DDIT (E), New Delhi V. Institute of Marketing and Management, New Delhi

ITA 4182/DEL/2013

• Counselvise Citation: [2014] 120 COUNSELVISE.COM (IT) 5456 (ITAT-DELHI)
• Duration Of Justice: 7 month(s) 12 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 21-02-2014
• Appeal Filed By: Department
• Order Result: Allowed
• Bench Allotted: C
• Assessment Year: 2009-2010
• Appeal Filed On: 09-07-2013
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: SATPAL SINGH
• Keywords: Depreciation; Charitable institution; Capital expenditure
• Section: 133(6); 12A; 12; 11

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCHES : C : NEW DELHI BEFORE SHRI A.D. JAIN, JUDICIAL MEMBER AND SHRI B.C. MEENA, ACCOUNTANT MEMBER ITA NO.4182/DEL/2013 ASSESSMENT YEAR : 2009-10 DY. DIRECTOR OF INCOME - TAX (E), TC-II, NEW DELHI. VS. INSTITUTE OF MARKETING AND MANAGEMENT, B-11, QUTAB INSTITUTIONAL AREA, NEW DELHI 110 016. PAN: AAAAI0016R ( APPELLANT ) ( RESPONDENT ) ASSESSEE BY : SHRI VED JAIN, ADVOCATE DEPARTMENT BY : S HRI SATPAL SINGH, SR. DR ORDER PER A.D. JAIN, JUDICIAL MEMBER: THIS IS AN APPEAL FILED BY THE REVENUE FOR ASSESSMENT YE AR 2009-10 AGAINST THE ORDER PASSED BY THE CIT(A)-XXI, NEW DELHI . 2. THE FACTS, AS AVAILABLE FROM THE RELEVANT ORDERS AN D OTHER DOCUMENTS ON RECORD ARE THAT THE ASSESSEE IS A SOCIETY REGISTERED U NDER THE SOCIETIES REGISTRATION ACT AS WELL AS UNDER SECTION 12A WITH TH E INCOME TAX DEPARTMENT BY ORDER DATED 4 TH APRIL, 1975 BEING NO. DIE/C/I-429. THE SOCIETY IS ALSO NOTIFIED UNDER SECTION 80G(5)(VI) VIDE ORDER D ATED 20 TH MAY, 2009. THE MAIN OBJECT OF THE SOCIETY IS TO RUN EDUCATIONAL INST ITUTION WHICH IS BEING RUN IN THE NAME AND STYLE OF INSTITUTE OF MARKETING AND M ANAGEMENT. THE PROGRAMME OF THE INSTITUTE IS RECOGNIZED BY THE AICTE , MINISTRY OF HRD, GOVERNMENT OF INDIA. THE RETURN FOR THE ASSESSMENT YEAR 2009-10 WAS FILED ITA NO.4182/DEL/2013 2 ON 22 ND SEPTEMBER, 2009. DURING THE COURSE OF THE ASSESSMENT TH E ASSESSING OFFICER RAISED VARIOUS ISSUES. AFTER EXAMINATION OF THE DETAILS SUBMITTED BY THE ASSESSEE AND THE REPLY THERETO, THE AO WAS OF THE VI EW THAT THE ASSESSEE-SOCIETY IS NOT ELIGIBLE FOR CLAIMING EXEMPTION U NDER SECTION 11 OF THE ACT AS IT HAS VIOLATED THE AICTE GUIDELINES, RULES OF THE REGISTRAR OF SOCIETIES AS WELL AS SECTION 13 OF THE INCOME TAX ACT. THE AO ALSO DISALLOWED VARIOUS EXPENSES INCLUDING DEPRECIATION CLA IMED BY THE ASSESSEE AND ASSESSED THE INCOME OF THE SOCIETY AT ` 2,70,51,170/ -. 3. AGGRIEVED BY THE ORDER OF THE AO THE ASSESSEE PREFER RED AN APPEAL BEFORE THE CIT(A). THE CIT(A) AFTER DETAILED EXAMI NATION HELD THAT THE ASSESSEE IS ELIGIBLE FOR EXEMPTION UNDER SECTION 11. TH E CIT(A) GAVE PARTIAL RELIEF IN RESPECT OF THE VARIOUS ADDITIONS MADE BY TH E AO. 4 AGGRIEVED BY THE ORDER OF THE CIT(A) THE REVENUE IS IN APPEAL AND HAS RAISED THE FOLLOWING GROUNDS OF APPEAL:- 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE A ND IN LAW, THE LD. CIT(A) HAS ERRED IN ALLOWING VIOLATION OF PROVI SION OF SECTION 13(1)(B) AND THEREBY AVAILING THE BENEFITS OF EXEMPTIO N U/S 11 & 12 WITHOUT CONSIDERING THE FACT STATED BY THE AO AND GIVING REASONS FOR THE SAME. 2. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE A ND IN LAW, THE LD. CIT(A) HAS ERRED IN ALLOWING DEPRECIATION AS AP PLICATION OF INCOME AS THE ASSESSEE SOCIETY HAS ALREADY CLAIMED IT AS APPL ICATION OF INCOME AT THE TIME OF ADDITION TO FIXED ASSETS. 3. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE A ND IN LAW, THE LD. CIT(A) HAS ERRED IN IGNORING THE FACT THAT THE CBDT HAS GIVEN CLARIFICATION TO HONBLE HIGH COURT OF KERALA IN PURSU ANCE OF THE INTERLOCUTORY ORDER DATED 17.02.2012 IN THE CASE OF LIS SIE MEDICAL INSTITUTION VS. CIT IN ITA NO. 42 OF 2011 AND CONVEYED ITS VIEW ON ALLOWANCE OF DEPRECIATION THAT SUCH NOTIONAL STATUTORY DED UCTIONS LIKE DEPRECIATION, IF CLAIMED AS DEDUCTION WHILE COMPUTIN G OF INCOME, IS REQUIRED TO BE ADDED BACK WHILE COMPUTING THE INCOME F OR THE PURPOSE OF APPLICATION IN THE INCOME & EXPENDITURE ACCOUNT. 4. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE A ND IN LAW, THE LD. CIT(A) HAS ERRED IN ALLOWING EXEMPTION U/S 11(1 )(A) & 13(3) FOR USAGE OF VEHICLES BY MEMBER OF DR. JAGIT SINGH AND F AMILY AND CREDIT ITA NO.4182/DEL/2013 3 CARD BY ITS OFFICIALS, TRUSTEES OR SPECIFIED PERSONS U/S 13(3) UNDER THE HEAD TRAINING EXPENSES. 5. