Dy. Director of Income-tax Exemptions-I, Hyderabad V. Vidyananda Educational Society, Hyderabad

ITA 131/HYD/2014

• Counselvise Citation: [2014] 120 COUNSELVISE.COM (IT) 6462 (ITAT-HYDERABAD)
• Duration Of Justice: 3 month(s) 24 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 23-05-2014
• Appeal Filed By: Department
• Order Result: Partly Allowed
• Bench Allotted: B
• Next Hearing Date: 22-02-2017
• Assessment Year: 2010-2011
• Appeal Filed On: 30-01-2014
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Assessee Lawyers: P PRASAD
• Keywords: Depreciation; Charitable institution
• Section: 12A; 11

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD BENCH B, HYDERABAD BEFORE SHRI CHANDRA POOJARI, ACCOUNTANT MEMBER AND SHRI SAKTIJIT DEY, JUDICIAL MEMBER ITA NO. 131/HYD/2014 ASSESSMENT YEAR: 2010-11 DY. DIRECTOR OF INCOME-TAX(E)-I, APPELL ANT HYDERABAD. VS. VIDYANANDA EDUCATIONAL SOCIETY, RESPONDENT HYDERABAD. (PAN AAATV3962G) REVENUE BY : SHRI SOLGY JOSE T. KOTTARAM ASSESSEE BY : SHRI P. PRASAD DATE OF HEARING : 15/05/2014 DATE OF PRONOUNCEMENT : 23/05/2014 ORDER PER CHANDRA POOJARI, A.M.: THIS APPEAL OF THE REVENUE IS DIRECTED AGAINST THE ORDER OF THE CIT(A)-IV, HYDERABAD DATED 14/11/2013 FOR THE AY 20 10-11, WHEREIN THE REVENUE HAS RAISED THE FOLLOWING EFFECTIVE GROU NDS OF APPEAL: 2. THE CIT(A) ERRED IN HOLDING THAT THE ASSESSEE IS ENTITLED FOR EXEMPTION U/S 11 OF THE IT ACT, 1961 EVEN IN ABSENC E OF APPROVAL UNDER SUB-CLAUSE (VI) TO SECTION 10(23C) O F THE IT ACT, 1961. 3. THE CIT(A) OUGHT TO HAVE APPRECIATED THE FACT TH AT APPROVAL UNDER SUB-CLAUSE (VI) TO SECTION 10(23C) OF THE IT ACT, 1961 IS DISTINCT FROM REGISTRATION U/S 12A OF THE IT ACT, 1 961. 4. THE CIT(A) OUGHT TO HAVE APPRECIATED THAT OBTAIN ING APPROVAL FROM THE PRESCRIBED AUTHORITY IS MANDATORY, AS PER THE PLAIN MEANING OF SECTION 10(23C)(VI) OF THE IT ACT, 1961, WHENEVER THE GROSS RECEIPTS OF AN EDUCATIONAL INSTITUTION EX CEED RS. 1 CRORE. ITA NO. 131/HYD/14 VIDYANANDA EDUCATIONAL SOCIETY 2 5. ON THE FACTS AND IN CIRCUMSTANCES OF THE CASE AN D WHEN THE ASSESSEE HAS GOT INCOME FROM DEVELOPMENT FEES, SPECIAL FEES AND OTHER FEES ETC., MENTIONED IN PARA 7.1 OF THE ASSESSMENT ORDER AND WHEN IT HAS BEEN HELD BY THE H ONBLE INCOME TAX APPELLATE TRIBUNAL, HYDERABAD IN THEIR O RDER IN THE CASE OF VASAVI ACADEMY OF EDUCATION, HYDERABAD IN I TA NO. 1120/HYD/2009, THAT THE ASSESSEE WOULD NOT BE ENTIT LED FOR EXEMPTION EITHER U/S 11 OR U/S 10(23C) IN CASE IT C OLLECTED ANY