DDIT(E), New Delhi V. Vishwa Jagriti Mission, Delhi

ITA 3877/DEL/2010

• Counselvise Citation: [2011] 134 COUNSELVISE.COM (IT) 3958 (ITAT-DELHI)
• Duration Of Justice: 8 month(s) 27 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 13-05-2011
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: H
• Next Hearing Date: 11-05-2011
• Assessment Year: 2006-2007
• Appeal Filed On: 16-08-2010
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: BANITA DEVI NAORAM SENIOR
• Keywords: Depreciation; Charitable institution; Benefit of exemption
• Section: 12AA; 32; 12; 11

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL (DELHI BENCH H : NEW DELHI) SHRI R.P. TOLANI, JUDICIAL MEMBER AND SHRI B.C. MEENA, ACCOUNTANT MEMBER ITA NO.3877/DEL./2010 (ASSESSMENT YEAR : 2006-07) DY.DIRECTOR OF INCOME TAX (E), VS. VISHWA JAGRITI MISSION, INV. CIRCLE II, NEW DELHI. ANAND DHAM ASHRAM, BAKKARWALA MARG, NANGLOI, NAJAFGARH ROAD, DELHI 110 041. (PAN : AAATV7679Q) (APPELLANT) (RESPONDENT) ASSESSEE BY : SHRI R.S. SINGHVI, CA REVENUE BY : MS. BANITA DEVI NAORAM, SENIOR DR ORDER PER B.C. MEENA, ACCOUNTANT MEMBER : THIS APPEAL FILED BY THE REVENUE ARISES OUT OF THE ORDER OF CIT (APPEALS)-XXI, NEW DELHI DATED 28.05.2010. THE GR OUNDS OF APPEAL READ AS UNDER :- 1. ON THE FACTS & IN THE CIRCUMSTANCES OF THE CASE , THE LD. CIT (A) HAS ERRED IN ALLOWING DEPRECIATION WHICH TH E A.O. HAD ADDED BACK TO THE TUNE OF RS.36,53,818/-. 2. THE APPELLANT CRAVES LEAVE TO ADD, TO ALTER OR A MEND ANY GROUND OF APPEAL RAISED ABOVE AT THE TIME OF HEARIN G. ITA NO.3877/DEL/2010 2 2. THE ONLY ISSUE INVOLVED IN THE APPEAL IS AGAINST THE ALLOWABILITY OF THE DEPRECIATION TO THE TUNE OF RS.36,53,818/-. 3. THE ASSESSEE IS A SOCIETY REGISTERED UNDER THE S OCIETY REGISTRATION ACT, 1860 SINCE MAY, 1993. THE RETURN WAS FILED ALONG W ITH AUDITED ACCOUNTS AND AUDIT REPORT IN FORM NO.10B CLAIMING EXEMPTION U/S 11 AND 12 OF THE INCOME-TAX ACT. INITIALLY, THE SOCIETY WAS DENIED REGISTRATION UNDER SECTION 12AA. HOWEVER, THE REGISTRATION U/S 12AA WAS GRANT ED VIDE ORDER DATED 11.9.2009 BY THE DIT (E) W.E.F. ASSESSMENT YEAR 199 4-95. AT THE OUTSET OF THE HEARING, THE LEARNED AR SUBMITTED THAT THE ISSUE RE GARDING THE ALLOWABILITY OF THE DEPRECIATION IS COVERED BY THE VARIOUS DECISION S OF ITAT AS WELL AS THE DECISION OF HON'BLE SUPREME COURT AND THE CIT (A) H AS GRANTED THE RELIEF ON THAT BASIS. THE LEARNED DR WAS ALSO NOT HAVING ANY OTHER CONTENTION IN THIS REGARD. 4. AFTER HEARING BOTH THE SIDES, WE FIND THAT THE C IT (A) HAS GRANTED THE RELIEF TO THE ASSESSEE BY HOLDING AS UNDER :- 7. IN GROUND NO.6 THE APPELLANT HAS RAISED ISSUE R EGARDING NOT ALLOWING DEDUCTION OF RS.36,53,818/- ON ACCOUNT OF DEPRECIATION ON FIXED ASSETS UTILIZED FOR CHARITABL E OBJECTS OF THE TRUST, IN AS MUCH AS, DEPRECIATION IS A LEGITIMATE DEDUCTION IN COMPUTING THE INCOME OF THE TRUST. I AM ALSO OF THE OPINION THAT THE APPELLANT IS ENTITLED TO THE CLAIM OF DEPRECIAT ION. THE JUDGMENT OF THE HON'BLE SUPREME COURT IN THE CASE O F ESCORTS LTD VS. UNION OF INDIA 199 ITR 43, OFTEN RELIED UPO N BY THE AOS, IS IN RESPECT OF CLAIM OF DEDUCTION MADE U/S.3 