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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
                          "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                              Respondent

                   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 2 ITA No. 6619/Mum/2012 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 3 ITA No. 6619/Mum/2012 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. Sd/- Sd/- (N.K. Billaiya) (D. Manmohan) Accountant Member Vice President Mumbai, Dated: 20th January, 2014 Copy to: 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 By Order //True Copy// Assistant Registrar ITAT, Mumbai Benches, Mumbai n.p.
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