ITO (Exemptions), New Delhi V. M/s. Indian Youth Centre Trust Vishwa Yuvak Kendra, New Delhi

ITA 3635/DEL/2015

• Counselvise Citation: [2016] 132 COUNSELVISE.COM (IT) 7777 (ITAT-DELHI)
• Duration Of Justice: 11 month(s) 19 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 23-05-2016
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Next Hearing Date: 28-03-2016
• Assessment Year: 2011-2012
• Appeal Filed On: 04-06-2015
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: K K JAISWAL
• Keywords: Depreciation; Charitable institution; Source of fund
• Section: 80G; 12A; 12AA; 12; 11

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH: A NEW DELHI BEFORE SMT DIVA SINGH, JUDICIAL MEMBER AND SH.PRASHANT MAHARISHI, ACCOUNTANT MEMBER I.T.A .NO.-3635/DE L/2015 (ASSESSMENT YEAR-2011-12) ITO(EXEMPTIONS), WARD-12, ROOM NO.2417, 24 TH FLOOR, E-2-BLOCK, PRATYAKSH KAR BHAWAN, DR. SHYAMA PRASAD MUKERJEE CIVIC CENTRE, JAWAHAR LAL NEHRU MARG, NEW DELHI-110002. ( APPELLANT) VS INDIAN YOUTH CENTRE TRUST, VISHWA YUVAK KENDRA, CIRCULAR ROAD, CHANAKYA PURI, NEW DELHI-110021. PAN-AAATI0141C (RESPONDENT) A SSESSEE BY SH. K.K.JAISWAL, DR R EVENUE BY SH.VED JAIN, ADV. ORDER PER DIVA SINGH, JM THE PRESENT APPEAL HAS BEEN FILED BY THE REVENUE AS SAILING THE CORRECTNESS OF THE ORDER DATED 12.03.2015 OF CIT(A) -40, NEW DELHI PERTAINING TO 201112 ASSESSMENT YEAR ON THE FOLLOWING GROUNDS:- 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD.CIT(A) HAS ERRED IN ALLOWING THE BENEFIT OF EXEM PTION U/S 11 & 12 OF THE INCOME TAX ACT, 1961, IGNORING THAT THE ACTIVIT IES OF THE TRUST WERE NOT WITHIN THE PURVIEW OF SECTION 2(150 OF THE I.T. ACT, 1961 DURING THE YEAR. 2. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD.CIT(A) HAS ERRED IN DIRECTING THE AO TO ALLOW BE NEFITS OF SECTION 11 & 12 OF THE I.T.ACT IGNORING THIS FACT THAT THE ASSES SEE WAS INVOLVED IN BUSINESS ACTIVITY DURING THE YEAR UNDER CONSIDERATI ON. 3. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE A ND IN LAW, THE LD.CIT(A) HAS ERRED IN ALLOWING THE CLAIM OF DEPREC IATION TO THE ASSESSEE ON THE FIXED ASSETS WHICH WERE CLAIMED AS APPLICATI ON OF INCOME IN EARLIER YEARS. DATE OF HEARING 28.03.2016 DATE OF PRONOUNCEMENT 23.05.2016 I.T.A .NO.-3635/DEL/2015 PAGE 2 OF 21 4. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE A ND IN LAW, THE LD.CIT(A) HAS ERRED IN ALLOWING THE CLAIM OF DEPREC IATION OF RS.33,34,307/- TO THE ASSESSEE IGNORING THE RECENT JUDGEMENT OF THE JURISDICTIONAL HIGH COURT IN THE CASE OF CHARANJIV CHARITABLE TRUST VS DIT(E) IN ITA NO.321, 322 AND 323/2013 DATED 18.03. 2014 WHEREIN THE HONBLE COURT HAS HELD THAT THE TRIBUNAL WAS NOT JU STIFIED IN DIRECTING THE ALLOWANCE OF DEPRECIATION IN RESPECT OF SUCH ASSETS . 5. THE APPELLANT CRAVES LEAVE TO ADD, TO ALTER OR AMEN D ANY GROUND OF APPEAL RAISED ABOVE AT THE TIME OF HEARING. 2. RIGHT AT THE OUTSET, IT WAS SUBMITTED BY THE LD. AR THAT THE POINT AT ISSUE IS FULLY COVERED IN FAVOUR OF THE ASSESSEE AS THE C IT(A) HAS FOLLOWED THE ORDER OF THE ITAT PASSED IN THE IMMEDIATELY PRECEDING ASSESS MENT YEAR ON IDENTICAL FACTS AND CIRCUMSTANCES. THE POSITION WAS NOT DISP UTED BY THE REVENUE. ACCORDINGLY THE LD.AR WAS REQUIRED TO SHOW HOW IT I S CLAIMED THAT THE ISSUES ARE SAME. THE LD.SR.DR STATED THAT HE HAS NO OBJEC TION IF THE ASSESSEE DEMONSTRATES ITS CLAIM FIRST. 2.1. ACCORDINGLY REFERRING TO THE GROUNDS REVISED, LD. AR SUBMITTED THAT GROUND NO.5 IS GENERAL IN NATURE. THE ISSUE ADDRES SED IN GROUND NO.1 & 2 IS FULLY ADDRESSED BY THE ITAT IN ITS ORDER DATED 23.0 8.2013 IN 2009-10 A.Y (COPY FILED). REFERRING TO THE ASSESSMENT ORDER PASSED IN THE YEAR UNDER CONSIDERATION IT WAS HIS SUBMISSION THAT THE ASSESSEE AS IN THE E ARLIER ASSESSMENT YEAR CONTINUES TO BE REGISTERED U/S 12A OF THE INCOME TA X ACT, 1961 BY REGISTRATION DATED 15.05.1973. THE TRUST IT WAS SUBMITTED IS AL SO IN RECEIPT OF ORDER DATED 02.12.2009 APPLICABLE FOR PERIOD COMMENCING FROM A. Y.2010-11 TO A.Y.2012-13 U/S 80G(5)(VI) VIDE DIT (EXEMPTION) DELHI AND THE A O HAS TAKEN COGNIZANCE OF THESE FACTS. THE OBJECTS AS PER THE MEMORANDUM OF A SSOCIATION, IT WAS SUBMITTED CONTINUE TO REMAIN THE SAME. ITS MAIN OB JECT AS IN EARLIER YEARS IT WAS SUBMITTED CONTINUES TO BE TO ESTABLISH, MAINTAI N AND CONDUCT ONE OR MORE I.T.A .NO.-3635/DEL/2015 PAGE 3 OF 21 NATIONAL OR INTERNATIONAL YOUTH CENTRES AT SUITABLE CENTRES IN INDIA, FOR THE BENEFIT OF THE FOREIGN STUDENTS AND YOUTH DELEGATIO NS AS WELL AS INDIVIDUALS VISITING INDIA. THE ASSESSEE AS IN EARLIER YEARS C ONTINUE TO SPONSOR PROGRAMMES FOR INTERACTION OF YOUTH LEADERS, YOUNG WORKERS AND STUDENTS ETC. 2.2. ADDRESSING THE BACKGROUND OF THE CASE IT WAS S UBMITTED THAT THE AO HAS FOLLOWING THE PAST HISTORY PROCEEDED TO DISALLOW TH E CLAIM OF THE ASSESSEE FOR EXEMPTION U/S 11 OF THE INCOME TAX ACT, 1961 HOLDIN G THAT THE ACTIVITIES OF THE ASSESSEE FALL WITHIN THE SCOPE OF GENERAL UTILITY U /S 2(15) OF THE ACT. AS IN THE PAST, THE AO HAS HELD THAT BENEFIT OF SECTION 11 & 12 WOULD NOT BE AVAILABLE TO THE ASSESSEE AS ACCORDING TO HIM THE TRUST IS DOING COMMERCIAL ACTIVITIES. THIS FINDING HAS BEEN REVERSED IN APPEAL BY THE CIT(A) R ELYING UPON THE ORDER OF THE ITAT IN ASSESSEES OWN CASE FOR 2009-10 AY AND ON THE VERY SAME FACTS, THE DETAILED FINDING RELIED UPON BY THE CIT(A) IT WAS S UBMITTED IS ADDRESSED AT PAGE 22 TO 28 IN PARA 6 TO 6.1 OF THE ORDER OF THE ITAT IN ITA NO.5502/DEL/2012 DATED 23.08.2013IN 2009-10 AY IN ASSESSEES OWN CAS E. IT WAS HEAVILY RELIED UPON. CARRYING US THROUGH THE COPY OF THE SAID ORD ER, IT WAS HIS SUBMISSION THAT SINCE THE CLAIM OF THE REVENUE REMAINED IDENTI CAL. THE CIT(A) WAS JUSTIFIED IN HOLDING THAT EXEMPTION CLAIMED U/S 11 OF THE ACT WAS TO BE ALLOWED. 3. THE LD. SR. DR, SH. K.K.JAISWAL CONSIDERING THE ORDER OF THE ITAT MERELY PLACED RELIANCE ON THE ASSESSMENT ORDER. NO DISTIN GUISHING FACTS OR CIRCUMSTANCE WAS BROUGHT TO THE NOTICE OF THE BENCH IN ORDER TO CANVASS A CONTRARY VIEW. 4. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL AVAILABLE ON RECORD. IT IS SEEN THAT THE AO IN THE YEAR UNDE R CONSIDERATION AS IN THE I.T.A .NO.