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE A ND IN LAW, THE LD. CIT(A) HAS ERRED IN UPHOLDING THE ASSESSEE AS A N EDUCATIONAL SOCIETY WHICH WAS FUNCTIONING AGAINST THE NORMS SET UP B Y THE AICTE, THE GOVERNING AUTHORITY WITH REGARDS TO EDUCATIONAL INSTI TUTION. 6. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE A ND IN LAW, THE LD. CIT(A) HAS ERRED IN UPHOLDING CLAIMS OF THE ASSE SSEE AS A CHARITABLE INSTITUTION AFTER BEING DENIED EXEMPTION U/S 11 OF THE A CT DUE TO VIOLATION OF SECTION 13(3) OF THE INCOME-TAX ACT, 1961. 7. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE A ND IN LAW, THE LD. CIT(A) HAS ERRED IN IS ALLOWING THE EXPENDITURE C LAIMED BY THE ASSESSEE USING BOGUS BILLS FOR PURCHASING 260 LAPTOP S ON ACCOUNT OF NON-VERIFICATION. 8. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE A ND IN LAW, THE LD. CIT(A) HAS ERRED IN ALLOWING THE EXEMPTION U/S 1 1 AS THE EXEMPTION CLAIMED IS BASED ON FORGED DOCUMENTS AND BOGUS SEAL. 9. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE A ND IN LAW, THE LD. CIT(A) HAS ERRED IN ALLOWING THE EXPENDITURE OF R S.36,32,518/- GIVEN TO CERTAIN COMPANIES WHICH ARE PAPER FIRM OPERA TED BY THE ASSESSEE. 10. THE APPELLANT CRAVES LEAVE TO ADD, TO ALTER OR AME ND ANY GROUND OF APPEAL RAISED ABOVE AT THE TIME OF HEARING. 5. GROUND NO. 1, 4, 5, 6 AND 8 ARE IN RESPECT OF EX EMPTION ALLOWED UNDER SECTION 11 OF THE ACT. DURING THE COURSE OF THE HEA RING THE LEARNED DR HAS RELIED UPON THE ORDER PASSED BY THE AO. ON THE OTHER HAND THE LEARNED AR SUPPORTED THE ORDER OF THE CIT(A). 6. WE HAVE PERUSED THE ASSESSMENT ORDER AS WELL AS THE ORD ER OF THE CIT(A). ON GOING THROUGH THE ABOVE ORDER OF THE CI T(A) WE NOTICE THAT EACH OF THE ALLEGATIONS LEVIED BY THE AO HAS BEEN EXAMINED BY THE CIT(A) AND A FINDING HAS BEEN GIVEN BASED ON THE FACTS. AS REGARDS THE ALLEGATION THAT IT HAS VIOLATED CERTAIN GUIDELINES OF AICTE, THE CIT(A) HAS DEALT THIS ISSUE IN PARA 5.7 OF ITS ORDER AS UNDER:- 5.7 FOR DENYING THIS BENEFIT EITHER THE AO HAS TO CO-RE LATE THE ALLEGATION SO AS TO MAKE OUT A CASE UNDER THE INCOME T AX ACT. THUS ASSESSEE IS A SOCIETY WHICH IS ENGAGED IN EDUCATIONAL ACTIVITY. IF IT HAS ITA NO.4182/DEL/2013 4 ADMITTED STUDENTS IN EXCESS OF THE NORMS PRESCRIBED BY THE AICTE IT CAN BE AN ISSUE CONNECTED WITH APPELLANT SOCIETY AND A ICTE AND NOT CONNECTED WITH AO AND THAT APPELLANT SOCIETY UNLESS THERE IS A REQUIREMENT OR A CONDITION IN ANY OF THE INCOME TAX P ROVISIONS TO THE EFFECT THAT EXEMPTION WILL BE DENIED IF THE GUIDELINES OF AICTE IS VIOLATED. MOREOVER IN THIS CASE, THE EXCESS ADMISSION HAS BEEN REGULARIZED BY THE AICTE. AS PER PROVISION OF SECTI ON 2(15) CHARITABLE PURPOSE INCLUDE EDUCATION THERE IS NO RIDER ATTACHED TO THIS WORD EDUCATION. ACCORDINGLY SO LONG THE ACTIVITIES ARE IN THE FIELD OF EDUCATION IRRESPECTIVE OF THE FACT WHETHER IT IS ACCREDIT ED OR WHETHER IT IS APPROVED IN ACCORDANCE WITH THE GUIDELINES OR NORM S, IT SHALL BE ELIGIBLE FOR EXEMPTION IF IT FULFILLS AND DOES NOT VI OLATE THE OTHER CONDITIONS OF THE INCOME TAX ACT. THUS I HOLD THAT AO I S NOT JUSTIFIED IN DRAWING ADVERSE INFERENCE ON THIS ACCOUNT. 7. WE NOTICE THAT THE ALLEGATIONS ARE MAINLY RELATED TO RUNNING SOME PROGRAMMES, AND THAT TOO, EDUCATIONAL. FURTHER, THE ALLEGATIONS ARE RELATED TO STUDENTS BEING ADMITTED IN EXCESS OF THE NORMS PRESCRI BED BY THE AICTE. BUT THE FACT REMAINS THAT THESE ARE EDUCATIONAL ACTIV ITIES FALLING WITHIN THE MEANING OF THE OBJECT OF THE SOCIETY AND ALSO FALLING WITHIN THE MEANING OF CHARITABLE PURPOSES UNDER SECTION 2(15) OF THE ACT . FROM THE FACTS WE NOTICE THAT THE AO HAS NOT APPRECIATED THE FACTS REGA RDING THE ALLEGATION OF VIOLATION OF THE GUIDELINES OF AICTE. THE ALLEGATIO N OF THE AO WAS THAT THE NUMBER OF STUDENTS WAS IN EXCESS OF THE STUDENTS ALLOWED BY THE AICTE. THE AICTE HAS REGULARIZED THIS BY CHARGING A FEE FOR THE SAME, WHICH MEANS, THAT THE STAND OF THE ASSESSEE STOOD RECTIFIED BY THE AICTE. THE SECOND ALLEGATION WAS REGARDING RUNNING A TRIPLE DEGREE PRO GRAMME IN THE SAME CAMPUS OF THE INSTITUTE DESPITE THERE BEING GUIDELINES BY AICTE THAT NO OTHER PROGRAMME COULD BE RUN ON THE SAME CAMPUS. WE ARE OF THE VIEW THAT THIS CANNOT BE A GROUND FOR DENYING EXEMPTION UNDER SECT ION 11 READ WITH SECTION 2(15) OF THE ACT. BOTH THE ALLEGATIONS ARE REGARDING EDUCATIONAL PROGRAMMES BEING CONDUCTED BY THE ASSESSEE. SUCH ACTIVI TIES OF THE SOCIETY WILL FALL WITHIN THE MEANING OF CHARITABLE PURPOSE UNDER SECTION 2(15) OF THE INCOME TAX ACT. AS PER THE PROVISIONS OF