ITO (E), New Delhi V. J.D. Tyler School Society, New Delhi

ITA 153/DEL/2014

• Counselvise Citation: [2016] 133 COUNSELVISE.COM (IT) 7350 (ITAT-DELHI)
• Duration Of Justice: 2 year(s) 10 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 18-01-2016
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: D
• Assessment Year: 2010-2011
• Appeal Filed On: 08-01-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: RAMAN KANT GARG
• Keywords: Depreciation; Charitable institution; Benefit of exemption
• Section: 12AA; 12; 11

Judgement Text

1 IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH: D NEW DELHI BEFORE SHRI S.V. MEHROTRA, ACCOUNTANT MEMBER AND SMT. BEENA A. PILLAI, JUDICIAL MEMBER I.T.A .NO.153/DEL/2014 ASSESSMENT YEAR-2010-11 ITO (E), TRUST WARD-IV, PRATYAKSH KAR BHAWAN, CIVIC CENTRE, NEW DELHI. (APPELLANT) VS J.D. TYTLER SCHOOL SOCIETY, 869, EAST PARK ROAD, KAROL BAGH, NEW DELHI. (PAN: AAATJ0755F) (RESPONDENT) APPELLANT BY SHRI RAMAN KANT GARG, SR. DR RESPONDENT BY SHRI MANISH KUMAR, ADV. ORDER PER BEENA A. PILLAI, JM THE PRESENT APPEAL ARISES FROM THE ORDER OF THE LD . CIT(A)- XXI, NEW DELHI VIDE ORDER DATED 23.10.2013 FOR ASSE SSMENT YEAR 2010-11 ON THE FOLLOWING GROUNDS OF APPEAL:- 1. 'ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD. CIT(A) HAS ERRED IN EXCLUD ING THE DEVELOPMENT FEES OF RS. 93,02,137/- OUT OF THE GROSS RECEIPTS AS COMPUTED BY THE A.O. 3. 'ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD. CIT(A) HAS ERRED IN ALLOWI NG DATE OF HEARING 4.1.2016 DATE OF PRONOUNCEMENT 18.1.2016 I.T.A. NO. 153/D/2014 ASSESSMENT YEAR 2010-11 2 THE BENEFIT OF EXEMPTION U/S 11 & 12 OF THE ACT IGNORING THE FACT THAT THE SOCIETY WAS INVOLVED IN VIOLATING THE RULES/GUIDELINES FRAMES IN THIS MATTE R.' 3. 'ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CA SE AND IN LAW, THE LD. CIT(A) HAS ERRED IN ALLOWING THE BE NEFIT OF EXEMPTION U/S 11 & 12 OF THE ACT IGNORING THE FACT THAT ASSESSEE DOES NOT SATISFY THE FIRST AND MAIN PRE-CO NDITION I.E. 'CHARITABLE PURPOSES' IN AS MUCH AS CONCERNED THE O BJECTS AS DEFINED IN THE MOA OF THE SOCIETY. 4. 'ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD. CIT(A) HAS ERRED IN ALLOWI NG THE BENEFIT OF EXEMPTION U/S 11 & 12 IGNORING THE F ACT THAT THE ASSESSEE SOCIETY WAS IMPARTING EDUCATION O N COMMERCIAL PRINCIPLE WITH HAVING PROFIT MOTTO. 5. 'ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD. CIT(A) HAS ERRED IN ALLOWI NG THE CLAIM OF DEPRECIATION OF RS. 23,29,584/- TO THE ASSESSEE. 