ITO (E), New Delhi V. Alliance Francaise de Delhi, New Delhi

ITA 389/DEL/2016

• Counselvise Citation: [2016] 131 COUNSELVISE.COM (IT) 6628 (ITAT-DELHI)
• Duration Of Justice: 10 month(s) 11 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 08-12-2016
• Appeal Filed By: Department
• Order Result: Partly Allowed
• Bench Allotted: SMC 1
• Next Hearing Date: 05-12-2016
• Assessment Year: 2011-2012
• Appeal Filed On: 27-01-2016
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: F R MEENA
• Keywords: Business income; Depreciation; Charitable institution; Benefit of exemption
• Section: 143(3); 12A; 154; 11

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH SMC-I, NEW DELHI BEFORE SHRI S.V. MEHROTRA, ACCOUNTANT MEMBER ITA NO.389/DEL/2016 ASSESSMENT YEAR : 2011-12 ITO (E), TRUST WARD 1(1), NEW DELHI VS. ALLIANCE FRANCAISE DE DELHI, 72, LODHI ROAD, LODHI ESTATE, NEW DELHI PAN : AABTA 3939 P (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI F. R. MEENA, SR.DR RESPONDENT BY : SHRI SANDEEP SAPRA, ADV. DATE OF HEARING : 05-12-2016 DATE OF PRONOUNCEMENT : 08-12-2016 O R D E R PER S.V. MEHROTRA, A.M : THIS IS AN APPEAL FILED BY THE REVENUE AGAINST THE ORDER DATED 09.11.2015 PASSED BY THE COMMISSIONER OF INCOME TAX (APPEALS)-40, NEW DELHI, U/S 143(3) OF THE INCOME TAX ACT, 1961 (IN S HORT THE ACT) RELATING TO ASSESSMENT YEAR 2011-12. 2. BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE, R EGISTERED U/S 12A OF THE ACT AND ALSO APPROVED U/S 80G(5)(VI) VALID FROM THE ASSESSMENT YEARS 2010-11 TO 2012-13, FILED ITS RETURN OF INCOME IN T HE STATUS OF AOP, DECLARING NIL INCOME. THE ASSESSING OFFICER HAS RE PRODUCED THE MAIN OBJECTIONS OF SOCIETY IN THE ASSESSMENT ORDER AND A FTER CONSIDERING THEM AND 2 ITA NO.389/DEL/2016 THE DETAILS FILED BY ASSESSEE IN THE LIGHT OF AIMS AND OBJECTS WITH REFERENCE TO AMENDED PROVISIONS OF SECTION 2(15) OF THE ACT, INTER-ALIA, CONCLUDED AS UNDER :- THE TEACHING OF FRENCH LANGUAGE IS INCIDENTAL TO TH E MAIN OBJECTS OF PROMOTING FRENCH THOUGHT CULTURAL AND LANGUAGE AND TO PROMOTE FRENCH CULTURAL RELATIONS. HOWEVER, LETTING OUT OF THE FACILITIES OF ART GALLE RY, BOOKING OF AFD PREMISES AND LETTING OUT AUDITORIUM AND CONFERENCE ROOM, ARE NOT INCIDENTAL TO THE ACTIVITY OF THE ASSESSEE IN RESPECT OF WHICH IT HAS BEEN GRANTED REGISTRATION U/S 12A OF THE I.T ACT, VIDE CIT'S LETTER NO. CIT-II/TB (44)/72/3145 DATED 23.09.75. THE ACTIVITIES OF THE ASSESSEE FOR WHICH REGISTRATI ON WAS GRANTED FALL UNDER THE CATEGORY OF 'ADVANCEMENT OF ANY OTHER OBJECT OF GEN ERAL PUBLIC UTILITY ' COVERED UNDER THE DEFINITION OF CHARITABLE PURPOSE AS GIVEN IN SEC. 2(15) OF THE I.T ACT,. THE OTHER ACTIVITIES OF THE ASSESSEE LIKE GIVING