-3635/DEL/2015 PAGE 4 OF 21 EARLIER YEAR FORMED THE VIEW THAT THE ASSESSEE FELL IN THE SCOPE OF GENERAL UTILITY AS PER SECTION 2(15) OF THE INCOME TAX ACT, 1961. IT IS AN ADMITTED FACT THAT THE FACTS AND CIRCUMSTANCES IN THE YEAR UNDER CONSIDERA TION CONTINUE TO REMAIN THE SAME AS IN THE EARLIER YEARS AND THAT THERE IS NO C HANGE IN THE MEMORANDUM OF ASSOCIATION AND THE ACTIVITIES OF THE ASSESSEE AS C OMPARED TO THE EARLIER YEARS. THE AO TOOK INTO CONSIDERATION THE FACT THAT THE AS SESSEE IS REGISTERED U/S 12A OF THE INCOME TAX ACT, 1961 VIDE REGISTRATION DATED 15.05.1971. THE TRUST ALSO RECEIVED ORDER U/S 80G(5)(VI) VIDE DIT (EXEMPTION) DELHI ORDER DATED 02.12.2009 APPLICABLE FOR PERIOD COMMENCING FROM A.Y.2010-11 T O A.Y.2012-13. THE OBJECTS OF THE SOCIETY THE AO NOTICED WAS CLAIMED T O BE TO MAINTAIN AND CONDUCT ONE OR MORE NATIONAL OR INTERNATIONAL YOUTH CENTRES AT & SUITABLE CENTRES IN INDIA, FOR THE BENEFIT OF THE FOREIGN STUDENTS AND YOUTH DELEGATION AS WELL AS INDIVIDUALS VISITING INDIA. THE SOCIETY IT WAS NOT ED ALSO SPONSORED PROGRAMMES FOR INTERACTION OF YOUTH LEADERS, YOUNG WORKERS AND STUDENTS ETC. BEING OF THE VIEW THAT THE ASSESSEE IS NEITHER IN THE FIELD OF E DUCATION, NOR IN THE FIELD OF MEDICAL RELIEF OR RELIEF OF POOR AND HE FORMED THE VIEW THAT IT COULD BE CONSIDERED AFTER SEEING THE ACTIVITIES CARRIED OUT BY ASSESSEE AS FALLING WITHIN THE SCOPE OF GENERAL PUBLIC UTILITY AS PER SEC.2(15) OF I.T.AC T. 4.1. FURTHER CONSIDERING THE ANNUAL ACCOUNTS OF THE ASSESSEE, HE WAS OF THE VIEW THAT THE ASSESSEE SOCIETYS MAIN SOURCE OF REC EIPTS IS FROM HOSTEL/CANTEEN ACTIVITIES AND BOOKING OF AUDITORIUM AND CONFERENCE HALL WHICH ARE OF COMMERCIAL NATURE. THE EXPENSES ARE CORRELATING TO THESE SOURCES OF INCOME ONLY. THE ASSESSEE IS PROVIDING ITS FACILITIES ON H IRE ON DAY-TO-DAY BASIS TO ALL TYPE OF CUSTOMERS BY RUNNING HOSTEL/CANTEEN AND GIV ING AUDITORIUM & I.T.A .NO.-3635/DEL/2015 PAGE 5 OF 21 CONFERENCES HALL ON HIRE ON COMMERCIAL LINES WHICH ARE OPEN TO EVERYONE. THUS, THESE ACTIVITIES ATTRACT AMENDMENT IN SEC.2(1 5) OF I.T. ACT APPLICABLE W.E.F A.Y.2009-10 ONWARDS. 4.2. THE AO DEPUTED AN INSPECTOR ACCOMPANIED BY SE NIOR T.A. (TAX ADVISOR) TO VISIT THE PREMISES OF THE ASSESSEE WHERE THEY AF TER PARTAKING SNACKS IN THE CANTEEN ENQUIRED ABOUT THE AVAILABILITY OF ROOMS FO R A GROUP OF 30 PEOPLE COMING FROM NORTH-EAST TO DELHI. HE NOTED THAT IN RESPONSE TO THIS QUERY, THEY WERE ADVISED TO BOOK WELL IN ADVANCE. HE WAS OF THE VIEW THAT SINCE NO INQUIRY REGARDING THEIR IDENTITY CARD OR MEMBERSHIP WAS MAD E, IT WAS CONCLUDED THAT THE FACILITIES OF THE ASSESSEE WERE OPEN TO EVERYON E AND WAS NOT RESTRICTED TO THE MEMBERS ONLY. ACCORDINGLY, CONSIDERING THE PAST HI STORY OF THE ASSESSEE ON THE ISSUE, THE ASSESSEE WAS PUT TO NOTICE TO EXPLAIN W HY IN TERMS OF THE PROVISO TO SECTION 2(15) NOT BE APPLIED FOR HAVING COMMERCIAL RECEIPTS AND INCOME FROM BOARDING AND LODGING AND CANTEEN INCOME ETC. CONSI DERING THE FACT THAT THE CENTRE WAS OPENED FOR ALL I.E. NON-MEMBER THE BENEF IT OF EXEMPTION SHOULD NOT BE DENIED. NOT ACCEPTING THE REPLY OFFERED BY THE A SSESSEE, THE INCOME OF THE ASSESSEE WAS TAXED AS PER RATES APPLICABLE TO AN AO P DENYING ITS CLAIM FOR EXEMPTION FOR BEING A CHARGEABLE INSTITUTION. 4.3. THE ISSUE TRAVELLED IN APPEAL BEFORE THE CIT(A ) WHERE RELYING UPON THE ORDER OF THE ITAT FOR 2009-10 A.Y. AND TAKING NOTE OF THE FACT THAT THERE WAS A SIMILAR DENIAL IN 2010-11 A.Y. ALSO ON IDENTICAL F ACT WHICH ISSUE ALSO STOOD CONCLUDED IN FAVOUR OF THE ASSESSEE, THE APPEAL OF THE ASSESSEE WAS ALLOWED BY THE CIT(A) HOLDING AS UNDER:- 4. THE FACTS EMANATING FROM THE ORDER OF THE AO AN D THE SUBMISSIONS OF THE ASSESSEE IS THAT THE ASSESSEE IS CHARITABLE TR UST AND IS REGISTERED AS PER I.T.A .NO.-3635/DEL/2015 PAGE 6 OF 21 TRUST DEED DATED 10.08.1961. THE TRUST IS REGISTER ED U/S 12AA(1) DATED 15.05.11974 AND ALSO U/S 80G DATED 02.12.2009. THE TRUST WAS FOUNDED WITH THE OBJECT OF CHARITABLE WORK OF PROMOTING THE WELF ARE WITH YOUTH ETC. THE TRUST WAS FOUNDED BY THE WORLD ASSEMBLY OF YOUTH, I NDIA AND THE FOLLOWING TRUSTEES WERE APPOINTED:- I) SHRI MORARI DESAI (CHAIRMAN) II) SMT. INDIRA GANDHI III) SHRI NAVAL H.TATA IV) SHRI RAVINDRA VERMA V) SHRI VIREN J.SHAH VI) SHRI RAM KRISHNA BAJAJ (MANAGING TRUSTEE) 4.5. I HAVE CONSIDERED THE ORDER OF THE AO AND THE SUBMISSIONS OF THE ASSESSEE AND I FIND CONSIDERABLE MERIT IN THE SUBMI SSIONS OF THE ASSESSEE THAT THE AO IS NOT JUSTIFIED TO DENY THE EXEMPTION U/S 1 1(1) AS THE ASSESSEE IS INVOLVED IN THE CHARITABLE WORK OF PROMOTING THE WE LFARE AND CAUSE OF THE YOUTH. AFTER CONSIDERING ALL THE FACTS AND CIRCUMST ANCES OF THE CASE, I AM OF THE VIEW THAT THE CASE OF THE ASSESSEE IS COVERED B Y THE ORDER OF THE LD.CIT(A) AND HONBLE TRIBUNAL FOR THE A.Y. 2009-10 AS REFERR ED ABOVE AND ACCORDINGLY THE AO IS DIRECTED TO ALLOW THE EXEMPTION U/S 11(1) TO THE ASSESSEE WITH ALL THE CONSEQUENTIAL BENEFITS. 4.4. WE HAVE SEEN THE MATERIAL AVAILABLE ON RECORD AND IN THE LIGHT OF THE SUBMISSIONS ADVANCED BY THE PARTIES AND ON CONSIDER ATION OF THE ABOVE FINDING, WE FIND THAT THE CONCLUSION DRAWN BY THE CIT(A) REL YING UPON THE ORDER OF THE ITAT CANNOT BE FAULTED WITH. IT IS SEEN THAT IN 20 09-10 A.Y. MORE OR LESS ON IDENTICAL FACTS, THE AO HAD PROCEEDED ON AN INSPECT ORS REPORT AND THEREIN ALSO RELYING UPON THE INFORMATION IN FORM 26AS AS IN THE YEAR UNDER CONSIDERATION HE RELYING ON THE TRANSACTIONS MADE WITH NON-MEMBER CONCLUDED THAT THE TRUST WAS RUNNING AS A COMMERCIAL ACTIVITY. THIS SIMILAR ITY OF FACT IN THE EARLIER YEAR WOULD BE EVIDENT FROM PARA 2.6.3 OF THE ORDER OF TH E ITAT AS IS REPRODUCED HEREUNDER:- 2.6.3. A FURTHER PERUSAL OF THE SAME ALSO SHOWED THAT SOME OF THE TRANSACTIONS WERE WITH ENTITIES AS WAS EVIDENT FROM FORM NO.-26AS, THE SAME ARE REPRODUCED FOR READY-REFERENCE FROM THE ASSESSM ENT ORDER:- FORM 26AS ENTRY AMOUNT P AID (RS.) AMWAY INDIA ENTERPRISES PRIVATE LTD. 33403 ENGINEERS INDIA LIMITED 143934 I.T.A .NO.-3635/DEL/2015 PAGE 7 OF 21 RURAL ELECTRIFICATION CORPORATION LIMITED 221106 THE ENERGY AND RESOURCES INSTITUTE 257792 CARE INDIA 57400 NAME OF CUSTOMER DATE OF TRANSACTION AMOUNT PAID (RS.) C/O VIETNAM EMBASSY 03.04.2008 3750 C/O TOSHNIWAL ENTERPRISES CONTROLS PVT. LTD. 05.04.2008 29600 C/O WORLD EXPEDITION (INDIA) PVT. LTD. 07.04.2008 21800 C/O LANDMARK EDUCATION INDIA 26.04.2008 3650 C/O S I S INDIA LTD. 30.04.2008 14700 C/O IMT FARIDABAD 01.05.2008 3678 C/O ELECTRONIC MEDIA PVT. LTD. 11.05.2008 9750 C/O TRIPS TREKS & TOURS 27.06.2008 50100 C/O PROJECT CONCERN INTERNATIONAL 08.07.2008 9100 C/O PROVITI CONSULTING PRIVATE LIMITED 21.07.2008 14600 C/O TITAN ENERGY SYSTEMS LTD. 21.08.2008 3650 C/O MATRIX LABORATORIES LIMITED 07.10.2008 3700 C/O SPC MANAGEMENT SERVICES PVT. LTD. 05.11.2008 80850 C/O MICROCOSM INTEGRATED SOLUTIONS (P) LTD. 19.11.2008 273500 M/S FAIR TRADE FORUM - INDIA 24.11.2008 120690 C/O ASIANET 13.03.2009 7300 4.5. IN THE FACTS OF THE PRESENT CASE ALSO A SIMILA R INFERENCE HAS BEEN DRAWN BY THE AO ON THE BASIS OF THE FOLLOWING ENTRIES IN FOR M 26AS:- FORM 26AS ENTRY AMOUNT PAID (RS.) JANVIKAS 329782 CENTRE FOR SCIENCE AND ENVIRONMENT 382758 INDIRA GANDHI NATIONAL CENTRE FOR THE ARTS 1146263 NASSCOM 880658 NATIONAL SCHOOL OF DRAMA 3891667 4.6. THE INFERENCE DRAWN ON THOSE FACTS FOR CONCLUD ING THAT THERE WAS COMMERCIAL ACTIVITY WAS DISPELLED BY THE ITAT IN TH E AFORESAID ORDER CONCURRING WITH THE FOLLOWING CONCLUSION OF THE CIT(A):- 4.1. THE CIT(A) FURTHER ELABORATED THE FINDING ARRIVED AT IN PARA 6.2 BY HOLDING THAT THE AO HAS NOT BEEN ABLE TO APPRECIATE THE NATURE OF THE HOSTEL AND CANTEEN ACTIVITIES AND THE AO HAD ALSO NOT APP RECIATED THAT THE RECEIPT ON ACCOUNT OF THE AUDITORIUM AND CONFERENCE HALL OF RS. 1.43 CRORE ODD INCLUDED THE SUM OF RS.1.02 CRORE ODD ON ACCOUNT O F THE RENTAL AND THE BALANCE AMOUNT REPRESENTED THE RECEIPT ON ACCOUNT O F CONFERENCES ORGANIZED IN THE AUDITORIUM. HE HELD THAT ALL THESE ACTIVITIES WERE PART OF THE I.T.A .NO.