M/s. Friends Charitable Society, Ghaziabad V. Addl. CIT, Ghaziabad

ITA 3298/DEL/2015

• Counselvise Citation: [2018] 125 COUNSELVISE.COM (IT) 6640 (ITAT-DELHI)
• Duration Of Justice: 3 year(s) 1 month(s) 24 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 19-07-2018
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: D
• Assessment Year: 2010-2011
• Appeal Filed On: 25-05-2015
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: DR RAKESH GUPTA; LAKSHAY GO Y A L
• Keywords: Business income; Depreciation; Charitable institution; Capital expenditure
• Section: 80G; 12AA; 32; 28; 11

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL (DELHI BENCH: D: NEW DELHI) BEFORE SHRI N.K BILLAIYA, ACCOUNTANT MEMBER & SHRI KULDIP SINGH, JUDICIAL MEMBER ITA NO:- 3298/DEL/2015 (ASSESSMENT YEAR: 2010-11) M/S FRIENDS CHARITABLE SOCIETY, 95, KATORI MILL, NEAR HINDON AIR FORCE STATION, LONI ROAD, MOHAN NAGAR,GHAZIABAD. VS. ADDITIONAL COMMISSIONER OF INCOME TAX, RANGE-1, GHAZIABAD. PAN NO: AAATF0997R APPELLANT RESPONDENT ASSESSEE BY : DR. RAKESH GUPTA, ADV. & SH. LAKSHAY GOYAL, ADV. REVENUE BY : SH. AMIT JAIN, SR. DR DATE OF HEARING : 16.07.2018. DATE OF PRONOUNCEMENT : 19/07/2018. ORDER PER: KULDIP SINGH, JM THE APPELLANT, M/S FRIENDS CHARITABLE SOCIETY (HERE INAFTER REFERRED TO AS THE ASSESSEE) BY FILING THE PRESENT APPEAL, SOUGHT TO SET ASIDE THE 2 ITA NO. 3298/DEL/2015. M/S FRIENDS CHARITABLE SOCIETY. IMPUGNED ORDER DATED 26.02.2015 PASSED BY LD. CIT(A ),MUZAFFAR NAGAR, QUA ASSESSMENT YEAR 2010-11, ON THE GROUNDS THAT:- 1. THAT ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN THE LAW THE LEARNED COMMISSIONER OF INCOME-TAX (APPEALS) HAS GR OSSLY ERRED IN CONFIRMING THE ADDITIONS MADE BY ASSESSING OFFICER TREATING HOSTEL FACILITY PROVIDED TO COLLEGE STUDENTS AS BUSINESS O F THE APPELLANT SOCIETY CONSIDERING THE ALLEGED SURPLUS OF RS.2,35, 43,997/- AS BUSINESS INCOME IN THE HAND OF APPELLANT SOCIETY. T HE OBSERVATION MADE AND BASIS ADOPTED ARE ERRONEOUS, UNJUSTIFIED, UNWARRANTED, BAD IN LAW AND ARE WITHOUT SUFFICIENT MATERIAL ON R ECORDS. 2. THAT THE LEARNED COMMISSIONER OF INCOME-TAX ( APPE ALS) HAS GROSSLY ERRED IN CONFIRMING THE ADDITIONS MADE BY A .O. HOLDING THAT HOSTEL/ MESS FACILITY FOR STUDENTS IS SEPARATE BUSI NESS ACTIVITY IN TERMS OF SECTION 11(4A) MERELY ON IRRELEVANT CONSID ERATION LIKE SURPLUS SHOULD HAVE BEEN REIMBURSED TO STUDENTS OR USED TO REDUCE FEE OR GIVING CONTENTS OF SOME WEBSITE ABOUT FALL I N DEMAND FOR ROOMS AT MEERUT ETC, EVEN AFTER ACCEPTING THAT MAIN TENANCE OF SUCH HOSTEL IS MANDATORY AS PER THE CONCERNED CONTROLLIN G AUTHORITY AND IT WAS AN INTEGRAL AND INALIENABLE PART OF EDUCATIONAL ACTIVITY. THUS FINDING IS PERVERSE. 