A D I T (E) - II(1) 5th Floor, Piramal Chambers Lalbaug, Mumbai 400012 VS.M/s. Gharda Foundation 48, Hill Road, Gharda House Bandra (E), Mumbai 400050
January, 29th 2014
IN THE INCOME TAX APPELLATE TRIBUNAL
"G" Bench, Mumbai
Before Shri D. Manmohan, Vice President
and Shri N.K. Billaiya, Accountant Member
ITA No. 6619/Mum/2012
(Assessment Year: 2009-10)
A D I T (E) - II(1) M/s. Gharda Foundation
5th Floor, Piramal Chambers Vs. 48, Hill Road, Gharda House
Lalbaug, Mumbai 400012 Bandra (E), Mumbai 400050
PAN - AAATG0260C
Appellant by: Shri B.P.K. Panda
Respondent by: Shri A.H. Dalal
Date of Hearing: 20.01.2014
Date of Pronouncement: 20.01.2014
Per D. Manmohan, V.P.
This appeal by the Revenue is directed against the order dated
06.08.2012 passed by the CIT(A)-1, Mumbai and it pertains to A.Y. 2009-10.
2. The following grounds were urged by the Revenue: -
"1. That on the facts and circumstances of the case and in law, the
Ld. CIT(A) erred in directing the AO to allow the claim of
depreciation amounting to Rs.2,73,80,195/-, relying on the
decision of the Hon'ble Bombay High Court in the case of CIT Vs.
Institute of Banking Personnel Services reported in 264 ITR 110
(Bom) ignoring the ratio of judgement of Hon'ble Supreme Court in
the case of Escorts Ltd. Vs. Union of India (199 ITR 43) wherein
Hon'ble Supreme Court has held that double deduction cannot be
presumed if the same is not specifically provided by law.
2. That without prejudice to ground No. 1 above, the Ld. CIT(A) ought
to have held that deduction of depreciation u/s 32 which falls
under the head `Profit and gains of business and profession' of
the Income Tax Act, 1961 would not be available to the assessee
trust whose income is otherwise not assessable under the above
3. That without prejudice to ground Nos. 1and 2 above, the Ld.
CIT(A) ought to have rejected the claim of depreciation, since the
written down value of the asset, the cost of which has already
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M/s. Gharda Foundation
been allowed as deduction on account of application of income ,
would be treated as NIL for the purpose of depreciation."
3. The assessee is admittedly a charitable trust, duly registered under
section 12A of the Act. In the return of income the assessee declared total
income/deficit at Nil. Assessee has claimed an amount of `2,74,32,935/- on
account of depreciation under section 11(1)(a) of the Act. The AO rejected
the claim 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. that
allowing depreciation would amount to claim of double deduction.
4. Aggrieved, assessee contended before the CIT(A) that expenditure on
purchase of assets is not claimed as revenue expenditure and only
depreciation is claimed. He also relied on the decision of the Hon'ble
Bombay High Court in the case of Institute of Banking 264 ITR 114 in
support of his contention. The learned CIT(A) followed the decision of the
Hon'ble Bombay High Court (supra) and allowed the claim of depreciation.
Aggrieved, Revenue is in appeal before us.
5. 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
6. On the other hand, the learned counsel for the assessee submitted
that the assessee has not claimed any double deduction since the
expenditure incurred on purchase of capital assets was not treated as
application of income for charitable purpose; in fact only depreciation on the
cost of assets was claimed as deduction. At any rate, the issue is even
otherwise covered by the decision of the Hon'ble Bombay High Court (supra).
7. We have carefully considered the rival submissions and perused the
record. It may be noticed that in the grounds of appeal filed before the
learned CIT(A) the assessee raised a specific issue (see ground No. 2.2) to
contend that the appellant had only claimed depreciation on fixed assets
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M/s. Gharda Foundation
and had not claimed any deduction in respect of actual cost of fixed assets
expended by it and thus the question of double deduction does not arise.
Even otherwise the issue stands squarely covered by the decision of the
Hon'ble Bombay High Court. Under these circumstances I do not find any
infirmity in the order passed by the learned CIT(A).
8. In the result, appeal of the Revenue is dismissed.
Order pronounced in the open court on 20th January, 2014.
(N.K. Billaiya) (D. Manmohan)
Accountant Member Vice President
Mumbai, Dated: 20th January, 2014
1. The Appellant
2. The Respondent
3. The CIT(A) I, Mumbai
4. The Director of Income Tax (E), Mumbai
5. The DR, "G" Bench, ITAT, Mumbai
ITAT, Mumbai Benches, Mumbai