-3635/DEL/2015 PAGE 8 OF 21 OBJECTS OF THE TRUST AND FOR THE CAUSE OF THE YOUTH ONLY. CONSIDERING THE FINDING OF THE AO THAT THE ASSESSEE HAD RECEIVE D MONEY FROM CORPORATE HOUSES, HE HELD THAT THE RECEIPTS WERE IN THE NATURE OF SPONSORSHIP FEES RECEIVED FOR ORGANIZING CONFERENCE IN THE AUDITORIUM AS SUCH COULD NOT BE CONSIDERED TO BE A COMMERCIAL ACTIVITY. EXAMINING THE ALLEGATIONS OF THE AO AS PER INSPECT ORS REPORT THAT THE FOOD BY THE CANTEEN WAS PROVIDED TO EVERYONE AN D THERE WAS NO CONTROL ON AN OUTSIDER HAVING FOOD, THE CIT(A) WAS OF THE V IEW THAT MERELY BECAUSE SOMEBODY HERE AND THERE OBTAINED A SERVICE BECAUSE OF THE LACK OF CONTROL WILL NOT MEAN THAT THE TRUST HAS BECOME COMMERCIAL AND AS SUCH LOST ITS CHARITABLE CHARACTER. THE OBJECTS AND THE ACTIVIT IES CONTINUED TO BE CHARITABLE DESPITE THE STRAY INSTANCE AND CANNOT BE THE GROUND FOR HOLDING THAT THE TRUST IS NOT CHARITABLE. SIMILARLY, THE INSTANCES OF SPO NSORSHIP FOR WHICH TAX HAD BEEN DEDUCTED BY VARIOUS CORPORATES AS PER FORM NO. -26AS, IT WAS HELD WILL NOT MAKE THE TRUST NON-CHARITABLE. THE RELIANCE PL ACED UPON THE DECISIONS BY THE AO WHICH WERE ASSAILED BY THE ASSESSEE AND ARGU ED TO BE DISTINGUISHABLE AFTER DISCUSSION WERE FOUND TO BE RIGHTLY OBJECTED TO BY THE ASSESSEE. ADDRESSING THE ADVERTISEMENT IN THE NEWSPAPER OBJEC TED TO BY THE AO, THE CIT(A) ACCEPTED THE EXPLANATION OF THE ASSESSEE AND HELD THAT THERE WAS NOTHING WRONG IN ATTRACTING MORE AND MORE YOUTHS T O BECOME ITS MEMBERS BY WAY OF ADVERTISEMENTS. (EMPHASIS PROVIDED) 4.7. THE AFORESAID CONCLUSION OF THE CIT(A) WAS VEH EMENTLY CONTESTED BY THE REVENUE. THIS FACT WOULD BE EVIDENT FROM THE FOLLO WING PARA WHICH BRINGS OUT THE ARGUMENTS ADVANCED ON BEHALF OF THE REVENUE BEF ORE THE ITAT:- 5.1. THE LD. SR. DR, MS. SHAMUNA SEN PLACED HEAVILY R ELIANCE ON THE ASSESSMENT ORDER SO AS TO CONTEND THAT THE ACTIVITI ES OF THE TRUST ARE NOT IN CONSONANCE WITH THE REQUIREMENTS OF THE ACT. IT WAS HER SUBMISSION RELYING UPON THE INSPECTORS REPORT THAT CANTEEN FA CILITIES WERE AVAILABLE TO EVERYONE AND WAS BEING RUN AS A COMMER CIAL ACTIVITY. IT WAS HER SUBMISSION THAT THE AO HAS CONSIDERED AFTER CONFRONTING IT TO THE ASSESSEE WHICH DEMONSTRATED THAT ANY AND EVERYONE COULD ENTER THE PREMISES AND HAVE THE MEAL AND PAY FOR THE SAME WIT HOUT ANY EFFORT TO CHECK WHETHER THE CUSTOMER WAS A RESIDENT OF THE HOSTEL O R NOT. IT WAS SUBMITTED THAT THERE WAS NO CONTROL TO ENSURE THAT OUTSIDERS DO NOT UTLIZE THE SERVICES OF THE CANTEEN/CAFETERIA. ACCORDINGLY THE GENERAL AND VAGUE ANSWER OF THE ASSESSEE HAVE RIGHTLY BEEN REJECTED B Y THE AO WHO HAS HELD THAT THE HOSTEL/CANTEEN FACILITY WERE UTILIZED BY T HE ASSESSEE AND RUN ON COMMERCIAL LINES. INVITING ATTENTION TO SECTION 2 (15) OF THE INCOME TAX ACT, IT WAS HER SUBMISSION THAT THE ACTIVITIES WHICH WERE IN THE NATURE OF TRADE, COMMERCE, BUSINESS AS PER THE PROVISO CANNOT TERMED TO BE COMING UNDER THE UMBRELLA OF OTHER CHARITABLE ACTI VITIES AS ENVISAGED BY THE STATUTE AND THE CLAIM OF THE ASSES SEE HAS RIGHTLY BEEN REJECTED BY THE AO. THE AO IT WAS HER SUBMISSION HAS IDENTIFIED THE FEATURES WHICH DISTINGUISH AN ACTIVITY WHICH IS IN THE NATURE OF TRADE AND I.T.A .NO.-3635/DEL/2015 PAGE 9 OF 21 BUSINESS AND ALL THE REQUIREMENTS ARE FULFILLED BY THE ASSESSEE. THE JUDGEMENTS RELIED UPON BY THE AO IT WAS HER SUBMISS ION HAVE BEEN DISTINGUISHED ON FRIVOLOUS REASONS BY THE ASSESSEE. INVITING ATTENTION TO THE LIST OF SPONSORS AS WERE AVAILABLE IN THE 26AS INFORMATION AVAILABLE TO THE DEPARTMENT VIS--VIS THE LIST GIVE N BY THE ASSESSEE, IT WAS HER SUBMISSION THAT THERE WERE A LOT OF DISC REPANCIES. IT WAS ALSO HER SUBMISSION THAT MEMBERSHIP LIST GIVEN BY T HE ASSESSEE PERTAINING TO SPECIFIC PERIOD I.E 01.04.2008 TO 31.03.2009 AND CO ULD NOT BE SAID TO BE A MEMBERSHIP LIST PER SE. THE CHARGES LEVIED TO DIFF ERENT PEOPLE FOR THE SO- CALLED MEMBERSHIP FEE, IT WAS HER SUBMISSION ALSO V ARIED AND INFACT HAD ODD FIGURES. IT WAS ALSO HER ARGUMENT THAT THE CORPORATE ENTITIE S WHO HAVE MADE PAYMENTS TO THE ASSESSEE FOR UTILIZING AU DITORIUM AND CONFERENCE HALL CANNOT BE SAID TO BE RENDERING ANY SERVICE TO THE YOUTH AND ALL THESE FACTS HAVE BEEN BROUGHT ON RECO RD BY THE AO. INVITING ATTENTION TO THE MANNER IN WHICH THE ASSES SEES BILLS ARE RAISED, IT WAS HER ARGUMENT NO DETAILS ARE RECORDED. SPECIFIC ATT ENTION WAS INVITED TO PAGE 78, IT WAS HER SUBMISSION THAT IT MERELY MENTIONS T HE NAME AS C/O NAWO AND MERELY MENTIONING TARIFF THEREIN DOES NOT PROVE ANY THING. INVITING ATTENTION TO PAGE 443 WHICH CONTAINS THE REVENUE SUMMARY, IT WAS HER SUBMISSION THAT THE SAME IS MERELY A LIST AND IN THE FACE OF THE IN SPECTORS REPORT APPEARING ON PAGE 489 WHICH WAS HEAVILY RELIED UPON BY THE RE VENUE. IT WAS ARGUED THAT IT CLEARLY BRINGS OUT THE FACT THAT THE FACILI TIES ARE OPEN TO THE ANYONE AND EVERYONE AND IS RUNNING ON COMMERCIAL LINES. FOR R EADY-REFERENCE, THE SAID REPORT IS REPRODUCED HREUNDER :- I WAS SENT BY ADIT(E), TC-II, NEW DELHI, FOR ENQUI RY IN CASE OF INDIA YOUTH CENTRE TRUST, CIRCULAR ROAD, CHANAKY A PURI, NEW DELHI ON 02.12.2011. AFTER REACHING VISHWA YUVAK KENDRA (INDIA YOUTH CE NTRE TRUST), WE WENT TO DINING HALL ALONGWITH SR. TA SH. OMVIR SING H AND TA SH. ARUN KUMAR, FOR TAKING LUNCH. WE WERE OFFERED BUFFET AS WELL A S ITEM-WISE LUNCH OPTION AND WE OPTED FOR ITEM-WISE LUNCH AND TOOK FOOD ITEM S COSTING RS. 957/- (APPROX.). VARIOUS OTHER PERSONS WERE ALSO TAKING LUNCH ON PAYMENT BASIS AND THERE WAS NO CHECK IN THE CENTRE FOR OUTSIDERS TAKING FOOD AT THE DINING HALL. AFTER TAKING THIS LUNCH WE ENQUIRED ABOUT A GET-TOG ETHER ARRANGEMENT FROM THE PERSONS INVOICING BILLS MR. RA KESH CHOPRA AND MR. VIPIN AND TOLD HIM THAT WE WANT A BUFFET ARRANG EMENT OF AROUND 25 PERSONS AND ASKED HIM TO GIVE THE COSTING DETAIL S. HE STATED THAT RS.300/- PER PLATE COST WILL BE THERE FOR VEGETARIA N FOOD PLATE, RS. 350/- FOR INCLUDING CHICKEN IN VEGETARIAN FOOD, RS.400/- FOR INCLUDING MUTTON IN VEGETARIAN FOOD AND FOR RS.500/- EVERYTHING INCLUDE D. ON ENQUIRING ABOUT HALL CHARGES, THEY STATED THAT NO CHARGES WILL BE T HERE FOR HALL AND IT IS INCLUDED IN FOOD. THEY TOLD THAT WE SHOULD INFORM TWO DAYS PRIOR TO THEM FOR MAKING THESE ARRANGEMENTS PERSONALLY OR OVER PHONE. AFTER ENQUIRY WE LEFT THE PLACE. SD/- SUSHMA RANI INSPECTOR TRUST CIRCLE-II, NEW DELHI I.T.A .NO.