DCIT(E), New Delhi V. M/s. G.R. Goenka Education Society, New Delhi

ITA 4134/DEL/2015

• Counselvise Citation: [2018] 125 COUNSELVISE.COM (IT) 6764 (ITAT-DELHI)
• Duration Of Justice: 3 year(s) 10 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 04-07-2018
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: B
• Assessment Year: 2010-2011
• Appeal Filed On: 24-06-2015
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: VIJAY KR JIWANI
• Assessee Lawyers: AMIT GOEL
• Keywords: Depreciation; Notional interest
• Section: 143(3); 11

Judgement Text

ITA NOS. 4133 TO 4135 /DEL/2015 & CO 35/DEL/2016 1 IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH: B NEW DELHI BEFORE SHRI R.S. SYAL, VICE PRESIDENT & SHRI K.N. CHARY, JUDICIAL MEMBER ITA NOS.-4133, 4134 & 4135/DEL/2015 ( ASSESSMENT YEARS: 2005-06, 10-11 & 2011-12) DCIT(E) CIRCLE 1(1) NEW DELHI. VS G.R. GOENKA EDUCATION SOCIETY SECTOR-B, POCKET 8 & 9, VASANT KUNJ, NEW DELHI. PAN NO. AAATG0617M & CROSS OBJECTION NO. 35/DEL/2016 (IN ITA NO.-4133/DEL/2015) ( ASSESSMENT YEAR: 2005-06) G.R. GOENKA EDUCATION SOCIETY SECTOR-B, POCKET 8 & 9, VASANT KUNJ, NEW DELHI. PAN NO. AAATG0617M VS DCIT(E) CIRCLE 1(1) NEW DELHI. REVENUE BY SH. VIJAY KR. JIWANI, SR. DR ASSESSEE BY SH. AMIT GOEL, CA ORDER PER K. NARSIMHA CHARY, J.M. REVENUE PREFERRED ALL THESE APPEALS CHALLENGING THE ORDERS OF THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) (FOR SHORT LD. CIT(A)) FOR THE ASSESSMENT YEARS 2005-06, 201 0-11 AND 2011-12 RESPECTIVELY. ASSESSEE PREFERRED CROSS OBJE CTIONS RELATING TO THE ASSESSMENT YEAR 2005-06. DATE OF HEARING 03.07.2018 DATE OF PRONOUNCEMENT 04.07.2018 ITA NOS. 4133 TO 4135 /DEL/2015 & CO 35/DEL/2016 2 2. COMMON GROUNDS IN ALL THESE APPEALS RELATE TO TH E DIRECTION GIVEN BY THE LD. CIT(A) TO THE ASSESSING OFFICER (LD. AO) TO ALLOW THE EXEMPTION UNDER SECTION 11 (1) OF THE ACT TO THE ASSESSEE. ADDITIONAL GROUND IN ITA NO. 4133/DEL /2015 RELATES TO THE DELETION OF ADDITION OF RS. 10,80,00 0/-MADE BY THE LD. AO ON ACCOUNT OF INTEREST INCOME. SO ALSO T HE OTHER ADDITIONAL GROUND INVOLVED IN OTHER TWO APPEALS ARE AGAINST THE ALLOWANCE OF DEPRECIATION ON THE ASSETS PURCHASED B Y THE APPLICATION OF THE RECEIPTS. IT IS SUBMITTED ON BEH ALF OF THE ASSESSEE THAT ALL THESE ISSUES ARE SQUARELY COVERED BY THE DECISIONS OF THE COORDINATE BENCH OF THIS TRIBUNAL IN ASSESSEES OWN CASE. 3. BRIEFLY STATED FACTS ARE THAT THE ASSESSEE IS R EGISTERED UNDER THE SOCIETIES REGISTRATION ACT, 1860 AND ALSO REGISTERED UNDER SECTION 12AA(1) OF THE INCOME TAX ACT (THE A CT) BESIDES ENJOYING THE BENEFIT OF SECTION 80 G OF THE ACT. IN SOFAR AS THE ASSESSMENT YEAR 2005-06 IS CONCERNED THE ASSESSMENT WAS COMPLETED IN SECTION 143(3) OF THE ACT WITHOUT DRAW ING ANY