ITO (E) 2(2), MUMBAI vs. PARMESHWARIDEVI GORDHANDAS GARODIA CHARITABLE TRUST, MUMBAI

आयकर अपील�य अ�धकरण, “tstststs” खंडपीठ मुंबई INCOME TAX APPELLATE TRIBUNAL,MUMBAI - ‘J’ BENCH सव�ी राजे��, लेखा सद�य एवं iou iou iou �संह,�या�यक सद�य iou Before S/Sh. Rajendra, Accountant Member & Pawan Singh, Judicial Member आयकर अपील सं/.ITA No.2661/Mum/2015,�नधा�रण वष�/Assessment Year-2010-11 ITO (E)- 2(2), Parmeshwaridevi Gordhandas Garodia Room No. 4502, 5th Floor, बनाम Charitable Trust, 153, Garodia Nagar, Piramal Chambers, Lalbaug, Ghatkopar (E), Mumbai-400077 Vs. Parel, Mumbai-4000012. PAN: AAATP0083C (अपीलाथ� /Appellant) (��यथ� / Respondent) राज�व ओर से / Revenue by : Shri Anu Krishna Aggarwal (DR) �नधा�रती क� ओर से/ Assessee by : Shri Rahul K. Hakani (AR)

सुनवाई क� तार�ख / Date of Hearing : 02-01-2017 घोषणा क� तार�ख / Date of Pronouncement : 13-01-2017 आयकर अ�ध�नयम, 1961 क� धारा 254(1) के अ�तग�त आदेश Order u/s.254(1)of the Income-tax Act,1961(Act) Per Pawan Singh, J.M. �या�यक सद�य iou iou iou �संह के अनुसार: iou 1. The present appeal by Revenue u/s 253 of the Income-tax Act, 1961 (for short ‘the Act’) is directed against the order of ld. Commissioner of Income-tax (Appeals)-1, Mumbai (for short the CIT(A) dated 05.02.2015 for Assessment Year(AY) 2010-11. The Revenue has raised the following grounds of appeal: 1. 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. 70,55,379/- 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 object 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 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. OIT(A) erred in allowing the capital, when the Delhi High Court in the case of Charanjiv Charitable Trust and Kerla High Court in. the case of Lissie Medical Institutions u/ s. CIT 76 DTR(Kar)372 has decided the issue in 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 of the case and in law the Ld. CIT(A) erred in allowing the set off of carry forward of deficit will tantamount to double deduction on account of expenditure out of exempt income 4. The Appellant prays that the order of the Commissioner of Income- Tax (Appeals) 1, Mumbai be set aside and that of the Assessing Officer be restored. 2. Brief facts are that the assessee is a Charitable trust registered with the Charity Commissioner, Mumbai. The assessee is also having Registration u/s 12A of the Act. The

2 ITA No. 2661/M/2015 M/s Parmeshwaridevi Gordhandas Garodia Charitable Trust.

assessee filed return of income for relevant AY on 27.09.2010. In the return of income, the assessee claimed the depreciation of Rs. 70,55,379/-. The assessment was completed u/s 143(3) on 28.02.2013. The Assessing Officer (AO) disallowed the depreciation. On appeal before the ld. CIT(A), the depreciation was allowed. Being aggrieved by the order of ld. CIT(A), the Revenue filed the present appeal before us. 3. We have heard ld. Departmental Representative (DR) for the Revenue and ld. Authorized Representative (AR) of the assessee. The ld. DR for the Revenue relied upon the order of AO. On the other hand, ld. AR of the assessee submits that the grounds of appeal raised by Revenue are covered in favour of assessee by the decision of Co-ordinate Bench in assessee’s own case for AY 2009-10 in ITA No. 5987/Mum/2012 . It was further argued that the against the decision of Tribunal for AY 2009-10, the Revenue filed appeal before the Hon’ble High Court and the same was dismissed on 20.10.2016. The ld. AR of the assessee placed on record the copy of decision of Tribunal in assessee’s own case for AY 2009-10 and the order of Hon’ble Bombay High Court dated 20.10.2016. 4. We have considered the contentions of the both the parties and seen that the order of Co- ordinate Bench in assessee’s own case for AY 2009-10, wherein the Tribunal while relying upon the decision of earlier in assessee’s own case for AY 2007-08 and passed the following order:

