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Income Tax Appellate Tribunal, “SMC”, BENCH MUMBAI
Before: SHRI R.C.SHARMA, AM
आदेश / O R D E R PER R.C.SHARMA (A.M): These are appeals filed by the revenue against the order of CIT(A)- 1 Mumbai dated 12/08/2016 for the A.Y. 2009-10 and 2010-11 in the matter of order passed u/s.143(3) of the IT Act. 2. In both the years grievance of revenue relates to allowing the assessee’s claim of depreciation on fixed assets in contravention of decision of Escorts Ltd., 199 ITR 43. At the outset, learned AR placed on record the order of the Tribunal in assessee’s own case for the A.Y. 2008- 09, wherein exactly similar issue was decided by the Tribunal vide its order dated 24/01/2014 after having the following observation:-
The assessee is admittedly a charitable trust, duly registered under section 12A of the Act. In the return of income the assessee has shown a deficit of `2.22 crores, which arises on account of excess expenditure over 2 & 6568/Mum/2016 Shri Satya Sai Trust the revenue. The AO rejected the claim of carry forward on the ground that the same is contrary to the principles laid down by the Apex Court in the case of Escorts Ltd. (199 ITR 43), i.e. no double deduction can be allowed unless it is specifically sanctioned by the statute.
Aggrieved, assessee contended before the CIT(A) that in the light of the decision of the Hon'ble Bombay High Court in the case of Institute of Banking 264 ITR 114 there are no words of limitation in section 11 of the Income Tax Act regarding that the income should have been applied for charitable purposes only in the year in which the income has arisen and there is no question of double deduction in the instant case since it is a case of carry forward of deficit and unabsorbed depreciation to be set off against the income of subsequent year. 5. The learned CIT(A) accepted the contention of the assessee in the light of the order passed by his predecessor in assessee's own case for A.Y. 2007- 08, which in turn is based upon the decision of the Hon'ble Bombay High Court (supra) wherein the decision of the Apex Court in the case Escorts India was referred to and distinguished. Aggrieved, Revenue is in appeal before us. 6. The learned D.R. submitted that the Revenue has not accepted the decision of the Hon'ble Bombay High Court in the case of CIT vs. Institute of Baking and further submitted that the issue falls within the ratio laid down by the Apex Court in the following cases: - i. Escorts Limited vs. Union of India 199 ITR 43 ii. J.K. Synthetics Ltd. vs. Union of India 65 Taxman 420 7. On the other hand, the learned counsel for the assessee submitted that identical issue had come up before "E" Bench, Mumbai in assessee's own case for 2007-08 wherein the appeal filed by the Revenue was dismissed (ITA No. 7350/Mum/2011 dated 25th March, 2013). It deserves to be noticed that in ITA No. 2248/Mum/2012 (ADIT (E) vs. M/s. Vaibhav Medical & Education Foundation dated 10.09.2013), wherein I am a party, the Bench observed that the decision of the Apex Court in the case of Escorts India was held to be not applicable under identical facts and by following the decision of the Hon'ble Bombay High Court (supra) the Bench dismissed the appeal filed by the Revenue. 8. Having carefully gone through the record I am of the view that the order passed by the learned CIT(A) does not call for any interference as identical issues are considered by the Tribunal in favour of the assessee and against the Revenue consistently. 3. I also found that issue is covered by series of other orders of the Tribunal. In the case of Sadguru Seva Trust in ITA No.3387/Mum/2015 to
The Ld. DR requested for confirmation the order of AO and for allowing the appeal of the department. On the other hand, Ld. Counsel of the assessee trust made her submissions in detail and submitted that the order of CIT(A)is very much in accordance with law and the facts and the same needs to be upheld. Her arguments are in two parts. One, the assesseee has been getting the benefit of claim of depreciation in the similar manner on these very assets since last many years. He has placed before us the copies of assessment orders Sadguru Seva Trust passed u/s 143(3) for A.Y. 2003-04 to A.Y. 2007- 08 at paper book pages 1 to 13. Second part of her argument is that the judgment of Hon'ble Jurisdictional High Court is binding upon the Tribunal and therefore the assessee is entitled for the benefit of depreciation. In addition to the above, she has further relied upon the judgment of other High Courts and copies of which have been placed in