3. THAT THE LEARNED ASSESSING OFFICER HAS FAILED TO AP PRECIATE THE FACT THAT MAINTAINING HOSTEL/MESS FACILITY TO STUDENTS I S AN ESSENTIAL & INTEGRAL PART OF EDUCATION U/S 2(15) OF THE ACT A ND NOT A SEPARATE BUSINESS ACTIVITY COVERED UNDER SECTION 11(4A) AS A LSO ACCEPTED IN THE PAST ASSESSMENTS AND THERE IS NO CHANGE IN LAW ABOUT THE FIRST THREE LIMBS OF SECTION 2(15) EVEN AFTER 01.04.2009, , HENCE OVERALL SURPLUS OF THE SOCIETY AS WORKED OUT IN INCOME & EX PENDITURE ACCOUNT OF THE SOCIETY AND CONSEQUENTLY USED AND IN VESTED IN THE FULFILLMENT OF THE MAIN OBJECTIVES OF THE SOCIETY R ESULTING INTO APPLICATION OF INCOME AND AS SUCH EXEMPT UNDER THE PROVISIONS OF SECTION 11 TO 13 OF THE ACT AND LEARNED COMMISSIONE R OF INCOME- TAX (APPEALS) HAS ALSO CONFIRMED THE VIEW TAKEN BY ASSE SSING OFFICER. 4. THAT THE LEARNED COMMISSIONER OF INCOME-TAX ( APPE ALS) HAS ALSO ERRED ON FACTS AND IN LAW TO CONFIRM THE DISALLOWAN CE MADE BY 3 ITA NO. 3298/DEL/2015. M/S FRIENDS CHARITABLE SOCIETY. ASSESSING OFFICER RS. 4,04,17,438/- BEING THE DEPRE CATION AS CLAIMED BY DEBITING THE SAME TO THE INCOME & EXPENDITURE AC COUNT OF THE SOCIETY FOR THE PURPOSES OF WORKING OUT THE SURPLUS IN THE HANDS OF THE SOCIETY. THE ASSESSING OFFICER HAS FAILED TO BR ING ANY MATERIAL ON RECORDS TO ESTABLISH THAT THE APPELLANT HAS AVAILED HUNDRED PERCENT APPLICATION OF THE VALUE OF CAPITAL EXPENDITURE IN THE YEAR OF INVESTMENT THEREBY INVITING DISALLOWANCE OF THE DEP RECIATION ON SUCH CAPITAL EXPENDITURE QUOTING DOUBLE DEDUCTION. DURIN G THE COURSE OF ASSESSMENT PROCEEDINGS, THE SOCIETYS COUNCIL HAS S UBMITTED DETAILS OF GROSS INCOME AND ITS APPLICATION OF INCOME OF RE LEVANT YEAR AND PRECEEDING FIVE YEARS TO JUSTIFY THAT ADDITION IN F IXED ASSETS COULD NOT BE UTILIZED AS APPLICATION OF INCOME IN PAST YE ARS DUE TO EXCESS UTILIZATION IN PAST YEARS, HENCE THE SAME COULD NOT BE TERMED AS DOUBLE CLAIM OF DEPRECIATION. HENCE THE DISALLOWANC E OF THE DEPRECIATION IS NOT ONLY UNJUSTIFIED BUT IT IS ILLE GAL AND BAD IN THE EYES OF LAW. 2. BRIEFLY STATED THE FACTS NECESSARY FOR ADJUDICATION OF THE CONTROVERSY AT HAND ARE: THE ASSESSEE SOCIETY IS RU NNING ENGINEERING AND PROFESSIONAL COLLEGE IN THE NAME OF KRISHNA ENGINEER ING COLLEGE (KEC) FOR B.TECH AND M.C.A COURSES, BEING A SOCIETY REGISTERE D UNDER THE REGISTRATION OF SOCIETY ACT AND HAS ALSO BEEN GRANT ED REGISTRATION U/S 12AA AND EXEMPTION U/S 80G OF THE INCOME TAX ACT, 1961 ( FOR SHORT THE ACT). THE ASSESSING OFFICER ON THE BASIS OF HIS ENQUIRY I N ASSESSMENT PROCEEDINGS CAME TO THE CONCLUSION THAT RUNNING OF HOSTEL FACILITIES BY THE