DCIT(EXEMPTION), CIRCLE-1(1), DELHI V. KARMANYA EDUCATION FOUNDATION, DELHI

ITA 3479/DEL/2024

AI Insights

The case revolves around an appeal by the Revenue against the order of the CIT(A) which had deleted additions made by the AO on account of payments made by Karmanya Education Foundation to its holding company and other related parties. The AO had questioned the reasonableness of these payments under sections 11, 12, and 13 of the Income Tax Act, citing that they were not made at arm's length and did not follow a qualitative screening process. The CIT(A) found that the payments were justified and supported by agreements and market comparisons, leading to the deletion of the additions. The Tribunal upheld the CIT(A)'s decision, emphasizing the lack of evidence from the AO to support his claims.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 396980 (ITAT-DELHI)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 28-05-2025
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: C
• Assessment Year: 2017-2018
• Other Referred Cases: CIT Vs Nagarathu Vaisiyargal Sangam (Mad) 246 ITR 164, State of Andhra Pradesh vs Kone Elevators India Ltd (2005) 181 ELT 156
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: DAYAINDER SINGH SIDHU
• Assessee Lawyers: SACHIT JOLLY
• Keywords: Depreciation; Fair market value; Rejection of books of accounts; Rule of consistency; Capital expenditure
• Section: 143(3); 11; 12A; 12

Judgement Text

" IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCHES: C : NEW DELHI BEFORE SHRI ANUBHAV SHARMA, JUDICIAL MEMBER AND SHRI AVDHESH KUMAR MISHRA, ACCOUNTANT MEMBER ITA No.3479/Del/2024 Assessment Year: 2017-18 DCIT (Exemption), Circle-1(1), Delhi. Vs Karmanya Education Foundation, Y-89, Ground Floor, Hauz Khas, Delhi – 110 016. PAN: AACCC6567F (Appellant) (Respondent) Assessee by : Shri Sachit Jolly, Sr. Advocate; Mrs. Mansha Anand, Advocate; Shri Aditya Rathore, Advocate; Sh Abhyudaya Shankar Bajpai, Adv;& Shri Sohum Dua, Advocate Revenue by : Shri Dayainder Singh Sidhu, CIT- DR Date of Hearing : 16.04.2025 Date of Pronouncement : 28.05.2025 ORDER PER ANUBHAV SHARMA, JM: This appeal is preferred by the Revenue against the order dated 24.05.2024 of the Commissioner of Income-tax (Appeals), NFAC, Delhi (hereinafter referred to as the Ld. First Appellate Authority or ‘the Ld. FAA’, for short) in Appeal No.CIT(A), Delhi-40/10496/2019-20 arising out of the appeal before it against the order dated 29.12.2019 passed u/s 143(3) of the ITA No.3479/Del/2024 2 Income Tax Act, 1961 (hereinafter referred as ‘the Act’) by the DCIT, Circle Exempt 1(1), Delhi (hereinafter referred to as the Ld. AO). 2. The grounds of appeal taken by the Revenue read as under:- “1. On the facts and in the circumstances of the case and in law, the Id. CIT(A) for the AY 2017-18 has erred in deleting the addition of Rs.3,30,82,692/- (25% of Rs.11,90,73,294/-+ Rs.1 ,32,57,474/-) on account of payment made to related parties by treating the payments was made as per fair market value. The Ld. CIT(A) has not take into consideration that the payments have been made by the assessee company to its Holding Company without following any qualitative screening process to select the most suitable vendor, which could provide the assessee company, the same quality services and that too at extremely competitive rates. Therefore, the payment of amounts paid to specified person of the assessee company cannot be treated as reasonable and hence the provision of section 13(1 )(c) are clearly attracted in the case of the assessee. 2. On the facts and in the circumstances of the case and in law, the Ld.CIT(A) for the AY 2017-18 has erred in deleting the addition of Rs.21,79,000/- by stating that Due to the violation of Section 13, the assessee cannot be denied the benefit of Sections 11 and 12. Since the benefit u/s 11, 12 and 13 of the Act has been denied the contribution received by the assessee is part of its income. 3. On the facts and in the circumstances of the case and in law, the Ld.C1T(A) has erred in deleting the addition of Rs. 40,80,000/- in respect of royalty. The royalties paid by the foundation to its holding company along with its nominees, who holds the entire share capital of the assessee company, that these payments do not reflect genuine transactions but rather a means to transfer/divert application income within related entities which is clear violation of Section 13(3) of the Act. 4. O n the facts and in the circumstances of the case and in law, the Ld. CIT(A) has erred in deleting the addition of Rs.25,28,757/- on account of Corporate guarantee. It will be worth mentioning here that the subsidiary company has not charged any amount towards the Corporate Guarantee extended by it which raises significant questions about the transaction's adherence to arm's length principles and its financial prudence. 