IN THE INCOME TAX APPELLATE TRIBUNAL
"SMC" Bench, Mumbai
Before Shri D. Manmohan, Vice President
ITA No. 3810/Mum/2015
(Assessment Year: 2010-11)
Income Tax Officer Burhani Qardan Hasan A Trust
(Exemption) - 1(1) 3rd Floor, Amatullah Mamzil
5th Floor, Room No. 508 Vs. 65, Bazargate Street, Fort
Pirmal Chambers, Lalbaug Mumbai 400001
Mumbai 400012
PAN - AAATB0459J
Appellant Respondent
Appellant by: Shri K. Ravikiran
Respondent by: None
Date of Hearing: 05.10.2015
Date of Pronouncement: 05.10.2015
ORDER
Per D. Manmohan, V.P.
This appeal by the Revenue is directed against the order passed
by the CIT(A)-7, Mumbai and it pertains to A.Y. 2010-11.
2. Following grounds were urged before the Tribunal: -
"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.22,24,298/- 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 applicatio n
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
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Income Tax Officer
appeal, 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 of the case and in law the ld.
CIT(A) erred in allowing the carry forward of deficit of
Rs.48,62,100/- and allowing set off against the income
of the subsequent years, allowing the deficit will
tantamount to double deduction on account of expenditure
out of exempt income.
4. Whether, on the facts and in the circumstances of the
case and in law, the Ld CIT(A) erred in allowing to
carry forward of deficit on account of excess
expenditure without appreciating the fact that this
would have the effect of granting double benefit to the
assessee, first as 'accumulation' of income
u/s.11(1)(a) or as corpus donation u/s.11(1)(d) in
earlier years/current year and then as 'application'
of income u1s.11(1)(a) in the subsequent years which
was legally not permissible.?
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 assessee 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."
3. None appeared on behalf of the assessee though notice was
served by RPAD. I therefore proceed to dispose of the appeal
exparte, qua the assessee.
4. Assessee is admittedly a charitable trust with the main object of
providing interest free loans to those deserving and to provide relief
to the poor. Assessee is registered under section 12A of the Act as a
charitable society. For the year under consideration assessee declared
deficit of `48,62,100/- for claiming exemption under section 11 of the
Act. It has also filed, along with its return, Income & Expenditure
Account, Balance Sheet and Audit Report in Form No. 10B. When the
case was taken up for scrutiny the AO noticed that the assessee
claimed depreciation of `22,24,298/- on fixed assets. The expenditure
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Income Tax Officer
incurred on acquiring these assets has already been claimed as
application of income in the earlier years. According to the AO,
claiming depreciation on fixed assets would amount to claim of double
deduction, which is not permissible in the light of the ratio laid down
by the Hon'ble Supreme Court in the case of Escorts Ltd. vs. UOI 199
ITR 43 and accordingly the claim of depreciation was rejected.
5. It was also noticed that the assessee claimed benefit of carry
forward of deficit. In this regard the AO observed that the deficit
arises on account of excess expenditure over the revenue and in such
a situation one has to explain as to what is the source of excessive
expenditure over the revenue generated. Naturally such funds can
come from three sources, i.e. when corpus funds are utilised,
accumulations are utilised or loan raised. In the instant case no loan
was raised. On corpus funds and accumulations the assessee has
enjoyed exemption and hence permitting carry forward will amount to
double deduction, which is contrary to law. Here also the AO relied
upon the decision of the Hon'ble Rajasthan High Court in the case
Akhey Ram Ishwari Prasad Trust vs. CIT 130 Taxman 827.
Accordingly he disallowed the claim of benefit of carry forward.
6. On an appeal filed by the assessee the learned CIT(A) followed
the decision of the Hon'ble Bombay High Court in the case of CIT vs.
Institute of Banking 264 ITR 110 to hold that the claim of
depreciation as well as carry forward benefit would not amount to
claim of double deduction and accordingly decided the matter in
favour of the assessee.
7. Aggrieved, Revenue is in appeal before the Tribunal. At the
time of hearing the learned D.R. admitted that the decision of the
Hon'ble Supreme Court in the case of Escorts Ltd. (supra) is not
directly on the issue on hand whereas the Hon'ble Bombay High Court
has considered this issue and held that while purchasing the asset it
would amount to application of income for charitable purposes but at
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Income Tax Officer
the same time statutory deduction is allowable on the assets so
purchased which would not amount to double deduction. In fact in
assessee's own case for earlier year the CIT(A) allowed the plea of
the assessee which was also taken on record by the learned CIT(A).
However, the learned D.R. relied upon the view taken by the AO.
8. Having regard to the circumstances of the case I am of the view
that the learned CIT(A), having followed the decision of the
jurisdictional High Court as well as the decision of his predecessor in
assessee's own case for earlier year, his order does not call for any
interference. I therefore dismiss the appeal filed by the Revenue.
Order pronounced in the open court on 5th October, 2015.
Sd/-
(D. Manmohan)
Vice President
Mumbai, Dated: 5th October, 2015
Copy to:
1. The Appellant
2. The Respondent
3. The CIT(A) 7, Mumbai
4. The Pr. CIT (Exemption), Mumbai
5. The DR, "SMC" Bench, ITAT, Mumbai
By Order
//True Copy//
Assistant Registrar
ITAT, Mumbai Benches, Mumbai
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