ACIT(E), CIRCLE- 1(1), NEW DELHI V. J D TYTLER SCHOOL SOCIETY, NEW DELHI

ITA 1688/DEL/2018

• Counselvise Citation: [2021] 107 COUNSELVISE.COM (IT) 3826 (ITAT-DELHI)
• Duration Of Justice: 3 year(s) 7 month(s) 2 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 11-10-2021
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: C
• Assessment Year: 2013-2014
• Appeal Filed On: 09-03-2018
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: AGAINST DATED PASSED
• Keywords: Capital asset; Depreciation; Charitable institution; Benefit of exemption; Capital expenditure
• Section: 12AA; 201; 13; 12; 11

Judgement Text

1 ITA NO. 1688/DEL/2018 IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH: C NEW DELHI BEFORE MS SUCHITRA KAMBLE, JUDICIAL ME MBER AND SH. PRASHANT MAHARISHI, ACCOUN TANT MEMBER I.T.A. NO. 1688/DEL/20 18 (A.Y 2013-14) (THROUGH VIDEO CON FERENCING) ACIT (E) CIRCLE-1(1) ROOM NO. 2418, 24 TH FLOOR, E-2, CIVIC CENTRE, NEW DELHI (APPELLANT) VS J D TYTLER SCHOOL SOCIETY, 869, EAST PARK ROAD, KAROL BAGH, NEW DELHI AAATJ0755F (RESPONDENT) ORDER PER SUCHITRA KAMBLE, JM THIS APPEAL IS FILED BY THE REVENUE AGAINST THE OR DER DATED 11/12/2017 PASSED BY CIT (A)-40, DELHI FOR ASSESSMENT YEAR 201 3-14. 2. THE GROUNDS OF APPEAL ARE AS UNDER: 1. ON THE FACTS AND IN CIRCUMSTANCES OF THE CASE AND IN L AW, LD CIT(A) HAS ERRED IN IGNORING THAT THE ASSESSEE SOCIETY HAS NOT TAKEN THE RECEIPT ON ACCOUNT OF DEVELOPMENT FUND IN THE INCOME AND EXPEN DITURE ACCOUNT RATHER IT WAS TAKEN DIRECTLY TO BALANCE SHEET. 2. ON THE FACTS AND IN CIRCUMSTANCES OF THE CASE A ND IN LAW, LD CIT(A) HAS ERRED IN IGNORING THE FACT THAT THE ASSESSES LIKE A NY CHARITABLE OR RELIGIOUS INSTITUTIONS ARE GOVERNED BY ALMOST THE SEPARATE OR INDEPENDENT PROVISIONS OF SECTION 11, 12, 12A, 12AA & 13 AND THESE PROVISIONS ARE INDEPENDENT CODE IN APPELLANT BY SH. VIVEK VARDHAN, SR. DR RESPONDENT BY SH. MANISH KUMAR, ADV DATE OF HEARING 05.10.2021 DATE OF PRONOUNCEMENT 11.10.2021 2 ITA NO. 1688/DEL/2018 ITSELF IN CHAPTER III OF THE INCOME TAX ACT, 1961. THE INCOME AND EXPENDITURE IS COMPUTED ON THE BASIS OF APPLICATION OF INCOME F OR CHARITABLE OR RELIGIOUS PURPOSES AND THE DEDUCTION IS ALLOWED OF THE ENTIRE EXPENDITURE INCLUDING THE CAPITAL EXPENDITURE FOR PURCHASE OF CAPITAL ASSETS U/S 11(1). 3. ON THE FACTS AND IN CIRCUMSTANCES OF THE CASE AN D IN LAW, LD CIT(A) HAS ERRED IN ALLOWING THE BENEFIT OF EXEMPTION U/S 11 & 12 OF THE ACT IGNORING THE FACT THAT THE ASSESSEE SOCIETY WAS INVOLVED IN VIOL ATING THE RULES/GUIDELINES FRAMED IN THE MATTER. 4. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E AND IN LAW, LD. CIT(A) HAS ERRED IN ALLOWING THE APPEAL OF THE ASSESSEE IG NORING THE FACT THAT IN THE CASE OF CHARITABLE OR RELIGIOUS INSTITUTIONS, THE A SSESSEE IS NOT ELIGIBLE FOR ANY TYPE OF DEPRECIATION AS THE ENTIRE EXPENDITURE FOR THE PURCHASE OF CAPITAL ASSETS IS ALLOWED AS A DEDUCTION AND THE SAME IS TR EATED AS APPLICATION OF INCOME U/S. 11(1) AND CLAIMING DEPRECIATION ON THE SAME CAPITAL ASSETS IS A DOUBLE DEDUCTION AND IS NOT AS PER LAW AS THESE CAP ITAL ASSETS ARE NOT USED FOR THE PURPOSE OF BUSINESS OF PROFESSION AS PROVID ED U/S 32(1). 