5. On the facts and in the circumstances of the case and in law, the Id. CIT(A) has erred in deleting the addition of 1,51,13,775/- in respect of depreciation claimed by the assessee. It may be noted here that the Ld. CIT(A) has observed that he had claimed cost of asset as application of ITA No.3479/Del/2024 3 fund during A.Y. 2017-18 and depreciation was not claimed as an application of fund. Further, on perusal of audit report it was found that the assessee has claimed depreciation amounting to Rs. 1,51,13,775/- and no definitive documents have been provided by the assessee to indicate whether the depreciation claimed pertains to the current year or earlier years. In view of this if the capital expenditure in respect of assessee has already been allowed as application of income in previous years then the claim of depreciation cannot be allowed, If the depreciation is allowed, the assessee shall have the double benefit of both application and depreciation. 6. The appellant may be permitted to add, alter or amend any of the foregoing ground in appeal.” 3. The assessee company was incorporated on 24.03.2005 with an object of establishing and running educational and research institutions and to take over and administer the Colors Foundation, a Trust registered with Sub- Registrar-III, New Delhi on 27.02.1996 with all its assets and liabilities including the management and control of affairs of various schools and institutions run by the said Trust. The assessee was accorded registration u/s 12A of the Act on 30.05.2006. During the year under consideration, the assessee was running nine schools in Gujarat and Rajasthan. The AO has made an addition of Rs.3,30,82,692/- for the reason that alleged benefit has been provided to persons specified in section 13(3) of the Act. The AO has taken into consideration the payment of Rs.11,90,73,294/- made to Altus Learning Pvt. Ltd. on account of ‘management fees’ and ‘other expenses’ and a payment of Rs.1,32,57,474/- made to YALI Education Company Pvt. Ltd. on account of ‘other expenses.’ The AO held that the expenses were unreasonable and the relevant findings of the AO in this context are as follows:- ITA No.3479/Del/2024 4 “4.15 Based on above it is implicit that the financial condition of the Holding Company is not strong enough to support and provide necessary infrastructure and support for all the services, for which purported payments have been made by the assessee company to its Holding Company. It is also a fact that the activity of running and operating schools do require certain types of services. It is noted that the payments to related parties in relation to Management Fees ( Payment of Rs.11,90,73,294/- to Altus learning Pvt Ltd and of Rs.1,32,57,474/- to Yali Education Company Private Limited comprises around 26.54% of the total expenses incurred by the assessee company(excluding depreciation). At this point, attention is invited to the judgment of the Hon’ble Madras High Court in case of CIT Vs Nagarathu Vaisiyargal Sangam (Mad) 246 ITR 164, wherein the Hon’ble Madras High Court has held that when unreasonable Payments made to interested persons, the trust is not eligible for exemption Therefore, the payment of amounts paid to specified person of the assessee company cannot be treated as reasonable and hence the provision of section 13(1)(c) are clearly attracted in the case of the assessee. Thus, the exemption u/s 11 & 12 of the Act is denied to the assessee. 4.16 Further, it is to be noted that though being part of the same group, the assessee foundation is still a separate legal entity. Though the benchmarking study has been brought on record, which tries to justify the margin of 24.81% charged by the Holding Company (Altus Learning Private Limited) in respect of management fees charged from the assessee company, nothing has been brought on record to substantiate that before choosing Holding Company as the Management Services Provider, a detailed screening process was adopted. Since the payments in respect of management services are substantial, it is commercially prudent for any organization to go through a qualitative screening process to select the most suitable vendor, which could provide the assessee company, the same quality services and that too at extremely competitive rates. Just being a holding company does not give the commercial right to the any company to start managing the subsidiary company. 