DDIT (E), New Delhi V. PHD Chamber of Commerce & Industry, New Delhi

ITA 1233/DEL/2010

• Counselvise Citation: [2011] 134 COUNSELVISE.COM (IT) 9987 (ITAT-DELHI)
• Duration Of Justice: 1 year(s) 11 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 31-03-2011
• Appeal Filed By: Department
• Order Result: Allowed
• Bench Allotted: F
• Next Hearing Date: 21-03-2011
• Assessment Year: 2006-2007
• Appeal Filed On: 19-03-2010
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: H K LAL
• Assessee Lawyers: SWEETY KOTHARI CAS; VINOD K BINDAL
• Keywords: Business income; Depreciation; Charitable institution; Rule of consistency
• Section: 143(3); 12A; 143(1); 143(2); 6; 28; 2; 11

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL (DELHI BENCH F NEW DELHI) BEFORE SHRI I.P. BANSAL, JUDICIAL MEMBER AND SHRI K.G . BANSAL, ACCOUNTANT MEMBER I.T.A. NO.1233 /DEL/2010 ASSESSMENT YEAR : 2006-07 D.D.I.T. (E), VS. PHD CHAMBER OF CO- INV. CIRCLE-II, MMERCE & INDUSTRY, PHD NEW DELHI HOUSE, OPP. ASIAN GAMES VILLAGE, NEW DELHI PAN NO.AAACP 1438 L (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI H.K. LAL, SR. DR RESPONDENT BY : SHRI VINOD K. BINDAL & SWEETY KOTHARI, CAS. ORDER PER K.G. BANSAL, AM: THE REVENUE HAS TAKEN TWO GROUNDS IN THIS APPEAL. GROUND NO.1 IS LENGTHILY WORDED, BUT THE SUM AND SUBSTANCE OF IT IS THAT SINCE T HE ASSESSEE IS NOT CARRYING OUT ANY CHARITABLE ACTIVITY, IT IS NOT ENTITLED TO DEDUCTI ON U/S 11 OF THE INCOME-TAX ACT, 1961 (THE ACT). THEREFORE, THE LEARNED CIT(A) ERRED IN GRAN TING HIM THE DEDUCTION. IN GROUND NO.2 IT IS MENTIONED THAT SINCE THE ASSESSEE HAS CL AIMED THE DEDUCTION OF AMOUNT SPENT ON ACQUIRING ASSETS U/S 11, IT IS NOT E NTITLED TO DEDUCTION OF DEPRECIATION ON SUCH ASSETS. THEREFORE, THE LEARNED CIT(A) ERRED IN GRANTING THE DEDUCTION OF DEPRECIATION. 2. THE FACTS OF THE CASE ARE THAT THE ASSESSEE-CHAMBER HAD FILED ITS RETURN ON 31.10.2006 DECLARING NIL INCOME. THE RETURN WAS PROCES SED U/S 143(1) AND 2 THEREAFTER STATUTORY NOTICES WERE ISSUED U/S 143(2) AND 14 2(1) TO INITIATE ASSESSMENT PROCEEDINGS. IN THE COURSE OF ASSESSMENT, IT HAS BEEN FOUN D THAT THE CHAMBER IS REGISTERED U/S 12A IN TERMS OF THE ORDER DATED 23.05.1994. THE ASSESSEE SHOWED AGGREGATE RECEIPTS OF `5,96,72,018/- AS UNDER:- I) MEMBERSHIP SUBSCRIPTION 1,37,85,850/-. II) SPECIALIZED SERVICES 1,00,18,475/- III) SERVICES AND FACILITIES 2,83,33,423/- IV) MEETING, SEMINARS AND TRAINING PROGRAMS: 40,58,134/- V) LEGAL AND ARBITRATION FEES 1,41,200/- VI) SALE OF PUBLICATION 84,075/- VII) MISCELLANEOUS 32,56,661/- 2.1 THE ASSESSING OFFICER HAS ALSO NOTED THE BREAK UP OF INCOME BY WAY OF SPECIALIZED SERVICES AND SERVICES AND FACILITIES AS UN DER:- THE DETAILS OF SPECIALIZED SERVICES ARE GIVEN IN THE SCHEDULE 15 ANNEXED WITH THE BALANCE SHEET WHICH IS AS