ASSESSEE FOR ITS STUDENTS IN WHICH SEPARATE FEE IS CHARGED DOES NOT FALL UNDER THE DEFINITION OF CHARITABLE PURPOSE U/S 2(15 ) OF THE INCOME TAX ACT, AND AS SUCH HELD TO BE A SEPARATE BUSINESS. CONSEQUENTLY, AO MADE ADDITION OF RS. 2,35,43,997/- GENERATED BY THE ASSE SSEE AS SURPLUS BY 4 ITA NO. 3298/DEL/2015. M/S FRIENDS CHARITABLE SOCIETY. CHARGING FEE FOR HOSTEL ACCOMMODATION AND MESS CHAR GES AS A BUSINESS INCOME. THE ASSESSING OFFICER ALSO DISALLOWED AN A MOUNT OF RS. 4,04,17,438/- CLAIMED BY THE ASSESSEE AS DEPRECIATI ON BY DEBITING THE SAME TO THE INCOME & EXPENDITURE ACCOUNT OF THE SO CIETY FOR THE PURPOSES OF WORKING OUT THE SURPLUS IN THE HANDS OF THE SOCIETY. 3. THE ASSESSEE CARRIED THE MATTER BEFORE THE LD. CIT (A) BY WAY OF FILING THE APPEAL, WHO HAS DISMISSED THE APPEAL. F EELING AGGRIEVED, THE ASSESSEE HAS COME UP BEFORE THE TRIBUNAL BY WAY OF FILING THE PRESENT APPEAL. 4. WE HAVE HEARD THE LD. AUTHORIZED REPRESENTATIVES O F THE PARTIES TO THE APPEAL, GONE THROUGH THE DOCUMENTS RELIED UPON AND ORDERS PASSED BY THE REVENUE AUTHORITIES BELOW IN THE LIGHT OF TH E FACTS AND CIRCUMSTANCES OF THE CASE. 5. UNDISPUTEDLY, THE ASSESSEE SOCIETY HAS BEEN GRANTE D REGISTRATION U/S 12AA OF THE ACT AND HAS ALSO BEEN FOUND ENTITLE D FOR EXEMPTION U/S 80G OF THE ACT. IT IS ALSO NOT IN DISPUTE THAT THE ASSESSEE SOCIETY HAS BEEN RUNNING THE HOSTEL AND MESS FACILITIES FOR ITS STUDENTS AND NO OUTSIDER IS ALLOWED IN THE HOSTEL AS WELL AS IN THE MESS. 6. THE LD. AR FOR THE ASSESSEE CONTENDED THAT THE ASS ESSEES CASE IS COVERED BY THE DECISIONS RENDERED BY THE HONBLE SU PREME COURT OF INDIA 5 ITA NO. 3298/DEL/2015. M/S FRIENDS CHARITABLE SOCIETY. AND ALSO THE DECISION RENDERED BY THE CO-ORDINATE B ENCH OF TRIBUNAL IN THE CASES CITED AS CIT VS. KARNATAKA LINGAYAT EDUCATION SOCIETY, ITA NO. 5004/2012, DATE OF ORDER 15.10.2014 (HC OF KARNATAKA) AND DR. K.N. INSTITUTE OF PHARMACEUTICALS EDUCATIONAL & RESEARCH TRUST VS. JCIT, ITA NO. 4232/DEL/2015, DATE OF ORDE R 26.04.2017, (ITAT DELHI) . THE LD. AR FOR THE ASSESSEE FURTHER CONTENDED THA T THE SINGLE BENCH OF THE TRIBUNAL IN ASSESSEES OWN CASE FOR A.Y. 2011-12 DECIDED THE IDENTICAL ISSUE IN FAVOUR OF THE ASSESS EE. 7. SO FAR QUESTION OF MAKING ADDITION OF RS. 2,35,43, 997/- ON ACCOUNT OF HOSTEL SURPLUS FEE RECEIVED BY THE ASSESSEE BY T REATING THE SAME AS BUSINESS INCOME U/S 11(4)/11(4A) OF THE ACT IS CONC ERNED, THE HONBLE KARNATAKA HIGH COURT WHILE DECIDING THE IDENTICAL I SSUE IN FAVOUR OF THE ASSESSEE HELD THAT PROVIDING HOSTEL TO THE STUDENT S/STAFF WORKING FOR THE SOCIETY IS INCIDENTAL TO ACHIEVE THE OBJECT OF PROV IDING EDUCATION, NAMELY THE OBJECT OF THE SOCIETY 8. THE CO-ORDINATE BENCH OF TRIBUNAL IN THE CASE OF KRISHNA CHARITABLE SOCIETY VS. ADDL. CIT IN ITA NO. 4639/DE L/2015 ORDER DATED 15.09.2017 ALSO DECIDED THE ISSUE IN FAVOUR OF THE ASSESSEE B Y FOLLOWING THE DECISION RENDERED BY HONBLE KARNATAK A HIGH COURT IN THE CASE OF KARNATAKA LINGAYAT EDUCATION SOCIETY (SUPRA). 