3. THE ASSESSEE SOCIETY IS RUNNING JD TYTLER SCHOOL SINCE 1954 AND IS REGISTERED U/S 12A(A) OF THE INCOME TAX ACT, 1961 V IDE ORDER DATED 28/1/1980. THE SOCIETY HAS ALSO BEEN GRANTED CERTIFICATE U/S 8 0G (5)(VI) OF THE ACT UP TO PERIOD 31/3/2011. THE SCHOOL RUN UNDER THE SOCIETY IS AFFILIATED TO CBSE AND THE MAIN AND EXCLUSIVE OBJECT OF THE ASSESSEE SOCIE TY IS TO PROVIDE EDUCATION. TILL THE SCRUTINY ASSESSMENT YEAR 2008-09, THE BENE FIT OF SECTION 11 & 12 GRANTED CONSISTENTLY TO THE ASSESSEE SOCIETY FOR TH E SAME ACTIVITY AND THE SAME OBJECTS. THE RETURN OF INCOME DECLARING INCOME OF RS. NIL WAS FILED ON 27/9/2013. THE ASSESSING OFFICER PASSED ASSESSMEN T ORDER DATED 10/3/2016 THEREBY MAKING ADDITION OF RS. 88,15,950/- TOWARDS DEVELOPMENT FUND, RS. 10,93,42,735/- AS REGARDS TOTAL RECEIPTS AND THUS A SSESSED THE INCOME AT RS. 9,90,08,122/- LESS: (EXPENDITURE ALLOWED AS PER I & E ACCOUNT EXCLUDING DEPRECIATION). 3 ITA NO. 1688/DEL/2018 4. BEING AGGRIEVED BY THE ASSESSMENT ORDER, THE ASS ESSEE FILED APPEAL BEFORE THE CIT(A). THE CIT (A) PARTLY ALLOWED THE APPEAL OF THE ASSESSEE. 5. AS REGARDS GROUND NO. 1 TO 3, THE LD. AR SUBMITT ED THAT THE SAME IS COVERED IN FAVOUR OF THE ASSESSEE BY THE ORDER OF T RIBUNAL AS WELL AS BY THE DECISION OF THE HON'BLE HIGH COURT IN ASSESSEES OW N CASE FOR ASSESSMENT YEAR 2012-13 VIDE ORDER DATED 8/4/2015 IN ITA NO. 424/20 14. AS REGARDS GROUND NO. 4 RELATING TO DISALLOWANCE OF DEPRECIATION AMOU NTING TO RS. 21,61,384/-, THE LD. AR RELIED UPON THE ORDER OF THE CIT(A) AS W ELL AS THE DECISION OF THE HON'BLE HIGH COURT IN CASE OF DIT VS. INDRAPRASTH C ANCER SOCIETY AND RAJASTANI & GUJARATI CHARITABLE FOUNDATION POONA (2 018) 402 ITR 441 (SC). 6. THE LD. DR RELIED UPON THE ASSESSMENT ORDER FOR ALL THE ISSUES CONTESTED BY THE REVENUE. 7. WE HAVE HEARD BOTH THE PARTIES AND PERUSED THE M ATERIAL AVAILABLE ON RECORD. AS REGARDS GROUND NO. 1 TO 3, DURING THE C OURSE OF ASSESSMENT, THE DEVELOPMENT FUND RECEIPTS AMOUNTING TO RS.88,15,915 /- WERE DIRECTLY TAKEN TO THE BALANCE SHEET AS LIABILITY AND THE SAME WERE AD DED BACK. AS PER THE DIRECTION OF THE DIRECTORATE OF EDUCATION, THE SCHO OL IS ENTITLED TO COLLECT DEVELOPMENT FEE UP TO 10 TO 15% OF TUITION FEE. TH E ISSUE IS SQUARELY COVERED IN ASSESSEES OWN CASE FOR ASSESSMENT YEAR 2012-13 BY THE HON'BLE HIGH COURTS DECISION. HENCE, GROUND NO. 1 TO 3 ARE DISMISSED. AS REGARDS GROUND NO. 4, THE CIT(A) HAS RELIED UPON THE DECISION OF THE HON BLE DELHI HIGH COURT IN CASE OF DIT (EXEMPTION) VS. INDERPRASTHA CANCER SOCIETY, ITA NO. 240, 348, 406, 4633 AND 464/2014 VIDE ORDER DATED 18/11/2014 WHERE IN IT HAS BEEN HELD THAT THE ASSESSEE IS ELIGIBLE FOR DEPRECIATION IN T HE CASE OF CHARITABLE OR RELIGIOUS INSTITUTIONS ALSO. AS REGARDS THE AMENDM ENT TO SECTION 11 WHICH IS EFFECTIVE FROM ASSESSMENT YEAR 2015-16 AND SUBSEQUE NT YEARS, THE DEPRECIATION HAS TO BE ALLOWED IN RELATION TO INCOM E FROM PROPERTY WHICH ARE IN RESPECT OF CHARITABLE PURPOSES. THE HONBLE SUPREM E COURT IN CASE OF CIT VS. 4 ITA NO. 1688/DEL/2018 RAJASTHANI & GUJARATI CHARITABLE FOUNDATION POONA ( SUPRA) HELD THAT THE DEPRECIATION IN RESPECT OF COST OF THE ASSETS ALLOW ED TO THE ASSESSEE AS EXPENDITURE IS ALLOWABLE. THUS, THE ISSUE CONTESTED BY THE REVENUE IS SQUARELY COVERED AGAINST THE REVENUE IN LIGHT OF THE HONBLE SUPREME COURT DECISION IN CASE OF RAJASTHANI & GUJARATI CHARITABLE FOUNDATION POONA (SUPRA). GROUND NO. 4 IS DISMISSED. HENCE, THE APPEAL OF THE REVEN UE IS DISMISSED. 8. IN RESULT, THE APPEAL OF THE REVENUE IS DISMISSE D. ORDER PRONOUNCED IN THE OPEN COURT ON THIS 11 TH DAY OF OCTOBER, 2021 SD/- SD/- (PRASHANT MAHARISHI) (SUCH ITRA KAMBLE) ACCOUNTANT MEMBER JUDICIAL MEM BER DATED: 11/10/2021 R. NAHEED * COPY FORWARDED TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(APPEALS) 5. DR: ITAT ASSISTANT REGISTRAR ITAT NEW DELHI