The Director of Income Tax (Exemption) vs The Watch Tower Bible and Tract Society of India

The Revenue is aggrieved by the order passed by the Income Tax Appellate Tribunal, Mumbai Bench dated 6 June 2012. the order is passed in Income Tax Appeal No. 4283/Mum/2011 for the Assessment Year 2007-08.

Mr. Sureshkumar submits that the Appeal raises substantial questions of law. Allowance of depreciation on the assets, costs of which have already been allowed as deduction on account of application of income, would amount to double deduction and the judgment of the Hon''ble Supreme Court in the case of Escort vs. Union of India, 1999 ITR page 43 has been erroneously left out of consideration. It is in these circumstances, the Appeal deserves to be admitted and as similar question has been admitted in Income Tax Appeal No. 1413 of 2012 on 5 March 2014 by this Court.

On the other hand, Mr. Vaidya, learned Counsel for the Assessee, relies upon several orders which have been passed from time to time by us dealing with the same questions and refusing to admit them as substantial questions of law. In relation to that reliance is placed on an order in Income Tax Appeal No. 822 of 2012 decided on 12 September 2014, then, in Income Tax Appeal No. 797 of 2012 decided on 26 September 2014.

In this case, as a fact, the Tribunal found that the Assessee filed the return of income declaring the income at ''Nil'' and the assessment order was passed determining the Assessee''s income as Rs.1,75,88,387. The claim of depreciation to the extent of Rs.2,07,45,118/- claimed by the Assessee on printing machinery & equipments, computers etc. was denied. The Assessing Officer also has denied exemption under section 11 of the IT Act and in the amount claimed by the Assessee. The order of the Assessing Officer was challenged in Appeal before the Commissioner, who partly allowed it. In dealing with the claim of double deduction raised before us, the Assessing Officer''s view has been reversed by the Commissioner by applying the ratio of the decision of this Court in the case of Commissioner of Income Tax Vs. Institute of Banking Personnel Selection (IBPS), and in the case of The Commissioner of Income Tax, Vidarbha, Nagpur Vs. The Nagpur Hotel Owners'' Association Nagpur, .

The Tribunal referred to this aspect and concluded that the Assessee in this case had pointed out that the claim of depreciation stands fully covered by these two judgments. It was pointed out that the income was applied initially for acquisition of the assets. Later on depreciation was claimed on the use of the assets and from year of its acquisition and later on.

Previously, such a question was raised by the Revenue in Income Tax Appeal No. 797 of 2012 decided on 26 September 2014. While negativing the arguments of Revenue, this Court has relied upon the earlier judgment of this Court rendered in the case of DIRECTOR OF INCOME TAX (EXEMPTION) Vs. FRAMJEE CAWASJEE INSTITUTE., . The distinction, as made therein, has been followed in the later decision in the case of Commissioner of Income Tax Vs. Institute of Banking Personnel Selection (IBPS), , the Division Bench, to which one of us (S.C. Dharmadhikari, J.) was a party, then held that the two Division Bench judgments conclude that the Assessee in Framjee''s case was a Trust. It derived its income from the depreciation assets. The Assessee took into account the depreciation of those assets in computing the income of the Trust. The Income Tax Officer held in that case that depreciation could not be taken into account because full capital expenditure has been allowed in the year of acquisition of the assets. The Tribunal in that case took a view that what the Assessing Officer really meant was that the amount spent on acquiring those assets has been treated as application of income of the Trust in the year in which the income was spent in acquiring these assets. This does not mean that in subsequent years, depreciation in respect of those assets cannot be taken into account. That is how the question was answered by the Division Bench of this Court in Framjee''s case. That view has been consistently followed and applied in the similar situation. It is precisely that view which has been applied in this case and on identical facts to the Assessee before the Tribunal and before us. The Tribunal has also referred to the judgments of the Hon''ble Supreme Court and held that there is no merit in the contention of the Departmental Representative that the decision of the Hon''ble Supreme Court in The Commissioner of Income Tax, Vidarbha, Nagpur Vs. The Nagpur Hotel Owners'' Association Nagpur, , with regard to claim of depreciation would in any way enable it to hold that the Commissioner has committed an error of law apparent on the face of the record. The reasons in para 14 of the order under challenge upholding the conclusion of the Commissioner, therefore, do not suffer from any error of law apparent on the face of the record.

We do not find that this view taken by us and in another order in the case of The Director of Income Tax v/s. Parmeshwaridevi Gordhandas Garodia Charitable Trust, Income Tax Appeal No. 822 of 2012, in any way runs contrary to the order of admission of an Appeal bearing Income Tax Appeal No. 1413 of 2012, on 5 March 2014.

In such circumstances, we conclude that the present Appeal does not raise any substantial question of law. It is accordingly dismissed. No costs.