UNDER:- CERTIFICATION FEE 92,90,975/- SECRETARIAL AFFILIATES 7,27,500/ 1,00,18,475/- THE DETAILS OF THE INCOME OF SERVICES AND FACILITIES ARE MEN TIONED IN SCHEDULE 16 WHICH IS AS UNDER:- COMMITTEE ROOM SERVICES 49,79,994/ SERVICES AND FACILITIES 2,26,37,738/ EMC PROJECT 6,64,081/ SIB HELPLINE 51,610/ 2,83,33,423/- 2.2 THE ASSESSING OFFICER ALSO DISCUSSED IN DETAIL THE IN COME RECEIVED BY WAY OF CERTIFICATION FEES, COMMITTEE ROOM SERVICES, AND SERVICES A ND FACILITIES. AFTER HEARING THE ASSESSEE IN THE MATTER, HE CAME TO THE CONCLUSION THAT THE ASSESSEE HAS BEEN CARRYING ON VARIOUS BUSINESS ACTIVITIES. THEREFORE, IT WAS REQUIRED TO STATE WHETHER SEPARATE BOOKS OF ACCOUNT HAVE BEEN MAINTAINED FOR THE BUSINESS ACTIVITIES. IT WAS SUBMITTED THAT THE INFORMATION IS VOLUMINOUS AND HAS TO BE 3 COMPILED MANUALLY. THE DESIRED REPORT CANNOT BE GENERATED ON COMPUTER. THEREFORE, THE ASSESSEE EXPRESSED INABILITY TO SUBMIT THE INF ORMATION IN A SHORT PERIOD UPTO 31.12.2008. THE ASSESSING OFFICER ALSO NOT ED THAT ALTHOUGH THE ASSESSEE HAS ADMITTED TEMPORARY MEMBERS, ARTICLE NOS.3 & 10 OF ITS MEMORANDUM DO NOT PERMIT IT TO DO SO. THE SERVICES HAVE BEEN RENDERED T O BOTH MEMBERS AND NON-MEMBERS. IN VIEW OF THESE FACTS, HE CAME TO THE CONCLU SION THAT THE ASSESSEE IS NOT ENTITLED TO DEDUCTION U/S 11 OF THE ACT. THEREFORE, T HE SAME WAS DENIED. THE TOTAL INCOME WAS COMPUTED AT `1,03,77,510/- AS UNDER:- TOTAL INCOME AS DECLARED 5,96,77,818 ADD: AMOUNT DIRECTLY CREDITED TO THE RESERVES/ADDL. SUBSCRIPTION ON ADMI- SSION AS DECLARED. . 53,000 5,97,30,818 LESS: EXPENSES AS CLAIMED (-) 4,93,53,311 TOTAL INCOME `1,03,77,507 ROUNDED OFF `1,03,77,510 3. AGGRIEVED BY THIS ORDER, THE ASSESSEE MOVED AN APPEAL BEF ORE THE CIT(A)- XXI, NEW DELHI, WHO DISPOSED OF THE SAME ON 29.12.2009 I N APPEAL NO.125-08- 09. THE GIST OF HIS FINDING IS THAT THE OBJECTS OF TH E CHAMBER ARE CHARITABLE IN NATURE AS UNDERSTOOD U/S 2(15) OF THE ACT. THE CHAMBER IS ALS O REGISTERED U/S 12A, WHICH REMAINS IN FORCE IN THIS YEAR ALSO. THE PROVISION CONT AINED IN SECTION 11(4A) PERMITS THE ASSESSEE TO CARRY ON THE BUSINESS, WHICH IS INCIDENTAL TO THE ATTAINMENTS OF THE OBJECTIVES OF THE TRUST. IF SUCH A BUSINESS CARRIED ON, THE ASSESSEE WILL NOT BE PRECLUDED FROM DEDUCTIONS U/SS 11(1), 11(2), 11(3) AND 11(3A) PROVIDED THAT SEPARATE BOOKS OF ACCOUNT ARE MAINTAINED IN RESPECT OF SUCH BUSI NESS. THE ASSESSEE HAS ALWAYS BEEN GRANTED DEDUCTION U/S 11 IN THE PAST. THE A SSESSING OFFICER HAS NOT BROUGHT ON RECORD ANY DISTINGUISHABLE FEATURE IN THIS Y EAR. THE DEFINITION OF THE TERM CHARITABLE PURPOSE U/S 2(15) HAS BEEN AMENDED W.E.F. 01. 