-3635/DEL/2015 PAGE 10 OF 21 WITNESS 1. OMVIR SINGH, SR. TA 2. ARUN KUMAR, TA 3. (EMPHASIS PROVIDED) 4.8. THE ARGUMENTS OF THE REVENUE WERE EQUALLY VEHE MENTLY CONTESTED BY THE LD.AR. FOR THE SAKE OF COMPLETENESS THESE ARE REPRO DUCED HEREUNDER:- 5.2. LD. AR ON THE OTHER HAND HEAVILY RELYING UPON THE IMPUGNED ORDER CONTENDED THAT THE CIT(A) HAS MET EACH AND EVERY AR GUMENT/OBJECTIONS OF THE AO WITH COGENT REASONING. IT WAS HIS SUBMISSIO N THAT THE AO ON THE OTHER HAND HAS FAILED TO APPRECIATE THAT THE ACTIVITIES O F THE TRUST WERE TOWARDS THE AIMS AND OBJECTS OF THE TRUST ALONE. IT WAS ALSO H IS CONTENTION THAT UNDUE EMPHASIS HAS BEEN LAID UPON THE INSPECTORS REPORT BY THE AO AS APART FROM THAT THIS WHICH HAS BEEN EXPLAINED THERE ARE ONLY S USPICIOUS WHICH IT WAS SUBMITTED CANNOT TAKE THE PLACE OF EVIDENCE. IT WAS ARGUED WHERE THE INMATES OF THE HOSTEL NECESSARILY UTILIZE THE FACIL ITY FOR SHORT DURATION THE HOSTEL INMATES FREQUENTLY CHANGE IN SUCH A SCEN ARIO IT IS PRACTICALLY IMPOSSIBLE FOR ANYONE TO ENSURE CONTROL TO THE EXTENT THAT NO STRAY INCIDENT OF OUTSIDER EATING OCCURS. IT WAS ARGUED THAT THE ASSESSEE CANNOT BE PENALIZED TO DO THE IMPOSSIBLE B ASED ON SUSPICIOUS. THE VERY FACT THAT THE HOSTEL IS NOT SITUATED IN A COMM ERCIAL HUB AND IS SITUATED IN A DIPLOMATIC AREA ENSURES THAT STRAY OUTSIDERS DO NOT COME UNLESS THE Y ARE RESIDING IN THE HOSTEL OR ATTENDING SEMINARS OR CONFERENCES HELD TOWARDS THE AIMS OF THE TRUST. ADDRESSING THE BACKGROUND OF THE TRUST THE FACTS LEADING THE CREATORS OF THE TRUST WHOSE AIMS AND OBJECTS HAVE CONTINUOUSLY BEEN CONSIDERED TO BE CHARITABLE IN NA TURE AS THEY AIM TO ADDRESS, HARNESS, CHANNEL AND FOCUS THE ENERGIES OF THE YOUTH AIMING AND PREPARING THE YOUTH TO PERFORM PRODUCTIVE, GAINFUL AND RESPONSIBLE ROLES IN THE ENVIRONMENT HAS ALL ALONG BEEN ACCEPTED AND IT CANNOT BE DOUBTED TO BE A NON-CHARITABLE MERELY BECAUSE THE CANTEEN STAFF IN GOOD FAITH ALLOWED THE INSPECTOR AND HER TEAM OF TWO TAX ADVIS ORS TO HAVE A MEAL. THE QUERIES ANSWERED IN GOOD FAITH BY THE CA NTEEN STAFF ALSO DO NOT MAKE TRUST TO BE OPERATING ON COMMERCIAL LIN ES. IT WAS HIS SUBMISSION THAT AUDITORIUM AND SEMINAR HALLS ARE MA DE ROUTINELY AVAILABLE TO GOVERNMENT EDUCATION BODIES ETC. AND N GOS HAVING THE SAME AIMS AND OBJECTS AS THE ASSESSEE AND STRINGENT DOCUMENTATIONS IS MAINTAINED BY THE ASSESSEE TRUST WHICH HE WOULD ADDRESS WHICH HAS BEEN BEFORE THE AO AND THE CIT(A) . ACCORDINGLY MERE ORAL QUERIES CASUALLY ANSWERED BY CANTEEN STA FF WHO DEFINITELY WERE NOT MAKING THE BOOKING DOES NOT LEAD TO ANY CO NCLUSION AGAINST THE ASSESSEES TRUST. IT WAS HIS SUBMISSIO N THAT THE ASSESSEE TRUST STARTED WITH A VERY HUMBLE CORPUS OF RS. 1000 /- TOWARDS ITS LAUDABLE AIM. THE HOSTEL FACILITIES IT WAS SUBMITTED ARE UTILI ZED BY VARIOUS STUDENTS EITHER FROM DIFFERENT PARTS OF THE COUNTRY OR THE WORLD AND PROVIDES A PLATFORM WHERE THE YOUTH CAN BE EXPOSED TO CONFEREN CES AND ACTIVITIES IN THE AUDITORIUM WHICH CO-INCIDE WITH THE AIMS AND OBJECT S OF THE ASSESSEE TRUST. IT WAS SUBMITTED THAT AS AND WHEN THE SAME ARE NOT REQ UIRED BY THE I.T.A .NO.-3635/DEL/2015 PAGE 11 OF 21 ASSESSEE TOWARDS THE SAME, THEY ARE AVAILABLE ON RE NT TO THE CORPORATE ENTITIES ETC. AND THE RECEIPTS SO GENERAT ED ARE FULLY UTILIZED ONLY TO MEET THE OBJECTS OF THE TRUST. THE CANTEEN /CAFETERIA FACILITY IS EXCLUSIVELY FOR THE BENEFIT OF THE STUDENTS STAY ING IN THE HOSTEL FACILITIES AND CONSIDERING THE FACT THAT THE HOSTEL CANNOT BE IN CONTINUOUS USE OF MORE THAN 28 DAYS THE AMOUNTS VAR Y. LOOKING AT THE SHEER NUMBER OF STUDENTS WHO UTILIZE THE FACILI TIES IT WAS SUBMITTED MAKES IT IMPOSSIBLE TO MONITOR WHETHER THE PERSON UTILIZI NG THE FACILITIES IS ACTUALLY A RESIDENT OF THE HOSTEL OR AN OUTSIDER AND IF ANY ST RAY PERSON HAS UTILIZED THESE FACILITIES HOODWINKING THE SERVING STAFF THAN THE A SSESSEE TRUST CANNOT PENALIZED. INVITING ATTENTION TO PAPER BOOK PAGE N O-27 WHICH CONTAINS THE COPY OF THE TRUST DEED WHOSE OBJECTS ARE ENSHRINED AT PAGE 31, THE SAID DEED IT WAS SUBMITTED UNDERWENT A CHANGE IN REGARD TO IT S NAME BY WAY OF A SUPPLEMENTARY DEED OF TRUST COPY PLACED AT PAGE 23- 35 OF THE PAPER BOOK. ADDRESSING THE SAME IT WAS SUBMITTED THAT THE NAME OF THE ASSESSEE TRUST WAS CHANGED FROM WORLD ASSEMBLY OF YOUTH INDIA T O INDIA YOUTH CENTRE. THE OBJECTS CONTINUED TO REMAIN THE SAME. INVITING ATTENTION TO PAGE 30 IT WAS SUBMITTED THAT THE TRUST WAS HAVING A CORPUS OF RS.1000/- AS THE TRUSTS FUNDS AND INVITING ATTENTION TO PAGE 619-814 IT WAS SUBMITTED THAT THIS CONTAINS A COPY OF LIST OF THE ORGANIZATIONS/NGOS, MEMBERS AND THE DOCUMENTS WHICH HAVE BEEN SUBMITTED OR COLLECTED SH OWING THEIR ELIGIBILITY OF MEMBERSHIP AND BEFORE THE HOSTEL FACILITY OR SEMINA R HALLS/AUDITORIUM IS ALLOWED TO BE USED EVIDENCE DEMONSTRATING THE ORGAN IZATION/TRUST ETC. WHO IS UTILIZING THE SERVICES ARE ALWAYS TAKEN AND THEY HAVE BEEN SHOWN TO THE AO ALL ALONG WHO CHOSE TO TALK ONLY OF INSPECTORS REP ORT. A SAMPLE COPY OF MEMBERSHIP AND ENROLLMENT FORM WITH PRE-PRESCRIBED ELIGIBILITY CRITERIA, IT WAS SUBMITTED WAS MADE AVAILABLE TO THE AO, ATTENTION W AS INVITED TO PAGE 517- 590. INVITING ATTENTION TO THE PAPER BOOK IT WAS S UBMITTED COPY OF LEDGER OF CANTEEN SALE AND ITS BREAK-UP SHOWING AMOUNT OF SAL E MADE TO MEMBERS/MEMBER ORGANIZATIONS AND SALES MADE TO OTH ERS. THE OTHERS INCLUDED DIRECTORS AND MANAGEMENT STAFF, AUDITORS, INSPECTORS, LAWYERS ETC. THE SAME IS APPEARING AT PAGES 607-618. ALL THESE D OCUMENTS IT WAS SUBMITTED WERE FILED BEFORE THE AO VIDE LETTER DATE D 19.12.2011. (EMPHASIS PROVIDED) 5.2.1. AS AN ILLUSTRATION FROM THE LIST OF MEMBERSHIP OF NGOS ETC, ATTENTION WAS INVITED TO PAGE 650 WHICH WOULD SHOW THAT THE MEMBERSHIP REGISTRATION FORM HAS BEEN FILLED BY SAMVEDNA FOUNDATION GIVI NG ITS CONTACT, ADDRESS, TELEPHONE NO, THE SOURCE OF ITS FUNDS (HEREIN GOVER NMENT) MENTIONING, THE NO. OF STAFF VISITING AND THE STATE FROM WHERE THEY BELONG (HEREIN GUJARAT). THE AIMS AND THE OBJECTS OF THE ORGANIZATIONS ARE MENTIONED IN THE COLUMN INDICATED THEREIN FOR SAMVEDNA FOUNDATION IS AS UNDER :- TO IMPROVE LIFE STANDARD OF WOMEN AT POOR SECTION THROUGH MAKING THEM SKILLFUL AND SELF RELIANT. THE INFORMATION REQUIRED TO BE MENTIONED UNDER THE TARGET GROUP IS AS UNDER :- WOMEN AND CHILD THE COLUMN REQUIRING INFORMATION ON THRUST AREA IS GIVEN AS UNDER :- WE ARE RUNNING VOCATIONAL TRAINING, CLASSES FOR PO OR SECTION WOMEN IN RURAL AREA I.T.A .NO.-3635/DEL/2015 PAGE 12 OF 21 5.2.2. IT WAS SUBMITTED THAT THE SAID INFORMATION IS ACCOM PANIED BY THE COPY OF THE MEMORANDUM OF ASSOCIATION, REGISTRATION CERT IFICATE, AUDITED STATEMENT OF THE ACCOUNTS OF THE SAID TRUST WHICH A RE APPEARING IN THE FOLLOWING PAGES. 5.2.3. SIMILARLY AT PAGE 667 IT WAS SUBMITTED IT WILL BE SEEN THAT THE NAME OF THE ORGANIZATION IS GIVEN AS SHREE CHANNAPPASWAMY VIDYAPEETH AND AFTER RECORDING OF THE RELEVANT INFORMATION OF ADDR ESS, TELEPHONE NO., NO. OF STAFF (HERE IN BEING 217); SOURCE OF FUNDS HEREIN DONATION, MEMBERSHIP AND STATE GOVERNMENT OF KARNATAKA. IN THE INFORMATION REQUIRED UNDER THE HEADING AIMS AND OBJECTS ARE DESCRIBED AS PER THE LAWS COPY KARNATAKA STATE. THE TARGET GROUP IS IDENTIFIED AS UNDER :- TARGGET GROUP (E.G. CHILDREN/WOMEN/YOUTH ETC.)