“2. At the time of hearing before us, the AR pointed out that grounds no. 1, 2 & 3 are covered by the order of the Coordinate Benches Mumbai in ITA No. 4108/Mum/2010 in the assessee's own case in assessment year 2007-08 and also by the order of Hon'ble Bombay High Court in the case of DIT(Exmp) vs GKR Charities in ITA No. 2060 of 2012 dated 08.03.2013. The AR pointed out that the Coordinate Bench held,

We have carefully considered the facts and the rival contentions. In CIT vs. Institute of Banking (supra), the Bombay High Court held that while computing the income of a trust, both the capital expenditure on acquisition of assets and the depreciation on the said assets were allowable, the capital expenditure being allowed as application of income of the trust and depreciation being allowable as a legitimate deduction in computing the real income of the assessee on general principles. In coming to this conclusion the High Court followed its earlier decision in CIT vs Munisuvarat Jain (1994) Tax Law Reporter 1084 (Bom). The Supreme Court in the judgment cited supra held that it is a fundamental and unwritten axiom that no Legislature could have intended a double deduction in regard to the same business outgoing and if it is so intended, it will be clearly expressed. On this basis the Supreme Court refused to allow a deduction of depreciation on assets used for scientific research, since the acquisition of the assets themselves were allowable as deduction, even though the expenditure represented capital expenditure. Both these judgments have been considered by the Punjab & Haryana High Court in a recent decision in CIT vs Market Committee, Pipli (2011) 330 ITR 16 (P & H). In this case the assessee was a trust registered under the Income Tax Act as a charitable trust. The Assessing Officer

3 ITA No. 2661/M/2015 M/s Parmeshwaridevi Gordhandas Garodia Charitable Trust. disallowed depreciation on the assets on the ground that since the income was exempt, allowing depreciation to ascertain whether the required percentage of funds were applied for the purposes of the trust would amount to conferring double benefit. His view was affirmed by the CIT(A) but the Tribunal allowed the assessee's appeal. On further appeal by the revenue to the High Court, it was held that the income of the assessee being exempt, the assessee was only claiming that depreciation should be reduced from the income for determining the percentage of funds which had to be applied for the purposes of the trust. There was thus no double deduction claimed by the assessee. In coming to this conclusion the Punjab & Haryana High Court, inter alia, followed the judgment of the Hon'ble Bombay High Court cited above and distinguished the judgment of the Supreme Court cited supra. In this view of the matter, and respectfully following the judgment of the Punjab & Haryana High Court and the Bombay High Court cited above, we affirm the decision of the 3 Parmeshwardevi Gordhandas Garodia Charitable Trust ITA 5987/Mum/2012 CIT(A) and dismiss the appeal filed by the revenue with no order as to costs". 3. The DR accepted the factual position, however, he placed reliance on the order of the AO. 4. After going through the orders as cited by the AR, we are of the opinion that the issue raised in the grounds are fully covered. We, therefore, respectfully following the decision of the coordinate Bench in the assessee's own case and the decision of the Hon'ble Bombay High Court in the case of GKR Charities, do not find any reason to disturb the findings and order of the CIT(A).” 5. Thus, respectfully following the decision of Co-ordinate Bench, which was confirmed by Hon’ble Bombay High Court, we do not find any reason to disturb the order of ld. CIT(A). As a result appeal filed by the revenue stands dismissed. फलतः jktLo �वारा दा�खल क� गई अपील ukमंजूर क� जाती है. Order pronounced in the open court on 13th January,2017. आदेश क� घोषणा खुले �यायालय म� �दनांक 13 जनवर�,2017 को क� गई । Sd/- Sd/- (राजे�� / RAJENDRA (iou iou iou �संह / PAWAN SINGH)) iou लेखा सद�य / ACCOUNTANT MEMBER �या�यक सद�य / JUDICIAL MEMBER मुंबई/Mumbai,�दनांक/Date: 13.01.2017 SK आदेश क� ��त�ल�प अ�े�षत/Copy of the Order forwarded to : 1. Assessee /अपीलाथ� 2. Respondent /��यथ� 3.The concerned CIT(A)/संब�ध अपील�य आयकर आयु�त, 4.The concerned CIT /संब�ध आयकर आयु�त 5. DR “J” Bench, ITAT, Mumbai /�वभागीय ��त�न�ध tstststs खंडपीठ,आ.अ.�याया.मुंबई 6. Guard File/गाड� फाईल स�या�पत ��त //True Copy// आदेशानुसार/ BY ORDER,

उप/सहायक पंजीकार Dy./Asst. Registrar आयकर अपील�य अ�धकरण, मुंबई /ITAT, Mumbai