ADVERSE REMARK BY THE LD. AO. HOWEVER SUBSEQUENTLY THE ASSESSMENT WAS REOPENED AND THE LD. AO DENIED THE E XEMPTION UNDER SECTION 11(1) OF THE ACT BY INVOKING THE MISC HIEF OF PROVISO TO SECTION 2(15) OF THE ACT ON THE GROUND T HAT THE ASSESSEE IS MAKING HUGE PROFITS AND THE DOMINANT OB JECT IS PROFIT-MAKING. SO ALSO FOR THE ASSESSMENT YEARS 201 0-11 AND 11-12 EXEMPTION UNDER SECTION 11(1) OF THE ACT WAS DENIED DURING THE SCRUTINY UNDER SECTION 143(3) OF THE ACT . 4. AT THE OUTSET, THE 1 ST APPELLATE ORDER READS THAT THE LD. CIT(A) FOLLOWED THE ORDER IN ASSESSEES OWN CASE FO R THE ITA NOS. 4133 TO 4135 /DEL/2015 & CO 35/DEL/2016 3 ASSESSMENT YEAR 2009-10 INASMUCH AS THE FACTS AND CIRCUMSTANCES OF THE CASE ARE THE SAME AND THERE IS NO MATERIAL TO DEVIATE FROM SUCH DECISION OF THE EARLIER YEAR. IT IS ALSO BROUGHT TO OUR NOTICE BY THE LD. AR THAT THIS ISSUE HAS BEEN DIRECTLY AND SUBSTANTIALLY BEEN DEALT A WITH THE BY THE TRIBUNAL IN ASSESSEES OWN CASE FOR THE ASSESSMENT YEARS 200 9-10 AND 2012-13 AND ALSO THE HONBLE JURISDICTIONAL HIGH CO URT UPHELD THE FINDINGS OF THE TRIBUNAL FOR ASSESSMENT YEAR 20 09-10. LD. 5. DR ARGUED AT LENGTH WHILE MAKING REFERENCE TO TH E OBSERVATIONS OF THE LD. AO ON THE ASPECT OF TRADE M ARK OF GD GOENKA AND THE MODUS OPERANDI OF ACCRUAL OF THE FR ANCHISE FEE ETC. HOWEVER, THERE IS NO DENIAL OF THE FACT THAT T HERE IS NO CHANGE IN THE FACTS AND CIRCUMSTANCES OF THE CASE F ROM THE YEARS 2009-10 AND 2012-13. HONBLE JURISDICTIONAL H IGH COURT IN ITA 871/2017 BY ORDER DATED 30/10/2017 DEALT WIT H THESE ASPECTS AND UPHELD THE FINDINGS OF THE TRIBUNAL FOR THE ASSESSMENT YEAR 2009-10. 6. ON A CAREFUL PERUSAL OF THE ORDERS OF THE TRIBUN AL AND OF THE HUMBLE HIGH COURT WE ARE CONVINCED THAT THE FAC TS CONTINUE TO BE THE SAME AND THERE IS NO REASON FOR US TO TAKE A DIFFERENT VIEW FROM THE VIEW TAKEN FOR THE ASSESSME NT YEARS 2009-10 AND 2012-13. WITH THIS VIEW OF THE MATTER W E DO NOT FIND ANY ILLEGALITY OR IRREGULARITY IN THE IMPUGNED ORDERS, AS SUCH THERE IS NO REASON FOR US TO INTERFERE WITH TH E SAME. WE THEREFORE DISMISS THE GROUNDS OF APPEAL RELEVANT TO THIS ISSUE. 7. THE ADDITIONAL GROUND RELATING TO ASSESSMENT YEA R 2005- 06 IS, AS STATED ABOVE, IN RESPECT OF THE DELETION OF ADDITION OF ITA NOS. 4133 TO 4135 /DEL/2015 & CO 35/DEL/2016 4 RS. 10, 80, 000/-MADE ON ACCOUNT OF INTEREST INCOME . DURING THE SCRUTINY OF THE ASSESSMENT FUN REASSESSMENT YEA R 2005-06 LD. AO OBSERVED THAT THE ASSESSEE SOCIETY HAD GIVEN SOME LOANS TO SH. BALKRISHAN EDUCATION AND SOCIAL WELFARE SOCI ETY AND ADDED THE NOTIONAL INTEREST AT 12% TO THE INCOME OF THE ASSESSEE. 