04.2009, UNDER WHICH THE ADVANCEMENT OF ANY OTHER OBJECT OF GENERAL UTILITY SHA LL NOT BE A CHARITABLE 4 PURPOSE, IF ANY ACTIVITY CARRIED OUT OR SERVICE IS RENDER ED IN RELATION TO ANY TRADE, OR BUSINESS FOR A CESS OR FEE. THIS PROVISION IS NOT APP LICABLE TO THE FACTS OF THIS YEAR. IT MAY BE THAT CERTAIN INCOME FALLS WITHIN THE AMBIT OF S ECTION 28 (III) OF THE ACT, WHICH MAY BE TERMED AS BUSINESS INCOME. HOWEVER, THIS INCOME HAS TO BE ADDED TO THE OTHER INCOMES AND THEREAFTER THE PROVISIONS CONTAINED IN S ECTION 11 ARE TO BE APPLIED FOR THE GRANT OF DEDUCTION. IN OTHER WORDS, IN THE CAS E OF A CHARITABLE ORGANIZATION, THE PROVISION CONTAINED IN SECTION 28 (III) DOES NOT OV ER RIDE THE PROVISION CONTAINED IN SECTION 11. THUS, THE ASSESSING OFFICER WAS DIRECTED TO COMPUTE THE INCOME AT NIL AGAINST THE COMPUTATION OF `1,03,77,510/-. AGGRIEVED BY THIS FINDING, THE REVENUE IS IN APPEAL BEFORE US. 3. THE LEARNED COUNSEL FOR THE ASSESSEE SUBMITS THAT THE AME NDMENT TO SECTION 2(15) COMES INTO FORCE W.E.F. 01.04.2009 AND, THEREFORE, APPLIES TO THE PROCEEDINGS OF ASSESSMENT YEAR 2009-10 AND ONWARD. THER EFORE, THIS AMENDMENT IS NOT APPLICABLE TO THE FACTS OF THIS YEAR. THE FACT S AND POSITION OF LAW IN THIS YEAR ARE THE SAME AS IN EARLIER YEARS. IN THE PAST, THE ASSESSEE H AD BEEN GRANTED DEDUCTION U/S 11. THEREFORE, THE SAME IS APPLICABLE TO T HE FACTS OF THIS YEAR ALSO. HE RELIES HEAVILY ON THE FINDINGS OF THE LEARNED CIT(A), CO NTAINED IN PARAGRAPH NOS.5 TO 5.9 OF THE IMPUGNED ORDER, WHICH READ AS UNDER: - 5. I HAVE CONSIDERED THE ASSESSMENT ORDER AND THE SUBMISS IONS OF THE APPELLANT. THE CASE OF THE ASSESSING OFFICER REVOLVES A ROUND THE FOLLOWING ISSUES: A. THE ASSESSEE DID NOT CARRY ON ACTIVITIES AS PER ITS M EMORANDUM OF ASSOCIATION. B. THE ASSESSEE HAS RENDERED SPECIALIZED SERVICES TO MEMBERS AND NON- MEMBERS AND THUS THE ASSESSEE WAS CARRYING ON A BUSINESS A CTIVITY AND ITS INCOME IS TAXABLE AS BUSINESS INCOME U/S 28. C. THE ASSESSEE WAS NOT MAINTAINING SEPARATE BOOKS OF AC COUNT FOR THE BUSINESS ACTIVITY. 5.1 SECTION 11 PROVIDES THAT THE INCOME DERIVED FROM THE PR OPERTY HELD UNDER TRUST WHOLLY FOR CHARITABLE OR RELIGIOUS PURPOSES WILL NOT BE INCLUDED IN THE TOTAL INCOME TO THE EXTENT TO WHICH SUCH INCOME IS 5 APPLIED TO SUCH PURPOSES IN INDIA. THUS FOR CLAIMING EXEMPTION U/S 11 THE FOLLOWING CONDITIONS HAVE TO BE FULFILLED: A) THE INCOME SHOULD BE DERIVED FROM A PROPERTY HELD UNDER TRU ST WHOLLY FOR CHARITABLE OR RELIGIOUS PURPOSES. B) SUCH INCOME SHOULD BE APPLIED FOR CHARITABLE PURPOSES IN INDIA. THUS, ONE HAS TO SEE THE PURPOSE FOR WHICH THE PROPERTY HA S BEEN HELD AND WHETHER THE INCOME HAS BEEN APPLIED FOR THE SAID PU RPOSE FOR AVAILING EXEMPTION U/S 11 OF THE ACT. SECTION 11 DOES NOT SPELL ANY SPECIFIC MANNER OR HEAD UND ER WHICH THE INCOME HAS TO BE SPECIFIED. THUS THE ASSESSEE IS FREE TO EARN INCOME UNDER ANY HEAD. HOWEVER, SECTION 11 (4A) PROVIDES T HAT IN CASE THE INCOME IS EARNED FROM BUSINESS ACTIVITY, THEN