MONEY BY WHATEVER NAME IT IS CALLED I.E., DONATION, BUILDING FUND, AUDITORIUM FUND ETC., OVER AND ABOVE THE PRES CRIBED FEES FOR ADMISSION OF STUDENTS, UNDER THAT CIRCUMSTANCE, THE CIT(A) IS NOT JUSTIFIED IN DIRECTING THE AO TO ALLOW EXEMP TION U/S 11 OF THE IT ACT, 1961, TO THE ASSESSEE IN THIS CASE. 6. ON THE FACTS AND IN CIRCUMSTANCES OF THE CASE AN D WHEN AS PER THE STATEMENT OF COMPUTATION OF TOTAL INCOME DT. 24-9- 2010, SIGNED BY ITS GENERAL SECRETARY, FILED BY THE ASSESSEE DURING THE ASSESSMENT PROCEEDINGS, IT HAS CLAIMED DEPRECIATION, THE CIT(A) IS NOT JUSTIFIED IN DELETI NG THE DISALLOWANCE OF DEPRECIATION MADE BY THE AO IN THE ASSESSMENT. 2. BRIEFLY THE FACTS OF THE CASE ARE THAT THE ASSES SEE IS A SOCIETY REGISTERED U/S 12A AND HAD CLAIMED EXEMPTION U/S 11 . THE AO NOTED THAT THE ASSESSEE HAD PROVIDED FEE CONCESSIONS TO P ERSONS SPECIFIED U/S 13(3) IN VIOLATION OF SECTION 13. THE AO ALSO H ELD THAT SINCE THE ASSESSEE WAS ENGAGED IN RUNNING AN EDUCATIONAL INST ITUTION, IT WAS ELIGIBLE FOR EXEMPTION U/S 10(23C)(VI) AND NOT U/S 11, AND THAT IT HAD NOT OBTAINED THE REQUISITE APPROVAL UNDER THAT PROV ISION. THE AO ALSO DISALLOWED THE DEPRECIATION AND ASSESSED THE TOTAL INCOME AT RS. 10,54,46,998/-. 3. ON APPEAL, AS REGARDS GROUND NOS. 2 TO 4, THE CI T(A) OBSERVED THAT TO GET EXEMPTION U/S 11 OF THE ACT, THE ASSESS EE SHOULD HAVE REGISTRATION U/S 12A OF THE ACT. FOR THIS PROPOSITI ON, THE CIT(A) RELIED ON THE FOLLOWING CASE LAWS: 1. CIT VS. BAR COUNCIL OF MAHARASTRA, [1981] 130 IT R 28(SC) 2. AMERICAN HOTEL AND LODGING ASSOCIATION/EDUCATION AL INSTITUTE VS. CBDT [2008] (170 TAXMAN 306) (SC) 3. RAJASTHANI SIKSHA SAMITI {(ITA NO. 80 & 91/HYD/2 008) 4. ST. THERESAS CONVENT SOCIETY, HYDERABAD (ITA NO . 844/HYD/08) ITA NO. 131/HYD/14 VIDYANANDA EDUCATIONAL SOCIETY 3 5. ADIT (EXEMPTIONS) VS. LOUIS EDUCATIONAL SOCIETY, (ITA NO. 1456/HYD/2008, DT. 26/12/2008) 6. AP SOCIETY FOR KNOWLEDGE (ITA NO. 843/HYD/09, DT . 09/10/2009. 4. AGAINST THE ORDER OF THE CIT(A), THE REVENUE IS IN APPEAL BEFORE US. 5. WE HAVE HEARD BOTH THE PARTIES, PERUSED THE RECO RD AND GONE THROUGH THE ORDERS OF THE REVENUE AUTHORITIES. THE TRIBUNAL IS CONSISTENTLY HOLDING THAT TO AVAIL EXEMPTION U/S 11 OF THE ACT, THE ONLY REQUIREMENT IS THAT THE ASSESSEE SHOULD HAVE OBTAIN ED REGISTRATION U/S 12A OF THE ACT AND THERE IS NO NECESSITY TO OBT AIN APPROVAL U/S 10(23C) OF THE ACT. IN THE PRESENT CASE, THE ASSESS EE DULY GRANTED REGISTRATION U/S 12A OF THE IT ACT AND CLAIMED EXEM