DCIT, Exemption Circle, Ghaziabad V. Bhagwati Educational Society, Ghaziabad

ITA 4258/DEL/2017

• Counselvise Citation: [2021] 107 COUNSELVISE.COM (IT) 3383 (ITAT-DELHI)
• Duration Of Justice: 4 year(s) 3 month(s) 17 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 14-10-2021
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: E
• Assessment Year: 2010-2011
• Appeal Filed On: 27-06-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Capital asset; Depreciation; Charitable institution; Capital expenditure
• Section: 143(3); 133(6); 12AA; 13; 32; 68; 11

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, DELHI BENCH: E NEW DELHI BEFORE SHRI KUL BHARAT, JUDICIAL MEMBER AND SHRI O.P. KANT, ACCOUNTANT MEMBER [THROUGH VIDEO CONFERENCING] ITA NO.4258/DEL/2017 ASSESSMENT YEAR: 2010-11 DCIT, EXEMPTION CIRCLE, GHAZIABAD VS. BHAGWATI EDUCATION SOCIETY, KJ-28, KAVI NAGAR, GHAZIABAD PAN :AABTM5521F (APPELLANT) (RESPONDENT) ORDER PER O.P. KANT, AM: THIS APPEAL BY THE REVENUE IS DIRECTED AGAINST ORDE R DATED 30/03/2017 PASSED BY THE LEARNED COMMISSIONER OF IN COME-TAX (APPEALS)- MUZAFFANAGAR [IN SHORT THE LD. CIT(A)] FOR ASSESSMENT YEAR 2010-11, RAISING FOLLOWING GROUNDS: 1. THE LD. COMMISSIONER OF INCOME TAX (APPEAL) HAS ERRED IN LAW AND ON FACTS IN DELETING THE DISALLOWANCE OF ACCOUN T OF DEPRECIATION OF RS.76,96,372/- IGNORING THE FACTS T HAT DEPRECIATION ON ACCOUNT OF APPLICATION OF INCOME FOR CHARITABLE PURPOSES IS NOT ALLOWABLE AS THE CAPITAL EXPENDITURE ON ACQUIRING F IXED ASSETS HAS ALREADY BEEN ALLOWED IN RESPECTIVE YEARS. APPELLANT BY SH. GAURAV PUNDIR, SR.DR RESPONDENT BY SH. RAGHAV GOEL, CA DATE OF HEARING 05.10.2021 DATE OF PRONOUNCEMENT 14.10.2021 2 ITA NO.4258/DEL./2017 2. THE ORDER OF THE LD. COMMISSIONER OF INCOME TAX (A) HAS ERRED IN LAW AND ON FACTS IN DELETING THE ADDITION OF RS.169 ,00,000/- ON ACCOUNT OF ANONYMS DONATION U/S 68. 3. THE LD. CIT(A) HAS ERRED IN LAW AND ON FACTS IN DELETING THE ADDITION OF RS.2,21,250/- ON ACCOUNT OF TRANSPORT A CTIVITIES IGNORING THE FACT THAT THE EXPENSES HAS BEEN CLAIME D ON ESTIMATED BASIS AND ASSESSEE HAS TRIED TO SEGREGATE THESE EXP ENSES FROM THE COMBINED INCOME & EXPENDITURE ACCOUNT OF THE SO CIETY WITHOUT MAINTAINING SEPARATE SET OF BOOKS OF ACCOUNT AS REQ UIRED AS PER LAW UNDER SECTION 11(4A) OF THE I.T. ACT. 4. THE LD. CIT(A) HAS ERRED IN LAW AND ON FACTS IN DELETING THE ADDITION OF RS.3,99,984/- ON ACCOUNT OF SURPLUS FRO M HOSTEL ACTIVITIES. 