8. THIS ASPECT HAS BEEN CONSIDERED AT LENGTH BY THE COORDINATE BENCH OF THIS TRIBUNAL FOR THE ASSESSMEN T YEAR 2009- 10 AND TRIBUNAL DELETED THE SAME HOLDING THAT THE I NTEREST FREE FUNDS TRANSFERRED TO SRI BALAKRISHNA SOCIETY, HAVIN G SIMILAR CHARITABLE OBJECTS, HAVE FINALLY REACHED TO SRI BAL AKRISHNA EDUCATION AND SOCIAL WELFARE SOCIETY FOR CONSTRUCTI ON OF SCHOOL BUILDING WHEREIN 600 STUDENTS OF THE ASSESSEE ARE S TUDYING. ON THIS ASPECT ALSO THERE IS NO ALLEGATION THAT THE FU NDS HAVE NOT REACHED BACK FINALLY TO SRI BALAKRISHNA EDUCATION A ND SOCIAL WELFARE SOCIETY WITH WHICH THE ASSESSEE MERGED, FOR CONSTRUCTION OF SCHOOL BUILDING. WHILE RESPECTFULLY FOLLOWING THE OBSERVATIONS OF THE COORDINATE BENCH OF THIS TRIBUN AL IN ITA NO. 3572/DEL/2013 WE FIND THAT THERE ARE NO MERITS IN T HIS GROUND AND THE SAME IS ACCORDINGLY DISMISSED. 9. NOW COMING TO THE OTHER GROUNDS IN THE APPEALS R ELATING TO THE ASSESSMENT YEARS 2010-11 AND 2011-12, THEY RELA TE TO THE ALLOWING OF THE CLAIM OF DEPRECIATION WHICH THE LD. AO DISALLOWED ON THE PREMISE THAT THE PURCHASE OF ASSE TS WAS AN APPLICATION OF INCOME AND HENCE THE GRANT OF DEPREC IATION WOULD AMOUNT TO DOUBLE BENEFIT. THIS ISSUE WAS CONSIDERED BY THE COORDINATE BENCH OF THIS TRIBUNAL IN ITA NO. 5043/D EL/2015 IN THE LIGHT OF THE DECISION OF THE HONBLE APEX COURT IN CIT VS. ITA NOS. 4133 TO 4135 /DEL/2015 & CO 35/DEL/2016 5 RAJASTHAN AND GUJARATI CHARITABLE FOUNDATION, POONA (2018) 89 TAXMANN.COM 127 (SC) TO REACH A CONCLUSION THAT SUBSECTION (6) OF SECTION 11 WAS INSERTED BY FINANCE ACT, 2014 AND IS ONLY PROSPECTIVE IN NATURE, AS SUCH, DEPRECIATION CANNOT BE DISALLOWED. WHILE RESPECTFULLY FOLLOWING THE SAME, WE DISMISS THE GROUNDS OF APPEAL OF REVENUE RELATING TO THIS I SSUE. 10. CROSS OBJECTIONS ARE NOT PRESSED BY THE ASSESS EE, AS SUCH, THERE DISMISSED AS NOT PRESSED. 11. IN THE RESULT APPEALS OF THE REVENUE AND THE C ROSS OBJECTION OF THE ASSESSEE ARE DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 04.07.2018 SD/- SD/- (R.S. SYAL) (K. NARSIMHA CHARY) VICE PRESIDENT JUDICIAL MEMBER DATED: 04.07.2018 *KAVITA ARORA COPY FORWARDED TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(APPEALS) 5. DR: ITAT TRUE COPY ASSISTANT REGISTRAR ITAT NEW DELHI ITA NOS. 4133 TO 4135 /DEL/2015 & CO 35/DEL/2016 6 DATE OF DICTATION 03.07.2018 DATE ON WHICH THE TYPED DRAFT IS PLACED BEFORE THE DICTATING MEMBER 03.07.2018 DATE ON WHICH THE TYPED DRAFT IS PLACED BEFORE THE OTHER MEMBER DATE ON WHICH THE APPROVED DRAFT COMES TO THE SR. PS/PS 06.07.18 DATE ON WHICH THE FAIR ORDER IS PLACED BEFORE THE DICTATING MEMBER FOR PRONOUNCEMENT 04.07.18 DATE ON WHICH THE FAIR ORDER COMES BACK TO THE SR. PS/PS 06.07.18 DATE ON WHICH THE FINAL ORDER IS UPLOADED ON THE WEBSITE OF ITAT 06.07.18 DATE ON WHICH THE FILE GOES TO THE BENCH CLERK 06.0 7.18 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