PTION U/S 11 OF THE ACT, THEREFORE, ASSESSING OFFICER CANNOT DENY EXEM PTION ON THE REASON THAT THE ASSESSEE'S CASE IS NOT COVERED U/S 10(23C) OF THE IT ACT AND CANNOT THRUST UPON THE ASSESSEE FOR PARTICU LAR DEDUCTION. SINCE ASSESSEE IS HAVING REGISTRATION U/S 12A OF TH E ACT, IT IS ENTITLED FOR EXEMPTION U/S 11, IF THE CONDITIONS REQUIRED UN DER THIS SECTION IS COMPLIED WITH. MOREOVER, THE CASES RELIED UPON BY T HE CIT(A) (SUPRA) ON THIS ISSUE SUPPORT THE ASSESSEES CASE. BEING SO , WE ARE IN AGREEMENT WITH THE ORDER OF THE CIT(A) ON THIS ISSU E AND ACCORDINGLY THE SAME IS HEREBY CONFIRMED. THUS, THE GROUNDS NO. 2 TO 4 RAISED BY THE REVENUE IN THIS REGARD ARE DISMISSED. 6. GROUND NO. 5 IS PERTAINING TO THE DENIAL OF EXEM PTION U/S 11 ON THE GROUND THAT THE ASSESSEE HAD EXTENDED BENEFIT T O SPECIFIED PERSONS AS DEFINED U/S 13(3) OF THE ACT. 7. BRIEFLY, THE FACTS ARE THAT THE ASSESSEE HAD WAI VED THE FEES OF SIX CHILDREN OF PERSONS SPECIFIED U/S 13(3) WITH TO TAL FEE CONCESSION VALUED AT RS. 4,08,500/-. THE ASSESSEE HAD ALSO PRO VIDED FEE CONCESSION OR BENEFITS, VALUED AT RS. 36,95,500/- T O CHILDREN OF STAFF AND CONCESSION OR BENEFITS, VALUED AT RS.36,95,500 TO C HILDREN OF ITA NO. 131/HYD/14 VIDYANANDA EDUCATIONAL SOCIETY 4 STAFF AND TEACHERS AND TO STUDENTS FROM ECONOMICALL Y BACKWARD CLASS, THOUGH THE ASSESSEE COULD NOT PROVIDE ANY DE TAILS OF SUCH STUDENTS FROM ECONOMICALLY BACKWARD CLASSES. THE AS SESSEE HAD CLAIMED THAT FEES CONCESSION HAD BEEN PROVIDED TO T HE CHILDREN OF STAFF AND TEACHERS TO BOOST THEIR MORAL AND ALSO TO ENSURE THAT THEY GAVE THEIR BEST TO THE ORGANIZATION AND CONTIN UED WITH THE ORGANIZATION IN THE LONG RUN. WITH REGARD TO THE FE ES CONCESSIONS TO CHILDREN OF PERSONS SPECIFIED U/S 13(3), THE ASS ESSEE SUBMITTED THAT IT WAS NOT AN UNREASONABLE BENEFIT S INCE THEY WERE NOT DRAWING ANY REMUNERATION FROM THE ASSESSEE . THE ASSESSEE RELIED ON THE DECISION IN THE CASE OF DIT V PARIWAR SEWA SANSTHAN 118 TAXMAN 587(DEL). 7.1 THE ASSESSING OFFICER REJECTED THE ASSESSEE'S C LAIM AND OBSERVED THAT AS PER SEC.13(1)(C), THE ASSESSEE WAS NOT PERMITTED TO APPLY ITS INCOME DIRECTLY OR INDIRECTL Y FOR THE BENEFIT OF ANY PERSON SPECIFIED IN SEC.13(3) AND THAT THE F EES CONCESSION TO THE CHILDREN OF SUCH PERSONS VIOLATED SEC. 13(1) (C) R.W.S. 13(2)(D). THE ASSESSING OFFICER HELD THAT THE ASSES SEE COULD NOT AVAIL THE BENEFIT OF SEC.13(6) SINCE THE ASSESSEE H AD NOT MERELY PROVIDED EDUCATIONAL FACILITIES TO SUCH PERSONS BUT HAD DONE SO FREE OF COST. THE ASSESSING OFFICER HELD THAT THE D ECISION IN THE CASE OF PARIWAR SEWA SANSTHAN WAS DISTINGUISHABLE O N FACTS AND REJECTED THE CLAIM OF EXEMPTION FOR VIOLATION OF SE C.13(1)( C) R.W.S.13(2)(D). 