5. THE APPELLANT CRAVES TO ADD OR ALTER ANY OR MORE GROUND OR GROUNDS OF APPEAL AS MAY BE DEEMED FIT AT THE TIME OF HEARING OF APPEAL. 2. BRIEFLY STATED FACTS OF THE CASE, AS CULLED OUT FR OM THE ORDER OF THE LOWER AUTHORITIES, ARE THAT THE ASSESSEE IS A CHARITABLE SOCIETY REGISTERED UNDER THE SOCIETIES REGISTRATION ACT, 1860 WITH EFFECT FROM 24/10/2005. THE ASSESSEE SOCIETY HAS BE EN GRANTED REGISTRATION UNDER SECTION 12AA OF THE INCOME-TAX A CT, 1961 (IN SHORT THE ACT) BY THE ORDER DATED 30/01/2006 OF T HE CONCERNED COMMISSIONER OF INCOME TAX. THE MAIN OBJECTS OF THE SOCIETY INCLUDE, MANAGING SCHOOLS, COLLEGE AND INSTITUTION FOR EDUCATION. THE ASSESSEE SOCIETY HAS SET UP A COLLEGE FOR EDUCA TION IN THE FIELD OF ENGINEERING IN THE NAME OF BHAGWATI INSTITUTE OF ENGINEERING AND SCIENCE IN VILLAGE MASURI, GAZIABAD (UTTAR PRAD ESH). THE ASSESSEE FILED RETURN OF INCOME FOR THE YEAR UNDER CONSIDERATION ON 05/10/2010 DECLARING NIL INCOME. THE RETURN OF I NCOME FILED BY THE ASSESSEE WAS SELECTED FOR SCRUTINY AND STATU TORY NOTICES UNDER THE ACT WERE ISSUED AND COMPLIED WITH. IN ASS ESSMENT ORDER COMPLETED ON 28/03/2013 UNDER SECTION 143(3) OF THE ACT, 3 ITA NO.4258/DEL./2017 THE ASSESSING OFFICER MADE CERTAIN ADDITIONS AND AS SESSED TOTAL INCOME AT 1,75,21,234/-. THE ASSESSEE FILED APPEAL BEFORE TH E LD. CIT(A), WHO ALLOWED THE APPEAL IN FAVOUR OF THE ASSESSEE AND DELETED ALL THE ADDITIONS, WHICH WERE MADE BY THE A SSESSING OFFICER. AGGRIEVED WITH THE FINDING OF THE LD. CIT( A), THE REVENUE IS IN APPEAL BEFORE THE TRIBUNAL, RAISING THE GROUN DS AS REPRODUCED ABOVE. 3. BEFORE US, THE PARTIES APPEARED THROUGH VIDEOCONFER ENCING FACILITY AND FILED PAPER-BOOK THROUGH EMAIL. 4. THE GROUND NO. 1 OF THE APPEAL RELATES TO DISALLOWA NCE OF DEPRECIATION, AMOUNTING TO BE RS. 76,96,372/-. 4.1 THE BRIEF FACTS QUA THE ISSUE IN DISPUTE ARE THAT THE ASSESSEE CLAIMED DEPRECIATION OF 76,96,372/- AS APPLICATION OF INCOME IN TERMS OF SECTION 11 OF THE ACT, WHEREAS ACCORDING T O THE ASSESSING OFFICER, INVESTMENT IN FIXED ASSETS HAS ALREADY BEE N CONSIDERED FOR THE PURPOSE OF THE APPLICATION OF INCOME IN THE YEA R OF INVESTMENT AND, THEREFORE, FURTHER ALLOWING DEPRECIATION WILL AMOUNT TO DOUBLE DEDUCTION IN RESPECT OF THE FIXED ASSET. ACC ORDINGLY, HE DISALLOWED THE CLAIM OF THE ASSESSEE OF DEPRECIATIO N, RELYING ON THE VARIOUS DECISIONS CITED IN THE ASSESSMENT ORDER . THE LD. CIT(A), HOWEVER, HAS OBSERVED THAT ASSESSEE HAS NOT CLAIMED ANY