Hon’ble jurisdictional High Court in the case of Baun Foundation Trust Vs. CIT in which the Hon’ble High Court has decided the similar issue in favour of the assessee. Similarly, the Ld. CIT (A) has decided the issue pertaining to denial of exemption u/s 11 of the Act in favour of the assessee by relying upon the decision of the coordinate Bench rendered in the assessee’s own case for A.Y. 2008-09 aforesaid and the decision of Hon’ble High Court in the case of 4 Assessment Year: 2009-10 Institute of Bombay Personnel Section 264 ITR 110. We further notice that the coordinate Bench has decided the said issue relying upon the judgment of the Hon’ble Bombay High Court in the case of Institute of Bombay Personnel Section (supra). Since, the issues involved in this case are identical to the issues involved in the assessee’s own case for the A.Y. 2008-09 (supra) and the coordinate Bench has decided both the issues in favour of the assessee, we respectfully following the decision rendered by the coordinate Bench in assessee’s own case for A.Y. 2009-10, we uphold the findings of the Ld. CIT (A) on both the issues and dismiss all the grounds of appeal of the revenue.

In the result, appeal filed by the revenue for assessment year 2009-2010 is dismissed.

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