8. ON APPEAL, THE CIT(A) OBSERVED THAT THE ASSESSIN G OFFICER HAS REFERRED IN HIS ORDER TO THE FEE CONCESSIONS PR OVIDED TO PERSONS SPECIFIED U/S 13(3) (VALUED AT RS.4,08,500) AND TO TEACHERS AND STAFF AND TO ECONOMICALLY WEAKER STUDE NTS (VALUED AT RS.36,95,500) WHILE HOLDING THAT THE ASSESSEE HA D VIOLATED THE PROVISIONS OF THE ACT RENDERING IT INELIGIBLE FOR T HE EXEMPTION U/S 11. PROVIDING FEE CONCESSIONS TO TEACHERS AND STAFF IS NOT A ITA NO. 131/HYD/14 VIDYANANDA EDUCATIONAL SOCIETY 5 VIOLATION OF ANY OF THE PROVISIONS OF THE ACT. AS POINTED OUT BY THE ASSESSEE, DOING SO MAY SERVE TO ENSURE COMMITME NT AND CONTINUED EMPLOYMENT WHICH MAY HELP THE ASSESSEE TO ACHIEVE ITS OBJECTS BETTER. THE ACT MERELY REFERS TO SUCH UNDUE BENEFIT BEING PROVIDED TO PERSONS SPECIFIED U/S 13(3). THER EFORE, THE CLAIM OF THE ASSESSEE WITH REGARD TO FEE CONCESSIONS TO T EACHERS AND STAFF IS ACCEPTED. 8.1 WITH REGARD TO THE FEE CONCESSIONS TO PERSONS S PECIFIED U/S 13(3), THE CIT(A) OBSERVED THAT THE PROVISIONS OF S EC.13(1) MUST BE READ IN CONSONANCE WITH THOSE OF SEC.13(6) AND S EC.12(2). SEC.13(6) SPECIFIES THAT EXEMPTION U/S 11 SHALL NOT BE DENIED MERELY BECAUSE THE TRUST HAS PROVIDED EDUCATIONAL F ACILITIES TO THE SPECIFIED PERSONS. HE FURTHER OBSERVED THAT THE ASS ESSING OFFICER HAS TAKEN THE VIEW THAT SEC. 13(6) PRESUMES THAT TH E EDUCATIONAL FACILITIES HAVE BEEN PROVIDED IN THE NORMAL COURSE, I.E. WITHOUT ANY FEE CONCESSIONS, AS THEY MAY HAVE BEEN DONE IN THE NORMAL COURSE. HOWEVER, SEC. 12(2) REFERS SPECIFICALLY TO THE KIND OF SITUATION THAT IS SEEN IN THE ASSESSEE'S CASE. APPL YING SEC.12(2), IT IS CLEAR THAT PROVISION OF FEE CONCESSIONS OR PR OVISION OF FREE EDUCATIONAL FACILITIES TO THE SPECIFIED PERSONS WOU LD NOT DISENTITLE THE ASSESSEE TO THE EXEMPTION U/S 11 BUT MERELY TH AT THE VALUE OF SUCH FACILITIES SHALL BE DEEMED TO BE THE INCOME OF THE ASSESSEE. THE VALUE OF SUCH FACILITIES HAVE BEEN COMPUTED BY THE ASSESSING OFFICER AT RS. 4,08,500/-. THE CIT(A), THEREFORE, D IRECTED THE ASSESSING OFFICER TO BRING TO TAX THIS SUM AS THE I NCOME OF THE TRUST. 