AMOUNT FOR THE INVESTMENT MADE IN THE FIXED ASSETS AS APPLICATION OF THE INCOME AND, THEREFORE, CLAIM OF DEPRECIATION IS NOT AMOUNTING TO DOUBLE DEDUCTION. THE LEARNED CIT(A) R ELIED ON THE DECISION OF THE HONBLE DELHI HIGH COURT IN THE CAS E OF DIRECTOR OF INCOME TAX VS. INDRAPRASTHA CANCER SOCIETY IN IT A NO. 240,348,406,463 AND 464/2014, DATED 18.11.2014 . THE RELEVANT FINDING OF THE LD. CIT(A) IS REPRODUCED AS UNDER: 4 ITA NO.4258/DEL./2017 19. THE FACTS OF THE CASE, SUBMISSIONS MADE BY TH E APPELLANT AND REMAND REPORT OF THE AO HAVE BEEN CONSIDERED. THE A PPELLANT HAS CLAIMED DEPRECIATION OF RS.76,96,372/-. THE AO HAS DISALLOWED THE SAME BEING DOUBLE DEDUCTION. THE AR HAS STATED THAT IT HAS CLAIMED DEPRECIATION OF RS.10231372/- IN THE INCOME & EXPEN DITURE STATEMENT AND IT IS NOT CLEAR FROM WHERE THE AO HAS TAKEN THE FIGURE OF AMOUNT OF DISALLOWANCE. THE APPELLANT HAS RELIED UPON THE DECISION OF THE HONBLE DELHI HIGH COURT IN THE CAS E OF DIT VS. INDRAPRASTHA CANCER SOCIETY. ON GOING THROUGH THE FACTS ON THE ABOVE ISSUE IT IS NOTED THAT THE APPELLANT HAS SHOWN DEFICIT OF RS.25142579/-, R S.7967356/-, RS.414868/- FOR THE YEAR ENDING ON31-03- 2010, 31-0 3-2009 AND 31-03-2008 IN THE INCOME & EXPENDITURE STATEMENTS A FTER CLAIMING DEPRECIATION. THERE WAS NO INCOME & EXPENDITURE STA TEMENT BEFORE THIS PERIOD. THUS THE APPELLANT HAS NOT CLAIMED ANY AMOUNT AS APPLICATION OF INCOME FOR THE INVESTMENTS MADE IN T HE FIXED ASSETS AND THUS THERE IS NO CLAIM OF DOUBLE DEDUCTION IN T HIS CASE. THE CASE OF THE APPELLANT IS COVERED BY THE RATIO OF THE HON BLE DELHI HIGH COURT IN THE CASE OF INDRAPRASTHA CANCER SOCIETY (S UPRA). SIMILAR VIEW HAS BEEN EXPRESSED BY THE HONBLE ITAT, DELHI IN THE CASE OF BHARDWAJ WELFARE TRUST (ITA NO.1979, 2564/DEL/2013) DATED 13- 02-2015, ARIHANT CHARITABLE HOSPITAL TRUST, GHAZIAB AD (ITA NO.5019/DEL/2015) DATED 17-11-2015. RESPECTFULLY FO LLOWING THE ABOVE REFERRED DECISIONS, THE AO IS DIRECTED TO ALL OW CLAIM OF DEPRECIATION. GROUND OF APPEAL NO.5 IS ALLOWED. 4.2 BEFORE US, THE LEARNED DEPARTMENTAL REPRESENTATIVE RELIED ON THE ORDER OF THE ASSESSING OFFICER AND VEHEMENTL Y ARGUED THAT ALLOWING DEPRECIATION WILL AMOUNT TO DOUBLE DEDUCTI ON IN RESPECT OF THE FIXED ASSETS. 