6 ITA NO. 3298/DEL/2015. M/S FRIENDS CHARITABLE SOCIETY. 9. THE REVENUE HAS GIVEN EFFECT TO THE DECISION RENDE RED BY CO- ORDINATE BENCH OF TRIBUNAL IN ASSESSEES OWN CASE B EARING ITA NO. 4640/DEL/2015 DECIDED VIDE ORDER DATED 15.2.2017, B Y PASSING ORDER DATED 15.3.2018 U/S 254/143(3) OF THE ACT AND FOUN D THE TOTAL INCOME OF THE ASSESSEE SOCIETY AT NIL. 10. SO, IN VIEW OF THE MATTER, WE ARE OF THE CONSIDERE D VIEW THAT THE ADDITION MADE BY THE AO ON ACCOUNT OF HOSTEL SURPLU S FEE RECEIVED BY ASSESSEE BY TREATING THE SAME AS BUSINESS INCOME IN THE HANDS OF ASSESSEE U/S 11(4)/11(4A) OF THE ACT AND CONFIRMED BY LD. CIT(A) IS NOT SUSTAINABLE IN THE EYES OF LAW, HENCE ORDERED TO BE DELETED. 11. SO FAR AS QUESTION OF MAKING ADDITION OF RS. 4,04, 17,438/- BY THE AO BY DISALLOWING THE DEPRECIATION CLAIMED BY THE A SSESSEE BY DEBITING THE SAME TO THE INCOME AND EXPENDITURE ACCOUNT OF TH E ASSESSEE FOR THE PURPOSES OF WORKING OUT THE SURPLUS IN THE HANDS OF THE SOCIETY, IS CONCERNED, THIS ISSUE HAS ALREADY BEEN DEALT WITH B Y THE CO-ORDINATE BENCH OF TRIBUNAL IN THE CASE OF KRISHNA CHARITABLE SOCIETY (SUPRA) BY FOLLOWING THE DECISION RENDERED BY HONBLE SUPREME COURT OF INDIA IN THE CASE CITED AS CIT VS. RAJASTHAN AND GUJARATI CHARITABLE FOUNDATIO N POONA, CIVIL APPEAL NO. 7186/2014, DATE OF ORDER 13 .12.2017, (SUPREME COURT OF INDIA) AND DECISION RENDERED BY HONBLE HIGH COURT OF DELHI IN THE CASE CITED AS DIT (EXEMPTION) VS. M/S INDRAPRASTHA 7 ITA NO. 3298/DEL/2015. M/S FRIENDS CHARITABLE SOCIETY. CANCER SOCIETY, ITA NO. 240/2014, DATE OF ORDER 18. 11.2014, (HIGH COURT OF DELHI). 12. THE HONBLE SUPREME COURT IN THE CASE OF RAJASTHAN AND GUJARATI CHARITABLE FOUNDATION POONA (SUPRA) UPHELD THE VIEW TAKEN BY THE TRIBUNAL AND AFFIRMED BY HONBLE BOMBAY HIGH COURT IN CASE OF COMMISSIONER OF INCOME TAX VS. INSTITUTE OF BANKING PERSONNEL SELECTION (IBPS) [(2003) 131 TAXMAN 386 (BOMBAY)] VIDE WHICH THE CONTENTION OF THE REVENUE THAT DISALLOWING THE DEPRECIATION ON THE GROUND THAT ONCE THE CAPITAL EXPENDITURE IS TREATED AS APPLICATION OF INCOME FOR CHARITABLE PURPOSES, THE ASSESSEE HAD VI RTUALLY ENJOYED 10% RIGHT OFF OF THE COST OF ASSETS AND THEREFORE GRANT OF DEPRECIATION WOULD AMOUNT TO GIVING DOUBLE BENEFIT TO THE ASSESSEE HAS NOT BEEN ACCEPTED BY THE TRIBUNAL AS WELL AS HONBLE HIGH COURT. THE