the paper book as per details given below: (I) CIT v. Institute of Banking, Bombay High Court (2003) 264 ITR 110 (ii) CIT v. Devi Sakuntala Tharal Charitable Foundation (2013) 358 ITR452 (MP) (iii) CIT vs. Siliguri Regulated Market Committee (2014) 366 ITR 51 (Cal) (iv) Director of Income Tax v. Vishwa Jagriti Mission (2012) 73 DTR 195 (Del.) (v) CIT vs. Market Committee, Pipli (2011) 330 ITR 16 (Punjab & Haryana) (vi) CIT vs. Tiny Tots Educational Society (2011) 330 ITR 21 (Punjab & Haryana) 7. She further submitted that the decision in the case of Escort Limited (supra) relied upon by the AO has been discussed and distinguished in the judicial pronouncement mentioned at serial no. iv to vi above. She further submitted that rule of consistency should also be applied especially in view of judgment of Hon'ble Bombay High Court in the case of CIT v. Gopal Purohit 336 ITR 287 (Bom) and Aroni Commercial Ltd. vs. DCIT & others (2014) 362 ITR 403 (Bom). She further submitted that the amendment made to section 11 is prospective and is not to be applied retrospectively in the assessment Sadguru Seva Trust year under consideration in this appeal. She requested for confirming the order of CIT(A) and dismissing the appeal filed by the Revenue. I have heard both the parties at length and have going through the judgments filed by both the parties. In my considered opinion, the judgment of jurisdictional High Court is binding upon the Tribunal and therefore, the assessee deserves to succeed on this ground itself. In addition to that it is further seen by me that the judgment of Hon'ble Supreme Court in 4 & 6568/Mum/2016 Shri Satya Sai Trust the case of Escorts Limited, (supra) has been discussed and distinguished by Hon'ble Delhi High court and Hon'ble Punjab and Haryana High Court in the judgments cited by Ld. Counsel of the assessee. The judgment of the Hon'ble jurisdictional High Court is binding upon by the Tribunal as was held by the Hon'ble M.P. High Court in the case of National Textile Corporation 216 CTR 153 in which it was held that the lower courts are bound to follow the judgment of superior courts, as per constitutional frame work of our country.
It is further seen by me that the Hon'ble Delhi High Court in the case of DIT vs. Indraprastha Cancer Society in ITA NO.240/2014 dated 18th November 2014 has discussed at length the entire law available as on that date on this issue, including the judgments relied upon by the Ld. DR in the case of Escorts Ltd. (supra), Charanjiv Charitable Trust, (supra) and Lissie Medical Institutions, (supra) and after analyzing all these judgments, it was held that the assessee was Sadguru Seva Trust entitled for the claim of depreciation and view taken by the jurisdictional High Court of Bombay was followed by Hon'ble Delhi High Court in the case of Indraprastha Cancer Society, (supra). It is further seen by me that Hon'ble Delhi High Court has also considered amendment made by the Finance Act 2014 and it was held by Hon'ble Delhi High Court that the amendment is prospective and cannot be applied retrospectively. Para 11 of the said judgment is reproduced hereunder for the sake of ready reference:- " By Finance (no.2) Act of 2014, sub-section (6) of section 11 stands inserted with effect from 1st April, 2005 to the effect that where any income is required to be applied, accumulated or set apart for application, then for such purposes the income shall be determined without any deduction or allowance by way of depreciation or otherwise in respect of an asset, the acquisition of which has been claimed as application of income under this section in the same or any other previous year. The legal position, therefore, would undergo a change in terms of Section 11(6), which has been inserted and applicable with effect from 1st April, 20015 and not to the assessment years in question."
In addition to above, it is further seen by me that the assessee has been getting the benefit of depreciation in all previous years and therefore, as a matter of principle of consistency, the assessee should be eligible to get the benefit of depreciation in this year as well and for this purpose, I derive support from the judgment of Hon'ble Supreme Court in the case of CIT v. Excel Industries Pvt. Ltd. 258 ITR 295. Thus, viewed from all the angles, I find that the assessee is eligible to Sadguru Seva Trust claim depreciation and the same is directed to be allowed and grounds raised
by department are dismissed.
4. Respectfully following the decision of the Tribunal in assessee’s own case vis-à-vis the decision of Bombay High Court in the case of