IN THE INCOME TAX APPELLATE TRIBUNAL "J" BENCH, MUMBAI
BEFORE SHRI VIJAY PAL RAO, JUDICIAL MEMBER AND
SHRI D. KARUNAKARA RAO, ACCOUNTANT MEMBER
./I.T.A. No.5912/M/2011
( / Assessment Year: 2008-2009)
M/s. Jawaharlal Nehru Port / Addl. CIT,
Trust, Administration Building, Panvel.
Vs.
Sheva, Tal Uran, Mumbai.
./ PAN : AABCJ 2372 E
( /Appellant) .. ( / Respondent)
/ Appellant by : Shri H.K. Panda, AR
/ Respondent by : Shri S.D. Srivastava, CIT-DR
/ Date of Hearing : 04.12.2013
/Date of Pronouncement : 11 .12.2013
/ O R D E R
PER D. KARUNAKARA RAO, AM:
This appeal filed by the assessee on 24.8.2011 is against the order of the CIT
(A)-1, Thane dated 27.5.2011 for the assessment year 2008-2009.
2. In this appeal, assessee raised the following grounds, which read as under:
"1. On the facts and circumstances of the case an in law, the CIT (A) erred in
confirming the action of the Ld AO assessing the income of the appellant as
business income under section 11(4) of the Act, stating the reason that the
appellant is carrying on the business which is incidental to the attainment of
the object, instead of assessing the same u/s 11(1)(a) of the Act as income
derived from property held.
Without prejudice to the ground no.1
1. On the facts and circumstances of the case and in law, the CIT (A) erred in
not directing the AO to delete the addition of container income of Rs.
24,67,000/- even though the same is offered to taxation in the AY 2009-2010.
2. On the facts and in the circumstances of the case and in law, CIT (A) erred in
not directing the AO to allow the claim of depreciation as application of
income of Rs. 16,83,16,468/- in the impugned order.
3. On the facts and circumstances of the case and in law the Ld CIT (A) erred in
not directing the AO to allow the claim of exemption u/s 10(34) of the Act
of Rs. 10,42,71,151/- in the impugned order.
4. On the facts and in the circumstances of the case and in law, the Ld CIT (A)
erred in not directing the AO to allow the claim of adjusting the carry
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forward of excess application of income of the earlier years claimed in
the computation of total income.
5. On the facts and circumstances of the case and in law the Ld CIT (A) erred in
not directing the AO not to charging interest u/s 234D of the Act."
3. At the outset, Shri H.K. Panda, AR, Ld Counsel for the assessee mentioned
that ground no.1 is not pressed. Therefore, the said ground no.1 is dismissed as
not pressed. Later, bringing our attention to the 5 grounds raised by the assessee
without prejudice, ld Counsel stated that the ground no.1, which relates to
addition of Rs. 24,67,000/- and the said income was offered in the AY 2009-2010.
He took objection to the fact that the AO made addition of the said amount in this
year without granting relief by way of reduction of income returned in the AY 2009-
2010. The said amount cannot be added otherwise and therefore, seeks the
direction of the Tribunal to AO for corresponding reduction of income in the
assessment year, if they insist on addition in the Assessment Year 2008-2009.
Further, he also made a statement at Bar stating that he shall have no objection for
making addition in this year. However, he seeks reduction in the return of income of
the subsequent assessment year.
4. On hearing the Ld Counsel, we find merit in the argument. Accordingly, we
direct the AO to grant relief in the subsequent assessment years after granting a
reasonable opportunity of being heard to the assessee. Accordingly, ground no.1
is allowed for statistical purposes.
5. Referring to ground no.2, which relates to depreciation of Rs.
16,83,16,468/- as application income, Ld Counsel mentioned that an identical issue
was adjudicated by the ITAT in assessee's own case vide ITA No.1434/M/2010
(AY 2006-2007) dated 21.11.2012 wherein the Tribunal has decided the issue in
favour of the assessee. In this regard, Ld Counsel bought our attention to para 18
to 24 of the said order of the Tribunal.
6. On the other hand, Ld DR relied on the orders of the Revenue Authorities.
7. We have heard both the parties and perused the orders of the Revenue
Authorities as well as the order of the Tribunal (supra) dated 21.11.2012. On
perusal of the said order of the Tribunal, we find that paras 22 to 24 are relevant
in this regard and the same are reproduced here under.
"22. We have carefully considered the submissions of the rival parties and
perused the material available on record. We find that the facts are not in dispute.