4.17 Further based on the benchmarking study provided by the assessee company it is clearly marked in the paras highlighting “ Functional Analysis” that the Holding Company has not only been engaged to carry on day to day activities of the assessee company, but has been engaged in providing Critical Corporate Strategy and Vision to the assessee company. As a natural corollary, it appears that the Holding Company is virtually carrying on its operations through the assessee company, which appears to be acting as a special purpose vehicle for fuelling the business profits of the Holding Company. In the light of above, around 25% of amount paid to the ITA No.3479/Del/2024 5 Holding Company in respect of management fees is being disallowed and added to the income of the assessee company. Addition of Rs.3,30,82,692/- (25% of Rs.11,90,73,294 /- + Rs.1,32,57,474/-) is being made on this account. (Addition of Rs.3,30,82,692/-)” 4. The ld.CIT(A) has deleted this addition with the following relevant findings:- “Ground No. 1:- The ground of appeal has been raised against an addition of Rs.3,30,82,692/- made by Ld. A.O. on account of benefit provided to persons specified in section 13(3) of the Act. The appellant Calorx Education and Research Foundation (CERF) is a not for profit company incorporated on 24.03.2005 within the meaning section 8 of Company Act. During the course of assessment proceedings, the Ld. AO observed that a payment of Rs.11,90,73,294/- has been made to M/s Altus Learning Pvt. Ltd.(ALPL) for management fees and other expenses and a further sum of Rs.1,32,57,474/- has been paid to M/s Yali Education Company Pvt. Ltd (YECPL) for other expenses. The Ld. AO treated payments to the extent of 25% made to the aforesaid companies as unreasonable. Further, exemption u/s 11 and 12 of the Act was also denied to the assessee. Payments made to M/s Altus Learning Pvt. Ltd (ALPL) It is seen that ALPL is the holding company of the appellant. During the course of assessment proceedings, as well as appellate proceedings, the appellant has given the breakup of payments made to ALPL which are as follows:- Nature of payment Amount Management fees and trademark charges 6,62,47,160/- Bus usage charges 1,54,45,950/- Infrastructure usage charges 1,79,48,681/- Admission charges 1,93,82,500/- Education kit and other items 49,003/- Total 11,90,73,294/- a. During the course of assessement proceedings, the assessee had filed copies of agreements as well as ledger accounts of the expenses of Rs.6,62,47,160/- incurred on account of management fees and trademark charges. ITA No.3479/Del/2024 6 During the appellate proceedings, the appellant has made submissions justifying the payments with copies of relevant agreements and ledger account thereof. It can be seen that payment to ALPL was made for various services like, (i) Human Resources (ii) Accounting (iii) Marketing (iv) Fund management (v) Information Technology (vi) Handling Legal Matters (vii) Administration Support (viii) Transport Management (ix) Admission related services (x) Infrastructure services etc. Besides services as above, buses were provided for the use by various schools of the appellant. The management services discharged due to contractual obligation were in conformity and in accordance with the terms of agreements between the appellant and ALPL. The Ld. AO has not brought about any discrepancy in the agreement submitted by the assessee during the course assessment proceedings. It is seen that the appellant is independently running the school and his core expertise is to part education. The payments have been duly paid to ALPL for providing all the kind of services as mentioned above. The Ld. AO has not given any basis for disallowance of the expenses of the appellant merely because they are from holding company while explaining the unreasonableness of the same. The support given by ALPL provides the backbone of the educational endeavour of the appellant. Hence, the bulk of payments have to be made by the appellant to ALPL. b. Further, the payment of Rs.1,54,45,950/- was made for provision for buses by ALPL to various schools of the Appellant. To provide school bus facility to the Delhi Public School, Bhopal and Delhi Public School, East Ahmedabad, and also in other schools the Appellant availed the services of buses of ALPL. The quotation for bus usage charges from independent bus operator has also been provided. c. Further, the appellant has also submitted the justification for payments for infrastructure uses of Rs.1,79,48,681/- as per the table below:- Sr. No. Location Agreement Dated Type of Property Cost of Assets at Altus Learning Pvt. Ltd. Area (Sq. Ft.) Per Sq. ft. Amt. Basic Rent Amount Total Amount with services tax 1 Delhi Public School, Bopal, Ahmedabad 01.08.20216 Land and Building 55232084 18500 18 3996000 (No increase since 2014) 4592070 2 Delhi Public School East, Ahmedabad 01.08.2016 Building 31799408 22200 16 4262400 (no increase since 4898200 ITA No.3479/Del/2024 7 2014) 3 Calorx Public School MundraSpecial Economic Zone (SEZ) 07.12.2012 Building 73390885 53896 6.5 4200000 (no increase since 2012) 4826500 Total 160422377 10393800 14316770 Also, the appellant entered into rental agreement with third parties for different schools which were also provided to the Ld. A.O. to justify the rate at which payment is made to ALPL on the immovable property. S. No Term Sheet/Agreement Location of the Property Rental Per Sq. Ft. 