-SCH OOLS, COLLEGES, TECHNICAL COLLEGES STUDENTS, SHG GROUPS, HOSTEL ETC . THE THRUST AREA IS THE STATE OF KARNATAKA. THE PROJECT UNDERTAKEN IS STATE GOVERNMENT GRANT PROJECT, ADED SCHOOL GRANT, WATERSHED GRANT, ZILLA PANCHAYAT GRANT ETC. 5.2.4. HEREIN ALSO, IT WAS SUBMITTED THAT THE RELEVANT DO CUMENTS ARE ATTACHED NAMELY COPY OF REGISTRATION CERTIFICATE, COPY OF TH E TRUST DEED, ANNUAL REPORT, AUDITED STATEMENT OF ACCOUNT, MEMORANDUM OF ASSOCIA TION, ETC. ARE ATTACHED ALONG WITH THIS. ACCORDINGLY IT WAS HIS SUBMISSION THAT THE SUSPICION RAISED BY THE SR. DR BY REFERRING TO THE FACT THAT THERE IS N O NAME RECORDED IN THE BILL IS INCORRECT AND EACH AND EVERY BILL WILL SHOW THAT NO T ONLY THE NAME BUT EVEN THE COPY OF THE TRUST DEED OR REGISTRATION ETC. OF THE ORGANIZATION REQUIRED TO BE FURNISHED AND IS AVAILABLE ON RECORD AND AN ABBR EVIATION OF THE NGO RECORDED DOES NOT MEAN THAT THE DOCUMENTATION IS WA NTING. IT WAS HIS SUBMISSION THAT THE DOCUMENTS WERE AVAILABLE BEFORE THE AO, HE DOES NOT CARE TO LOOK AT THEM AND OPERATES ON SUSPICION AND EVEN TODAY THE PAPER BOOK IS AVAILABLE ON RECORD WHICH HAS BEEN CONSIDER ED BY THE CIT(A) AND THE SR. DR DOES NOT ASSAIL AT THE SAME AND MERELY RELI ES ON THE AOS VERSION BASED ON THE INSPECTORS REPORT WITHOUT FAULTING TH E ASSESSEE IN THE STRINGENT DOCUMENTATION MAINTAINED BY THE ASSESSEE TRUST. AL L THESE DOCUMENTS IT WAS SUBMITTED ARE FURNISHED AND SUBMITTED BEFORE MAKING ITS FACILITIES TO THE N.G.OS ETC WHO HAVE THE SAME AIMS AND OBJECTS AS TH E ASSESSEE TRUST. INVITING ATTENTION TO PAGE 9 OF THE ASSESSMENT ORDE R PARA 5.5 IT WAS HIS SUBMISSION THAT SOME OF THESE FACTS HAVE BEEN RECOR DED BY THE AO HIMSELF IN HIS ORDER BUT FOR REASONS BEST KNOWN TO HIM, HE CHO OSES TO RELY ON INSPECTORS REPORTS. FOR READY-REFERENCE ARGUMENTS OF THE ASSE SSEE AS RECORDED BY THE AO AND RELIED UPON BY THE ASSESSEE ARE REPRODUCED F ROM THE ASSESSMENT ORDER HEREUNDER:- 5.5 IN ADDITION TO THE ABOVE WE WOULD ALSO LIKE TO SUBMIT HERE THAT THE TOTAL RECEIPTS OF CANTEEN IS RS. 82.95 LACES WHICH INCLUD E RS. 61.19 LACES AGAINST THE WORKSHOP / SEMINAR IN WHICH BUFFET LUNCH WAS SE RVED TO PARTICIPANTS AND RS.13.14 LACES FOR THE PERSONNEL STAYED IN THE HOST ELS. BALANCE RS.8.62 LACES FROM OTHERS THAT INCLUDES FROM STAFF/STAFFS' GUEST/ TRUST GUEST (VIZ. AUDITORS, LOWERS, ARCHITECT, CONTRACTORS ETC) AND THOSE WHO H AD COME TO ATTEND SOME FUNCTION OR OTHER. THEREFORE, IT WOULD NOT BE POSSIBLE TO ASCERTAIN TH E AMOUNT OF CANTEEN I.T.A .NO.-3635/DEL/2015 PAGE 13 OF 21 COLLECTION FROM THOSE PERSONS WHO WERE NOT STAYED I N THE HOSTEL. IN ANY CASE IT IS BOUND TO BE VERY NEGLIGIBLE AND WITHIN P ERMISSIBLE LIMITS OF SECTION 2(15) OF THE INCOME TAX ACT. FURTHER, IT CAN BE SEE N FROM THE DOCUMENTS SUBMITTED THAT THE TRUST SERVES BUFFET MEALS DURING THE PROGRAM / WORKSHOP CONDUCTED BY MEMBERS ORGANIZATIONS AND/OR DURING OW N PROGRAM AND WORKSHOP BUT NOT FOR ANY OTHER PURPOSES. THIS CAN B E REVIEWED FORM THE RELATED DOCUMENTS ENCLOSED HEREWITH FOR YOUR KIND P ERUSAL I.E. BILLS OF BUFFETS SERVED DURING WORKSHOP AND SEMINARS. FURTHER, WE ALSO LIKE TO SUBMIT THAT FOR THE BOOKIN G OF THE FACILITIES (BUFFET, AUDITORIUM, CONFERENCE HALL ETC.) OF THE TRUST, OFF ICIALS OF THE TRUST DESIGNATED FOR THE SAID PURPOSES (AT THE RANK OF MA NAGER) ARE ONLY AUTHORIZED. HENCE, AS REGARD THE REMARKS MADE BY OU R CANTEEN STAFF THEY HAD MERELY GIVEN THE INFORMATION IN REGARD TO TARIF F RATE BOTH FOR VEGETARIAN AND NON VEGETARIAN BUFFETS ARRANGEMENT. THERE IS NO THING WRONG IN WHAT HAS BEEN STATED BY THEM AND NO WHERE THEY HAD COMMI TTED THAT IT WILL BE SERVED ALSO FOR THE PURPOSES OTHER THAN THE OBJECTI VES OF THE ACTIVITIES FOR WHICH IT WAS INTENDED. THEY HAD MERELY ANSWERED A Q UERY. THEREFORE, IT WOULD BE INAPPROPRIATE TO CONCLUDE THAT WHAT THEY H AD STATED INVOLVE COMMERCIAL ACTIVITIES. . 4.9. CONSIDERING THESE ARGUMENTS, IT IS SEEN THAT T HE ORDER WHICH HAS BEEN FOLLOWED BY THE CIT(A) PROCEEDED TO GIVE A DETAILED FINDING ON FACTS AND REJECTING THE DEPARTMENTAL GROUNDS AND UPHOLDING THE IMPUGNED ORDER. THE SAME IS REPRODUCED HEREUNDER FOR READY-REFERENCE:- 6. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED TH E MATERIAL AVAILABLE ON RECORD. THE DOCUMENTS RELIED UPON BEF ORE US IN THE PAPER BOOK AND THE CASE LAWS REFERRED TO AND THE ORDERS OF THE AUTHORITIES HAVE BEEN TAKEN INTO CONSIDERATION. THE OBJECTS OF THE TRUST AVAILABLE AT PAGES 31 & 32 READ AS UNDER :- 4.(A) TO ESTABLISH, MAINTAIN AND CONDUCT ONE OR MO RE NATIONAL OR INTERNATIONAL YOUTH CENTRE AT SUITABLE CENTRES IN I NDIA FOR PRACTICING INTERNATIONAL UNDERSTANDING AND COOPERATION AND DEV ELOPING YOUTH LEADERSHIP; (B) EACH SUCH YOUTH CENTRE MAY BE MULTI-PURPOSE IN CHARACTER FUNCTIONING AS A MODEL YOUTH CENTRE FOR INTELLECTUAL AND RECREA TIONAL SERVICES TO YOUTH; A CO-ORDINATING AGENCY FOR YOUTH ORGANIZATIONS A CENT RE FOR BUILDING UP YOUTH LEADERSHIP THROUGH A VARIETY OF PROGRAMMES; AND A C OUNSELING BUREAU TO ADVISE ON VARIOUS PROBLEMS CONFRONTING YOUTH; (C) FOR THE BENEFIT OF FOREIGN STUDENTS AND YOUTH D ELEGATIONS IAS WELL AS INDIVIDUALS VISITING INDIA, THE YOUTH CENTRE MAY PR OVIDE HOSTEL FACILITIES, IT MAY SERVE AS AN INFORMATION CENTRE, AND PROVIDE THE M WITH OPPORTUNITY FOR .. (D) THE HOSTEL FACILITIES AT THE YOUTH CENTRE SHALL BE AVAILABLE TO STUDENTS OR OTHER PERSONS ON PAYMENT OF SUCH CHARGES AS THE TRUSTEE MAY DECIDE FROM TIME TO TIME. I.T.A .NO.-3635/DEL/2015 PAGE 14 OF 21 (E) THE CENTRE FOR ALSO SPONSOR PROGRAMMES FOR BILA TERAL ..OF YOUTH LEADERS, YOUNG WORKERS AND STUDENTS WITH A VIEW TO BETTER NATIONAL INTEGRATION AND INTERNATIONAL UNDERSTANDING AND CO- OPERATION. (F) THE TRUSTEE MAY JOIN, CONTRIBUTE TO OR ..FINAN CIALLY OR OTHERWISE, ANY OTHER INSTITUTIONS WITH SIMILAR OBJECTS TO CARRY OU T OR IMPLEMENT ANY OF THE OBJECTS OF THIS TRUST. 6.1. THE INSPECTORS REPORT REPRODUCED IN THE EARLIER P ART OF THIS ORDER IN PARA 5.1 HAS ALSO BEEN TAKEN INTO CONSIDERATION. IT IS SEEN THAT THE AO HAS BEEN GUIDED BY THE FACT THAT THE ASSESSEE IS CH ARGING FEES FOR HOSTEL FACILITIES AND HAS ALSO IN ITS INCOME SHOWN RECEIPTS FROM CANTEEN FACILITIES OVER AND ABOVE RECEIPTS FROM HIR ING OF CONFERENCE HALL/AUDITORIUM ETC. APART FROM THAT HE HAS ALSO BE EN GUIDED BY THE FACT THAT THE INSPECTOR ACCOMPANIED BY TAX ADVI SORS WAS ALLOWED TO UTILIZE THE CANTEEN FACILITIES WITHOUT A NY EFFORT OR THE PART OF THE SERVING PERSONNEL TO ENSURE THAT ONLY I NMATES OF THE HOSTEL WERE BEING SERVED. THE EXPLANATION OF THE ASSESSEE THAT ITS HOSTEL FACILITIES ARE UTILIZED BY NGOS AND GOVERNMENT SCHO OLS, EDUCATION DEPARTMENTS ETC. WHO STAY/ATTEND FOR A FEW DAYS AS STUDENTS, PROFESSORS, SCHOLARS ETC ATTENDING SEMINARS, CONFERENCES AND TH EN MOVE ON THEREBY MAKING IT DIFFICULT FOR CANTEEN STAFF TO ASCERTAIN WHETHER THE PERSONS ARE STAYING IN THE HOSTEL OR NOT HAS NOT BEEN ACCEPTED. THE CHANCES OF STRAY INCIDENTS WHERE UNCONNECTED PERSON MAY AVAIL OF SER VICES HAS NOT BEEN ACCEPTED AS SUFFICIENT COMPLIANCE. THE ARGUMENT TH AT CANTEEN STAFF MAY NOT BE IN A POSITION TO IDENTIFY WHETHER THE PERSON AVAILING THE SERVICES IS STAYING IN THE