HO NBLE BOMBAY HIGH COURT IN THE CASE OF INSTITUTE OF BANKING PERSONNEL SELECTION (SUPRA) TURNED DOWN THE CONTENTION OF THE DEPARTMENT ON DOU BLE BENEFIT BY RETURNING THE FOLLOWING FINDINGS AS UNDER:- 3.AS STATED ABOVE, THE FIRST QUESTION WHICH REQUIR ES CONSIDERATION BY THIS COURT IS: WHETHER DEPRECIATIO N WAS ALLOWABLE ON THE ASSETS, THE COST OF WHICH HAS BEEN FULLY ALLOWED AS APPLICATION OF INCOME UNDER SECTION 11 I N THE PAST YEARS? IN THE CASE OF CIT V. MUNISUVRAT JAIN 1994 TAX LAW REPORTER, 1084 THE FACTS WERE AS FOLLOWS. THE ASSESSEE WAS A CHARITABLE TRUST. IT WAS REGISTERED AS A PUBLIC CHARITABLE TRUST. IT WAS ALSO REGISTERED WIT H THE COMMISSIONER OF INCOME TAX, PUNE. THE ASSESSEE DERI VED INCOME FROM THE TEMPLE PROPERTY WHICH WAS A TRUST 8 ITA NO. 3298/DEL/2015. M/S FRIENDS CHARITABLE SOCIETY. PROPERTY. DURING THE COURSE OF ASSESSMENT PROCEEDIN GS FOR ASSESSMENT YEARS 1977-78, 1978-79 AND 1979-80, THE ASSESSEE CLAIMED DEPRECIATION ON THE VALUE OF THE B UILDING @2 AND HALF % AND THEY ALSO CLAIMED DEPRECIATION ON FURNITURE @ 5%. THE QUESTION WHICH AROSE BEFORE THE COURT FOR DETERMINATION WAS: WHETHER DEPRECIATION C OULD BE DENIED TO THE ASSESSEE, AS EXPENDITURE ON ACQUIS ITION OF THE ASSETS HAD BEEN TREATED AS APPLICATION OF IN COME IN THE YEAR OF ACQUISITION? IT WAS HELD BY THE BOMBAY HIGH COURT THAT SECTION 11 OF THE INCOME TAX ACT MAKES PROVISION IN RESPECT OF COMPUTATION OF INCOME OF TH E TRUST FROM THE PROPERTY HELD FOR CHARITABLE OR RELIGIOUS PURPOSES AND IT ALSO PROVIDES FOR APPLICATION AND ACCUMULATI ON OF INCOME. ON THE OTHER HAND, SECTION 28 OF THE INCOME TAX ACT DEALS WITH CHARGEABILITY OF INCOME FROM PROFITS AND GAINS OF BUSINESS AND SECTION 29 PROVIDES THAT INCO ME FROM PROFITS AND GAINS OF BUSINESS AHLL BE COMPUTED IN ACCORDANCE WITH SECTION 30 TO SECTION 43C. THAT, SE CTION 32(1) OF THE ACT PROVIDES FOR DEPRECIATION IN RESPE CT OF BUILDING, PLANT AND MACHINERY OWNED BY THE ASSESSEE AND USED FOR BUSINESS PURPOSES. IT FURTHER PROVIDES FOR DEDUCTION SUBJECT TO SECTION 34. IN THAT MATTER ALS O, A SIMILAR ARGUMENT, AS IN THE PRESENT CASE, WAS ADVAN CED ON BEHALF OF THE REVENUE, NAMELY, THAT DEPRECIATION CA N BE ALLOWED AS DEDUCTION ONLY UNDER SECTION 32 OF THE I NCOME TAX ACT AND NOT UNDER GENERAL PRINCIPLES. THE COURT REJECTED THIS ARGUMENT. IT WAS HELD THAT NORMAL DEPRECIATION CAN BE CONSIDERED AS A LEGITIMATE DEDU CTION IN COMPUTING THE REAL INCOME OF THE ASSESSEE ON GEN ERAL PRINCIPLES OR UNDER SECTION 11 (1) (A) OF THE INCOM E TAX ACT THE COURT REJECTED THE ARGUMENT ON BEHALF OF TH E REVENUE THAT SECTION 32 OF THE INCOME TAX ACT WAS T HE ONLY SECTION GRANTING BENEFIT OF