4.3 ON THE CONTRARY, THE LEARNED COUNSEL OF THE ASSESS EE RELIED ON THE ORDER OF THE LEARNED CIT(A) AND SUBMITTED TH AT FIXED ASSETS HAVE BEEN PURCHASED OUT OF THE LOANS FROM TH E BANKS AND OTHER PARTIES AND IT HAS NEVER CLAIMED APPLICATION OF THE INCOME FOR CHARITABLE PURPOSES AT THE TIME OF PURCHASE OF THE ASSETS AND ONLY DEPRECIATION HAS BEEN CLAIMED, WHICH COULD BE VERIFIED FROM THE AUDITED BALANCE SHEET AND INCOME AND EXPENDITUR E ACCOUNT. 5 ITA NO.4258/DEL./2017 HE SUBMITTED THAT THE ASSESSEE HAS BEEN CONSISTENTL Y FOLLOWING THIS METHOD, WHICH HAS BEEN APPROVED BY THE DEPARTM ENT EVEN IN THE SCRUTINY ASSESSMENT OF EARLIER YEARS. THE ASSES SEE SUBMITTED THAT DEPRECIATION HAS NOT BEEN CLAIMED UNDER SECTIO N 32 OF THE ACT, AND IT HAS BEEN CLAIMED AS APPLICATION OF THE INCOME ONLY. 4.4 WE HAVE HEARD RIVAL SUBMISSION OF THE PARTIES ON T HE ISSUE DISPUTE. THE CLAIM OF THE ASSESSEE OF DEPRECIATION IS ALLOWABLE IN VIEW OF THE TWO REASONS. FIRSTLY, THE LD. CIT(A) HA S GIVEN A FACTUAL FINDING THAT ASSESSEE HAS NOT CLAIMED INVESTMENT IN FIXED ASSET AS APPLICATION OF THE INCOME IN THE YEAR OF PURCHASE O F FIXED ASSETS. THE LEARNED CIT(DR) HAS NOT BROUGHT ANYTHING ON REC ORD WHICH COULD CONTROVERT THE FINDING OF THE LD. CIT(A), DES PITE THE IMPUGNED ORDER WHICH HAS BEEN PASSED BY THE LD. CIT (A) ON 30/03/2017. THE LEARNED COUNSEL OF THE ASSESSEE HAS ALSO REFERRED TO AUDITED BALANCE SHEETS AND INCOME AND E XPENDITURE ACCOUNTS OF EARLIER YEARS AND SUBMITTED THAT INVEST MENT IN FIXED ASSETS WAS NOT CLAIMED AS APPLICATION OF THE INCOME IN THE YEAR OF INVESTMENT. THIS FACT HAS ALSO NOT BEEN CONTROVERTE D BY THE LEARNED DEPARTMENTAL REPRESENTATIVE. IN THE CIRCUMS TANCES, THE ASSESSEE HAS CLAIMED DEPRECIATION FOR THE FIRST TIM E AS APPLICATION OF THE INCOME AND, THEREFORE, CLAIM OF DOUBLE DEDUC TION OF THE ASSESSING OFFICER IS BASELESS AND WITHOUT ANY EVIDE NCES, HENCE NOT JUSTIFIED. SECONDLY, HONBLE SUPREME COURT IN T HE CASE OF CIT VS. RAJASTHAN AND GUJARATI CHARITABLE FOUNDATION, P OONA, (CIVIL APPEAL NO.7186 OF 2014, ORDER DATED 13.12.20 17) HAS HELD THAT EVEN IF THE ENTIRE EXPENDITURE INCURRED FOR ACQUISITION OF A CAPITAL ASSET IS TREATED AS APPLIC ATION OF INCOME FOR CHARITABLE PURPOSES U/S 11(1)(A) OF THE A CT, THE 6 ITA NO.4258/DEL./2017 ASSESSEE IS ALSO ENTITLED TO DEPRECIATION U/S 32. T HE ARGUMENT THAT THE GRANT OF DEPRECIATION AMOUNTS TO GI VING DOUBLE BENEFIT TO THE ASSESSEE IS NOT ACCEPTABLE. S. 11(6) WHICH BARS DEPRECIATION ON EXPENDITURE APPLIED FOR CHARITABLE PURPOSES IS PROSPECTIVE AND APPLIES ONLY FROM AY 2015-16. 