5(2)(IV) AS WELL AS U/S.32 OF THE IT ACT. SECTION 35(2)(IV) SPE CIFICALLY LAYS ITA NO.3877/DEL/2010 3 DOWN THAT WHERE THE DEDUCTION IS ALLOWED FOR ANY PR EVIOUS YEAR U/S.35 IN RESPECT OF AN EXPENDITURE REPRESENTED WHO LLY OR PARTLY BY AN ASSET, NO DEDUCTION SHALL BE ALLOWED UNDER CL AUSE (2) OF SUB-SECTION (1) OF SECTION 32 FOR THE SAME PREVIOUS YEAR IN RESPECT OF THAT ASSET. THUS, THE RATIO LAID DOWN IN THE ABOVE CASE IS NOT APPLICABLE IN THE CASE OF ASSESSMENTS OF INC OME DERIVED FROM PROPERTY HELD UNDER TRUST WHOLLY FOR CHARITABL E OR RELIGIOUS PURPOSE. THE SECTIONS DEALING WITH SUCH ASSESSMENTS DO NOT SPECIFICALLY DEBAR DEDUCTION ON ACCOUNT OF DEPRECIA TION AS PROVIDED FOR U/S.35(2)(IV). THERE HAS NEVER BEEN A DISPUTE THAT IN CASE OF CHARITABLE TRUST, THE INCOME SHOULD BE C OMPUTED ON COMMERCIAL PRINCIPLES. FURTHERMORE, IN MY VIEW THE APPELLANT HAS NOT CLAIMED ANY DOUBLE DEDUCTION SO AS TO MAKE THE OBSERVATION OF 'FUNDAMENTAL AXIOM' SPELT OUT IN THE ABOVE JUDGEMENT OF SUPREME COURT APPLICABLE IN THE INSTAN T CASE. THE PROVISIONS RELATING TO COMPULSORY APPLICATION OF IN COME IS ALTOGETHER A DIFFERENT CONCEPT, AND WOULD COME INTO PLAY ONLY AFTER THE INCOME IS DETERMINED. APPLICATION OF INCO ME IS NOT COMPUTATION OF INCOME OF CHARITABLE INSTITUTION, TH EREFORE, THE QUESTION WHETHER THE DEPRECIATION IS ALLOWED OR NOT HAS NOTHING TO DO WITH THE APPLICATION OF INCOME. THE INCOME IS ALWAYS TO BE COMPUTED ON COMMERCIAL PRINCIPLES AS PER THE SYS TEM OF ACCOUNTING FOLLOWED BY THE ASSESSEE SUBJECTED OF CO URSE, AS ALWAYS TO THE STATUTORY PROVISION. APPLICATION OF I NCOME IS A CONDITION FOR ALLOWING BENEFIT OF EXEMPTION TO A CH ARITABLE INSTITUTION. IT HAS NOTHING TO DO WITH COMPUTATION OF INCOME AND IS NOT A DEDUCTION. THEREFORE, THE ARGUMENT PROFFER ED BY THE AO'S THAT THE APPELLANT IS CLAIMING DOUBLE DEDUCTIO N HAS NO SUBSTANCE AND IS TO BE REJECTED. IN COMING TO THIS CONCLUSION, RELIANCE IS PLACED ON THE JUDGMENT OF HON'BLE ITAT, DELHI BENCH, 'H', NEW DELHI IN THE CASE OF ACIT VS. TINY TOTS EDUCATION SOCIETY, IN ITA NO.3182/DEL/2008, ASSESSM ENT YEAR 2006-07 DATED 2.6.2009, AS ALSO THE FOLLOWING CASES :- (I) ITO VS.TRUSTEES OF MARATHI MISSION AND VICE VER SA (1982) 1 ITD (BOM) 539 (II) DIRECTOR OF INCOME TAX (EXEMPTION) VS.FRAMJEE CAWASJEE INSTITUTE (1993) 109 CTR (BOM) 464 (III) CIT VS. INSTITUTE OF BANKING PERSONNEL SELECT ION (2003)264 ITR (BOM.) 110 ITA NO.3877/DEL/2010 4 7.1 THUS, IN LIGHT OF THE ABOVE DISCUSSION, THE CLA IM OF THE APPELLANT IN RESPECT OF DEPRECIATION AMOUNTING TO RS.36,53,818/- IS ALLOWED. SINCE THE RELIEF HAS BEEN GRANTED ON THE BASIS OF V ARIOUS JUDGMENTS OF ITAT, DELHI BENCH, RESPECTFULLY FOLLOWING THE SAME, WE SU STAIN THE ORDER OF THE CIT (A) AND DISMISS THE APPEAL OF THE REVENUE. 5. IN THE RESULT, THE APPEAL OF THE REVENUE IS DISM ISSED. ORDER PRONOUNCED IN THE OPEN COURT ON THIS 13 TH DAY OF MAY, 2011. SD/- SD/- (R.P. TOLANI) (B.C. MEENA) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED : THE DAY OF MAY, 2011 TS COPY FORWARDED TO: 1.APPELLANT 2.RESPONDENT 3.CIT 4.CIT (A)-XXI, NEW DELHI. 5.CIT(ITAT), NEW DELHI. AR, ITAT, NEW DELHI.