DEDUCTION ON ACCOU NT OF DEPRECIATION. IT WAS HELD THAT INCOME OF A CHARITAB LE TRUST DERIVED FROM BUILDING, PLANT AND MACHINERY AND FURN ITURE WAS LIABLE TO BE COMPUTED IN NORMAL COMMERCIAL MANN ER ALTHOUGH THE TRUST MAY NOT BE CARRYING ON ANY BUSIN ESS AND THE ASSETS IN RESPECT WHEREOF DEPRECIATION IS C LAIMED MAY NOT BE BUSINESS ASSETS. IN ALL SUCH CASES, SECT ION 32 OF THE INCOME TAX ACT PROVIDING FOR DEPRECIATION FO R COMPUTATION OF INCOME DERIVED FROM BUSINESS OR PROFESSION IS NOT APPLICABLE. HOWEVER, THE INCOME O F THE TRUST IS REQUIRED TO BE COMPUTED UNDER SECTION 11 O N COMMERCIAL PRINCIPLES AFTER PROVIDING FOR ALLOWANCE FOR NORMAL DEPRECIATION AND DEDUCTION THEREOF FROM GROS S INCOME OF THE TRUST.IN VIEW OF THE AFORESATATED JUD GMENT OF THE BOMBAY HIGH CURT, WE ANSWER QUESTION NO. 1 I N THE 9 ITA NO. 3298/DEL/2015. M/S FRIENDS CHARITABLE SOCIETY. AFFIRMATIVE I.E., IN FAVOUR OF THE ASSESSEE AND AGA INST THE DEPARTMENT. 4.QUESTION NO. 2 HEREIN IS IDENTICAL TO THE QUESTI ON WHICH WAS RAISED BEFORE THE BOMBAY HIGH COURT IN THE CAS E OF DIRECTOR OF INCOME-TAX (EXEMPTION) V. FRAMJEE CAWASJEE INSTITUTE [1993] 109 CTR 463. IN THAT CASE, THE FACTS WERE AS FOLLOWS: THE ASSESSEE WAS THE TRUST. IT DERIVED ITS INCOME FROM DEPRECIABLE ASSETS. THE ASSESSEE TOOK I NTO ACCOUNT DEPRECIATION ON THOSE ASSETS IN COMPUTING T HE INCOME OF THE TRUST. THE ITO HELD THAT DEPRECIATION COULD NOT BE TAKEN INTO ACCOUNT BECAUSE; FULL CAPITAL EXPENDITURE HAD BEEN ALLOWED IN THE YEAR OF ACQUISI TION OF THE ASSETS. THE ASSESSEE WENT IN APPEAL BEFORE THE ASSISTANT APPELLATE COMMISSIONER. THE APPEAL WAS REJECTED. THE TRIBUNAL, HOWEVER, TOOK THE VIEW THAT WHEN THE ITO STATED THAT FULL EXPENDITURE HAD BEEN ALLOW ED IN THE YEAR OF ACQUISITION OF THE ASSETS, WHAT HE REAL LY MEANT WAS THAT THE AMOUNT SPENT ON ACQUIRING THOSE ASSETS HAD BEEN TREATED AS 'APPLICATION OF INCOME' OF THE TRUS T IN THE YEAR IN WHICH THE INCOME WAS SPENT IN ACQUIRING THO SE ASSETS. THIS DID NOT MEAN THAT IN COMPUTING INCOME FROM THOSE ASSETS IN SUBSEQUENT YEARS, DEPRECIATION IN R ESPECT OF THOSE ASSETS CANNOT BE TAKEN INTO ACCOUNT. THIS VIEW OF THE TRIBUNAL HAS BEEN CONFIRMED BY THE BOMBAY HIGH COURT IN THE ABOVE JUDGMENT. HENCE, QUESTION NO. 2 IS COVERED BY THE DECISION OF THE BOMBAY HIGH COURT IN THE ABOVE JUDGMENT. CONSEQUENTLY, QUESTION NO. 2 IS ANSWERED IN THE AFFIRMATIVE I.E., IN FAVOUR OF THE ASSESSEE AND AGAINST THE DEPARTMENT.' 