ITO (E), New Delhi V. S.D. College Society (Lahore), New Delhi

ITA 3640/DEL/2012

• Counselvise Citation: [2014] 140 COUNSELVISE.COM (IT) 77798 (ITAT-DELHI)
• Duration Of Justice: 44 year(s) 6 month(s) 10 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 11-07-2014
• Appeal Filed By: Department
• Assessment Year: misc
• Appeal Filed On: 01-01-1970
• Court: TRIBUNAL
• Department Lawyers: SHALINI VERMA
• Assessee Lawyers: JASWANT SINGH
• Keywords: Depreciation; Charitable institution; Capital expenditure
• Section: 12A

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH G NEW DELHI BEFORE SHRI S.V. MEHROTRA : ACCOUNTANT MEMBER AND SHRI C.M. GARG : JUDICIAL MEMBER ITA NO. 3640/DEL/2012 ASSTT. YR: 2008-09 INCOME-TAX OFFICER(E), VS. S.D. COLLEGE SOCIETY ( LAHORE) TRUST WARD-1, NEW DELHI. BHUPENDRA BHAWAN PAHAR GA NJ, NEW DELHI0110055. PAN: AADTS 5793 H ( APPELLANT ) ( RESPONDENT ) APPELLANT BY : SMT. SHALINI VERMA SR. DR. RESPONDENT BY : SHRI JASWANT SINGH CA DATE OF HEARING : 08-07-2014 DATE OF ORDER : 11-07-2014. O R D E R PER S.V. MEHROTRA, A.M: THIS APPEAL, BY THE DEPARTMENT, IS DIRECTED AGAINST THE ORDER DATED 12- 4-2012 PASSED BY THE LD. CIT(A)-XXI, NEW DELHI, IN APPEAL NO. 106/10-11, RELATING TO A.Y. 2008-09. 2. BRIEF FACTS OF THE CASE ARE THAT ASSESSEE IS REG ISTERED U/S 12A VIDE REGISTRATION NO. 1004/95-96 DATED 28-1-1996 W.E.F. 1-4-1995. THE ASSESSEE HAD FILED ITS RETURN OF INCOME DECLARING NIL INCO ME. THE ASSESSEE HAD BEEN CARRYING OUT THE ACTIVITY OF IMPARTING EDUCATION AN D THE SOCIETY WAS RUNNING THE INSTITUTIONS NAMELY, S.D. COLLEGE AMBALA; S.D. PUBLIC SCHOOL AMBALA; S.D. SANSKRIT COLLEGE AMBALA; AND S.D. SCHOOL NOIDA . IN THE COURSE OF ASSESSMENT PROCEEDINGS, THE ASSESSING OFFICER NOTIC ED THAT ASSESSEE HAD CLAIMED AN AMOUNT OF RS. 58,65,877/- TOWARDS DEPREC IATON ON FIXED ASSETS. 2 FURTHER, THE ASSESSEE HAD ALSO CLAIMED INVESTMENT I N FIXED ASSETS AS AN APPLICATION OF INCOME. THE ASSESSING OFFICER REFERR ED TO THE DECISION OF THE TRIBUNAL IN THE CASE OF PARKASH EDUATION SOCIETY WH EREIN, INTER ALIA, IT WAS HELD AS UNDER: IN A CASE WHERE THE CAPITAL EXPENDITURE HAS BEEN T REATED TO HAVE BEEN APPLIED FOR THE OBJECT OF THE TRUST, ALLO WANCE OF DEDUCTION ON ACCOUNT OF DEPRECIATION WILL AMOUNT TO DOUBLE DEDUCTION. 2.1. ACCORDINGLY, THE ASSESSING OFFICER DISALLOWED THE SUM OF RS. 58,65,877/-. 2.2. BEFORE LD. CIT(A) THE ASSESSEE RELIED ON THE D ECISION OF HONBLE PUNJAB & HARYANA HIGH COURT IN THE CASE OF CIT VS. TINY TOTS EDUCATION SOCIETY 330 ITR 21, WHEREIN IT WAS HELD THAT THE AS SESSEE WAS NOT CLAIMING DOUBLE DEDUCTION ON ACCOUNT OF DEPRECIATION. THE IN COME OF THE ASSESSEE BEING EXEMPT, THE ASSESSEE WAS ONLY CLAIMING THAT D EPRECIATION SHOULD BE REDUCED FROM THE INCOME FOR DETERMINING THE PERCENT AGE OF FUNDS WHICH HAD TO BE APPLIED FOR THE PURPOSES OF THE TRUST. 