1 23.12.2014 Karai, Gandhinagar Rs.18/- with increase by 12% on the completion on every 3 years 2 30.06.2015 Bharuch Rs.15.25/- with increase by 12% on the completion on every 36 months 3 13.02.2015 Sanathal, Ahmedabad Rs.15/- with 13% increase after the end of 3 every years 4 07.02.2013 Satellite Ahmedabad Rs.21.20/- with 4% increase on year on year basis. The appellant has submitted that the balance of the infrastructure usage charges Rs.36,31,911/- (Rs.1,79,48,681/- Less Rs.1,43,16,770/-) is paid to ALPL towards (i) Solar Plant Rs.16,89,286/- (including Tax) (ii) Other Infrastructure and Office equipment Rs.11,09,986/- (Including Tax) (iii) Lease Hold Improvements Rs.8,32,639/- (Including Tax) which is actual cost recovery over a period of lease. The copy of the said agreement has also been submitted. d and e. Admission charges (Rs.1,93,82,500/-) and Educational Kit and other expenses (Rs.49,003/-)- It has been submitted that these were also paid in terms of the agreements which were also submitted to the Ld. A.O. The admission charges of Rs.1,93,82,500/- paid to ALPL was for the services relating to enrolment advisory includes brand image, demographic study, generating database, creative communication for admission campaign, execution of the market plan etc. It is seen from the accounts that the services are on actual basis received from ALPL. The appellant has submitted the copies of agreements and ledger account of payments during the course of appellant proceedings. ITA No.3479/Del/2024 8 Payments made to M/s Yali Education Company Pvt. Ltd. (YECPL) During the A.Y., the appellant has made payments of Rs.1,32,57,474/- to YECPL for providing manpower supply services such as drivers, conductors, Peons, Ayahs and Intermediary services such as security, catering, housekeeping and manpower supply services. The appellant placed on record agreements on 20.11.2019 before the Ld. AO during the course of assessment proceedings, the copies of which have also been provided during the appellate proceedings. These agreements include those dated 31.03.2016, 21.05.2016 and another agreement dated 21.05.2016. The appellant has also provided ledger accounts of YECPL in its books of accounts. Sample invoices of third party contractors have also been placed on record wherein the service charges range between 7.5% to 8%. The appellant has also provided the basis of payments and justification of the expenditure as well through calculations. From the forgoing, in respect of all the payments made to ALPL and YECPL, it is evident that the Ld. AO had not raised any objection on the genuineness of the expenses. No discrepancy in the books of account of the appellant have been brought on record by the Ld. AO which could have warranted the rejection of books of accounts. The Ld. AO has not brought out any reason or comparison to show that inflated expenses have been booked by the appellant. The Ld. AO has also not given a reason or produced any documentary evidence to substantiate his decision for bench marking 25% of the expenses as excessive while during the earlier A.Y.’s the submissions of the appellant have been agreed upon by the preceding AO’s and allowed by the department. The postulate of the Ld. AO is not based on any absolute market data made available. The rule of consistency must have been followed by the AO. Quantum of payments to a particular party is no reason to treat a part of payment as unreasonable since the test is the value and importance of the services rendered. The contemporaneous material by way of ledger accounts, agreements, third party quotes, market comparable have been substantiated to the extent of services provided by ALPL and YECPL in the regular course of its business by the appellant. The appellant is running 9 schools in Gujrat and Rajasthan the overall scale of expenses of the appellant commensurate to the scale of its operations. Hence, there is no evidence to support the postulates of the Ld. A.O. In this regard, reliance is placed on the orders of various benches of Hon’ble ITAT :- 1. DIT vs. Manav Bharati Child Institute & Child Psychology [2008] 20 SOT 517 (Del) 2. ACIT vs. Idicula Trusts Society 52 SOT 1 (Del)-approved in 223 Taxman 66 (P&H) ITA No.3479/Del/2024 9 3. Dr. D.Y. Patil Pratisthan vs. Dy. CIT [2014] 61 SOT 47 (Pune) 4. ACIT (E) vs. Mahima Shiksha Samiti [20174] 79 taxman.com 38 (Jaipur). In view of the facts and circumstances as stated above, the additions made by the Ld. AO to the extent of Rs.3,30,82,692/- are hereby deleted. The ground of appeal no. 1 is Allowed.” 