IT S PREMISES, ART GALLERY, AUDITORIUM AND CONFERENCE ROOM FREQUENTLY FALL UNDE R THE CATEGORY OF (A) ANY ACTIVITY IN THE NATURE OF TRADE, COMMERCE O R BUSINESS, OR (B) ANY ACTIVITY OF RENDERING IN RELATION TO ANY TR ADE, COMMERCE, BUSINESS; SINCE, THE INCOMES FROM THIS ACTIVITY EXCEEDS RS. 1 0 LAKHS THE ADVANCEMENT OF ANY OTHER OBJECT OF GENERAL PUBLIC UTILITY SHALL NOT BE A CHARITABLE PURPOSE, IRRESPECTIVE OF THE NATURE OF USE OR APPLICATION, O R RETENTION, OF THE INCOME FROM SUCH ACTIVITY THEREFORE, THE BENEFIT OF EXEMPTION U /S 11 OF THE 1.T ACT, CANNOT BE GIVEN TO THE ASSESSEE IN RESPECT OF SUCH BUSINESS A CTIVITY AND THE ASSESSEE'S CONTENTION IN THIS REGARD IS REJECTED AND PROVISO T O SECTION 2(15) IS INVOKED. 3. HE COMPUTED THE INCOME AT RS.48,57,825/- AS UNDE R :- BUSINESS INCOME OTHER THAN THE CHARITABLE ACTIVITY AS PER AIMS AND OBJECTS OF THE SOCIETY FROM BOOKING OF AFD PREMISES, AUDITORIUM, CONFERENCE ROOM AND ART GALLERY INCLUDI NG INCOME ON CANCELLATION OF BOOKING. RS.25,42,775/- ADD: INCOME FROM TRANSLATION AND INTERPRETATION RS . 31,98,712/- ADD: DEPRECIATION AS DISCUSSED ABOVE RS.32,05,64 0/- LESS: DEPRECIATION ON ASSETS ADDED DURING THE YEAR RS.19,23,113/- TOTAL BUSINESS RECEIPTS RS.70,24,014/- LESS: EXPENSES AGAINST TRANSLATION AND INTERPRETATI ON INCOME RS.21,66,189/- (EXPENSES AGAINST INCOME FROM BOOKING ALREADY CLAIM ED 3 ITA NO.389/DEL/2016 IN THE INCOME & EXPENDITURE A/C AS EXPENSES IN THE FORM OF APPLICATION OF FUNDS). BUSINESS INCOME RS.48,57,825/- ROUNDED OFF RS.48,57,830/- 4. LD. CIT(A) ALLOWED THE ASSESSEES APPEAL. BEING AGGRIEVED THE DEPARTMENT IS IN APPEAL BEFORE THE TRIBUNAL AND HAS TAKEN THE FOLLOWING GROUNDS OF APPEAL :- 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CA SE AND IN LAW, THE LD. CIT(A) IS ERRED IN IGNORING THE FACT THAT THE ACTIV ITIES OF THE ASSESSEE DO NOT QUALIFY FOR CHARITABLE PURPOSE IN VIEW OF THE PROVI SIONS OF SECTION 2(15) OF THE I.T.ACT, HENCE, THE INCOME OF THE ASSESSEE DOES NOT QUALIFY FOR EXEMPTION U/S 11 OF THE I.T.ACT. 2. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E AND IN LAW, THE LD.CIT(A) IS ERRED IN ALLOWING THE CLAIM OF DEPRECI ATION OF RS. 32,05,640/- TO THE ASSESSEE BY NOT ADJUDICATION, IGNORING THE FACT THA T THE ASSESSEE HAD CLAIMED THE AMOUNT INCURRED ON PURCHASE OF ASSETS IN EARLIER YE ARS AS APPLICATION OF INCOME, ON WHICH DEPRECIATION IS CLAIMED NOW AND FURTHER AL LOWANCE OF DEPRECIATION WILL BE TANTAMOUNT TO DOUBLE DEDUCTION. 3. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E AND IN LAW, THE LD.CIT(A) HAS ERRED IN ALLOWING THE CLAIM OF DEPREC IATION OF RS. 32,05,640/- TO THE ASSESSEE BY NOT ADJUDICATION IN VIEW OF THE REC ENT DECISION OF THE RECENT DECISION OF THE HON'BLE DELHI HIGH COURT IN THE CAS E OF DIT(E) VS. CHARANJIV CHARITABLE TRUST DATED 18.03.2014. 