SECTION 11, EXEMPTION IS ALLOWED IN CASE THE INCOME HAS BEEN APPLIED FOR CHARITABLE PURPO SES. CHARITABLE PURPOSE INCLUDES EDUCATION. FURTHER, FOR CLAIMING E XEMPTION, THE CONDITIONS PRESCRIBED UNDER SECTION 12A HAVE TO BE COMPLIED WIT H. THE ASSESSEE ITA NO.4182/DEL/2013 5 SOCIETY HAS DULY COMPLIED WITH THESE CONDITIONS. ITS ACT IVITIES ARE EDUCATIONAL AND AS SUCH, IT IS ELIGIBLE FOR EXEMPTION UNDER SECT ION 11 OF THE ACT. THUS, THE CIT(A) WAS CORRECT IN HOLDING THAT THESE ALLEGATI ONS CANNOT BE THE BASIS FOR DENYING EXEMPTION UNDER SECTION 11 OF THE ACT. 8. THE CIT(A) HAS DEALT WITH THE ISSUE OF GOVERNANCE I N PARA 5.7, 5.8, 5.9 AND 5.10 OF THE IMPUGNED ORDER, AS UNDER:- THE OTHER REASONS FOR DENYING BENEFIT OF SECTION 11 BY THE AO ARE VIOLATION OF REGISTRAR OF SOCIETIES NORMS. IN THIS R EGARD THE ALLEGATIONS OF THE AO ARE AS UNDER- 1. THE EXECUTIVE PRESIDENT AND DIRECTOR GENERAL ARE RE LATED TO EACH OTHER AND HOLDING THE POSITION IN VIOLATION OF THE GUIDELINES ISSUED UNDER SOCIETIES REGISTRATION ACT. 2. ANNUAL ELECTIONS ARE NOT BEING CONDUCTED IN THE AGM OF THE MEMBERS OF THE SOCIETY. 3. THE GOVERNING COUNCIL MEMBERS REGISTERED AS THE SO CIETY DID NOT REIMBURSE THE MEDICAL EXPENSES OF THE EMPLOYEE. 4. NO RECORD OF AGM AND GOVERNING COUNCIL MEETINGS HAVE BEEN FILED WITH THE REGISTRAR OF SOCIETIES. 5. THE BALANCE SHEET OF THE SOCIETY ARE BEING SIGNED O NLY BY DR. GAGANJIT SINGH AND DR. JAGJIT SINGH. 6. THE SOCIETY HAS FABRICATED THE SEAL OF THE REGISTRAR OF SOCIETIES. 7. THE ASSESSEE HAS CHANGED ITS BANK ACCOUNT WITHOUT TH E APPROVAL OF THE GOVERNING BODY. 5.8 IN VIEW OF THE ABOVE ALLEGATIONS THE AO HAS DRAWN ADVERSE INFERENCE AGAINST THE APPELLANT SOCIETY SO AS TO DENY THE BENEFIT OF SECTION 11 OF THE ACT. NOW THE ISSUE IS WHETHER ON THE BASIS OF THESE ALLEGATIONS CAN THE AO DENY THE BENEFIT OF SECTION 11. I AM OF THE VIEW THAT ALL THESE ISSUES ARE RELATED TO GOVERNANCE AND SO L ONG THESE ISSUES DO NOT AFFECT THE OBJECT AND THE ACTIVITIES BEING CHARITABLE, IT WILL NOT BE OF RELEVANCE FOR THE PURPOSE OF SECTION 11 OF THE ACT. AS STATED HEREINABOVE, BENEFIT OF SECTION 11 OF THE ACT IS AVAIL ABLE ON COMPLIANCE OF CERTAIN CONDITIONS. NONE OF SUCH CONDITIONS CAN B E SAID TO HAVE VIOLATED BECAUSE OF THE ALLEGATIONS OF THE AO. ACCORD INGLY I AM OF THE VIEW THAT THE AO WAS NOT JUSTIFIED IN DRAWING ADVERSE I NFERENCE ON THESE GROUNDS. 5.9 FURTHERMORE IT IS NOTICED FROM THE STATEMENT OF DR. GA GANJIT SINGH RECORDED DURING THE COURSE OF THE SURVEY, SPECI FIC QUESTIONS ITA NO.4182/DEL/2013 6 WERE RAISED ON THESE ISSUES AND HE HAS ANSWERED AND CLARIFIED ALL THE QUERIES. 5.10 ON THE ISSUE OF ELECTION OF OFFICE BEARERS AND THE OTHER MEMBERS OF THE GOVERNING COUNCIL IN THE AGM, IT HAS BEEN CLARI FIED THAT LAST AGM WAS CONDUCTED IN OCTOBER, 2009. HE HAS FURTHER CLARI FIED THAT THE SECRETARIAL RECORD HAS BEEN STOLEN BY THE DISGRUNTLED EMPLOYEES AND ALL THE DOCUMENTS INCLUDING THE LIST OF GOVERNING COU NCIL MEMBERS STARTING FROM 1969 TILL 2007 HAS BEEN FILED WITH THE REG ISTRAR OF SOCIETIES. FURTHER IN RESPONSE TO THE ANOTHER QUESTION H E HAS SUBMITTED COPIES OF MEMORANDUM OF ASSOCIATION, RULES AND REGULATIONS AS AMENDED UPTO 21 ST AUG. 2004 AND SEPTEMBER, 2009. THE AO HAS NOT CONTROVERTED THE FACTS IN THE ASSESSMENT ORDER. 9. THE AO HAS NOT APPRECIATED THE FUNCTIONING OF THE SOCIETY AND THE REQUIREMENT OF THE LAW IN THE RIGHT PERSPECTIVE. TH E AO HAS OBSERVED THAT PEOPLE WHO ARE RELATED THROUGH BLOOD CANNOT BE FUNC TIONARIES OF THE SOCIETY. THIS INTERPRETATION OF THE LAW BY THE AO IS NOT CORRE CT. THERE IS NO PROVISION, EITHER UNDER THE SOCIETIES REGISTRATION ACT, OR UNDER THE INCOME TAX ACT PROHIBITING PERSONS RELATED THROUGH BLOOD TO BE FUN CTIONARIES OF THE SOCIETY. FURTHER, THERE IS NO CONDITION, EITHER IN SECTION 11 , OR SECTION 12, THAT EXEMPTION WILL BE GRANTED ONLY WHEN THE TRUST IS AN I NDEPENDENT DEMOCRATIC BODY HAVING NO RELATIVES. THE SOCIETY IS REGISTERED UN DER THE SOCIETIES REGISTRATION ACT AND IT HAS ITS OWN BYE-LAWS FOR MANAGI NG ITS AFFAIRS. ACCORDINGLY, THIS CANNOT BE A GROUND FOR DENYING EXE MPTION UNDER SECTION 11 OF THE ACT. SIMILARLY, THE ALLEGATION OF THE AO THAT THE BALANCE SHEET AND THE CHEQUES ARE BEING SIGNED BY TWO PERSONS AND HENCE I T IS NOT ELIGIBLE FOR EXEMPTION, IS INCORRECT. THIS BEING THE INTERNAL PRO CEDURE OF THE SOCIETY ABOUT MANAGING ITS AFFAIRS AND OPERATION OF THE BANK ACCOUNT, IT CANNOT BE A GROUND FOR DENYING EXEMPTION UNDER SECTION 