9. AGGRIEVED BY THE ORDER OF THE CIT(A), THE ASSESS EE IS IN APPEAL BEFORE US. 10. WE HAVE HEARD BOTH THE PARTIES, PERUSED THE REC ORD AND GONE THROUGH THE ORDERS OF THE REVENUE AUTHORITIES. THE ALLEGATION OF THE AO IS THAT THE ASSESSEE HAS WAIVED THE FEES OF RS. 4,08,500/- OF SIX ITA NO. 131/HYD/14 VIDYANANDA EDUCATIONAL SOCIETY 6 CHILDREN OF PERSONS SPECIFIED U/S 13(3) OF THE ACT, WHO ARE CHILDREN OF TEACHERS AND STAFF THOSE WHO HAVE COMPLETED CONTINU OUS SERVICE. THERE IS NO DISPUTE ON THIS ISSUE. BEING SO, THE A O DENIED THE EXEMPTION U/S 11 TO THE ASSESSEE. WHEREAS THE CIT(A ) OBSERVED THAT THE ASSESSEE CANNOT BE DENIED EXEMPTION U/S 11 ON T HIS REASON AS THE TOTAL FEES CONCESSION GRANTED TO THE PERSONS SP ECIFIED U/S 13(3) HAS TO BE CONSIDERED AS INCOME OF THE ASSESSEE. HE, THEREFORE, DIRECTED THE AO TO BRING TO TAX THE SUM OF RS. 4,08 ,000/- AS THE INCOME OF THE TRUST. SECTION 13 STIPULATES THAT SEC TION 11 SHALL NOT APPLY IN CERTAIN CASES. UNDER SECTION 13(1)(V)(II), NOTHING CONTAINED IN SECTION 11 SHALL OPERATE SO AS TO EXCLUDE FROM THE TOTAL INCOME OF THE PREVIOUS YEAR OF THE PERSON, IN THE CASE OF A TRUST FOR CHARITABLE PURPOSES, IF ANY PART OF SUCH INCOME OR ANY PROPERT Y OF THE TRUST OR THE INSTITUTION IS, DURING THE PREVIOUS YEAR, USED OR APPLIED DIRECTLY OR INDIRECTLY FOR THE BENEFIT OF ANY PERSON REFERRED T O IN SUB-SECTION (3). UNDER SECTION 13(3)(A) TO (C) THE PERSONS, REFERRED TO IN SECTION 13(1)(C), ARE THE AUTHOR OF THE TRUST OR THE FOUNDE R OF THE INSTITUTION AND ANY OF THE TRUSTEES, AS MENTIONED IN SECTION 13 (3) OF THE IT ACT. SECTION 13(3) READS AS FOLLOWS: (3) THE PERSONS REFERRED TO IN CLAUSE (C) OF SUB-SE CTION (1) AND SUB-SECTION (2) ARE THE FOLLOWING, NAMELY : (A) THE AUTHOR OF THE TRUST OR THE FOUNDER OF THE INSTITUTION (B) ANY PERSON WHO HAS MADE A SUBSTANTIAL CONTRIBU TION TO THE TRUST OR INSTITUTION, [THAT IS TO SAY, ANY PERSON WHOSE TOTA L CONTRIBUTION UP TO THE END OF THE RELEVANT PREVIOUS YEAR EXCEEDS [FIFTY] T HOUSAND RUPEES]; (C) WHERE SUCH AUTHOR, FOUNDER OR PERSON IS A HIND U UNDIVIDED FAMILY, A MEMBER OF THE FAMILY; [(CC) ANY TRUSTEE OF THE TRUST OR MANAGER (BY WHAT EVER NAME CALLED) OF THE INSTITUTION;] (D) ANY RELATIVE OF ANY SUCH AUTHOR, FOUNDER, PERS ON, [MEMBER, TRUSTEE OR MANAGER] AS AFORESAID; (E) ANY CONCERN IN WHICH ANY OF THE PERSONS REFERR ED TO IN CLAUSES (A), (B), (C) [, (CC)] AND (D) HAS A SUBSTANTIAL INTEREST. ITA NO. 131/HYD/14 VIDYANANDA EDUCATIONAL SOCIETY 7 ASSESSEE HAS GIVEN THE FEES CONCESSION TO THE FOLLO WING PERSONS: S. NO . STUDENT NAME FATHER NAME CLASS STATUS TOTAL FEE 1 KANTAMNENI LAKSHMI RIYAA K RAKESH NURSER Y MANGEMENT (G. RAMESH, PRESIDENT RELATIVE) 54,000/- 