TH E EXEMPTION WILL NOT BE GRANTED A) IF THE BUSINESS IS NOT INCIDENTAL TO THE ATTAINMENT OF T HE OBJECTIVES OF THE TRUST AND B) SEPARATE BOOKS OF ACCOUNT ARE NOT MAINTAINED BY SUCH TR UST OR INSTITUTION IN RESPECT OF SUCH BUSINESS. THUS, THE EXEMPTION CAN BE GRANTED TO A CHARITABLE ORGAN IZATION EVEN IF IT IS CARRYING ON A BUSINESS PROVIDED THE SAID BUSI NESS IS INCIDENTAL TO ATTAINMENT OF THE OBJECTIVES OF THE ORGANIZATION AND SEP ARATE BOOKS OF ACCOUNT ARE MAINTAINED FOR THE SAID BUSINESS. 5.2. THE APPELLANT HAS BEEN GRANTED REGISTRATION U1S 12A AND EXEMPTION U1S 11 OF THE ACT IN THE PRECEDING YEARS RATHER S INCE ITS INCEPTION. THE OBJECTS OF THE APPELLANT AS MENTIONED IN IT S MEMORANDUM OF ASSOCIATION ARE TO PROMOTE THE GROWTH OF TRADE, COMMERCE AN~ INDUSTRY WHICH IS AN OBJECT OF THE GENERAL PUBLIC UTILITY AS MENTIONED IN CLAUSE 2(15) AND ALSO HELD BY THE HON'BLE APEX COURT IN CIT VS ANDHRA CHAMBER OF COMMERCE 55 ITR 722 (SC) THAT PRIMARY OBJECT OF THE ASSESSEE WAS TO PROMOTE AND PROTECT TRADE, COMMERCE A ND INDUSTRIES AND TO AID, STIMULATE AND PROMOTE THE DEVELOPM ENT OF TRADE, 'COMMERCE AND INDUSTRIES IN INDIA. SUCH OBJECTS ENU RE FOR THE BENEFIT OF THE ENTIRE COMMUNITY. THUS THE OBJECTS ARE OF G ENERAL PUBLIC UTILITY AND INCOME FROM PROPERTY OF SUCH A TRUST IS EX EMPT. SIMILAR VIEW HAS BEEN TAKEN IN CIT VS FEDERATION OF INDIAN CHAMBERS OF COMMERCE AND INDUSTRY 130 ITR 186 (SC), WHEREIN IT BEEN HEL D THAT MAIN OBJECTS OF PROMOTION, PROTECTION AND DEVELOPMENT OF TRADE AND INDUSTRY IN INDIA, AMOUNTED TO 'OBJECT OF GENERAL PUBL IC UTILITY' WITHIN THE MEANING OF SECTION 2(15). THE ASSESSING OFFICER HAS NO T MENTIONED ANY THING ADVERSE ABOUT THE OBJECTS OF THE ASSESSEE. THUS, UNDISPUTEDLY THE OBJECTS OF THE ASSESSEE ARE CHARITABLE IN N ATURE AND 6 COVERED U/S 2(15) OF THE ACT. ONCE THE REGISTRATION U1S 1 2A IS GRANTED THEN IT CAN NOT BE CHALLENGE THAT THE OBJECTS OF THE ORGAN IZATION ARE NOT CHARITABLE FOLLOWING THE JUDGMENTS OF HI RALA I BH AGWATI REPORTED AT 246 ITR 188 (GUJ) LD ACIT VS. SURAT CITY GYMKHANA (2008) 300 ITR 214 (SC). 5.3. THE INCOME DERIVED BY THE APPELLANT HAS BEEN UTILIZED F OR CHARITABLE PURPOSES AS MENTIONED IN THE MEMORANDUM OF AS SOCIATION OF THE APPELLANT. THE ASSESSING OFFICER HAS NOT MENTIONED SINGLE WORD OR GAVE AN ADVERSE FINDING ABOUT THE UTILIZATION OF INC OME, WHICH SUPPORTS THE CONTENTION OF THE APPELLANT THAT THE SAID I NCOME HAS BEEN UTILIZED FOR THE CHARITABLE PURPOSES FOR WHICH THE AP PELLANT HAS BEEN CREATED. 5.4 ON PERUSAL OF THE MEMORANDUM OF ASSOCIATION AND TH E OBJECTS OF THE ASSESSEE, ALONG WITH THE NATURE OF INCOME DERIVED BY THE APPELLANT, IT IS CLEAR THAT THE APPELLANT IS RENDERING AL L THE SERVICES AS PER THE OBJECTS MENTIONED IN ITS MEMORANDUM OF ASSOCIATIO N, WHICH HAS BEEN AMPLY BROUGHT OUT BY ITS SUBMISSIONS DISCUSS ED IN PARAGRAPH 4.11 TO 4.14 OF THIS ORDER. 