4.5 THUS, IN VIEW OF THE HONBLE SUPREME COURT, EVEN IF INVESTMENT IN CAPITAL ASSET HAS BEEN CLAIMED AS APP LICATION OF THE INCOME, THE ASSESSEE IS ENTITLED FOR DEPRECIATION A S APPLICATION OF THE INCOME IN SUBSEQUENT YEARS, PRIOR TO INSERTION OF SECTION 11(6) OF THE ACT WITH EFFECT FROM ASSESSMENT YEAR 2 015-16. THE INSTANT CASE BEING OF ASSESSMENT YEAR 2010-11, THE ASSESSEE IS ELIGIBLE FOR DEPRECIATION AS APPLICATION OF THE INC OME IRRESPECTIVE OF THE FACT WHETHER INVESTMENT IN FIXED ASSETS WAS CLAIMED AS APPLICATION OF THE INCOME OR NOT. 4.6 ACCORDINGLY, WE UPHOLD THE FINDING OF THE LD. CIT(A ) ON THE ISSUE IN DISPUTE AND DISMISS THE GROUND NO. 1 OF AP PEAL OF THE REVENUE. 5. THE GROUND NO. 2 OF THE APPEAL RELATES TO ADDITION OF 1,69,00,000/- ON ACCOUNT OF ANONYMOUS DONATION UNDE R SECTION 68 OF THE ACT, WHICH HAS BEEN DELETED BY THE LEARNE D CIT(A). 5.1 BRIEF FACTS QUA THE ISSUE IN DISPUTE ARE THAT ASSE SSEE RECEIVED DONATION OF 2,04,02,000/- TOWARDS CORPUS FUND AND ON BEING ASKED BY THE ASSESSING OFFICER FILED COMPLETE DETAILS OF DONATION SHOWING NAME AND ADDRESS OF THE DONOR, PER MANENT ACCOUNT NO., DONATION AMOUNT, MODE OF DONATION, DAT E OF DONATION ALONG WITH COPIES OF THE CONFIRMATION LETT ER, COPIES OF INCOME TAX RETURN, COPIES OF PERMANENT ACCOUNT NUMB ER ETC. 7 ITA NO.4258/DEL./2017 THE ASSESSING OFFICER ISSUED NOTICE UNDER SECTION 1 33(6) OF THE ACT IN FIRST WEEK OF MARCH, 2013, TO FEW DONORS FOR VERIFICATION. ACCORDING TO THE ASSESSING OFFICER, IN SOME CASES N OTICES WERE RETURNED UNSERVED WITH THE POSTAL REMARK LEFT AND IN OTHER CASES THOSE NOTICES WERE SERVED BUT NO COMPLIANCE W AS MADE OR INCOMPLETE COMPLIANCE WAS MADE. ACCORDING TO THE AS SESSEE, IT WAS CONFRONTED AS A RESULT OF SERVICE OF NOTICES UN DER SECTION 133(6) ON 22/03/2013 AND COMPLIANCE WAS SOUGHT BY 25/03/2013. IT IS THE CONTENTION OF THE ASSESSEE TH AT IT COULD NOT COMPLY IN VIEW OF TOO SHORT AND INSUFFICIENT TIME G IVEN FOR COMPLIANCE. THE ASSESSING OFFICER MADE DETAILED DIS CUSSION IN RESPECT OF PARTIES AND TREATED THE DONATION FROM FO LLOWING PARTIES AS ANONYMOUS: NAME OF DONER DONATION AMOUNT RS. MS. SAROJ KANSAL 2,50,000.00 MS. VEENU KANSAL 2,00,000.00 MR. ATUL KANSAL 3,50,000.00 M/S VAG EXPORTS PVT. LTD. 1,00,00,000.00 HYDROCARBONS EDUCATION AND RESEARCH SOCIETY 50,00,000.00 MAA SARASWATI GYAN MANDIR EDUCATION SOCIETY 11,00,000.00 TOTAL 1,69,00,000.00 5.2 BEFORE THE LD. CIT(A), THE ASSESSEE FILED COMPLETE DETAILS IN RESPECT OF ABOVE PARTIES. THE LD. CIT(A) FORWARDED ALL THOSE DETAILS TO THE ASSESSING OFFICER AND AFTER OBTAINING REMAND