2 KANTAMNENI RISHI K. RAKESH 1 MANAGEMENT (G. RAMESH PRESIDENT RELATIVE 68,500/- 3 YERRA VENKATA SAI JANISH YERRA UMANADH 7 MANAGEMENT (GENERAL SECRETARY) 71,500/- 4 YADLAPATI KRISHNA TEJA Y. LAKSHMINARAYAN 7 MANAGEMENT ( JOINT SECRETARY) 71,500/- 5 VENKATA SRIRAMA TEJA UMMAREDDY U.V. GANESH 9 MANAGEMENT (TREASURER) 71,500/- 6 YERRA VENKATA SAI MOHNISH YERRA UMANADH 10 MANAGEMENT (GENERAL SECRETARY) 71,500/- 4,08,500/- THERE IS NO DISPUTE REGARDING GRANTING BENEFIT TO T HE ABOVE PERSONS. WHEN THE INCOME OF THE ASSESSEE IS APPLIED FOR CHAR ITABLE PURPOSES OR RELIGIOUS PURPOSES, THE SAME IS ENTITLED FOR EXE MPTION U/S 11 OF THE ACT PROVIDED THAT THE MONEY ACCUMULATED OR SET APAR T IS INVESTED OR DEPOSITED IN THE FORMS OR MODES SPECIFIED U/S 11(5) OF THE ACT. CONCESSION GIVEN THE ABOVE PERSONS FALLS FOUL OF SE CTION 13(1)(C) OF THE ACT. WHEN THE ASSESSEE HAS VIOLATED THE PROVISI ONS OF SECTION 11 AND 13 OF THE ACT BY GIVING CONCESSION TO THE ABOVE PERSONS, WHO ARE SPECIFIED PERSONS U/S 13(3) OF THE ACT, BEING SO, T HE ASSESSEE CANNOT BE GRANTED EXEMPTION U/S 11 OF THE ACT. THE CIT(A) WAS NOT JUSTIFIED IN BRINGING ONLY THE BENEFIT GIVEN TO THE SPECIFIED PERSONS AS INCOME LIABLE TO TAX. THEREFORE, THE ONLY REMEDY IS TO DI SENTITLE THE ASSESSEE IN GETTING EXEMPTION U/S 11 OF THE ACT. ACCORDINGLY , WE SET ASIDE THE ORDER OF THE CIT(A) ON THIS ISSUE AND DIRECT THE AO NOT TO GRANT EXEMPTION U/S 11 OF THE ACT TO THE ASSESSEE. TO COM E TO THIS ITA NO. 131/HYD/14 VIDYANANDA EDUCATIONAL SOCIETY 8 CONCLUSION, WE TAKE SUPPORT FROM THE JUDGEMENT OF JURISDICTIONAL HIGH COURT IN THE CASE OF I) T. BAPANAIAH VIDYADHAR MA TRUST VS. CIT, [1987] 167 ITR 482 (AP) AND II) IN THE CASE OF CIT VS. GURUKUL GHATKESWAR TRUST, [2011] 332 ITR 611 (AP). ACCORDIN GLY, THIS GROUND OF APPEAL OF THE REVENUE IS ALLOWED. 11. THE SIXTH GROUND OF APPEAL RELATES TO THE DISAL LOWANCE OF DEPRECIATION OF RS. 2,01,71,596/-. 12. THE AR SUBMITTED BEFORE THE ASSESSING OFFICER THAT THE ASSESSEE HAD DEBITED DEPRECIATION TO ITS INCOME & E XPENDITURE ACCOUNT BUT HAD NOT CLAIMED ANY DEPRECIATION IN ITS COMPUTATION OF INCOME. THE ASSESSING OFFICER RELIED ON THE DECISIO N IN THE CASES OF ESCORTS LTD V UNION OF INDIA 199 ITR 43 (SC) AND OF THE JURISDICTIONAL ITAT IN THE CASE OF EXHIBITION SOCIE TY (ITA NO.1195/HYD/09, DT.22.3.2012 AND HELD THAT SINCE TH E ASSESSEE HAD CLAIMED THE TOTAL VALUE OF THE ASSETS AS APPLIE D FOR CHARITABLE PURPOSES IN THE YEAR OF ACQUISITION, THE CLAIM OF D EPRECIATION COULD NOT BE ALLOWED. 