4. THE APPELLANT CRAVES LEAVE TO ADD, TO ALTER OR A MEND ANY GROUND OF APPEAL RAISED ABOVE AT THE TIME OF HEARING. 5. LD. DR RELIED ON THE ORDER OF THE ASSESSING OFFI CER. 6. APROPOS GROUND NO.1, LD. COUNSEL FOR THE ASSESSE E SUBMITTED THAT THE ISSUE IS COVERED BY THE DECISION OF THE TRIBUNAL IN ASSESSEES OWN CASE DATED 27.11.2015 VIDE ITA NO.6190/DEL2012 WHEREIN THE TRI BUNAL HAS DISMISSED THE REVENUES APPEAL. 4 ITA NO.389/DEL/2016 7. APROPOS GROUND NOS.2 AND 3, LD. COUNSEL POINTED OUT THAT ASSESSEE HAD NOT CLAIMED ANY DEPRECIATION IN ITS COMPUTATION OF INCOME AND, THEREFORE, THE ASSESSING OFFICER HAD WRONGLY ADDED THE DEPRECIATION WHILE COMPUTING INCOME. HE POINTED OUT THAT APPLICATION U/S 154 IS PENDING BEFORE THE ASSESSING OFFICER ON THIS COUNT AND AS R EGARDS NON-ADJUDICATION OF THIS GROUND BEFORE LD. CIT(A) ALSO THE APPLICATI ON U/S 154 IS PENDING BEFORE LD. CIT(A). HE, THEREFORE, SUBMITTED THAT D IRECTION MAY BE GIVEN TO THE ASSESSING OFFICER TO DISPOSE OF THE PETITION FI LED U/S 154. 8. I HAVE CONSIDERED THE SUBMISSIONS OF BOTH THE PA RTIES AND PERUSED THE RECORD OF THE CASE. AS FAR AS AFORESAID GROUND NO. 1 IS CONCERNED, I FIND THAT THE TRIBUNAL HAS OBSERVED AT PAGE 12 OF ITS ORDER I N ASSESSEES OWN CASE AS UNDER :- INCOME OF THE ASSESSEE FROM ART GALLERY, BOOKING O F AFC, INCOME FROM LETTING OUT OF AUDITORIUM AND CONFERENCE ROOM ETC, IS NOT D ERIVED WITH THE MOTIVE TO EARN PROFIT BUT TO FURTHER ADVANCE THE CHARITABLE CAUSE OF TEACHING FRENCH LANGUAGE AND PROMOTING INDO-FRENCH CULTURAL RELATIONS ETC. 15. IN VIEW OF WHAT HAS BEEN DISCUSSED ABOVE, FINDI NG NO ILLEGALITY OR PERVERSITY IN THE FINDINGS RETURNED BY LD. CIT(A) V IDE IMPUGNED ORDER DATED 03.09.2012, WE ARE NOT INCLINED TO INTERFERE INTO T HE SAME. HENCE, THE APPEAL FILED BY THE REVENUE IS HEREBY DISMISSED. 9. RESPECTFULLY FOLLOWING THE DECISION OF THE TRIBU NAL IN ASSESSEES OWN CASE THE GROUND NO.1 RAISED BY THE REVENUE IN ITS A PPEAL IS DISMISSED. 5 ITA NO.389/DEL/2016 10. APROPOS GROUND NOS.2 AND 3, THE ASSESSING OFFIC ER IS DIRECTED TO DISPOSE OF THE PETITION FILED U/S 154 OF THE ACT BY ASSESSEE. THUS, THE GROUND NOS.2 AND 3 ARE ALLOWED FOR STATISTICAL PURP OSES. 11. IN THE RESULT, THE APPEAL OF THE REVENUE IS PAR TLY ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON THIS 08 TH DAY OF DECEMBER, 2016. SD/- (S.V. MEHROTRA) ACCOUNTANT MEMBER DATED : 08-12-2016. SUJEET COPY OF ORDER TO: - 1) THE APPELLANT; 2) THE RESPONDENT; 3) THE CIT; 4) THE CIT(A)-, NEW DELHI; 5) THE DR, I.T.A.T., NEW DELHI; BY ORDER //TRUE COPY// ASSISTANT REGISTRAR ITAT, NEW DELHI