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We further find that this issue is squarely covered in favour of the assessee by the
decisions of the Tribunal. Recently, this Bench of the Tribunal has considered the
similar issue in the case of ADIT (E) vs. Shri Vile Parle Kelvani Mandal in ITA
No.7106/Mum/2011 for A.Y. 2008-09 order dtd. 5-10-2012 and after considering
various decisions including the decision in Lissie Medical Institutions vs. CIT (2012)
348 ITR 344 (Ker.) has held in para 14-15 of the order as under:-
"14. We have carefully considered the submissions of the rival parties and
perused the material available on record. We find that the facts are not in dispute. In
the present case the assessee is not claiming double deduction on account of
depreciation as has been held by the Revenue Authorities. The income of the
assessee being exempt, the assessee is only claiming that depreciation should be
reduced from the income for determining the percentage of funds which have to be
applied for the purpose of Trust. Thus there is no double deduction claimed by the
assessee. Recently the Hon'ble Punjab & Haryana High Court in CIT vs. Market
Committee, Pipli (2011) 330 ITR 16 (P&H) after distinguishing the decision of the
Hon'ble Supreme Court in Escorts Ltd. vs. UOI (1993) 199 ITR 43 (SC) while relying
on various decisions inclu ding the decision of Hon'ble jurisdictional High Court in
Institute of Banking (supra) has held vide penultimate para 10 as under:-
"In the present case, the assessee is not claiming double deduction on account of
depreciation as has been suggested by learned counsel for the Revenue. The
income of the assessee being exempt, the assessee is only claiming that
depreciation should be reduced from the income for determining the percentage of
funds which have to be applied for the purposes of the trust. There is no double
deduction claimed by the assessee as canvassed by the Revenue. The judgment of
the hon'ble Supreme Court in Escorts Ltd. case [1993] 199 ITR 43 is distinguishable
for the above reasons. It cannot be held that double benefit is given in allowing
claim for depreciation for computing income for purposes of section 11. The
questions proposed have, thus, to be answered against the Revenue and in favour
of the assessee".
15. In the absence of any distinguishing feature brought on record by the
Revenue, we respectfully following the consistent view of the Hon'ble jurisdictional
High Court (supra), which is binding on us and the consistent view of the co-ordinate
Benches of the Tribunal including the decision in GKR Charities (supra) wherein the
Tribunal after considering the decision cited by the ld. D.R. in Lissie Medical
Institutions, Kochi has held that it is settled principle of law that where there are two
different decisions of High Courts, one favourable to the assessee should be followed,
upheld the order of the ld. CIT(A) in deciding the issue in favour of the assessee and
accordingly we are inclined to uphold the finding of the ld. CIT(A) in deleting the
disallowance made by the A.O. The ground taken by the Revenue is, therefore,
rejected".
23. In ACIT vs. Shri Adichunchanagiri Shikshana Trust (2012) 19 ITR (Trib)828
(Bangalore) the Tribunal after considering the decisions including the decision in Dy.
Director of Income Tax (Exemptions) v. Lissie Medical Institutions (2010) 8
Taxmann.com 82 (Cochin ITAT) and Lissie Medical Institutions v. CIT (2012) 348 ITR
344 (Ker) has upheld the order of the ld. CIT(A) in directing the A.O. to grant the
depreciation.
24. In the absence of any distinguishing feature brought on record by the
Revenue we respectfully following the consistent view of the Tribunal hold that there
is no double deduction and hence the assessee is entitled to the deduction of
depreciation. The ground taken by the assessee is, therefore, allowed. "
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8. Considering the above settled nature of the issue and following the principle
of consistency, we are of the opinion that there is no double deduction and hence,
the assessee is entitled to the deduction of depreciation. Accordingly, ground no.2
raised by the assessee is allowed.
9. Referring to ground no.3, which relates to exemption u/s 10(34) of Rs.
10,42,71,151/- Ld Counsel mentioned that the similar issue was adjudicated by the
Tribunal vide in assessee's own case vide ITA No.1434/M/2010 (AY 2006 -2007)
dated 21.11.2012 wherein the Tribunal has decided the issue in favour of the
assessee. In this regard, Ld Counsel bought our attention to para 12 to 17 of the
said order of the Tribunal.
10. On the other hand, Ld DR relied on the orders of the Revenue Authorities.
11. We have heard both the parties and perused the orders of the Revenue
Authorities as well as the order of the Tribunal (supra) dated 21.11.2012. On
perusal of the said order of the Tribunal, we find that paras 16 and 17 are relevant
in this regard and the same are reproduced here under.