2.3. THE ASSESSEE ALSO RELIED ON THE ITAT DECISIONS IN THE CASES OF - ITO VS. DR. KHERA CHARITABLE TRUST (ITA NO. 4427/DE L/2011); AND - ACIT V. BHOPAL CAMPION SCHOOL SOCIETY (2011) 14 TAXMANN.COM 59 (INDORE-TRIB). - ITO (E) VS. J.D. TYTLER SCHOOL SOCIETY (2014) 30 IT R (TRIB) 277 (DEL.). 2.4. LD. CIT(A) RELYING ON THE DECISION OF ITAT IN THE CASE OF DR. KHERA CHARITABLE TRUST (SUPRA) AND THE DECISION OF HONBL E PUNJAB & HARYANA 3 HIGH COURT IN THE CASE OF TINY TOTS EDUCATION SOCIE TY (SUPRA) ALLOWED THE ASSESSEES APPEAL. 3. WE HAVE CONSIDERED THE SUBMISSIONS OF BOTH THE P ARTIES AND HAVE PERUSED THE RECORD OF THE CASE. WE FIND THAT THIS I SSUE IS SQUARELY COVERED IN FAVOUR OF THE ASSESSEE BY VARIOUS DECISIONS RELIED UPON BY THE ASSESSEE. WE FIND THAT ON THIS ISSUE, IN THE CASE OF J.D. TYTLER SCHOOL SOCIETY (SUPRA), THE ITAT HAS HELD AS UNDER: HELD, DISMISSING THE APPEAL, THAT IN ACCORDANCE WI TH THE DIRECTIONS ISSUED BY THE DIRECTORATE OF EDUCATION, THE SCHOOL WAS ENTITLED TO COLLECT THE DEVELOPMENT FUND FOR TH E PURPOSE OF SUPPLANTING THE RESOURCES FOR PURCHASE, UPGRADATION AND REPLACEMENT OF FURNITURE, FIXTURES AND EQUIPMENT. T HE FUND COLLECTED FROM THE STUDENTS WAS UTILIZED FOR DEVELO PMENT OF AMENITIES FOR THE BENEFIT AND WELFARE OF THE CHILDR EN. THE SCHOOL HAD DURING THE PREVIOUS YEAR PROVIDED A SWIMMING PO OL AND OTHER GAMES FACILITIES AND COMPUTERS AND TESTING EQ UIPMENT IN THE SCIENCE LABORATORIES. FOR ALL THOSE ACTIVITIES THE SCHOOL COLLECTED THE DEVELOPMENT FUND WHICH WAS TREATED AS CAPITAL FUND BEING EARMARKED FOR DEVELOPMENT OF THE ACTIVIT IES. THIS SYSTEM OF ACCOUNTING HAD BEEN FOLLOWED BY THE ASSES SEE IN EARLIER ASSESSMENT YEARS ALSO AND IT WAS NOT DISTUR BED BY THE DEPARTMENT, HENCE WHEN THE COLLECTION WAS MEANT FOR BEING SPENT ON ACTIVITIES IN THE CAPITAL FIELD, IT COULD NOT BE TREATED AS REVENUE RECEIPT. THE DECISION OF THE COMMISSIONER ( APPEALS) WAS JUSTIFIED. THE ASSESSEE CLAIMED DEPRECIATION IN THE INCOME AND EXPENDITURE ACCOUNT. THE ASSESSING OFFICER HELD THA T SINCE THE BENEFIT OF APPLICATION OF FUND HAD ALREADY BEEN TAK EN WHEN THE ASSETS WERE PURCHASED, THE CLAIM OF THE ASSESSEE WA S NOT ALLOWABLE AND DISALLOWED THE CLAIM OF THE DEPRECIAT ION. THE COMMISSIONER (APPEALS) DECIDED IN FAVOUR OF THE ASS ESSEE. ON APPEAL BY THE DEPARTMENT: HELD, DISMISSING THE APPEAL, THAT IT WAS NOT A CASE OF DOUBLE DEDUCTION AND DEPRECIATION HAD TO BE ALLOWED. 4 3.1. THE ORDER OF THE CIT(A) BEING IN CONFORMITY WI TH THE AFOREMENTIONED DECISIONS, WE SEE NO REASON TO INTERFERE WITH THE S AME. ACCORDINGLY, ORDER OF CIT(A) IS CONFIRMED. 4. IN THE RESULT, DEPARTMENTS APPEAL IS DISMISSED. ORDER PRONOUNCED IN OPEN COURT ON 11-07-2014. SD/- SD/- ( C.M. GARG ) ( S.V. MEHROTRA ) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED: 11-07-2014. MP COPY TO : 1. ASSESSEE 2. AO 3. CIT 4. CIT(A) 5. DR