2. BRIEF FACTS OF THE CASE AS RECORDED BY THE LD. A SSESSING OFFICER ARE AS UNDER:- 2.1. THE ASSESSEE HAD FILED ITS INCOME DECLARING NI L ON 29.9.2010. THE RETURN WAS PROCESSED U/S 143(1) AND THE CASE WA S SELECTED FOR SCRUTINY. ACCORDINGLY, NOTICES WERE ISSUED TO THE ASSESSEE. THE ASSESSEE SOCIETY HAS BEEN REGISTERED WITH THE R EGISTRAR OF SOCIETIES, DELHI ON 28.04.1955. THE ASSESSEE SOCIET Y IS ENGAGED IN RUNNING SCHOOL IN THE NAME OF M/S J.D. TYTLER SC HOOL, RAJINDER NAGAR, DELHI. THE MAIN AIMS & OBJECTS ARE TO ESTABLISH, MAINTAIN AND RUN SCHOOLS, COLLEGES, LABORATORIES, T RAINING CENTRES FOR THE FORMATION, EDUCATION AND DIFFUSION OF SCIEN CE, LITERATURE, FINE ARTS AND IN GENERAL FOR IMPARTING ANY USEFUL K NOWLEDGE, TO I.T.A. NO. 153/D/2014 ASSESSMENT YEAR 2010-11 3 CONSTRUCT, DEMOLISH, ALTER OR RENT ANY BUILDINGS WH ICH MAY BE NECESSARY FOR ITS OBJECTIVES, TO PROVIDE HOTELS AND RESIDENCE FOR STUDENTS, FOR ITS MEMBERS AND FOR SUCH PERSONS AS M AY WORK FOR IT, TO ESTABLISH, ORGANIZE, MAINTAIN AND RUN, LIBRA RIES, READING ROOMS, COMMON ROOMS FOR THE GENERAL USE OF MEMBERS, STUDENTS AND THE GENERAL PUBLIC, ETC. 2.2. LD. ASSESSING OFFICER OBSERVED THAT THE ASSESS EE IS REGISTERED U/S 12A(A) OF THE ACT VIDE ORDER NO. CIT-II/TE (128 )/78-79/1168 TO 1169 DATED 28.1.1980. DURING THE ASSESSMENT PRO CEEDINGS, THE LD. ASSESSING OFFICER OBSERVED THAT THE ASSESSE E HAS RECEIVED DEVELOPMENT FUND OF RS. 93,02,137/-. LD. ASSESSING OFFICER CALLED FOR VARIOUS DETAILS IN RESPECT OF DEVELOPMEN T FUND RECEIVED BY THE ASSESSEE. AFTER GOING THROUGH THE SUBMISSION S OF THE ASSESSEE, THE LD. ASSESSING OFFICER HELD THAT THE A SSESSEE DOES NOT FALL WITHIN THE SCOPE OF CHARITABLE PURPOSES AS DEFINED IN SECTION 2(15) OF THE ACT. HE THEREFORE DENIED THE BENEFIT OF SECTION 11 AND 12 AND MADE AN ADDITION OF RS. 93,02 ,137/- BEING THE DEVELOPMENT FUND RECEIVED BY THE ASSESSEE. THE LD.AO FURTHER MADE ADDITION BY DISALLOWING THE DEPRECIATI ON OF RS.23,29,584 AND HELD THAT THE CLAIM AMOUNTED TO DO UBLE DEDUCTION ON ACCOUNT OF THE CLAIM OF CAPITAL EXPEND ITURE AS APPLICATION OF FUND. 3. AGGRIEVED BY THE ORDER OF THE LD. ASSESSING OFFI CER, THE ASSESSEE PREFERRED AN APPEAL BEFORE THE LD. CIT(A). 3.1. THE LD. CIT(A) RELYING UPON THE SUBMISSIONS OF THE ASSESSEE HAD DELETED THE ADDITION IN RESPECT OF THE DEVELOPM ENT FEE COLLECTED BY THE ASSESSEE. LD. CIT(A) ALSO DELETED THE ADDITION I.T.A. NO. 153/D/2014 ASSESSMENT YEAR 2010-11 4 MADE BY THE ASSESSING OFFICER IN RESPECT OF THE DEP RECIATION BEING DENIED IN THE HANDS OF THE ASSESSEE BY RELYING UPON THE ORDER OF HIS PREDECESSOR FOR ASSESSMENT YEAR 2008-09. LD. C IT(A) HELD THAT THE ASSESSEE RUNS A SCHOOL AND HAS BEEN IMPART ING EDUCATION AND, THEREFORE, IS ELIGIBLE FOR EXEMPTION U/S 11 OF THE ACT. HE ALSO HELD THAT THE ACTIVITIES OF THE ASSES SEE COME UNDER EDUCATION WITHIN THE DEFINITION OF CHARITABLE PURPO SES U/S 2(15) OF THE ACT. 4. AGGRIEVED BY THE ORDER OF THE LD. CIT(A), THE DE PARTMENT IS IN APPEAL BEFORE US. LD. DR HAS PLACED HIS RELIANCE O N THE ORDER PASSED BY THE ASSESSING OFFICER. GROUND NO. 1 4. LD. AR, AT THE OUTSET, SUBMITTED THAT THIS GROUN D STANDS COVERED BY THE ORDER OF THIS TRIBUNAL FOR