13. IN THE COURSE OF THE APPELLATE PROCEEDINGS, BEF ORE THE CIT(A) THE AR SUBMITTED THAT THE ASSESSEE HAD NOT CLAIMED ANY DOUBLE DEDUCTION ON THIS COUNT SINCE IT HAD NOT CLAIMED AN Y DEPRECIATION IN ITS COMPUTATION OF INCOME. 14. AFTER CONSIDERING THE SUBMISSIONS OF THE ASSESS EE, THE CIT(A) OBSERVED THAT THOUGH DEPRECIATION WAS DEBITE D BY THE ASSESSEE TO THE INCOME & EXPENDITURE ETC, THE ASSESSEE'S CLAIM, THAT DEPRECIATION HAD NOT BEEN CLAIMED AS A DEDUCTI ON WHILE COMPUTING THE INCOME, IS FACTUALLY CORRECT. THEREFO RE, AS FAR AS THE INCOME TAX PROVISIONS ARE CONCERNED, THE ASSESS EE DID NOT CLAIM A DOUBLE DEDUCTION IN THE FORM OF APPLICATION OF INCOME AS WELL AS DEPRECIATION. ITA NO. 131/HYD/14 VIDYANANDA EDUCATIONAL SOCIETY 9 15. THE CIT(A) NOTED THAT THE ITAT, HYDERABAD HAS C ONSIDERED THIS ISSUE IN THE CASE OF ACIT V SRI VENKAT SAI EDUCATIONAL SOCIETY, AND OTHERS (ITA NO. 1440/HYD/2011, AND OTH ERS, DATED 9.4.2012) AND HELD THAT WHERE THE ENTIRE COST OF THE ASSET STANDS ALLOWED BY WAY OF APPLICATION OF INCOME U/S 11(1), THE DEPRECIATION CLAIMED BY THE ASSESSEE U/S. 32(1) IS NOT ALLOWABLE. HOWEVER, DISALLOWANCE OF ANY CLAIM PRESUPPOSES THAT THE CLAIM SHOULD HAVE BEEN MADE BY THE ASSESSEE IN THE FIRST PLACE. SINCE THE ASSESSEE HAS NOT MADE THIS CLAIM FOR THE PURPOS ES OF INCOME TAX, THE QUESTION OF DISALLOWANCE OF DEPRECIATION D OES NOT ARISE. THE CIT(A) ALLOWED THE CLAIM OF THE ASSESSEE. 16. AGGRIEVED THE REVENUE IS IN APPEAL BEFORE US. 17. WE HAVE HEARD BOTH THE PARTIES, PERUSED THE REC ORD AND GONE THROUGH THE ORDERS OF THE AUTHORITIES BELOW. W E FIND THAT THIS ISSUE IS SQUARELY COVERED BY DECISION OF THE C OORDINATE BENCH OF HYDERABAD TRIBUNAL IN CASE OF DDIT VS. EXH IBITION SOCIETY IN ITA NO. 1195/HYD/2009 VIDE ORDER DATED 2 2/03/2012 WHEREIN IT HAS BEEN HELD AS FOLLOWS: 6. WE HEARD BOTH THE PARTIES ON THIS ISSUE. SIMILA R ISSUE CAME UP FOR CONSIDERATION BEFORE THE JAIPUR BENCH OF THI S TRIBUNAL IN THE CASE OF JAIPUR STOCK EXCHANGE (108 TTJ 393)(JP) , WHEREIN IT WAS HELD THAT DEPRECIATION ON FIXED ASSETS IS AN ALLOWABLE DEDUCTION, WHICH IS NECESSARY TO ARRIVE AT THE INCO ME AVAILABLE FOR APPLICATION TO CHARITABLE PURPOSE. FURTHER, IN THE CASE OF MAHILA SIDH NIRMAN YOJNA V/S. IAC (50 ITD 472), IT HAS BEEN HELD BY THE DELHI BENCH OF THE TRIBUNAL THAT MERELY BECAUSE ENTIRE VALUE OF ASSET IS ALLOWABLE AS EXPENDITURE U NDER S.11, IT IS NOT SUFFICIENT TO DENY CLAIM FOR DEPRECIATION UN LESS THE VALUE OF ASSET HAS BEEN