HOSTEL OR IS MERELY ATTENDING CONFER ENCE OR IS A RANK OUTSIDER HAS NOT BEEN ACCEPTED. ON ACCOUNT OF THIS LACK OF FULL CONTROL BY THE CANTEEN STAFF ON THEIR FACILITIES BEING USED AS IS EVIDENCED BY INSPECTORS REPORT, THE REVENUE WOULD WANT TO ARGUE THAT THE ASSESSEE TRUST THROUGH ITS CANTEEN FACILITIES IS FU NCTIONING ON COMMERCIAL LINES. SIMILARLY THE REVENUE HAS ALSO ASSAILED THE IMPUG NED ORDER ON THE GROUND THAT INFORMATION AS PER THE 26 AS IS THAT CERTAIN CORPORATE ENTITIES HAVE UTILIZED THE FACILITIES THE REBY LEADING TO THE PRESUMPTION THAT THE HOSTEL AND CANTEEN FACILITIES ARE BEING USED ON COMMERCIAL LINES. ON THE OTHER HAND, ON BEHALF OF THE ASSESSEE, THE CONTENTION HAS BEEN THAT THE ASSESSEE MAINTAINS VER Y STRICT CHECKS FOR MAKING AVAILABLE ITS HOSTEL FACILITIES. VARIOUS PA GES IN THE PAPER BOOK REFERRED TO SHOW THAT THE ASSESSEE REQUIRES THE FIL LING OF MEMBERSHIP FORM WHICH REQUIRES THE SPECIFIC AND RELEVANT INFORMATIO N OF THE ORGANIZATION MAKING A BOOKING. IF IT IS A TRUST/NGO ETC., THE C OPY OF THE DEED OF REGISTRATION, FINANCIAL STATEMENTS, SOURCES OF FUND , THE PURPOSE OF THE STAY, THE AIMS AND OBJECTS THE THRUST AREA, THE TARGET GR OUP ETC. ARE REQUIRED TO BE MENTIONED. IT HAS ALSO BEEN STATED THAT THE FACILITIES ARE AVAILABLE TO OUTSIDERS ONLY WHEN THEY ARE NOT BEING UTILIZED BY THE ASSESSEE TRUST OR NGOS ETC. HAVING IDENTICAL AIM A ND THEN TOO THE RECEIPTS THEREOF ARE UTILIZED FOR THE OBJECTS OF TH E TRUST AS IN RESPONSE TO THE SR. DRS OBJECTIONS BASED ON PAPER BOOK PAGE -78. LD. AR HAS POINTED OUT THAT BILL NO-26949 HAS BEEN ISSU ED FOR NAWO GIVING CUSTOMER NO-12306 DATED 07.09.2008. THE SPECIFIC O RGANIZATION HAD BOOKED 15 ROOMS FOR 17 PERSONS BELONGING TO NAWO AN D THE PERIOD OF I.T.A .NO.-3635/DEL/2015 PAGE 15 OF 21 BOOKING WAS 07.09.2008 TO 10.09.2008. DETAILS OF TH IS ARE AVAILABLE ON THE LIST AT PAGE 465 SL. NO-631 GIVEN AGAIN TO THE AO. NOTE MENTIONED AT THE BOTTOM OF THE BILL HAS BEEN POINTED OUT SHOWING THAT MEMBERSHIP FEE IS VALID ONLY FOR 28 DAYS AND THE LD . AR HAS SAID THAT AS PER THE RULES THE HOSTEL CANNOT BE USED FOR MORE THAN 28 DAYS BY THE PERSON/ORGANIZATION AS EVIDENTLY HOSTEL INMATES ARE NOT ADMITTED FOR AN ACADEMIC YEAR AS IS NORMALLY DO NE IN HOSTEL OF COLLEGES ETC. WHERE STUDENTS ARE STUDYING FOR GRADU ATION AND POST- GRADUATION COURSES. THE HOSTEL OF THE TRUST IS ONL Y FOR STUDENTS, SCHOLARS, PROFESSORS ATTENDING SEMINARS/CONFERENCES WHICH AIM TO BUILD LEADERSHIP QUALITIES IN THE YOUTH; EDUCATE, I NFORM, ENCOURAGE AND EMPOWER THEM BY KNOWLEDGE ETC. BY PROGRAMMES/CONFERENCE HELD BY NGOS OR BY FOREIGN VISITING ORGANIZATIONS WHOSE AIMS ARE IDENTICAL. CONSEQUENTLY AT THE TIME OF ADMISSION IT IS SEEN TH AT HOSTEL FACILITIES ARE MADE AVAILABLE ONLY AFTER THE ASSESSEE TRUST IS SAT ISFIED THAT THE AIMS AND OBJECTS OF THE CHARITABLE TRUST ORGANIZATIONS ARE A LSO FOR PROMOTION OF YOUTH ACTIVITIES EVIDENCED BY RELEVANT FINANCIAL STATEMEN T, CERTIFICATIONS OF REGISTRATION NARRATING THE PURPOSE OF VISIT ETC AND ONLY THEN HOSTEL FACILITIES ARE MADE AVAILABLE FOR A MAXIMUM PERIOD OF ONLY 28 DAYS WHICH RESULTS AT TIMES WHERE ODD FIGURES MAY BE WORKED OUT DEPENDING ON FACILITIES USED. WE MAY REPRODUCE FOR READY-REFERENCE FROM PAGE 78 O F PAPER BOOK, THE NOTE PRINTED AT THE BOTTOM OF THE BILL DEMONSTRATIN G THE DURATION:- NAWO NOTE:-THIS MEMBERSHIP FEE IS VALID FOR THE NEXT 2 8 DAYS FROM THE DATE OF CHECKIN 07 SEP 2008 AND UPTO DATE 04 OCT 2008 FOR ROOMS ONLY. PLEASE RETAIN COPY OF THIS BILL TO AVOID THE REPAYM ENT OF MEMBERSHIP FEES. THIS MEMBERSHIP FEES IS VALID FOR ROOM(S) ONLY AND CANNOT BE ADJUSTED AGAINST THE OTHER SERVICES. 6.2. A PERUSAL OF PAGES 79, 80 & 81 ALSO DEMONSTRATE TH AT SPECIFIC NO FOR ROOMS HAVE BEEN BOOK BY SPECIFIED ORGANIZATIONS ON SPECIFIED DATES NAMELY M/S POSITIVE WOMEN NETWORK; SOCIO LEGAL INFORMATION CENTRE; AND INDO- GLOBAL SOCIAL SERVICE SOCIETY RESPECTIVELY AND ALL THESE BILLS HAVE A SIMILAR NARRATION WITH REGARD TO THE MEMBERSHIP FEE THAT IT IS ONLY FOR 28 DAYS STARTING FROM THE DATE OF CHECKIN WHICH NECESSARILY DIFFERS FOR EACH ONE OF THEM. FOR READY-REFERENCE, WE REPRODUCE FROM PAGES 79-81 OF THE PAPER BOOK AS UNDER :- M/S POSITIVE WOMEN NETWORK NOTE:-THIS MEMBERSHIP FEES IS VALID FOR THE NEXT 2 8 DAYS FROM THE DATE OF CHECKIN 01-OCT-2008 AND UPTO 28-OCT-2008 FOR ROOMS ONLY. PLEASE RETAIN COPY OF THIS BILL TO AVOID THE REPAYM ENT OF MEMBERSHIP FEES. THIS MEMBERSHIP FEES IS VALID FOR ROOM(S0 ONLY AND CANNOT BE ADJUSTED AGAINST THE OTHER SERVICES. SOCIO LEGAL INFORMATION CENTRE NOTE:-THIS MEMBERSHIP FEES IS VALID FOR THE NEXT 2 8 DAYS FROM THE DATE OF CHECKIN 26-JUN-2008 AND UPTO DATE 23-JUL-20 08 FOR ROOMS ONLY. PLEASE RETAIN COPY OF THIS BILL TO AVOID THE REPAYMENT OF MEMBERSHIP I.T.A .NO.-3635/DEL/2015 PAGE 16 OF 21 FEES. THIS MEMBERSHIP FEES IS VALID FOR ROOM(S) ON LY AND CANNOT BE ADJUSTED AGAINST THE OTHER SERVICES. INDO-GLOBAL SOCIAL SERVICE SOCIETY NOTE:-THIS MEMBERSHIP FEES IS VALID FOR THE NEXT 2 8 DAYS FROM THE DATE OF CHECKIN 31-JUN-2008 AND UPTO DATE 27-AUG-20 08 FOR ROOMS ONLY. PLEASE RETAIN COPY OF THIS BILL TO AVOID THE REPAYMENT OF MEMBERSHIP FEES. THIS MEMBERSHIP FEES IS VALID FOR ROOM(S) ON LY AND CANNOT BE ADJUSTED AGAINST THE OTHER SERVICES. 6.3. IT IS ALSO SEEN ON A PERUSAL OF DOCUMENTS PLACED A T PAGES 517 814 WHICH ARE THE DOCUMENTS MADE AVAILABLE TO THE AO AL ONGWITH ACCOMPANYING LETTER DATED 19.12.2011, COPY OF WHICH IS ALSO PLAC ED AT PAGES 510-516. IT IS SEEN THAT THE ASSESSEE AT THE TIME OF BOOKING IT S HOSTEL ROOMS IS STRICTLY ADHERING TO MAINTAINING, RECORDING AND KEEPING THE DOCUMENTATION EVIDENCING THE AIMS AND OBJECTS OF THE ORGANIZATION THE PURPOSE OF VISITING THE TARGET GROUP AND THRUST AREA QUA THE VISIT OR P ROGRAMME CONTEMPLATED. A PERUSAL OF THE SAMPLE FORM OF ENROLMENT PLACED AT PAGE 517 AND MEMBERSHIP FORM AT PAGE 518 HAS BEEN DEMONSTRATED T O SHOW THAT IT IS STRICTLY ADHERED TO IN STRICT AND SPECIFIC COMPLIAN CE. REFERENCE MAY ALSO BE MADE TO PAGE 63 OF THE PAPER BOOK ADDRESSED TO THE ADIT(E) DATED 08.08.2011 REFERRING TO THE POSITION FOR 2009-10 WH EREIN COLUMN-8, IT IS SAID THAT THE ASSESSEE TRUST HAS NOT GIVEN ANY DONATION AND NEITHER ANY DONATION HAS BEEN RECEIVED. SIMILARLY IN REGARD TO THE CONT RIBUTION TO THE CORPUS COLUMN-9 INDICATES THAT THE ASSESSEES TRUST HAS NO T RECEIVED ANY CONTRIBUTION TO CORPUS DURING THE YEAR. A PERUSAL OF PAGE 815-816 ADDRESSED AGAIN TO THE ADIT(E) DATED 29.12.2011 IND ICATE THAT THE ACCUMULATED FUND HAS BEEN UTILIZED IN THE TIME LIMI T AS PRESCRIBED IN THE INCOME TAX ACT FOR THE PURPOSE OF CONSTRUCTION OF T HE ANNEX BUILDING OF TRUST AND RENOVATION OF OLD BUILDING. THE DETAILS OF THIS SURPLUS FOR THE FIVE YEARS AND ITS UTILIZATION AS PER PAGE 816 INDICATED AS UNDER :- ASST. YEARS TOTAL SURPLUS/(DEFICIT) ACCUMULATION U/S 11(2) U/S 11(1) UP TO 15% 2004 - 05 16,83,695 NOT REQUIRED 16,83,695 2005 - 06 (54,52,886) NOT REQUIRED 0 2006 - 07 (50,03,098) NOT REQUIRED 0 2007 - 08 86,88,124 80,00,000 6,88,124 2008 - 09 1,85,47,381 1,25,00,000 60,47,381 2009 - 10 CASE IS UNDER PROCESS THE ABOVE ACCUMULATION IS STARTED UTILIZATION FROM 2009-10 ONWARDS FOR THE CONSTRUCTION OF BUILDING & RENOVATION OF OL D BUILDING OF THE 2009-10 APPROX. RS. 2.20 CRORES WAS UTILIZED FOR SAID PURPO SES. 6.4. WE HAVE ALSO TAKEN INTO CONSIDERATION, THE OBJECTI ONS POSED BY THE AO TO THE ADVERTISEMENT WHICH WAS PLACED BY THE ASSESS EE IN ORDER TO INVITE ATTENTION OF THE NGOS ETC. TO UTILIZE THE HOSTEL FA CILITIES AND AUDITORIUM AND SEMINAR FACILITIES IN ORDER TO PROMOTE LEADERSHIP A CTIVITIES FOR THE YOUTH OF THE COUNTRY AND FIND OURSELVES IN HARMONY WITH THE FINDINGS OF THE CIT(A) AS IT DOES NOT LEAD TO THE CONCLUSION THAT THE ACTIVIT IES ARE IN THE NATURE OF I.T.A .NO.