11 OF TH E ACT. THERE IS NO PROHIBITION OR CONDITION PRESCRIBED UNDER SECTION 12 A OR UNDER SECTION 11 REGARDING OPERATION OF THE BANK ACCOUNT. SIMILARLY , THE ALLEGATION OF THE AO THAT THE AGM IS NOT BEING PROPERLY HELD AND AMENDMEN T IN THE MEMORANDUM OF ASSOCIATION HAS NOT BEEN PROPERLY CARRIED OUT, IS N OT CORRECT. IN THIS REGARD, WE NOTICE THAT THE STATEMENT OF DR. GAGANJIT SINGH, EXECUTIVE PRESIDENT OF THE SOCIETY, WAS ALSO RECORDED AND HE HAS CLARIFIED THE VARIOUS ITA NO.4182/DEL/2013 7 ISSUES INVOLVED INCLUDING THE ISSUES ON THE QUESTION OF GO VERNANCE OF THE SOCIETY. SIMILARLY, THE ALLEGATION THAT TWO PERSONS O F THE GOVERNING COUNCIL HAVE RESIGNED BECAUSE REIMBURSEMENT OF THE MEDICAL EXP ENSES OF AN EMPLOYEE WAS DENIED, CANNOT BE A GROUND FOR DENIAL O F EXEMPTION UNDER SECTION 11 OF THE ACT. THESE TOO ARE INTERNAL MATTE RS OF THE SOCIETY AND THEY CANNOT BE GROUNDS FOR DENYING EXEMPTION TO THE SOCIE TY, SO LONG AS ITS OBJECTS COME WITHIN THE MEANING OF CHARITABLE PURPO SE UNDER SECTION 2 (15), AND THE INCOME HAS BEEN APPLIED TO SUCH PURPOSE S. IN THIS REGARD WE ARE IN AGREEMENT WITH THE OBSERVATION OF THE CIT(A) THAT EXEMPTION UNDER SECTION 11 IS AVAILABLE ON COMPLIANCE OF THE CONDITI ONS AS PRESCRIBED IN SECTIONS 11 AND SECTION 12 OF THE ACT. 10. AS REGARDS THE ALLEGATION OF THE AO THAT THE ASSESSEE HAS VIOLATED THE PROVISIONS OF SECTION 13 THE ALLEGATION OF THE AO IS T HAT THE OFFICE BEARERS OF THE ASSESSEE SOCIETY ARE RELATED TO EACH OTHER AND THIS AFFECTS THE DEMOCRATIC WORKING OF THE ASSESSEE. THIS ISSUE HAS BEEN DE ALT WITH BY THE CIT(A) IN PARA 5.11 AS UNDER:- 5.11 THE NEXT ISSUE IS THE ALLEGATION OF VIOLATION OF PROVISIONS OF SECTION 13(3) OF THE INCOME TAX ACT. THESE ALLEGATIO NS HAVE TO BE READ WITH THE SPECIFIC CLAUSES OF THIS SECTION 13(3). IN FA CT SECTION 13(3) TALKS ABOUT ONLY THE PERSONS WHO HAVE OBLIGATION UNDER SECTION 13(1) AND 13(2). THUS THE ISSUE IS WHETHER THOSE SPECIFIED PERSONS HAVE VIOLATED ANY OF THE PROVISIONS OF SECTION 13(1) OR 13 (2). IN THIS REGARD THE FIRST ALLEGATION OF THE AO IS THAT THE OFFICE BEARERS OF THE SOCIETY ARE RELATED TO EACH OTHER AND AS SUCH THEY HAVE DIRECT IMPA CT ON THE DEMOCRATIC WORKING OF THE SOCIETY. THIS ALLEGATION NOW HERE CONTRADICTS OR VIOLATES THE PROVISIONS OF SECTION 13. 11. AS PER THE PROVISIONS OF SECTION 13, THERE ARE CER TAIN CONDITIONS WHICH, IF VIOLATED, WOULD LEAD TO DENIAL OF THE BENEFIT UN DER SECTION 11, IF SOME ADVANTAGE OR BENEFIT HAS BEEN TAKEN BY THE PERSONS WHO ARE IN THE GOVERNANCE OF THE INSTITUTION. HOWEVER, THERE IS NO CONDITION SPECIFIED, THAT THE PERSONS IN GOVERNANCE SHOULD NOT BE RELATIVES. THE FUNCTIONING OF THE INSTITUTION CANNOT BE CONSIDERED TO BE UNDEMOCRATIC, IF TWO RELATIVES ARE OCCUPYING THE POSITION IN THE MANAGEMENT. IN FACT, SECTION 13 ITSELF PROVIDES ITA NO.4182/DEL/2013 8 FOR PAYMENT OF SALARY, AND ALLOWANCE TO THE PERSONS IN THE MANAGEMENT, IN CASE SUCH PAYMENT DOES NOT EXCEED WHAT MAY BE REASONAB LY PAID FOR SUCH SERVICES. THUS, WE ARE IN AGREEMENT WITH CIT(A) THAT THERE IS NO SUCH RESTRICTION IN SECTION 13 REGARDING RELATIVES HOLDING POSITION IN THE CHARITABLE SOCIETY OR INSTITUTION. 12. FURTHER, AS REGARDS THE ALLEGATION OF THE AO THA T THE FACILITIES OF THE SOCIETY ARE BEING MISUSED BY THE OFFICE BEARERS REGARDI NG CARS, PREMISES, ETC., WE NOTICE THAT THIS ISSUE GOT CLARIFIED DURING THE COURSE OF THE SURVEY ITSELF, WHERE ONE OF THE EMPLOYEE, MR. S.K. DHALL, I N RESPONSE TO A SPECIFIC QUESTION, STATED THAT THE VEHICLES WERE BEING USED BY T HE OFFICERS, STAFFERS/FACULTY AND ALSO BY OTHER STAFF MEMBERS, FOR LI AISON WORK OF THE SOCIETY. THIS STATEMENT CLEARLY ADDRESSES THE CONCERN OF THE AO. THIS STATEMENT BEING A STATEMENT RECORDED DURING THE SURVEY , IT CANNOT BE IGNORED, PARTICULARLY WHEN THE AO HAS NOT BROUGHT AN Y MATERIAL TO SUBSTANTIATE HIS ALLEGATION AGAINST THE ASSESSEE. THE SURVE Y REPORT WAS ALSO BEFORE THE AO AND IN CASE HE HAD ANY DOUBT ABOUT THE SAME, HE COULD HAVE MADE FURTHER INVESTIGATION, WHICH HE CHOSE NOT TO DO. HAVING FAILED TO DO SO, HE CANNOT IGNORE THE STATEMENT AND DRAW ADVERSE INFER ENCE MERELY ON THE BASIS OF ASSUMPTIONS. THE CIT(A) HAS DEALT WITH THIS ISSUE IN PARAS 5.11 AND 5.12 AS FOLLOWS:- THE OTHER ALLEGATION OF THE AO ON THIS ACCOUNT IS THE OF FICE BEARERS ARE MAINTAINING LUXURIOUS CARS AND THE EXPENSES RELATED TO THEIR PURCHASE, REPAIR AND MAINTENANCE BEING BORNE BY THE SOCIETY. IN THIS REGARD I HAVE GONE THROUGH THE RECORDS AND I NOTICE THAT DURING S URVEY A SPECIFIC QUESTION WAS PUT TO THE EMPLOYEE, MR. S.K. DH ALL ON 31.01.2012 WHERE IN RESPONSE TO QUESTION NO.4 HE HAS CLARIFIED AS UNDER:- VEHICLES OWNED BY THE IMM AS PER ANNEXURE A ATTACHED. THESE VEHICLES ARE USED BY THE OFFICERS/ STAFFERS/ FACULTY O F IMM FOR ATTENDING VARIOUS MEETINGS/FUNCTIONS AND ALSO BY OTHER STAFF MEMBERS FOR LIAISON WORK FOR IMM. THESE VEHICLES A RE ALSO USED BY THE SPEAKERS/ SESSION CHAIRMAN/ HIGH DIGNITARIES D URING THE SEMINAR/ TRAINING PROGRAMS. 