5.5 THUS, THE AVERMENT OF THE ASSESSING OFFICER THAT TH E APPELLANT IS NOT CARRYING OUT ITS ACTIVITIES AS PER ITS OBJECTS AND MEMORANDUM OF ASSOCIATION IS NOT CORRECT AND IS NOT TENABLE. SINCE T HE APPELLANT WAS CARRYING ON THE ACTIVITIES AND RENDERING SERVICES AS PER I TS OBJECTS ONLY, IT WAS NOT AT ALL CARRYING ON ANY BUSINESS ACT IVITY AS HAS BEEN STATED B) THE ASSESSING OFFICER. NONE OF THE SAID ACTIVI TIES WAS UNDERTAKEN TO EARN PROFIT BUT WHEN CARRIED OUT TO ATTAIN THE OBJECTS OF THE APPELLANT AND THUS NO BUSINESS WAS CARRIED OUT BY THE APPELLANT AND THERE WAS NO NEED TO MAINTAIN SEPARATE BOOKS OF ACCO UNT FOR THE SAIL ACTIVITIES AT ALL. IT IS NOW A SETTLED LAW THAT G ENERATION OF INCOME OF A SOCIETY IS NO TEST IN ITSELF FOR DETERMINING THE CHARITA BLE NATURE OF ACTIVITIES AND THAT EARNING OF SURPLUS IN WORKING OUT THE CHARITABLE PURPOSES IS NOT EXCLUDED FROM THE PROVISION OF SECTION 2( 15) OF THE ACT. (SURAT ART SILK CLOTH MANUFACTURERS ASSOCIATION 121 IT R 1 (SC). INCIDENTALLY, IT MAY BE POINTED OUT THAT HON'BLE ITAT , CHANDIGARH BENCH, IN THE CASE OF I.T.O. V S TRILOK TIRATH VIDYAVA TI CHUTTANNI CHARITABLE TRUST [91 TTJ 1044/90ITD 569 (2004) HELD T HAT MAINTAINING SEPARATE BOOKS OF ACCOUNT IS ONLY TO ENABL E THE ASSESSING OFFICER TO FIND OUT TRUE INCOME AND ALSO WHETHER THE ASS ESSEE FULFILLS THE CONDITIONS LAID DOWN U/S 11 FOR EXEMPTION AND ALSO WHETHER 7 RUNNING OF SUCH UNDERTAKING IS FOR PROFIT MOTIVE OR I NCIDENTAL TO THE OBJECT OF THE TRUST. THE BENCH HELD THAT IT IS NOT MANDA TORY AND NON- MAINTENANCE OF SEPARATE BOOKS OF ACCOUNTS SHALL NOT PRO VE FATAL TO THE CLAIM OF THE ASSESSEE FOR EXEMPTION U/S 11 OF THE IT A CT. 5.6 THE CONTENTION OF THE ASSESSING OFFICER THAT EXEMPTION U/S 11 WILL NOT BE AVAILABLE TO THE APPELLANT AS IT RENDERED TO MEMBERS AND NON- MEMBERS IS NOT CORRECT. WHEN THE EXEMPTION IS CLAIMED UNDER THE CONCEPT OF MUTUALITY, THEN IT IS NECESSARY TO SEE THAT TH E SERVICES SHOULD BE RENDERED TO THE MEMBERS ONLY. IN THAT CASE THE CON TRIBUTORS AND THE BENEFICIARIES SHOULD BE THE SAME. HOWEVER, WHILE CLA IMING EXEMPTION U/S SECTION 11, THERE IS NO SUCH CONDITION. SECTIO N 11 DOES NOT SPECIFICALLY PROVIDE HOW THE INCOME HAS TO BE EARNED O R IT HAS TO BE RECEIVED ONLY FROM THE MEMBERS. IF THE APPELLANT WOULD HA VE CLAIMED EXEMPTION ON THE CONCEPT OF MUTUALITY THEN THE I SSUE OF RECEIPTS FROM MEMBERS OR NON-MEMBERS WOULD HAVE BEEN RELEVANT BUT IT HAS NO RELEVANCE AND IMPORTANCE WHEN THE EXEMPTION IS BEING CLAIMED U/S 11 AS IN THAT CASE THE UTILIZATION OF FUND S IS THE ONLY CRUCIAL ELEMENT, TO BE CONSIDERED. IN VIEW OF THE ABOVE, THIS FACT T HAT THE APPELLANT RECEIVED INCOME FROM NON-MEMBERS OR TEMPORARY MEM BERS IS NOT RELEVANT AT ALL. 5.7 THE APPELLANT HAS