ACTUALLY ALLOWED AS EXPENDITURE. IF NOT SO ALLOWED IN THE YEAR OF ACQUISITION, ASSESSEE WILL B E ENTITLED TO DEPRECIATION. FURTHER, IT WAS HELD BY THE COCHIN BE NCH OF THE TRIBUNAL IN THE CASE OF DY. CIT V/S. ADI SANKARA TR UST (46 SOT 230) THAT WHERE AN ASSESSEE TRUST IS CLAIMING DEPRE CIATION ON ASSETS WHERE COST OF THE RELEVANT ASSETS STOOD CLAI MED AS AN APPLICATION OF INCOME FOR A PRECEDING AND/OR THE CU RRENT YEAR UNDER S.11(1), ITS CLAIM UNDER S.32(1)IS ELIGIBLE O NLY IN RESPECT OF BUSINESS ASSETS AND WHERE ENTIRE COST OF THE ASS ET STANDS ITA NO. 131/HYD/14 VIDYANANDA EDUCATIONAL SOCIETY 10 ALLOWED BY WAY OF APPLICATION OF INCOME UNDER S.11( 1), THE DEPRECIATION CLAIMED BY THE ASSESSEE UNDER S.32(1) IS NOT ALLOWABLE AS THE TRUST IS NOT UNDERTAKING ANY BUSIN ESS ACTIVITY. IN VIEW OF THE ABOVE, THE ASSESSING OFFICER IS DIRE CTED TO VERIFY IN RESPECT OF EACH ASSET ON WHICH DEPRECIATION CLAI MED, WHETHER THE VALUE OF SUCH ASSET WAS IN FACT ALLOWED UNDER S .11, AND IF IT WAS SO ALLOWED, THE DEPRECIATION WOULD NOT BE ALLOW ED IN RESPECT OF SUCH ASSET. ONLY IF THE VALUE OF THE ASS ET WAS NOT ALLOWED AS EXPENDITURE UNDER S.11, THE ASSESSING OF FICER IS REQUIRED TO ALLOW DEPRECIATION THEREON, AS PER THE RATE APPLICABLE TO THOSE ASSETS, AS HELD IN THE CASE OF MAHILA SIDH NIRMAN YOJNA, CITED SUPRA. THIS ISSUE RAISED BY THE REVENUE IS SET ASIDE TO THE FILE OF THE ASSESSING OFFICER FOR FRESH CONSIDERATION, IN THE LIGHT OF THE ABOVE OBSERVATIO NS. THE ASSESSING OFFICER SHALL ACCORDINGLY REDECIDE THE IS SUE IN ACCORDANCE WITH LAW AND AFTER GIVING REASONABLE OPP ORTUNITY OF HEARING TO THE ASSESSEE. SINCE THE ISSUE UNDER CONSIDERATION IS IDENTICAL TO THAT OF THE SAID CASE DECIDED BY THE COORDINATE BENCH, RESPECTFULLY FOLLOWING THE SAME WE REMIT THE ISSUE TO THE FILE OF THE AO TO DECIDE THE SAME IN THE LIGHT OF THE SAID DECISION OF THE COORDINATE BENCH. THIS GROUND IS ALLOWED FOR STATISTICAL PURPOSES. 8. IN THE RESULT, APPEAL OF THE REVENUE IS PARTLY A LLOWED FOR STATISTICAL PURPOSES. PRONOUNCED IN THE OPEN COURT ON 23/05/2014 SD/- SD/- (SAKTIJIT DEY) (CHANDRA POOJARI) JUDICIAL MEMBER ACCOU NTANT MEMBER HYDERABAD, DATED: 23/05/2014. KV COPY TO:- 1) ADIT(E), 3 RD FLOOR, AAYAKAR BHAVAN, BASHEERBAGH, HYDERABAD. 2)VIDYANANDA EDUCATIONAL SOCIETY, KHAJAGUDA VILLAGE , GOLCONDA POST, HYDERABAD. 3) THE CIT(A)-IV, HYDERABAD 4) THE DIT(E)-I, HYDERABAD. 5) THE DEPARTMENTAL REPRESENTATIVE, I.T.A.T ., HYDERABAD. ITA NO. 131/HYD/14 VIDYANANDA EDUCATIONAL SOCIETY 11