5.12 THE ABOVE STATEMENT RECORDED DURING THE SURVEY CL EARLY SHOWS THAT THE VEHICLES ARE BEING USED FOR THE PURPOSES OF THE SOCIETY. I ITA NO.4182/DEL/2013 9 FURTHER NOTICE THAT DURING THE COURSE OF THE SURVEY NOTHIN G ADVERSE ON THIS ACCOUNT HAS BEEN FOUND. IN THE ABSENCE OF ANY EV IDENCE THE ALLEGATION OF THE AO CANNOT BE SUSTAINED. THE AO HAS JUST MADE THE ALLEGATION AND HAS NOT GIVEN ANY BASIS, MATERIAL OR I NFORMATION ON THE BASIS OF WHICH SUCH ALLEGATION IS BEING MADE. ON TH E CONTRARY, THE ASSESSEE HAS GIVEN EXPLANATION WHICH HAS NOT BEEN CON TROVERTED. 13. SIMILARLY, THE ALLEGATION OF THE ASSESSING OFFICER REGARDING A FLOOR OF THE PREMISES OF THE SOCIETY BEING OCCUPIED BY ITS EXECUTIVE PRESIDENT DOES NOT VIOLATE THE PROVISIONS OF SECTION 13. THE CIT(A) HAS CONSIDERED THIS ISSUE IN PARA 5.13 OF THE IMPUGNED ORDER IN THE FOLLOWING MA NNER:- 5.13 THE AO FURTHER ALLEGED THAT THE EXECUTIVE PRESIDE NT AND THE DIRECTOR GENERAL HAVE BEEN STAYING ON THE 4 TH AND 5 TH FLOOR OF THE BUILDING OF THE INSTITUTE. IN THIS REGARD THE SOCIETY HAS CLARIFIED THAT THEY HAVE BEEN OCCUPYING THIS IN THEIR CAPACITY AS THE E XECUTIVE PRESIDENT OF THE SOCIETY. IN ITEMS OF PROVISIONS OF SE CTION 13(2)(C) SALARY ALLOWANCE OR OTHERWISE CAN BE PAID TO SUCH PER SON FOR SERVICES RENDERED BY SUCH PERSON. THE ONLY CONDITION IS THAT TH E AMOUNT SO PAID SHOULD NOT BE IN EXCESS OF WHAT MAY BE REASONABL Y PAID FOR SUCH SERVICES. ALLOWING OCCUPATION OF THE PREMISES TO EXEC UTIVE PRESIDENT CANNOT BE CONSIDERED TO BE UNREASONABLE. THE AO HAS JUST MADE THE ALLEGATION AND HAS NOT EVEN BOTHERED TO EXAMINE THE SAM E IN THE CONTEXT OF SECTION 13(2)(C) OF THE ACT. ACCORDINGLY I FOUND THAT FINDING OF THE AO IS NOT JUSTIFIED 14. IN THIS REGARD, SECTION 13(2)(C) SPECIFICALLY PRO VIDES REGARDING PAYMENT OF SALARY AND ALLOWANCES TO THE PERSONS RENDERING SERVI CES. IT IS NOT THE CASE OF THE AO, AS WE NOTICE FROM THE ASSESSMENT ORDER, THAT THE SALARY OR THE PERQUISITES PAID TO THE OFFICE BEARERS ARE EITHER UNRE ASONABLE, OR EXCESSIVE. AS SUCH, WE ARE IN AGREEMENT WITH THE CIT(A) THAT NO ADVERSE INFERENCE ON THIS ACCOUNT CAN BE DRAWN AGAINST THE SOCIETY. 15. SIMILARLY, WE NOTICE THAT AS REGARDS THE ALLEGED PAYMENT OF ` 12 LACS BY THE ASSESSEE SOCIETY FOR A PLOT TO HARYANA URBAN DE VELOPMENT AUTHORITY, THIS PAYMENT WAS MADE UNDER AN MOU, FOR CONSTRUCTION O F A HOSTEL FOR THE SOCIETY. THIS PAYMENT WAS MADE DIRECTLY TO THE HARYANA URBAN DEVELOPMENT AUTHORITY AND NOT TO ANY OFFICE BEARER OF HUDA. IT WAS ONLY ON FAILURE TO GET THE PERMISSION FROM THE HARYANA URBAN DEVELOPMENT AUT HORITY THAT THE AMOUNT WAS RECEIVED BACK BY THE SOCIETY. IN THESE CI RCUMSTANCES, THE FINDING OF THE CIT(A) THAT THE PAYMENT WAS FOR THE B ENEFIT OF THE SOCIETY, IS A ITA NO.4182/DEL/2013 10 CORRECT FINDING OF FACT AND IT CANNOT BE SAID THAT A NY BENEFIT HAS BEEN PASSED ON TO ANY RELATED PERSON, SO AS TO VIOLATE THE PROVISIO NS OF SECTION 13 OF THE ACT. 16. LIKEWISE, THE PREMISES IN NAVJEEVAN VIHAR WAS TAK EN ON RENT BY THE SOCIETY, FOR SETTING UP ITS GLOBAL DEVELOPMENT CENTRE , WHICH THE SOCIETY WAS RUNNING FROM GURGAON. THUS, THE ADVERSE INFERENCE DR AWN BY THE AO IN THIS REGARD IS NOT TENABLE. 17. AS REGARDS THE ALLEGATION OF MISUSE OF THE CREDIT C ARD AND THE PAYMENTS BEING PERSONAL IN NATURE WE ARE IN AGREEMENT WITH THE FOLLOWING FINDING GIVEN BY THE CIT(A) IN PARA 5.23 OF THE ORD ER UNDER APPEAL:- 5.23 THE APPELLANT-SOCIETY HAS SUBMITTED AN EXPLANATI ON THAT EXPENSES INCURRED THROUGH CREDIT CARD ARE NOT PERSONAL IN NATURE. THESE CREDIT CARDS HAVE BEEN USED TO INCUR EXPENSES F OR AND ON BEHALF OF THE APPELLANT-SOCIETY. THE CREDIT CARD FACILITY IS A FACILITY LIKE BANK. I HAVE GONE THROUGH THE LIST OF THE EXPENSES WHICH HAS BE EN STATED IN THE ASSESSMENT ORDER. I NOTICE THAT THE TOTAL OF SUCH EXPE NSES COMES TO RS.6,04,872/- ONLY. FURTHER THE TOTAL PAYMENTS MADE BY THE ASSESSEE THROUGH CREDIT CARD IS OF RS.16,19,243/-. A