BEEN RENDERING THESE SERVICES SINCE ITS INCEPTION AND HAS BEEN ALLOWED EXEMPTION U/S 11 IN THE ASS ESSMENT U/S 143(3) PASSED FOR THE AY 2005-06 BY THE SAME ASSESSIN G OFFICER. THERE IS NO CHANGE IN THE NATURE OF INCOME 1 RECEIPTS OR IT S UTILIZATION. THE ASSESSING OFFICER DID NOT DISTINGUISH THE FACTS AS COMPARED TO LAST YEAR FOR DENYING EXEMPTION U/S 11. THE ONLY DIFFERENCE IS T HE AMENDMENT IN SECTION 2(15) OF THE ACT. THE DEFINITION O F CHARITABLE PURPOSE U/S 2(15) HAS BEEN AMENDED W.E.F. 1/4/2009 AND AS PER THE SAID AMENDMENT, IT HAS BEEN SPECIFICALLY PROVIDED THA T W.E.F. 1/4/2009, THE ADVANCEMENT OF ANY OTHER OBJECT OF GENERAL U TILITY SHALL NOT BE A CHARITABLE PURPOSE IF ANY ACTIVITY IS C ARRIED OUT OR SERVICE IS RENDERED IN RELATION TO ANY TRADE, COMMERCE OR BU SINESS FOR A FEE, IRRESPECTIVE OF THE NATURE OF USE OR APPLICATION OF THE INCOME FROM SUCH ACTIVITY. THUS AS PER THE SAID SECTION IF A SERVICE IS RENDERED IN RELATION TO ANY TRADE, COMMERCE OR BUSINESS FOR A FEE, THE SAME WILL NOT BE A CHARITABLE PURPOSE W.E.F. THE A.Y. 2009-10 EVEN I F THE SAME WAS UTILIZED FOR THE CHARITABLE PURPOSES. HOWEVER, THE SA ID AMENDMENT DOES NOT EFFECT THE POSITION FOR THE A.Y. 2006 -07 AS THIS AMENDMENT HAS BEEN BROUGHT IN STATUTE W.E.F. 1/4/2009 AND EFFECT 8 OF THE SAME NEED TO BE CONSIDERED ONLY IN THAT ASSESSMENT YEA R OR THEREAFTER. THE SAME CANNOT HAVE ANY RETROSPECTIVE APPLICAT ION. THUS, THERE ARISES NO DIFFERENCE IN THE NATURE OF INCOME, SERVICES R ENDERED OR UTILIZATION OF INCOME AS COMPARED TO THE PRECEDING A SSESSMENT YEAR. 5.8 I AGREE WITH THE CONTENTION OF THE APPELLANT THAT SECT IONS 11 TO 13 DO NOT GOVERN THE SECTIONS UNDER WHICH THE INCOME IS TO BE COMPUTED OR ASSESSED. THE INCOME OF ANY CHARITABLE ORGANIZATION H AS TO BE COMPUTED UNDER DIFFERENT HEADS OF INCOME AS PER PROVISIONS OF THE ACT AND THEN TOTAL INCOME SO COMPUTED IS SUBJECT TO EXEM PTION U/S 11 TO 13. IT MAY BE SO THAT THE SAID INCOMES ARE TAXABLE U/ S 28(III) AS PER THE PROVISIONS OF THE ACT, BUT THEN AFTER INCLUDING THE SAME UNDER THE HEAD BUSINESS INCOME, TOTAL INCOME HAS TO BE COMPUTED AN D THEN EXEMPTION U/S 11 FOR WHICH THE APPELLANT IS ELIGIBLE SHOU LD BE ALLOWED. SECTION 28 (III) CANNOT OVERRIDE THE PROVISIONS OF SECTION 11. THUS, IF THE APPELLANT IS CHARITABLE ORGANIZATION THEN IT IS ENTITLED FOR EXEMPTION UNDER SECTION L! NOTWITHSTANDING THE INCOME OF THE NATURE MENTIONED IN SECTION 28(III) DERIVED BY THE ASSESSEE. 5.9 IN VIEW OF THE ABOVE FACTS AND FINDINGS, I AM OF THE OPINION THAT THE APPELLANT IS ELIGIBLE FOR EXEMPTION U/S 11 OF THE ACT AND, THEREFORE, THE ADDITION OF RS. 1,03,77,510/. 