13. HONBLE DELHI HIGH COURT IN THE CASE CITED AS M/S INDRAPRASTHA CANCER SOCIETY (SUPRA) EXAMINED THE ISSUE AT LENGTH AND HAS ALSO EXAMINED FINANCE ACT (NO. 2) ACT OF 2014, SUB SECTI ON (6) TO SECTION 11 INSERTED WITH EFFECT FROM 1.4.2015 BY RETURNING THE FOLLOWING FINDINGS AS UNDER:- 11. BY FINANCE (NO.2) ACT OF 2014, SUB-SECTION (6) TO SECTION 11 STANDS INSERTED WITH EFFECT FROM 1 ST APRIL, 2015 TO THE EFFECT THAT WHERE ANY INCOME IS REQUIRED TO BE APPLIED, ACCUMULATED OR SET APART FOR APPLICATION, THEN FOR 10 ITA NO. 3298/DEL/2015. M/S FRIENDS CHARITABLE SOCIETY. SUCH PURPOSES THE INCOME SHALL BE DETERMINED WITHOU T ANY DEDUCTION OR ALLOWANCE BY WAY OF DEPRECIATION OR OTHERWISE IN RESPECT OF AN ASSET, THE ACQUISITION O F WHICH HAS BEEN CLAIMED AS APPLICATION OF INCOME UNDER THI S SECTION IN THE SAME OR ANY OTHER PREVIOUS YEAR. TH E LEGAL POSITION, THEREFORE, WOULD UNDERGO A CHANGE IN TERM S OF SECTION 11(6), WHICH HAS BEEN INSERTED AND APPLICAB LE WITH EFFECT FROM 1 ST APRIL, 2015 AND NOT TO BE ASSESSMENT YEARS IN QUESTION. THE NEWLY ENACTED SUB-SECTION RELATES TO APPLICATION OF INCOME. 14. HONBLE DELHI HIGH COURT HAS ALSO ALLOWED THE DEPR ECIATION CLAIMED BY THE ASSESSEE BY DEBITING THE SAME TO THE INCOME AND EXPENDITURE ACCOUNT OF THE SOCIETY FOR THE PURPOSE OF WORKING T HE SURPLUS IN THE HANDS OF THE SOCIETY. SO, FOLLOWING THE DECISION RENDERE D BY HONBLE SUPREME COURT OF INDIA AND HONBLE HIGH COURT AS DISCUSSED IN THE PRECEDING PARAS, WE ARE OF THE CONSIDERED VIEW THAT LD. AO/CI T HAVE ERRED IN MAKING/AFFIRMING ADDITIONS ON ACCOUNT OF DEPRECIATI ON CLAIMED BY THE ASSESSEE, HENCE ORDERED TO BE DELETED. IN VIEW OF WHAT HAS BEEN DISCUSSED ABOVE, PRESENT APPEAL FILED BY THE ASSESS EE IS ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 19/7/2018 SD/- SD/- (N.K. BILLAIYA) (KULDIP SINGH) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED: 19.07.2018 POOJA/- 11 ITA NO. 3298/DEL/2015. M/S FRIENDS CHARITABLE SOCIETY. COPY FORWARDED TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(APPEALS) 5. DR: ITAT ASSISTANT REGISTRAR ITAT NEW DELHI 12 ITA NO. 3298/DEL/2015. M/S FRIENDS CHARITABLE SOCIETY. DATE OF DICTATION 17/7/2018 DATE ON WHICH THE TYPED DRAFT IS PLACED BEFORE THE DICTATING MEMBER 19/7/2018 DATE ON WHICH THE TYPED DRAFT IS PLACED BEFORE THE OTHER MEMBER DATE ON WHICH THE APPROVED DRAFT COMES TO THE SR. PS/PS 19 /7/2018 DATE ON WHICH THE FAIR ORDER IS PLACED BEFORE THE DICTATING MEMBER FOR PRONOUNCEMENT 19 /7/2018 DATE ON WHICH THE FAIR ORDER COMES BACK TO THE SR. PS/PS 20/7/2018 DATE ON WHICH THE FINAL ORDER IS UPLOADED ON THE WEBSITE OF ITAT DATE ON WHICH THE FILE GOES TO THE BENCH CLERK DATE ON WHICH THE FILE GOES TO THE HEAD CLERK THE DATE ON WHICH THE FILE GOES TO THE ASSISTANT REGISTRAR FOR SIGNATURE ON THE ORDER DATE OF DISPATCH OF THE ORDER 13 ITA NO. 3298/DEL/2015. M/S FRIENDS CHARITABLE SOCIETY.