CCORDINGLY BASED ON THIS FIGURE THE AO IS NOT CORRECT IN CONSIDERING THAT ENTIRE TRAINING EXPENSES OF RS.99,21,943/- IS THROUGH CREDIT CARD AND 60% OF THE SAME IS PERSONAL IN NATURE. THE APPELLANT-SOCIETY HAS STATE D THAT THESE EXPENSES ARE NOT PERSONAL IN NATURE AND THESE ARE REQ UIRED TO BE INCURRED. THE EXPLANATION OF THE ASSESSEE THAT THESE HA VE BEEN INCURRED FOR THE SEMINARS/CONFERENCES BEING ORGANIZE D BY IT FOR THE VARIOUS COURSE BEING RUN BY IT WHEREBY IT IS REQUIRED TO MAKE PRESENTATION TO THE HONORARY FACULTY. THE AO HOWEVER CO ULD NOT BRING ANY MATERIAL THAT THESE EXPENSES ARE PERSONAL. HE HAS GONE BY THE NOMENCLATURE OF THE EXPENSE ASSUMING THAT THE GOVERNING COUNCIL MEMBERS HAVE BOUGHT THESE ITEMS FOR THEIR PERSONAL US E. IN THE ABSENCE OF ANY EVIDENCE PARTICULARLY KEEPING IN VIEW THE FACT THAT THE SURVEY WAS CARRIED OUT AND NOTHING INCRIMINATING ON TH IS ASPECT WAS FOUND DURING THE SURVEY I AM OF THE VIEW THAT THE ALLEGA TION OF THE AO DO NOT HAVE ANY MERIT. 18. THE SOCIETY IS AN EDUCATIONAL INSTITUTION. IT HAS MADE PAYMENT THROUGH CREDIT CARD OF ONLY ` 16,19,243/-. AS AGAINST THIS, T HE AO HAS CONSIDERED THE ENTIRE TRAINING EXPENSES OF ` 99,21,943/- AND DISALLOW ED 60% OF THE SAME AS BEING PERSONAL IN NATURE. THE SOCIETY HAD SUBMITTED D ETAILS OF THE SAME ITA NO.4182/DEL/2013 11 BEFORE THE AO AND AO HAS NOT BEEN ABLE TO POINT OUT ANY PARTICULAR ITEM OF THE EXPENDITURE WHICH CAN BE CONSIDERED TO BE PERSONA L IN NATURE. A SURVEY WAS CONDUCTED. NOTHING ADVERSE TO THE ASSESSEE EMERGED DU RING SURVEY ON THIS ACCOUNT. THE ASSESSEE HAS GIVEN AN EXPLANATION THAT THE EXPENSES INCURRED THROUGH CREDIT CARD WERE MEANT FOR THE SOCI ETY. IT ORGANIZED VARIOUS SEMINARS AND CONFERENCES, THROUGH WHICH AN EMINENT FAC ULTY WAS INVITED. THUS, THE ASSUMPTION OF THE AO THAT THE EXPENDITURE I NCURRED THROUGH CREDIT CARD WAS PERSONAL, IS NOT CORRECT. THE CIT(A) HAS CORRE CTLY HELD THAT THE FACILITY OF THE CREDIT CARD IS A FACILITY LIKE THAT OF A BANK. THE CREDIT CARD HAS BEEN USED TO INCUR EXPENSES FOR AND ON BEHALF OF THE A SSESSEE SOCIETY. 19. IN THE COURSE OF THE HEARING THE LEARNED DR COUL D NOT POINT OUT ANY ERROR OR DEFECT IN THE FINDING GIVEN BY THE CIT(A). WE ARE IN AGREEMENT WITH THE CIT(A) THAT THE OBJECTS OF THE ASSESSEE SOCIETY ARE EDUCATIONAL IN NATURE AND HENCE, THEY FALL WITHIN THE MEANING OF CHARITA BLE PURPOSE UNDER SECTION 2(15) OF THE ACT. THE ASSESSEE IS A SOCIETY REGISTERED U NDER SECTION 12A OF THE ACT. 20. IN VIEW OF THE ABOVE FACTS, WE UPHOLD THE FINDIN G OF THE LD. CIT(A) THAT THE ASSESSEE IS ELIGIBLE FOR EXEMPTION UNDER SECTION 11 AND ACCORDINGLY, GROUND NOS. 1, 4, 5, 6 AND 8 RAISED BY THE DEPARTMENT ARE REJECTED. 21. GROUND NO. 2 AND 3 ARE REGARDING ALLOWING DEPRE CIATION DESPITE THE FACT THAT THE SOCIETY HAS ALREADY CLAIMED THE SAME AS D EDUCTION OF INCOME AT THE TIME OF ADDITION TO THE FIXED ASSETS. THE AO ALLO WED DEPRECIATION ON THE ASSETS PURCHASED DURING THE CURRENT YEAR ONLY, AND DEPR ECIATION OF ASSETS PURCHASED IN EARLIER YEARS WAS DISALLOWED. THE CIT(A) H AS DELETED THESE ADDITIONS FOLLOWING THE JUDGMENT OF THE HONBLE DELH I HIGH COURT IN THE CASE OF DIRECTOR OF INCOME TAX VS. VISHWA JAGRITI MISSION , 73 DTR 195 (DEL). WE ARE IN AGREEMENT WITH THE ORDER OF THE CIT(A). THE ASSESSEE-SOCIETY IS A CHARITABLE INSTITUTION AND WHEN INCOME IS APPLIED TOW ARDS CHARITABLE PURPOSES INCLUDING TOWARDS PURCHASE OF FIXED ASSETS, IT I S CONSIDERED TO BE ITA NO.4182/DEL/2013 12 DEDUCTION OF INCOME AND HENCE, INCOME, TO THAT EXTE NT, IS CONSIDERED AS APPLIED FOR CHARITABLE PURPOSE AND THUS, NOT CHARGED TO TAX UNDER SECTION 11(1)(A) OF THE ACT. THE ASSESSEE HAVING PURCHASED THE F IXED ASSETS AND THE SAME HAVING BEEN UTILIZED IN CARRYING OUT ITS ACTIVIT IES, THE INCOME ARISING FROM THE ACTIVITIES IS TO BE COMPUTED BY APPLYING THE NORMAL PRINCIPLE OF COMPUTATION OF INCOME, WHICH WILL INCLUDE A CHARGE ON ACCOUNT OF DEPRECIATION IN RESPECT OF THE FIXED ASSETS USED FOR CA RRYING OUT SUCH ACTIVITIES. AS SUCH, DEPRECIATION IS ALLOWED WHILE COM PUTING INCOME OF THE YEAR UNDER CONSIDERATION. IT CANNOT BE SAID THAT THE FIXED ASSETS ACQUIRED HAD ALREADY BEEN CLAIMED AS DEDUCTION. DEPRECIATION IS A NORMAL EXPENDITURE INCURRED IN THE COURSE OF THE ACTIVITIES AND HENCE, THE SAME NEED TO BE DEDUCTED WHILE COMPUTING THE INCOME. TH IS ISSUE HAS BEEN DEALT WITH BY THE JURISDICTIONAL HIGH COURT IN THE CASE OF DIRECTOR OF INCOME TAX VS. VISHWA JAGRITI MISSION, ITA