4. THE LEARNED DR FAIRLY SUBMITTED THAT THE AMENDED PROVIS ION OF SECTION 2(15) COME INTO FORCE FROM ASSESSMENT YEAR 2009-10 ONLY. IN EA RLIER YEARS, THE POSITION IS GOVERNED BY UN-AMENDED PROVISIONS. UNDER UN-AMENDED PROVI SIONS, THERE IS NO BAR ON CARRYING OUT BUSINESS, WHICH IS INCIDENTAL TO ATTAINMENT OF THE OBJECTS OF THE CHARITABLE INSTITUTION. HOWEVER, THE INCOME FROM THE BU SINESS IS SUBJECT TO GRANT OF DEDUCTION U/S 11 ONLY IF THE BUSINESS IS INCIDENTAL IN NATURE AND SEPARATE BOOKS OF ACCOUNT ARE MAINTAINED. IN THIS CONNECTION, HEAVY REL IANCE HAS BEEN PLACED ON THE ASSESSMENT ORDER, THE SALIENT FEATURES OF WHICH HAVE ALREA DY BEEN DESCRIBED BY US, AND IT IS ARGUED THAT THE ORDER OF THE ASSESSING OFFICER IS RIGHT ON FACTS AND IN LAW. 5. WE HAVE CONSIDERED THE FACTS OF THE CASE AND THE SUBMISS IONS MADE BEFORE US. FROM THE ORDERS OF THE LOWER AUTHORITIES, IT BECOMES CLEAR THAT ADMITTED POSITION 9 IS THAT THE ASSESSEE IS CARRYING ON CERTAIN ACTIVITIES, W HICH ARE IN THE NATURE OF THE CARRYING ON OF THE BUSINESS. IN THIS CONTEXT, THE ASSES SING OFFICER HAD QUESTIONED THE ASSESSEE AS TO WHETHER IT HAS MAINTAINED SEPARATE BOOKS OF ACCOUNT. THE ASSESSEE WAS ALSO DIRECTED TO WORK OUT PROFIT OF SUCH BUSINESS OR BUSINESSES. HOWEVER, THE ASSESSEE EXPRESSED INABILITY TO FILE THE DETAILS BY 31.12.2 008. AT THIS STAGE, WE MAY REPRODUCE THE PROVISION CONTAINED IN SECTION 11 (4A) AS UNDER:- (4A) SUB-SECTION (1) OR SUB-SECTION (2) OR SUB-SECTIO N (3) OR SUB- SECTION (3A) SHALL NOT APPLY IN RELATION TO ANY INCOM E OF A TRUST OR AN INSTITUTION, BEING PROFITS AND GAINS OF BUSINESS, UNL ESS THE BUSINESS IS INCIDENTAL TO THE ATTAINMENT OF THE OBJECTIVES OF THE TRUS T OR, AS THE CASE MAY BE, INSTITUTION, AND SEPARATE BOOKS OF ACCOUNT ARE MAINTAINED BY SUCH TRUST OR INSTITUTION IN RESPECT OF SUCH BUSINESS. 5.1 THE AFORESAID PROVISION HAS BEEN DISCUSSED EVEN BY THE LEARNED CIT(A) ON PAGE NO.22 WHILE COMING TO HIS FINDING IN THE MATTER. HE HAS ALSO NOTED THE FINDING OF THE ASSESSING OFFICER THAT THE ASSESSEE HAS NOT MAINTA INED SEPARATE BOOKS OF ACCOUNT FOR THE BUSINESS ACTIVITY. HOWEVER, THEREAFTER, H E DID NOT TAKE INTO ACCOUNT THE IMPORT OF THE PROVISION AND GRANTED DEDUCTION U/S 1 1 AS IF NO BUSINESS HAS BEEN CARRIED ON BY THE ASSESSEE IN THIS YEAR. HE HAS MENTIONED T HAT THE POSITION IN THIS YEAR IS SIMILAR TO POSITION IN EARLIER YEARS. THUS, HE INDIRECTLY INVOKED THE RULE OF CONSISTENCY WHILE COMING TO HIS CONCLUSION. 5.2 THE PROVISION CONTAINED IN SECTION 11(4A) IS CLEAR TO THE EFFECT THAT VARIOUS DEDUCTIONS U/S 11 SHALL NOT BE ADMISSIBLE IN RELATION T O ANY INCOME, BEING PROFITS AND GAINS OF BUSINESS. THEREAFTER, A CONCESSION IS ALSO GIVEN THAT IF (I) THE BUSINESS IS INCIDENTAL TO ATTAINMENT OF OBJECTIVES OF THE INSTITU TION, AND (II) SEPARATE BOOKS OF ACCOUNT ARE MAINTAINED IN RESPECT OF SUCH BUSINESS, THE ASSESSEE WILL BECOME ENTITLED TO OTHER DEDUCTIONS U/S 11. HOWEVER, THE OTHER DED UCTIONS WILL BECOME INADMISSIBLE IN RESPECT OF