-3635/DEL/2015 PAGE 17 OF 21 COMMERCIAL ACTIVITY. MERELY ADVERTISING THE FACT T HAT FACILITY OF HOSTEL, SEMINAR HALLS, AUDITORIUM ETC. CAN BE USED BY ORGAN IZATIONS INTERESTED IN HAVING LEADERSHIP PROGRAMS FOR THE BENEFIT OF YOUTH DOES NOT MAKE THE ACTIVITY A COMMERCIAL ACTIVITY. WE HAVE ALSO TAKEN INTO CONSIDERATION THE ARGUMENTS ADVANCED BY THE ASSESSEE BEFORE US IN SUP PORT OF THE IMPUGNED ORDER WHICH ARE FOUND SUPPORTED BY THE EXPLANATION DTD. 19.12.2011 AFFORDED BY THE ASSESSEE BEFORE THE AO, COPIES PLAC ED AT PAGES 510-516 OF THE PAPER BOOK IN RESPONSE TO SHOW CAUSE NOTICE DAT ED 19.12.2011 WHEREIN APART FROM RELYING UPON THE LETTERS DATED 8.8.2011, 8.9.2011.13.10.2011, 20.11.2011, 28.11.2011, 5.12.2011 AND 12.12.2011 TH E ASSESSEE AS AN ILLUSTRATION HAS MADE REFERENCE TO A CERTIFICATE CO URSE CONDUCTED BY THE TRUST FOR THE DURATION 01 ST DECEMBER TO 23 RD DECEMBER 2011 WHICH WAS HELD FOR UNEMPLOYED YOUTH AND PARTICIPANTS WHO WERE STATED T O BE FROM DIFFERENT PARTS OF INDIA AS WELL AS FROM ABROAD INCLUDING GI RL PARTICIPANTS. IT IS FOUND EXPLAINED ON BEHALF OF THE ASSESSEE THAT SOMETIMES THE GUARDIANS OF THE GIRL PARTICIPANTS COME TO THE CENTRE TO MEET THEM AND CA NTEEN STAFF HAD BEEN INSTRUCTED NOT TO STOP THEM FROM TAKING SNACKS AND LUNCH IF THEY SO WANT, KEEPING IN MIND THE FACT THAT THE LOCATION OF THE T RUST WAS NOT CLOSE TO THE COMMERCIAL AREAS WHERE THE GUARDIANS OF THESE GIRLS VISITING THEM COULD HAVE GONE. THE MERE AFFORDING OF SUCH A COURTESY D OES NOT LEAD TO THE CONCLUSION THAT THE TRUST WAS OPERATING ON COMMERCI AL LINES. IN THE COURTESY SO AFFORDED IF THE LADY INSPECTOR ACCOMPANIED BY TW O TAX ADVISORS WERE ALLOWED TO HAVE LUNCH/SNACKS WITHOUT REQUIRING THEM TO SHOW ANY IDENTIFICATION IN NO WAY DETRACTS FROM THE MERITS O F THE CASE. ON A CONSIDERATION OF THE FACTS. EVIDENCES, MATERIAL AND ARGUMENTS ADVANCED BY THE PARTIES BEFORE THE BENCH, WE DO NOT FIND ANY I NFIRMITY ARRIVED AT BY THE CIT(A) IN THE IMPUGNED ORDER WHICH WARRANTS OUR INT ERFERENCE. WE HAVE TAKEN INTO CONSIDERATION THE DECISIONS RELIED UPON BY THE AO AND FIND NO FAULT IN THE CONCLUSION OF THE CIT(A) WHO HAS HELD THE JUDGEMENT OF JALANDHAR DEVELOPMENT AUTHORITY TO BE INAPPLICABLE ON FACTS AS THE SAID AUTHORITY WAS ENGAGED IN SELLING LAND AFTER DEVELOP MENT COULD NOT PROVE ITS OBJECTS TO BE CHARITABLE. SIMILAR WAS THE POSITION FOR PUNJAB URBAN PLANNING & DEVELOPMENT AUTHORITY WHO WAS FOUND TO BE FUNCTIO NING ON COMMERCIAL LINES. IN THE CASE OF INDIAN CHAMBER OF COMMERCE, THE SURPLUS WAS AVAILABLE FOR DISTRIBUTION WHICH IS NOT A FACT IN T HE PRESENT CASE. THE JUDGEMENT RENDERED IN THE CASE OF MCD VS. CHILDREN BOOK TRUST WAS ALSO NOT APPLICABLE AS IT WAS RENDERED INTERPRETING MUNI CIPAL CORPORATION OF DELHI ACT FOR THE PURPOSES OF HOUSE TAX. 6.5. ACCORDINGLY ON ACCOUNT OF THE ARGUMENTS DETAILED R EASONING ON FACTS AND LAW DISCUSSED AT LENGTH IN THE EARLIER PART OF THIS ORDER, WE FIND NO GOOD REASON TO INTERFERE WITH THE FINDING ARRIVED AT IN THE IMPUGNED ORDER. BEING SATISFIED BY THE REASONING AND FINDING OF THE CIT(A ), GROUND NO-1 OF THE REVENUE IS REJECTED. (EMPHASIS PROVIDED) 4.10. ACCORDINGLY, ON A CAREFUL READING OF THE ABOV E DETAILED ORDER, IT IS SEEN THAT IDENTICAL CLAIM OF THE REVENUE HAS BEEN CONSID ERED BY THE ITAT. NO CHANGE I.T.A .NO.-3635/DEL/2015 PAGE 18 OF 21 IN FACT OR CIRCUMSTANCE HAS EITHER BEEN REFERRED TO BY THE LD. SR. DR NOR HAS BEEN BROUGHT OUT IN THE ASSESSMENT ORDER. IN THE A BSENCE OF ANY INFIRMITY HAVING BEEN POINTED OUT, WE FIND NO GOOD REASON TO DEVIATE FROM THE VIEW TAKEN. HOLDING THE CONCLUSION OF THE CIT(A) IN RELYING THE REON JUSTIFIED ON FACTS AND LAW THE DEPARTMENTAL GROUND IS DISMISSED. 5. ADDRESSING THE ISSUE RAISED IN GROUND NO.3 & 4 B Y THE REVENUE, THE LD.AR AGAIN PLACED RELIANCE ON THE AFORE-SAID ORDE R ON THE ITAT AND INVITED SPECIFIC ATTENTION TO PAGES 29 TO 31 PARA 7 TO 7.1 OF THE SAME ALSO SUBMITTED THAT THE ISSUE IS COVERED IN ASSESSEES FAVOUR. RE FERRING TO THE JUDGEMENTS CITED BY THE REVENUE IN ITS GROUND NAMELY DIT(E) VS CHARANIV CHARITABLE TRUST IN ITA NO.322-323/2013 DATED 18.03.2014, IT WAS SUBMITTED THAT THE SAID JUDGEMENT HAS BEEN OVER-RULED BY THE DELHI HIGH COU RT IN THE DIT(E) VS INDRAPRASTHA CANCER SOCIETY []2015 229 TAXMAN 93 ( DELHI). THE LD. SR. DR DID NOT OFFER ANY ARGUMENT IN REBUTTAL ON CONSIDERI NG THE FOLLOWING FINDING ARRIVED AT BY THE ITAT:- 7. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED T HE MATERIAL AVAILABLE ON RECORD. IT IS SEEN THAT NO DISTINCTIO N ON FACTS HAS BEEN MADE ON BEHALF OF THE REVENUE NOR ANY CONTRARY DECISION IN SUPPORT OF THE CLAIM EITHER OF THE JURISDICTIONAL HIGH COURT OR THE HONBLE APE X COURT HAS BEEN REFERRED TO FOR OUR CONSIDERATION. IT IS SEEN THAT THE ISSUE W AS DECIDED BY THE CIT(A) IN THE FOLLOWING MANNER :- 8.2. I HAVE CONSIDERED THE SUBMISSION MADE BY THE APPELLANT AND I HAVE PERUSED THE RECORD. ON GOING THROUGH THE SAME, I HA VE NOTICED THAT THE ISSUE OF DEPRECIATION IS COVERED BY THE JUDGMENT OF DELHI TRIBUNAL IN THE CASE OF ACIT VS. TINY TOTS EDUCATION SOCIETY ITA NO. 3182/D EL/2008 WHICH HAS ALSO BEEN CONFIRMED BY THE PUNJAB AND HARYANA HIGH COURT IN THE CASE OF CIT VS. TINY TOTS EDUCATION SOCIETY 330 ITR 21. THE CONTENT ION OF THE ASSESSING OFFICER THAT DEPRECIATION ON ASSETS PURCHASED IN EA RLIER YEARS CANNOT BE ALLOWED BECAUSE THOSE ASSETS HAVE BEEN CLAIMED AS A PPLICATION OF INCOME IN EARLIER YEARS IS NOT CORRECT. AS PER THE PROVISIONS OF SECTION 11(1)(A) INCOME OF THE CHARITABLE TRUST TO THE EXTENT IT IS APPLIED TO WARDS CHARITABLE PURPOSE IS CONSIDERED TO BE EXEMPT. ACCORDINGLY, FOR THE PURPO SE OF COMPUTATION OF INCOME, IT IS MANDATORY TO COMPUTE THE SAME APPLYIN G THE ORDINARY PRINCIPLE I.T.A .NO.-3635/DEL/2015 PAGE 19 OF 21 OF COMPUTATION OF INCOME. THIS WILL INCLUDE DEPRECI ATION OF THE ASSETS USED IN EARNING SUCH INCOME. AFTER HAVING DETERMINED SUCH I NCOME, THE APPLICATION THEREOF HAS TO BE SEEN. THE PROVISION OF SECTION 11 (1)(A) ALLOWS DEDUCTION OF SUCH INCOME TOWARDS REVENUE AS WELL AS CAPITAL EXPE NDITURE BOTH. SO IF THE INCOME IS USED FOR PURCHASING OF ASSETS THAT IS AN APPLICATION OF INCOME, NOT ALLOWANCE OF THE DEPRECIATION. IF IN THE SUBSEQUENT YEARS ASSET IS USED TO GENERATE INCOME, THE INCOME HAS TO BE COMPUTED AFTE R ALLOWING DEPRECIATION ON THE ASSETS SO USED. THE ASSESSING OFFICER IS NOT JUSTIFIED IN NOT ALLOWING DEPRECIATION BECAUSE THESE ASSETS HAVE BEEN CLAIMED AS APPLICATION OF INCOME IN EARLIER YEARS. 