NO. 140/2012, VIDE ORDER DATED 29 TH MARCH, 2012, WHILE MAKING A DISTINCTION WITH THE JUDGMENT OF THE SUPREME COURT IN ESCORTS LTD. VS. UNION OF INDIA, AS UNDER:- 13. THE JUDGMENT OF THE SUPREME COURT IN ESCORTS LIM ITED VS. UNION OF INDIA (SUPRA) HAS BEEN RIGHTLY HELD TO BE INAPPLIC ABLE TO THE PRESENT CASE. THERE ARE TWO REASONS AS TO WHY THE JUDGMENT CANN OT BE APPLIED TO THE PRESENT CASE. FIRSTLY, THE SUPREME COURT WAS NOT C ONCERNED WITH THE CASE OF A CHARITABLE TRUST/INSTITUTION INVOLVING THE QUESTION AS TO WHETHER ITS INCOME SHOULD BE COMPUTED ON COMMERCIAL P RINCIPLES IN ORDER TO DETERMINE THE AMOUNT OF INCOME AVAILABLE FOR A PPLICATION TO CHARITABLE PURPOSES. IT WAS A CASE WHERE THE ASSESSEE WAS CARRYING ON BUSINESS AND THE STATUTORY COMPUTATION PROVISIONS OF CHA PTER IV-D OF THE ACT WERE APPLICABLE. IN THE PRESENT CASE, WE ARE N OT CONCERNED WITH THE APPLICABILITY OF THESE PROVISIONS. WE ARE CONC ERNED ONLY WITH THE CONCEPT OF COMMERCIAL INCOME AS UNDERSTOOD FROM THE ACCOUNTING POINT OF VIEW. EVEN UNDER NORMAL COMMERCIAL ACCOUNTIN G PRINCIPLES, THERE IS AUTHORITY FOR THE PROPOSITION THAT DEPRECIATION I S A NECESSARY CHARGE IN COMPUTING THE NET INCOME. SECONDLY, THE SUPR EME COURT WAS CONCERNED WITH THE CASE WHERE THE ASSESSEE HAD CLAIMED DEDUCTION OF THE COST OF THE ASSET UNDER SECTION 35(1) OF THE ACT, WH ICH ALLOWED DEDUCTION FOR CAPITAL EXPENDITURE INCURRED ON SCIENTIF IC RESEARCH. THE QUESTION WAS WHETHER AFTER CLAIMING DEDUCTION IN RESPE CT OF THE COST OF THE ASSET UNDER SECTION 35(1), CAN THE ASSESSEE AGAIN C LAIM DEDUCTION ON ACCOUNT OF DEPRECIATION IN RESPECT OF THE SAME ASSET. THE SUPREME COURT RULED THAT, UNDER GENERAL PRINCIPLES OF TAXATION, DOUBLE DEDUCTION IN REGARD TO THE SAME BUSINESS OUTGOING IS NOT INTENDED UNLESS CLEARLY ITA NO.4182/DEL/2013 13 EXPRESSED. THE PRESENT CASE IS NOT ONE OF THIS TYPE, AS RIGHTLY DISTINGUISHED BY THE CIT (APPEALS). 22. THE ABOVE VIEW IS ALSO SUPPORTED BY CIT VS. TINY T OTS EDUCATIONAL SOCIETY, 330 ITR 21 (P&H), CIT VS. SHRI GUJRATI SA MAJ (REGD.), (2012) 349 ITR 559(MP) AND CIT VS. MARKET COMMITTEE, PIPLI, ( 2011) 330 ITR 16 (P&H). 23. IN VIEW OF THE ABOVE SETTLED POSITION OF LAW, WE UPHO LD THE ORDER OF THE CIT(A) AND REJECT GROUND NOS.2 AND 3. 24. GROUND NO.7 IS REGARDING ALLOWANCE OF EXPENDITUR E CLAIMED BY THE ASSESSEE FOR PURCHASING 260 LAPTOPS. IN THIS REGARD, THE ALLEGATION OF THE AO WAS TO THE EFFECT THAT 260 LAPTOPS WERE ALLEGEDLY PUR CHASED FOR DISTRIBUTION TO STUDENTS AND WERE FOUND TO HAVE BEEN WRONGLY CLAIM ED AS FIXED ASSETS. THE CIT(A) HAS DEALT WITH THIS ISSUE IN PARA 5.18 OF HI S ORDER, AS UNDER:- 5.18 THE ALLEGATION OF THE AO THAT 260 LAPTOPS HAS BEEN WRONGLY CLAIMED AS FIXED ASSETS IS ALSO UNTENABLE IN VIEW OF THE CLARIFICATION GIVEN BY THE APPELLANT-SOCIETY. THE PURCHASE OF THESE LAPTOPS IS NOT IN DISPUTE. IN CASE THESE LAPTOPS HAVE BEEN DISTRIBUTED A ND ARE NOT TO BE RECOVERED BACK THEN THE EXPENDITURE TO BE RECOVERED BAC K, THEN THE EXPENDITURE ON SUCH PURCHASE WILL BE REVENUE IN NATUR E AND ALLOWABLE IN THE HANDS OF THE APPELLANT-SOCIETY. IN CASE THE LAP TOPS ARE TO BE RECOVERED BACK FROM THE PERSON TO WHOM IT HAS BEEN GIV EN THE SAME WILL BE FIXED ASSETS OF THE APPELLANT-SOCIETY AND ELI GIBLE FOR DEPRECIATION. THUS IT DOES NOT MAKE ANY DIFFERENCE S O FAR PROVISIONS OF SECTION 13 READ WITH SECTION 11 ARE CONCERNED. THE FINDING OF THE AO IS FOUND TO BE WITHOUT ANY MERIT ON THIS ACCOUNT. 25. THE ISSUE BEFORE THE AO AND THE CIT(A) WAS, AS TO WHETHER THE AMOUNT SPENT ON LAPTOPS SHOULD BE CONSIDERED AS EXPENDITURE, O R AS FIXED ASSETS. THE CIT(A) HAS CLEARLY HELD THAT IN CASE IT IS TO BE C ONSIDERED AS EXPENDITURE, IT WILL BE AN APPLICATION OF INCOME, AND IF, THE SAM E IS TO BE CONSIDERED AS FIXED ASSETS, IT WILL STILL BE AN APPLICATION OF INCOM E AND EITHER WAY, THE SOCIETY IS ELIGIBLE TO CLAIM THE AMOUNT AS APPLICATION OF ITS INCOME. IN THE COURSE OF THE HEARING, WE ASKED THE LD. DR TO RESPOND TO THE ALLEGATION THAT THE ASSESSEE HAS USED BOGUS BILLS, AND THE GROUND OF APPE AL IN THE ABSENCE OF ANY FINDING BY THE ASSESSING OFFICER IN THIS REGARD. THE LEARNED DR, ITA NO.4182/DEL/2013 14 HOWEVER, COULD NOT SUBSTANTIATE THIS ALLEGATION. AS SUCH , WE ARE IN AGREEMENT WITH THE FINDING OF THE CIT(A) THAT NO AD VERSE INFERENCE NEEDS TO BE DRAWN ON THIS ISSUE, PARTICULARLY IN THE YEAR UNDE R CONSIDERATION. ACCORDINGLY, THIS GROUND OF APPEAL IS REJECTED. 