"16. We have carefully considered the submissions of the rival parties and perused
the material available on record. We find that the ld. CIT(A) after considering the
submission of the assessee and the order of the A.O. while distinguishing the decisions
in CIT vs. Silk & Art Silk Mills Association Ltd. (1990) 182 ITR 38 (Bom) and His Holiness
Silasri Kasivasi Muthukumaraswami Thambiran and Others v. Agricultural I.T.O. (1978)
113 ITR 889 (Mad.) passed a very brief order on this issue which is as under (para
16.5):-
"These two cases are not relevant for the case of the appellant. Even if the
income is exempt, the same has to be included in the gross receipts and has
to be applied as per provisions of section 11(1) because income has to be
computed in commercial manner. Accordingly, I take the view that the action
of the A.O. in this connection is in order and accordingly the ground is
dismissed."
17. Since the ld. CIT(A) has not adjudicated the issue properly and has not passed
a reasoned order, we are of the view that in the interest of justice the matter should go
back to the file of the ld. CIT(A) and accordingly we set aside the order passed by the
ld. CIT(A) and send back the matter to his file to decide the same afresh in the light of
our observation hereinabove and according to law including the decision of Hon'ble
Bombay High Court in the case of General Insurance Corporation of India vs. DCIT
(2012) 204 Taxman 587 (Bom) after providing reasonable opportunity of being heard to
the assessee. The ground taken by the assessee is, therefore, partly allowed for
statistical purpose."
12. Considering the above settled nature of the issue and following the principle
of consistency, we are of the opinion that this ground should be remanded to the
files of the AO to decide the matter after. AO is also directed write a speaking order
5
in the light the relevant precedents and in accordance with law after providing a
reasonable opportunity of being heard to the assessee. Accordingly, ground no.3
is allowed for statistical purposes.
13. Referring to ground no.4, which relates to adjusting the carry forward of
excess application of income of earlier years claimed in computation of income. Ld
Counsel mentioned that the similar issue was adjudicated by the Tribunal vide in
assessee's own case vide ITA No.1434/M/2010 (AY 2006-2007) dated 21.11.2012
wherein the Tribunal has decided the issue in favour of the assessee. In this regard,
Ld Counsel bought our attention to para 25 & 30 of the said order of the Tribunal.
14. On the other hand, Ld DR relied on the orders of the Revenue Authorities.
15. We have heard both the parties and perused the orders of the Revenue
Authorities as well as the order of the Tribunal (supra) dated 21.11.2012. On
perusal of the said order of the Tribunal, we find that para 30 is relevant in this
regard and the same is reproduced here under.
"30. We have carefully considered the submissions of the rival parties and perused
the material available on record. We find that it has been held by the A.O. that the
exemption u/s 11 in the earlier years was not claimed by the assessee and the returns
are barred by limitation, therefore, the question of excess application does not arise.
At the time of hearing the ld. Counsel for the assessee has placed on record the copy
of the Tribunal order in ITA No. 2206 to 2208/M/2009 for A.Y. 2003-04 order dtd. 30-
9-2010 since reported in (2011) 48 SOT 129 (Mum)(Trib) (URO). On going through
the same we find that the Tribunal (supra) has remitted the matter back to the file of
the A.O. with a direction "to examine the matter, on merit, for eligibility to tax
exemption as a result of the registration u/s 12AA now available to the assessee and
in the light of the requisite audit report and other documents now filed by the
assessee". Since the assessments for the earlier assessment years are still pending,
therefore, we are of the view that, in the interest of justice, the matter should go back
to the file of the A.O. and accordingly we set aside the order passed by the Revenue
authorities on this account and send back the matter to the file of the A.O. to decide
the same afresh in the light of our observation hereinabove and according to law after
providing reasonable opportunity of being heard to the assessee. The ground taken
by the assessee is, therefore, partly allowed for statistical purpose."
16. Considering the above, we are of the opinion that since, the assessments for
the earlier assessment years are still pending, therefore, in the interest of justice,
this ground should also be remanded to the files of the AO for adjudicating the
matter afresh. Accordingly, we set aside the orders of the Revenue Authorities and
remit the matter to the files of the AO, with identical directions, to decide the same
afresh after affording a reasonable opportunity of being heard to the assessee.
Accordingly, ground no.4 is allowed for statistical purposes.
