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Income Tax Appellate Tribunal, MUMBAI BENCH “E”, MUMBAI
Before: Shri Mahavir Singh & Shri G Manjunatha
O R D E R Per G Manjunatha, AM : The department filed this appeal by raising the following grounds of appeal:-
“I "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. 96,69,4361- 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 some 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 ldCIT(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 That the decision of Hon'ble Bombay High Court in the case of Indian Institute of Banking and Personnel Selection (2003) 264 ITR 110 was not accepted by Revenue, but the appeal was not filed due to the smallness of tax effect. On the issues decided in said order are challenged in Apex Court in other cases hence the issue of double deduction on account of allowing claim of depreciation have not reached finality.”
All the above three grounds raised by the revenue revolves around a narrow compass as to whether, the assessee, a charitable organization, would be entitled for depreciation on its fixed assets, when the investment itself was allowed u/s 11 at the application stage.
Upon hearing the parties and on perusal of material placed before us, we find that the issue is squarely covered in favour of the assessee by the decision of the Tribunal in assessee’s own case for AY 2010-11 order dated 18-07-2016, wherein it has been held as under:-
“We have heard both the parties and perused the orders of the Revenue Authorities as well as the cited judgments of Hon'bie High Court of Bombay in the case of CIT vs. Institute of Banking, wherein it was held "that the Tribunal was right Th law in direct the Assess/hg Officer to allow depreciation on the 11 in the past years. Considering the binding nature of the judgments and the covered nature on the issue, we are of the opinion that the issue of allowability of depreciation on depreciable assets should be decided in favour of the assessee. Accordingly, the decision taken by the CIT (A) by allowing the assessee’s claim in all the appeals under consideration is fair and reasonable and the same does not call for any interference. Thus, all the grounds raised by the Revenue in all the appeals under consideration are dismissed.”
We also find that in yet another order in assessee’s own case, vide order dated 16-09-2015 for AY 2009-10, the “E” Bench of the Tribunal decided the very same issue in the following manner:-
“The issues raised by ground No. 1 have been considered 5. by the Tribunal in at para 9.6 on page-12 of its order and in ITA No. 2668/M/12 in A.Y. 2008-09 at para-5 of its order. The relevant finding of the Tribunal in ITA No. 5760/M/10 in A.Y. 2007-08 reads as under:
"We ,find the Delhi Bench of the Tribunal in the case of S.R.M Foundation of India "supra) while deciding the issue u/s. 10(22) of the LT Act has held that there is no requirement prescribed u/s. 10(22) that the institution should be recognized by an University or State or Central Government. The Tribunal in the said decision held 33 lessons of what is termed as Science of Creative Intelligence ('SC?) which are in the nature of Yoga Classes as education. The Tribunal while deciding the issue has considered the decision qf the Hon'bie Supreme Court in the case of Sole Trustee, Lok Shikshan Trust (supra). We find the various other decisions relied on by the Ld. Counsel for the assessee also support its case. The decision in the case of Bihar Institute of Mining and Mine Surveying (supra) in our opinion, is not applicable to the facts of the present case. In that case it was coaching of students for particular examination, for which it was held that coaching institution is not a charitable institution the meaning of section 2(15), However, in the instant case the assessee is giving training in the area of Pre Sea and Post Sea to sea men. The various other decisions relied on by the AO are also distinguishable and not applicable to the facts of the present case. In our opinion, merely because the courses are not approved by the DG Shipping or merely because there is huge surplus in the non- approved courses than the approved courses cannot be a ground for denial of exemption u/s.1 as long as the Trust is imparting education as per the objects of the Trust. In this view of the matter and in view of the detailed observations given by the Ld. CIT(A) on this issue we do not find any infirmity in the same and accordingly the same is upheld. The grounds raised by the Revenue are accordingly dismissed."
Respectfully following the findings of the Co-ordinate Bench, ground No. 1 is dismissed.
The issue relating to the claim of depreciation has been decided in favour of the assessee and against the Revenue by the decision of the Hon'ble High Court of Bombay in the case of Institute of Banking Personnel Services 264 ITR 110 wherein the Hon'bie High Court has inter alia held as under:
"In all such cases, section 32 of the Income-tax Act providing for depreciation for computation of income derived from business or profession is not applicable. However, the income of the trust is required to be computed under section 11 on commercial principles after providing for allowance for normal depreciation and deduction thereof from gross income of the trust.”
As the CIT(A) has allowed the relief following the order of the Hon’ble High Court of Bombay, we do not find any reason to interfere with the Ld. CIT(A). Ground No. 2 is accordingly dismissed.”
Consistent with the earlier decisions of the Tribunal in earlier assessment years, we do not see any merit in the appeal file by the revenue.
In the result, the appeal filed by the revenue is dismissed. 5.
Order pronounced in the open court on 27th October, 2017.