BUSINESS INCOME IF THE AFORES AID TWO CONDITIONS ARE CUMULATIVELY SATISFIED. THIS IS A STATUTORY PROVISIO N AND RULE OF CONSISTENCY CANNOT 10 OVERRIDE THE PROVISION. THEREFORE, IT CANNOT BE HELD THAT LOOKING TO THE PAST ASSESSMENTS, THIS PROVISION OUGHT TO BE IGNORED. IN OT HER WORDS, THIS PROVISION WILL HAVE TO BE APPLIED. THE ADMITTED POSITION OF FACT IS TH AT THE ASSESSEE HAS BEEN CARRYING ON BUSINESS ACTIVITIES. HOWEVER, IT IS NOT CL EAR WHETHER SEPARATE BOOKS OF ACCOUNT HAVE BEEN MAINTAINED FOR SUCH BUSINESS OR BUSINES SES. THE FINDING OF THE ASSESSING OFFICER IS THAT THE ASSESSEE IS CARRYING ON BUS INESS ACTIVITY BY RENDERING PROFESSIONAL SERVICES TO MEMBERS AND NON-MEMBERS AND IT I S NOT CARRYING ON ANY CHARITABLE ACTIVITY. THE LATTER FINDING OF THE ASSESSIN G OFFICER CANNOT BE UPHELD IN VIEW OF THE FACT THAT THE ASSESSEES OBJECTS ARE CHARITABLE IN NATURE AND IT HAS BEEN REGISTERED U/S 12A. THEREFORE, THE ONLY THING WHICH CAN B E DONE ON THE FACTS OF THE CASE IS TO ASCERTAIN THE BUSINESS INCOME, WHETHER SUCH IN COME IS INCIDENTAL TO THE OBJECTS, WHETHER BOOKS ARE MAINTAINED FOR THE BUSINESS AND QUANTUM THEREOF. IF THE CONDITIONS PRESCRIBED IN SECTION 11(4A) STANDS SATISFI ED, THE ASSESSEE WILL BE ENTITLED TO OTHER DEDUCTIONS U/S 11, OTHERWISE NOT. AS MENTIONED EARLIER, THESE FACTS COULD NOT BE ASCERTAINED BY THE ASSESSING OFFICER DUE TO PAUCITY OF TIME. THEREFORE, THE MATTER IS RESTORED TO THE FILE OF THE ASSESSING OFFICER TO ASCERTAIN FACTS IN THIS MATTER, HEAR THE ASSESSEE AND PASS A FRESH ORDER AS PER LAW. THUS, THIS GROUND IS TREATED AS ALLOWED FOR STATISTICAL PURPOSES. 6. IN SO FAR AS THE DEDUCTION OF DEPRECIATION IS CONCERN ED, THE CASE OF THE LEARNED COUNSEL IS THAT THE ASSESSEE HAS NEVER WRITTEN OFF CA PITAL ASSETS FROM ITS ACCOUNTS BY TREATING THEM AS APPLICATION OF INCOME. T HEREFORE, IT IS ARGUED THAT THE ASSESSEE IS ENTITLED TO THE DEDUCTION OF DEPRECIATION. WE FI ND THAT THIS ISSUE HAS NOT BEEN DISCUSSED BY THE ASSESSING OFFICER IN THE ASSESSMENT O RDER. THEREFORE, WE THINK IT FIT TO RESTORE THE MATTER TO HIS FILE FOR CONSI DERING THIS SUBMISSION OF THE ASSESSEE ALSO AND THEREAFTER DECIDE IT DE NOVO AFTER HEARING T HE ASSESSEE. THUS, THIS GROUND IS TREATED AS ALLOWED FOR STATISTICAL PURP OSE. 11 7 IN RESULT, THE APPEAL IS TREATED AS ALLOWED FOR STATIS TICAL PURPOSES. THIS ORDER WAS PRONOUNCED IN OPEN COURT ON 31.03.2011. SD/- SD/- ( I.P. BANSAL ) ( K.G. BANSAL ) JUDICIAL MEMBER ACCOUNTA NT MEMBER NS DT. 31.03.2011. COPY FORWARDED TO:- 1. THE DY. DIRECTOR OF INCOME-TAX (E), INV. CIRCLE-II, N EW DELHI. 2. THE M/S PHD CHAMBER OF COMMERCE & INDUSTRY, PHD HOUSE, OPP. ASIAN GAMES VILLAGE, NEW DELHI. 3. THE CIT 4. THE CIT (A)-, NEW DELHI. 5. THE DR, ITAT, LOKNAYAK BHAWAN, KHAN MARKET, NEW DELHI. TRUE COPY. BY ORDER (ITAT, NEW DELHI).