ASSESSMEN T YEAR 2009- 10 IN I.T.A. NO. 152/DEL/14 IN THE ASSESSEES OWN C ASE. HE SUBMITTED THAT THE SENIOR DEPUTY ACCOUNTANT GENERAL (COMMERCIAL) OF CAG OFFICE HAS CERTIFIED THAT THE G ENERAL CONDITIONS OF THE ACCOUNTS OF THE ASSESSEE HAVE BEE N FOUND SATISFACTORY. LD. AR SUBMITTED THAT THE AMOUNT OF DEVELOPMENT FUND WAS TAKEN AS PER THE NORMS FIXED UNDER DELHI E DUCATION ACT AND, THEREFORE, WAS NOT IN VIOLATION OF ANY STATUTO RY PROVISIONS IN REGARD TO FEES. 4.1. LD. AR SUBMITTED THAT THE FEES WERE CHARGED FR OM THE STUDENTS ONLY UP TO LIMITATION ALLOWED AS PER THE A PPLICABLE PROVISIONS OF LAW. LD. AR FURTHER SUBMITTED THAT E XEMPTION GRANTED BY THE CIT/DIT(E) U/S 12AA OF THE ACT HAS N OT YET BEEN I.T.A. NO. 153/D/2014 ASSESSMENT YEAR 2010-11 5 CANCELLED AND THAT THE ASSESSEE HAS AND IS STILL BE ING CONSIDERED AS CHARITABLE SOCIETY. LD. AR HAS PLACED RELIANCE UPON THE DECISION OF THIS TRIBUNAL FOR ASSESSMENT YEAR 2008- 09 IN ASSESSEES OWN CASE IN I.T.A. NO. 4476/DEL/2011 VID E ORDER DATED 8.1.2014. 5. LD. AR SUBMITTED THAT IN THIS DECISION OF THIS T RIBUNAL IN THE ASSESSEES OWN CASE, WHERE IT HAS BEEN HELD THA T THE ASSESSEE IS ENTITLED TO COLLECT DEVELOPMENT FEES FOR THE PUR POSES OF SUPPLEMENTING THE RESOURCES FOR PURCHASE/UP GRADATI ON AND REPLACEMENT OF FURNITURE, FIXTURES AND EQUIPMENT. LD. AR SUBMITS THAT THE REVENUE HAD PREFERRED AN APPEAL AG AINST THE ORDER OF THIS TRIBUNAL FOR ASSESSMENT YEAR 2008-09 BEFORE THE HONBLE JURISDICTIONAL HIGH COURT IN I.T.A. NO. 424 /2014. THE HONBLE HIGH COURT VIDE ITS ORDER DATED 8.4.15 HAS DECIDED THE ISSUE IN FAVOUR OF THE ASSESSEE. 6. WE, ACCORDINGLY, FOLLOWING THE DECISION OF THE H ONBLE JURISDICTIONAL HIGH COURT AND THE CONSISTENT FINDIN GS OF THIS TRIBUNAL IN ASSESSEES OWN CASE IN THE PRECEDING YE ARS, DISMISS THIS GROUND OF APPEAL RAISED BY THE REVENUE. GROUND NO.5 7. THIS GROUND RELATES TO THE CLAIM OF DEPRECATION AMOUNTING TO RS. 23,29,584/- TO BE TREATED AS APPLICATION OF FUN D FOR THE PURPOSES OF EXEMPTION. LD. DR RELIED UPON THE ORDE R OF LD. ASSESSING OFFICER. 7.1. ON THE CONTRARY, LD. AR SUBMITS THAT THIS ADDI TION HAS BEEN MADE FOR THE FIRST TIME IN THE YEAR 2008-09 BY HOLD ING THAT THE I.T.A. NO. 153/D/2014 ASSESSMENT YEAR 2010-11 6 CLAIM OF DEPRECIATION MADE BY THE ASSESSEE AMOUNTS TO DOUBLE DEDUCTION ON ACCOUNT OF THE CLAIM OF CAPITAL EXPEND ITURE AS APPLICATION OF FUNDS. THE INCOME OF THE RESPONDENT ASSESSEE IS ALREADY EXEMPT AND THE RESPONDENT ASSESSEE IS ONLY CLAIMING THAT DEPRECIATION SHOULD BE REDUCED FROM THE INCOME FOR THE PERCENTAGE OF FUNDS WHICH HAVE TO BE APPLIED FOR TH E PURPOSE OF TRUST. 