5. Although the ld. DR has defended the order of the AO, we find that the assessee had brought evidence to show that the expenses were on account of availing actual facilities including services like bus usage, infrastructure charges, admission charges including enrolment advisory, manpower, supply of various categories of employees like security, catering, housekeeping, peon, etc. The AO has conducted no exercise to point out any discrepancy in the evidences to show that these services were not required for running the schools and conducting other activities. As a matter of fact, these are not new expenses, but, in assessment proceedings for AY 2011-12, 2012-13 and 2015-16 also such payments have been examined by the Department and no additions were made. Thus, on the principle of consistency alone the said charges deserved to be allowed and in any case, if they were to be disputed, the same could have been on the basis of substantive evidence establishing that these expenses were not bona fide, which is not done. The findings arrived by the CIT(A) are on the basis of appreciation of facts which have been left out of consideration of the AO and we find no reason to interfere in the same. ITA No.3479/Del/2024 10 6. The next addition in dispute is of Rs.21,79,000/- for corpus donation which the AO has disallowed consequent to withdrawal of benefit u/s 11 and 12 of the Act for the alleged violation of section 13 of the Act. There is no dispute with regard to the genuineness or identity of the donors and in the aforesaid discussion with regard to the addition amounting to Rs.3,30,82,692/-, we have examined the issue including that the AO was unable to make out a case of benefit being provided to persons specified in section 13(1)(c) of the Act. Thus, this ground is rightly determined by the CIT(A) in favour of the assessee and we sustain the same. 7. The next ground arises out of addition of Rs.40,80,000/- made on account of payment of royalty to specified persons u/s 13(3) of the Act. The assessee is paying royalty to holding company/ALPL for using ‘Calorx’ word, the AO has observed in paras 4.6 to 4.9 as follows:- “4.6 At this juncture it is important to consider the below facets of the case as well 1. Altus Learning Private Limited was incorporated on 03/10/2008 as Calorx Education Company Private Limited. Its name was changed to Altus only w.e.f. 18/10/2012. 2. Calorx Education and Research Foundation (The assessee company) was incorporated on 24/03/2005. Further, based on background Information, as contained in financials of the assessee company for the year ended 31/03/2017, the assessee company has acquired all activities of DPS Bhopal, DPD-East, Prerna and all units of Calorx Foundation ( Another Foundation registered on 24/03/2005) w.e.f. 01/10/2009. 4.7 In view of these it is evident that the assessee company was incorporated much before its Holding Company, ie Altus Learning Private Limited( Earlier known as Colorx Education Company Private Limited) came into being. The word Calorx for which the assessee company is ITA No.3479/Del/2024 11 paying royalty to its Holding Company was in existence much before the Holding Company was incorporated. Thus the brand name/ trade name for which the assessee company is now paying royalty to its Holding Company could be developed only through the efforts of the assessee company. The payment of royalty by the assessee company to its Holding Company towards usage of tradename which the assessee company itself has helped to developed, is itself questionable. 4.8 Based on above, it appears that the trademarks have been specifically registered in name of Holding Company to monetize the trademark and to divert payments by the Assessee Company to its Holding Company. Since Holding Company along with its nominees, holds the entire share capital of the assessee company, the payment of amount of royalty by the assessee company to its Holding Company is devoid of any substance and shows the application of income of the assessee company being diverted for the benefit of a related party covered u/s 13(3) of the IT Act,1961. At this juncture, it is relevant to quote the observation of the Hon’ble Apex Court in case of State of Andhra Pradesh vs Kone Elevators India Ltd (2005) 181 ELT 156, wherein the apex court held that substance of a contract is determinative and not its form. Thus the essence of the contract is crucial and is to be seen, keeping in mind the intention of the parties. 4.9 In view of the above, the amount of trademark charges/royalty allegedly paid by the assessee company to its Holding Company is hereby disallowed. (Addition: Royalty Payment of Rs.40,80,000/- )” 8. The CIT(A) has intervened in these findings and has held as follows:- “Ground No. 3:- The ground of appeal has been raised against addition of Rs.40,80,000/- on account of royalty payments by the assessee company to its holding company (ALPL). During the course of assessment proceeding, the Ld. AO has stated that the assessee company is paying royalty to its holding company even though it was in existence before the holding company. Hence, the brand name/ trade name for which assessee company is paying royalty to its holding company could be developed only through the efforts of the