26. GROUND NO. 9 IS REGARDING ALLOWING OF DEDUCTION OF EXPENDITURE OF ` 36,32,518/- DISALLOWED BY THE AO WHILE COMPUTING THE INCOME OF THE ASSESSEE. THIS ISSUE HAS BEEN DEALT WITH BY THE CIT(A) IN PARA 5.26 THUS:- 5.26 THE AO HAS FURTHER ALLEGED THAT CERTAIN EXPENSES INCURRED BY THE APPELLANT-SOCIETY COULD NOT BE GOT VERIFIED IN THE ENQU IRY CONDUCTED UNDER SECTION 133(6) OF THE ACT. IN THIS REGARD THE AO HAS ARRIVED AT ADVERSE INFERENCE IN RESPECT OF THE EXPENDITURE INCURR ED TO THE EXTENT OF RS.36,32,518/-. AS PER THIS ENQUIRY, THE PERSONS FROM WHOM THESE WORKS HAVE BEEN GOT DONE WERE NOT AVAILABLE AND THE L ETTERS SENT TO THEM HAVE BEEN RETURNED BACK. IN THIS REGARD THE ASSE SSEE HAS SUBMITTED BEFORE ME THAT IT HAS PURCHASED THE ITEM OR TAKE N SERVICES FROM THESE SUPPLIERS/SERVICE PROVIDERS AND THE PAYMEN T HAS BEEN MADE BY ACCOUNT PAYEE CHEQUES. THERE IS NO MATERIAL OR EVIDENCE THAT THE SOCIETY HAS ANY LINK DIRECTLY OR INDIRECT WITH AN Y OF THESE ENTERPRISES. THESE WERE INDEPENDENT SUPPLIER WHO HA S PROVIDED SERVICES. ONE OF THE PERSONS IS A PAINTING CONTRACTOR TO WHOM PAYMENT HAS BEEN MADE FOR THE PAINTING WORK. LIKEWISE THERE IS ANOTHER PERSON TO WHOM PAYMENT HAS BEEN MADE FOR THE FU RNITURE WORK. FURTHER PAYMENT HAS BEEN MADE FOR THE REPAIR AN D RENOVATION WORK GOT DONE BY THE APPELLANT-SOCIETY. IN VIEW OF THE FACT THAT THESE SUPPLIERS ARE NOT AVAILABLE AFTER A GAP OF MORE THAN TH REE YEARS IT CANNOT BE HELD THAT APPELLANT-SOCIETY IS AT FAULT. I NOTI CE THAT THESE PERSONS WERE NOT AVAILABLE IN THE ENQUIRY CONDUCTED UN DER SECTION 133(6) BUT THE FACT THAT PAYMENT TO THESE PERSONS HAVE BEEN MADE BY ACCOUNT PAYEE CHEQUES AND TYPE OF JOB WORK THESE PERSO NS HAVE DONE IS THAT OF PAINTING, POLISHING, REPAIR, RENOVATION, ETC. . FURTHERMORE, MERELY ON THIS BASIS THE APPELLANT-SOCIETY CANNOT BE S AID TO HAVE VIOLATED THE PROVISIONS OF SECTION 13 SO AS TO DENY THE BENEFIT UNDER SECTION 11 OF THE ACT. IN VIEW OF MY ABOVE FINDINGS I AM OF THE VIEW THAT THE AO IS NOT CORRECT IN MAKING AN ALLEGATION THAT THE APPELLANT- SOCIETY IS NOT ELIGIBLE FOR EXEMPTION UNDER SECTION 1 1 OF THE INCOME TAX ACT. ACCORDINGLY, AO IS DIRECTED TO ALLOW THE BENE FIT OF PROVISIONS OF SECTION 11 OF THE INCOME TAX ACT AS APPELLANT-SOCI ETY IS REGISTERED UNDER SECTION 12A OF THE ACT. AS PER AOS OWN OBSERV ATION IN PARA 3 OF THE ASSESSMENT ORDER THE ACTIVITIES OF THE SOCIETY ARE IN ACCORDANCE WITH ITS STATED OBJECTS I.E. EDUCATIONAL AND IT IS CHAR ITABLE WHICH IS SECOND LIMB OF SECTION 2(15) OF THE ACT. GROUNDS NO. 3 & 5 OF THE APPEAL ARE ALLOWED. ITA NO.4182/DEL/2013 15 27. THE LD. DR COULD NOT SUCCESSFULLY CONTRADICT THE A BOVE FINDINGS OF THE CIT(A). THE ASSESSEE HAS ACTUALLY PURCHASED THESE ITEMS, OR HAS IN FACT TAKEN SERVICES FROM THESE SUPPLIERS/SERVICE PROVIDERS. TH E PAYMENTS HAVE BEEN MADE BY ACCOUNT PAYEE CHEQUES. THERE IS NO MATE RIAL OR EVIDENCE BROUGHT BY THE ASSESSING OFFICER THAT THE PAYMENTS HAVE BEEN MADE TO ANY RELATED PARTIES OR THAT THE ASSESSEE HAS ANY LINK, DIRECT LY, OR INDIRECTLY, WITH ANY OF THESE ENTERPRISES. FURTHER, NOTHING ADVERSE WAS FOUND DURING THE COURSE OF THE SURVEY. WE ALSO NOTE THAT THESE EXPENSES A RE ROUTINE EXPENDITURE FOR REPAIR AND MAINTENANCE. A SUM OF `1 ,11,755/- HAS BEEN PAID TO THE PAINTING CONTRACTOR, MR. MOHD. IQBAL. A SUM OF ` 64,425/- HAS BEEN PAID FOR THE FURNITURE WORK TO SHAH FURNITURE. FRO M THE PAPER BOOK, WE NOTICE THAT THE ASSESSEE HAD SUBMITTED COMPLETE DETAILS DURING THE COURSE OF THE ASSESSMENT PROCEEDINGS. THE ASSESSING OFFICER VERIFIED THESE DETAILS AND HE HAD CARRIED OUT INVESTIGATION BY CALLING FOR THE BANK STATEMENTS OF THESE PARTIES. THE BANK STATEMENTS CONFIRMED THE FACT THAT THESE PARTIES WERE IN EXISTENCE AND WERE HAVING BANK ACCOUNTS AND THE PAYME NTS WERE CREDITED IN THEIR RESPECTIVE ACCOUNTS. 28. IN VIEW OF THE ABOVE, WE ARE OF THE VIEW THAT N O ADVERSE INFERENCE CAN BE DRAWN AGAINST THE ASSESSEE IN THIS REGARD AND ACCORDIN GLY, THE CIT (A)S FINDINGS ARE CONFIRMED. ACCORDINGLY THIS GROUND OF A PPEAL IS ALSO REJECTED. 29. GROUND NO.10 IS GENERAL IN NATURE AND NEEDS NO AD JUDICATION. 30. IN THE RESULT, FOR STATISTICAL PURPOSES, THE ASSESSEES A PPEAL IS TREATED AS ALLOWED. THE ORDER PRONOUNCED IN THE OPEN COURT ON 21.02.201 4. SD/- SD/- [ B.C. MEENA ] [A.D. JAIN] ACCOUNTANT MEMBER JUDICIAL MEMBER DATED, 21 ST FEBRUARY, 2014. ITA NO.4182/DEL/2013 16 DK COPY FORWARDED TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT (A) 5. DR, ITAT AR, ITAT, NEW DELHI.