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17. Referring to ground no.5, which relates to interest u/s 234D of the Act, Ld
Counsel mentioned that an identical issue was adjudicated by the Tribunal vide in
assessee's own case vide ITA No.1434/M/2010 (AY 2006-2007) dated 21.11.2012
wherein the Tribunal has decided the issue in favour of the Revenue. In this regard,
paras 35 to 37 of the said order of the Tribunal are relevant.
18. On the other hand, Ld DR relied on the orders of the Revenue Authorities.
19. We have heard both the parties and perused the orders of the Revenue
Authorities as well as the order of the Tribunal (supra) dated 21.11.2012. On
perusal of the said order of the Tribunal, we find that para 35 to 37 are relevant in
this regard and the same is reproduced here under.
"35. We have carefully considered the submissions of the rival parties and
perused the material available on record. We find that the issue before us is no
longer res integra. The Hon'ble Bombay High Court in CIT vs. M/s Indian Oil
Corporation Ltd. (2012) 210 Taxman 466 (Bom) vide para 27 of the judgment has
held as under:-
"27) In view of the above, we hold that the decision of the Tribunal in
ITO .V. Ekta Promoters Pvt. Ltd. reported in 113 ITD 719 which has
been followed in the impugned order by the Tribunal is not correct.
One more aspect of the matter which must be borne in mind is that till
such time as the assessment proceedings are completed in respect of
any assessment year, the amendment made to the Act would be
applicable even in case of pending proceedings. It is not the case of the
respondent that the proceeding in regard to refund which has been
granted under section-143(1) of the Act are concluded and final. The
refund which has been granted under section 143(1) of the Act is
provisional, to be finally determined when final assessment order is
passed under section 143(3) of the Act. Explanation-2 to section 234D
of the Act makes it clear that it would be applicable to pending
proceedings i. e. where assessments in respect of such assessment
year is not completed on 1/6/2003".
36. Recently the Special Bench of the Tribunal in Kotak Mahindra Capital Co. Ltd.
vs. ACIT (2012) 138 ITD 57 (Mum) [SB] has also considered the similar issue and
has held vide para 48 of the order as under:-
"48. As regards the issue involved in ground no.3 relating to levy of
interest u/s.234D, it is observed that Explanation 2 has been inserted
in sec.234D by the Finance Act, 2012 with retrospective effect from
1.6.2003 clarifying that the provisions of sec.234D shall also apply to
the assessment year commencing before the first day of June, 2003 if
the proceedings in respect of such assessment year is completed after
the said date. In the present case the assessment year involved is AY
2003-04 and since the proceedings in respect of the said year has
been completed on 30.11.2005, we are of the view that the assessee is
liable to pay an interest u/s.234D as per Explanation 2 to sec.234D
inserted by the Finance Act, 2012 with retrospective effect from
1.6.2003. In that view of the matter we uphold the impugned order of
the Ld. CIT (A) confirming the interest charged by the AO u/s.234D
and dismiss ground no.3 of the assessee's appeal".
37. Respectfully following the above decisions, we are of the view that the A.O.
was justified in charging the interest u/s 234D of the Act and accordingly we decline
7
to interfere with the order passed by the ld. CIT(A) on this account. The ground
taken by the assessee is, therefore, rejected. "
20. Considering the above settled nature of the issue of charging the interest
under section 234D of the Act at the level of Bombay High Court in the case of CIT
vs. M/s. Indian Oil Corporation Ltd [2012] 210 Taxmann 466 (Bom), wherein it was
held that "............Explanation 2 to section 234D of the Act makes it clear that it
would be applicable to pending proceedings i.e., where assessment in respect of
such assessment year is not completed on 1.6.2003". Respectfully following the
above cited decisions and the ground taken by the assessee is rejected.
Accordingly, ground no.5 is dismissed.
21. In the result, appeal of the assessee is partly allowed for statistical purposes.
Order pronounced in the open court on 11th December, 2013.
Sd/- Sd/-
(VIJAY PAL RAO) (D. KARUNAKARA RAO)
JUDICIAL MEMBER ACCOUNTANT MEMBER
Mumbai; 11.12.2013
.../ OKK , Sr. PS
/Copy of the Order forwarded to :
1. / The Appellant
2. / The Respondent.
3. () / The CIT(A)-
4. / CIT
5. , , / DR,
ITAT, Mumbai
6. / Guard file.
//True Copy//
/ BY ORDER,
/ (Dy./Asstt. Registrar)
, / ITAT, Mumbai
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