assessee. During the course of appellate proceedings, it has been stated by the appellant that Yali Trade Mark is owned by ALPL since 03.10.2008 and this trademark is also registered in the trade mark book in the name of M/s Calorx Education Company Pvt. Ltd. (Earlier named ALPL). So this trade name is legally registered in the name of the ALPL and in order to use this trademark the appellant is paying the particular fees for Rs.1,70,000/- per month as per the agreed term. ITA No.3479/Del/2024 12 Calorx Trademark It has been stated by the appellant that there are two parts on the mark one is the word “Calorx” and another is the logo. For the word Calorx Education Company Pvt. Ltd. (Earlier name of ALPL) and it was registered under the trademarks records accordingly. And hence the payment of royalty charges are being made to ALPL. Secondly, in case of logo, since day one it is in the name Calorx Education Company Private Limited (Earlier name of ALPL). Since it is in the name of ALPL, the Appellant is using that particular logo and hence appellant is paying the royalty charges to ALPL. From the submissions, it is clear that both the charges are being paid independently to the owners of the respective trademarks. Further, the Ld. AO has disallowed the trademark charges without going into the reasonability or the benefit derived by the appellant and straight away disallowed going on the basis that the ALPL was incorporated on 03.10.2008. Further, the chronologic facts mentioned above prove that the trademark charges are actually paid consistently and to the owners of the trademark, and hence the disallowance needs to be deleted. Alternately, it is also seen that the Ld. AO has already considered this amount at the time of disallowing the amount of management fee charges and trademark charges paid to ALPL. This being a double disallowance of the same expense, the double addition needs to be deleted. In view of the foregoing, the addition of Rs.40,80,000/- is hereby deleted. The ground of appeal no. 3 is Allowed.” 9. The AO has misconceived the payment of royalties by the assessee to the specified persons to be happening for the first time when the assessee is paying such charges for the use of trade mark since FY 2009-10. On the basis of transfer of trade mark ‘Calorx’ by the assessee to ALPL a presumption cannot be drawn that the same was done for giving any benefit to ALPL. The CIT(A) has observed that ALPL has the trade mark ‘Yali’ registered since 03.10.2008 and the trade mark Calorx does not comprise of the words, but only a logo which stands in the name of ALPL exclusively and the payments for ITA No.3479/Del/2024 13 royalty are being made for both. There is also substance that since this royalty payment is also included in the aggregate payment of Rs. 11,90,73.294/- made to ALPL which has been examined earlier, then, there was no reason to make a disallowance again. We are, thus, not inclined to interfere in the findings of the ld.CIT(A). 10. The next ground is on account of addition of Rs.25,28,757/- as notional income on account of corporate guarantee charges. The assessee has given a corporate guarantee for a loan of Rs.6,32,18,944/- taken from HDFC from its holding company and the holding company/ALPL is charging Rs.5,35,68,000/- annually from the assessee. The AO has held that it is generally holding company that provide corporate guarantee. However, it is established that the corporate guarantee was given in January, 2012 when there was no relationship of holding and subsidiary company between the ALPL and the assessee. Furthermore, the assessee has not incurred any expense or received anything on this account, thus, making an addition on the notional income is not sustainable under law. The ld. CIT(A) has given reasoned findings which require no interference. 11. The last disputed addition is of Rs.1,51,13,775/- on account of disallowance of depreciation. A suo moto addition was made on account of disallowance by the assessee and the same have been deleted by the CIT(A) holding that no cogent reason has been given by AO for disallowance. The ITA No.3479/Del/2024 14 assessee has not claimed depreciation of asset as application of fund, but, instead, claimed cost of asset as application of fund for AY 2017-18. That being the case, as in the computation of income depreciation on asset has not been claimed as the application of fund for the AY 2017-18 no addition could have been made and the same has been rightly deleted by the CIT(A) and require no interference. 12. Consequently the grounds raised in appeal of assessee require no interference and the appeal of revenue is dismissed. Order pronounced in the open court on 28.05.2025. Sd/- Sd/- (AVDHESH KUMAR MISHRA) (ANUBHAV SHARMA) ACCOUNTANT MEMBER JUDICIAL MEMBER Dated: 28th May, 2025. dk Copy forwarded to: 1. Appellant 2. Respondent 3. CIT 4. CIT(A) 5. DR Asstt. Registrar, ITAT, New Delhi "