8.3 APPLICATION OF INCOME AND DEPRECIATION ARE TWO DIFFERENT ASPECTS. THIS VIEW HAS BEEN UPHELD BY HON'BLE DELHI HIGH COURT IN THE CASE OR DIT VS. VISHWA JAGRITI MISSION REPORTED AT 2012-TLOL-271-HC -DEL-IT, WHEREIN, HON 'BLE DELHI HIGH COURT HAS OBSERVED AS UNDER:- 'THERE IS NO DISPUTE THAT THE ASSESSEE HAS BEEN GRA NTED REGISTRATION UNDER SECTION 12AA VIDE ORDER DATED 11TH SEPTEMBER, 2009 AND, THEREFORE, IT WAS ENTITLED TO EXEMPTION OF ITS INCOME UNDER SECTION 1 1. THE ONLY QUESTION IS WHETHER THE INCOME OF/HE ASSESSEE SHOULD BE COMPUTE D ON COMMERCIAL PRINCIPLES AND IN DOING SO WHETHER DEPRECIATION ON FIXED ASSETS UTILIZED FOR THE CHARITABLE PURPOSES SHOULD HE ALLOWED. ON THIS ISSU E. THERE SEEMS TO BE A CONSENSUS OF JUDICIAL THINKING AS IS SEEN FROM THE AUTHORITIES RELIED UPON BY THE CIT(APPEALS) AS WELL AS THE TRIBUNAL. IN CLT VS . THE SOCIETY OF THE SISTERS OF ST. ANME (SUPRA), AN IDENTICAL QUESTION AROSE BE FORE THE KARNATAKA HIGH COURT. THERE THE SOCIETY WAS RUNNING A SCHOOL IN BA NGALORE AND WAS ALLOWED EXEMPTION UNDER SECTION11. THE QUESTION AROSE AS TO HOW THE INCOME AVAILABLE FOR APPLICATION TO CHARITABLE AND RELIGIO US PURPOSES SHOULD BE COMPUTED. JAGANNATHA SETTY, J SPEAKING FOR THE DIVI SION BENCH OF' THE COURT HELD THAT INCOME DERIVED FROM PROPERTY HELD UNDER T RUST CANNOT BE THE 'TOTAL INCOME' AS DEFINED IN SECTION 2(45) OF THE ACT AND THAT THE WORD 'INCOME' IS A WIDER TERM THAN THE EXPRESSION 'PROFITS AND GAINS O F BUSINESS OR PROFESSION'. REFERENCE WAS MADE TO THE NATURE OF DEPRECIATION AN D IT WAS POINTED OUT THAT DEPRECIATION WAS NOTHING BUT DECREASE IN THE VALUE OF PROPERTY THROUGH WEAR, DETERIORATION OR OBSOLESCENCE. IT WAS OBSERVED THAT DEPRECIATION, IF NOT ALLOWED AS A NECESSARY DEDUCTION FOR COMPUTING THE INCOME OF CHARITABLE INSTITUTIONS, THEN THERE IS NO WAY TO PRESERVE TH E CORPUS OF THE TRUST FOR DERIVING THE INCOME. THE CIRCULARNO.5-P (LXX-6) OF 1968, DATED JULY 19,1968 WAS REPRODUCED IN THE JUDGMENT IN WHICH THE BOARD HAS TAKEN THE VIEW THAT THE INCOME OF THE TRUST SHOULD BE UNDERSTOOD IN IT S COMMERCIAL SENSE. THE CIRCULAR IS AS UNDER:- 'WHERE THE TRUST DERIVES INCOME FROM HOUSE PROPER TY, INTEREST ON SECURITIES. CAPITAL GAINS, OR OTHER SOURCES, THE WORD 'INCOME' SHOULD BE UNDERSTOOD IN ITS COMMERCIAL SENSE, I.E., BOOK INCOME, AFTER ADDING B ACK ANY APPROPRIATIONS OR APPLICATIONS THEREOF TOWARDS THE PURPOSE OF THE TRU ST OR OTHERWISE, AND ALSO AFTER ADDING BACK ANY DEBITS MADE FOR CAPITAL EXPEN DITURE INCURRED FOR THE PURPOSES OF THE TRUST OR OTHERWISE. IT SHOULD BE NO TED, IN THIS CONNECTION, THAT THE AMOUNTS SO ADDED BACK WILL BECOME CHARGEABLE TO TAX U/S. 11(3) TO THE EXTENT THAT THEY REPRESENT OUTGOINGS FOR PURPOSES O THER THAN THOSE OF THE TRUST. THE AMOUNTS SPENT OR APPLIED FOR THE PURPOSE S OF THE TRUST FROM OUT OF I.T.A .NO.-3635/DEL/2015 PAGE 20 OF 21 THE INCOME COMPUTED IN THE AFORESAID MANNER, SHOULD BE NOT LESS THAN 75 PER CENT. OF THE LATTER, IF THE TRUST IS TO GET THE FUL L BENEFIT OF THE EXEMPTION U/S. 11(1). ' 12. A SIMILAR VIEW WAS EARLIER EXPRESSED BY THE AND HRA PRADESH HIGH COURT IN COMMISSIONER OF INCOME-TAX. V. NIZAM'S SUPPL. RELIG IOUS ENDOWMENT TRUST (1981) 127 ITR 378 AND BY THE MADRAS HIGH COURT IN COMMISSIONER OF INCOME-TAX VS RAO BAHADUR CALAVALA CUNNAN CHETTY CH ARITIES (1982) 135 ITR 485. THE MADHYA PRADESH HIGH COURT IN CIT VS. RAIPU R PALLOTTINE SOCIETY (SUPRA) HAS HELD, FOLLOWING THE JUDGEMENT OF THE KA RNATAKA HIGH COURT CITED ABOVE, THAT IN COMPUTING THE INCOME OF A CHARITABLE INSTITUTION/TRUST, DEPRECIATION OF ASSETS OWNED BY THE TRUST/INSTITUTI ON IS A NECESSARY DEDUCTION ON COMMERCIAL PRINCIPLES. THE GUJARAT HIGH COURT, AFTER REFERRING TO THE JUDGEMENTS OF THE KARNATAKA, MAHARASHTRA AND MADHYA PRADESH HIGH COURTS CITED ABOVE, ALSO CAME TO THE SAME CONCLUSION AND H ELD THAT THE AMOUNT OF DEPRECIATION DEBITED TO THE ACCOUNTS OF THE CHARITA BLE INSTITUTION HAS TO BE DEDUCTED TO ARRIVE AT THE INCOME AVAILABLE FOR APPL ICATION TO CHARITABLE AND RELIGIOUS PURPOSES. 7.1. IN THE AFORE-MENTIONED FACTS WHERE THERE IS NO INFI RMITY POINTED OUT BY THE REVENUE NOR ANY CONTRARY DECISION HAS BEEN REFE RRED TO FOR OUR CONSIDERATION WE FIND NO MERIT IN THE DEPARTMENTAL GROUND. BEING SATISFIED WITH THE REASONING AND FINDING OF THE CIT(A), THE G ROUND IS DISMISSED. 6. WE FURTHER FIND THAT THE HONBLE DELHI HIGH COUR T IN THE CASE INDRAPRASTHA CANCER SOCIETY (CITED SUPRA) FOLLOWING THE VISHWA JAGRITI MISSIION DECIDED THE ISSUE AS UNDER:- 10. THE AFORESAID PARAGRAPH REFERS TO THE DECISION IN THE CASE OF VISHWA JAGRITI MISSION (SUPRA) BUT RATIO WAS DISTINGUISHED ON THE GROUND THAT IN THE SAID CASE THE COURT WAS CONCERNED WITH COMPUTATION OF INCOME OF A CHARITABLE TRUST/INSTITUTION ON COMMERCIAL PRINCIPLES AND IF S O WHETHER DEPRECIATION ON FIXED ASSETS USED FOR CHARITABLE PURPOSES SHOULD BE ALLOWED AS A DEDUCTION. THE CONSENSUS OF JUDICIAL OPINION ON THE SAID ASPEC T WAS REFERRED TO. IT IS NOTICEABLE THAT IN CHARANJIV CHARITABLE TRUST (SUPR A) IT STANDS OBSERVED THAT THE TRIBUNAL OVERLOOKED THE FACT THAT THE COST OF A SSET HAD BEEN ALLOWED AS A DEDUCTION AND THEREAFTER DEPRECATION WAS BEING CL AIMED. THE SAID CASE, THEREFORE, APPEARS TO BE A PECULIAR ONE WHEREIN DED UCTION AS EXPENDITURES AND DEPRECATION WAS BEING CLAIMED SIMULTANEOUSLY, W HILE COMPUTING THE TAXABLE INCOME UNDER THE HEAD PROFITS AND GAINS FR OM BUSINESS. THE SAID DECISION DATED 18 TH MARCH 2014 DOES NOT REFER TO THE DECISION IN INDIA N TRADE PROMOTION ORGANIZATION (SUPRA) WHICH WAS DECIDED ON 27 TH NOVEMBER 2013. THE JUDGEMENT IN THE CASE OF CHARANJIV CHARITBALE TRUST (SUPRA) IS AUTHORED BY THE SAME JUDGE, WHO HAS ALSO AUTHORED THE DECISI ON IN THE CASE OF VISHWA JAGRITI MISSION (SUPRA). IT IS OBVIOUS THAT IN CHA RANJIV CHARITABLE TRUST (SUPRA), THE DIVISION BENCH COULD NOT HAVE TAKEN A DIFFERENT VIEW ON THE LEGAL RATIO AS INTERPRETED IN VISHWA JAGRITI MISSION (SUP RA). FURTHER, THE DECISIONS IN THE CASE OF VISHWA JAGRITI MISSION AND INDIA TRADE PROMOTION ORGANIZATION I.T.A .NO.-3635/DEL/2015 PAGE 21 OF 21 (SUPRA) BEING PRIOR IN POINT OF TIME WOULD ACT AS B INDING PRECEDENTS AND COULD NOT HAVE BEEN OVERRULED OR DISSENTED FROM BY A COOR DINATE DIVISION BENCH. 7. ACCORDINGLY, IN VIEW OF THE ABOVE, THE ISSUE RAI SED BY GROUND NOS.3 & 4 OF THE REVENUE IS DISMISSED. 8. IN THE RESULT, THE APPEAL OF THE REVENUE IS DISM ISSED. THE ORDER IS PRONOUNCED IN THE OPEN COURT ON 23 RD OF MAY, 2016. SD/- SD/- (PRASHANT MAHARISHI) (DIVA SINGH) ACCOUNTANT MEMBER JUDICIAL MEMBER *AMIT KUMAR* COPY FORWARDED TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(APPEALS) 5. DR: ITAT ASSISTAN T REGISTRAR ITAT NEW DELHI