7.2. LD. AR HAS RELIED UPON THE ORDER OF THIS TRIBU NAL IN ASSESSEES OWN CASE FOR ASSESSMENT YEAR 2008-09 IN I.T.A. NO. 4476/DEL/2011. THIS TRIBUNAL HAS DELETED THE ADDIT ION MADE BY THE ASSESSING OFFICER ON THE CLAIM OF DEPRECIATION BY RELYING UPON THE DECISION OF HON'BLE PUNJAB & HARYANA HIGH COURT IN THE CASE OF TINY TOTS EDUCATION SOCIETY IN ITA NO. 93/2010. IT IS FURTHER BROUGHT TO OUR NOTICE THAT AGGRIEVED BY THIS DELETI ON, THE REVENUE HAD PREFERRED AN APPEAL BEFORE THE HON'BLE JURISDIC TIONAL HIGH COURT IN I.T.A. NO. 424/2014, WHEREIN THE HON'BLE H IGH COURT HAD UPHELD THE DECISION OF THIS TRIBUNAL BY RELYING UPON THE DECISION OF DIT VS INDRAPRASTHA CANCER SOCIETY VIDE ORDER DATED 18.11.2014 IN I.T.A. NO. 240/2014. 8. WE ACCORDINGLY, FOLLOWING THE CONSISTENCY AND T HE RATIO LAID DOWN BY HON'BLE HIGH COURT IN THE ASSESSEE S OWN C ASE AS WELL AS IN THE CASE OF INDRAPRASTHA CANCER SOCIETY (SUPR A) DISMISSED THIS GROUND OF APPEAL RAISED BY THE REVENUE. 8. GROUND NO. 2, 3 & 4 RELATE TO ALLOWING THE BENEF IT OF EXEMPTION U/S 11 AND 12 OF THE ACT. I.T.A. NO. 153/D/2014 ASSESSMENT YEAR 2010-11 7 8.1. IT IS AN UNDISPUTED FACT THAT THE ASSESSEE SOC IETY IS ENGAGED IN RUNNING SCHOOL IN THE NAME OF M/S J.D. TYTLER SC HOOL, RAJINDER NAGAR, DELHI. THE AUTHORITIES BELOW HAVE R ECORDED THE MAIN AIMS & OBJECTS OF THE ASSESSEE ARE TO ESTABLIS H, MAINTAIN AND RUN SCHOOLS, COLLEGES, LABORATORIES, TRAINING C ENTRES FOR THE FORMATION, EDUCATION AND DIFFUSION OF SCIENCE, LITE RATURE, FINE ARTS AND IN GENERAL FOR IMPARTING ANY USEFUL KNOWLEDGE, TO CONSTRUCT, DEMOLISH, ALTER OR RENT ANY BUILDINGS WHICH MAY BE NECESSARY FOR ITS OBJECTIVES, TO PROVIDE HOTELS AND RESIDENCE FOR STUDENTS, FOR ITS MEMBERS AND FOR SUCH PERSONS AS MAY WORK FOR IT, TO ESTABLISH, ORGANIZE, MAINTAIN AND RUN, LIBRARIES, READING ROOM S, COMMON ROOMS FOR THE GENERAL USE OF MEMBERS, STUDENTS AND THE GENERAL PUBLIC, ETC. 8.2. IT HAS ALSO BEEN OBSERVED BY THE LD. ASSESSING OFFICER OBSERVED THAT THE ASSESSEE IS REGISTERED U/S 12A(A) OF THE ACT VIDE ORDER NO. CIT-II/TE (128)/78-79/1168 TO 1169 DATED 28.1.1980, WHICH STANDS VALID TILL DATE. 8.3. FROM THE ABOVE, IT IS VERY CLEAR THAT THE ACTI VITIES CARRIED OUT BY THE ASSESSEE CERTAINLY AMOUNTS TO CHARITABLE PUR POSE, AS IT IS BEING COVERED UNDER THE LIMB EDUCATION TO THE DEF INITION OF CHARITABLE PURPOSE IS CONTAINED IN SECTION 2(15) OF THE ACT. THEREFORE, THE ASSESSEE HAS TO BE NECESSARILY CONSI DERED A GENUINE CHARITABLE ORGANIZATION ELIGIBLE TO CLAIM E XEMPTION U/S 11 & 12 OF THE ACT AND THE PROVISIONS OF THE FIRST PROVISO TO SECTION 2(15) DO NOT APPLY TO THE CASE OF THE APPEL LANT. 9. THESE GROUNDS OF THE REVENUE THEREFORE STAND DIS MISSED/ I.T.A. NO. 153/D/2014 ASSESSMENT YEAR 2010-11 8 10. IN THE RESULT, THE APPEAL OF THE REVENUE IS DIS MISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 18.01. 2016 SD/- SD/- (S.V. MEHROTRA) (BEENA A. PILLAI) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED: 18 TH JANUARY 2016 GS COPY FORWARDED TO: 1. APPELLANT 2. RESPONDENT 3. CIT(A) 4. CIT 5. DR ASSTT. REGISTRAR