REPORT FROM THE ASSESSING OFFICER AND REJOINDER FROM THE ASSESS EE, HE DELETED THE DISALLOWANCE OBSERVING AS UNDER: ..THE AO IN THE REMAND REPORT VIDE LETTER NO.29 44 DATED 20- 03-2017 HAS STATED THAT SHE HAS GONE THROUGH AND VE RIFIED THE EVIDENCES FILED BY THE APPELLANT FOR CORPUS DONATIO N OF RS. 1.69 CRORE 8 ITA NO.4258/DEL./2017 AS ABOVE. SHE HAS NOT MADE ANY ADVERSE COMMENTS ON THE GENUINENESS OF THE EVIDENCES FURNISHED BY THE APPEL LANT IN SUPPORT OF THE CORPUS DONATION. IT IS PROVIDED U/S 115BBC O F THE ACT THAT ANONYMOUS DONATIONS MEANS ANY VOLUNTARY CONTRIBUTIO N IN RESPECT OF WHICH RECORD HAVING IDENTITY (NAME & ADDRESS OF THE DONOR ALONG WITH OTHER PARTICULARS AS PRESCRIBED) HAS .NOT BEE N MAINTAINED. IN THIS CASE, ON THE FACTUAL MATRIX IT IS NOTED THAT T HE APPELLANT HAS MAINTAINED COMPLETE RECORD GIVING IDENTITY OF THE D ONORS (NAME & ADDRESS) ALONG WITH, PARTICULARS OF THE CORPUS DONA TIONS' RECEIVED - AMOUNT, DATE, MODE OF PAYMENT. UNDER THE FACTS IT IS NOTED THAT THE PROVISION OF SECTION 115 BBC OF I ' THE ACT ARE NOT ATTRACTED IN THIS CASE. THE FACTS, OF THIS CASE ARE COVERED BY THE RA TIO OF CASE LAWS RELIED BY THE AR (SUPRA). ACCORDINGLY, IN VIEW THE DISCUSSION MADE AS ABOVE, IT IS HELD THAT THE AO WAS NOT JUSTIFIED IN MAKING ADDITION OF RS. 1.69 CRORE U/S 115BBC OF THE ACT AND THE SAM E IS HEREBY DELETED. GROUND OF APPEAL NO. 1 IS ALLOWED. GROUND .OF APPEAL NO.8 IS NOT SEPARATELY ADJUDICATED AS GROUND OF APPEAL N O. 1 HAS ALREADY BEEN ALLOWED IN FAVOUR OF THE APPELLANT. 5.3 BEFORE US, THE LEARNED DEPARTMENT REPRESENTATIVE R ELIED ON THE FINDING OF THE LEARNED ASSESSING OFFICER AND SU BMITTED THAT DURING ENQUIRY UNDER SECTION 133(6), THE PARTIES CO ULD NOT BE TRACED. HE SUBMITTED THAT IN THE REMAND REPORT, THE ASSESSING OFFICER HAS VERIFIED THE PAPERWORK, HOWEVER, THIS F ACT THAT PARTIES COULD NOT BE TRACED AT THEIR ADDRESSES DURING ENQUI RY UNDER SECTION 133(6) OF THE ACT, CANNOT BE IGNORED. 5.4 THE LEARNED COUNSEL OF THE ASSESSEE, ON THE OTHER HAND, SUBMITTED THAT ASSESSEE HAS MAINTAINED A COMPLETE R ECORD OF IDENTITY INDICATING NAME AND ADDRESS OF THE PERSONS MAKING THE DONATION AND SUCH COMPLETE DETAILS WERE FURNISHED B EFORE THE ASSESSING OFFICER DURING ASSESSMENT PROCEEDING AND THEREFORE PROVISION OF SECTION 115BBC IN THE CASE OF DONATION OF 1,69,00,000/- RECEIVED BY THE ASSESSEE ARE NOT ATTR ACTED. THE LEARNED COUNSEL OF THE ASSESSEE RELIED ON THE DECIS IONS OF THE TRIBUNAL IN THE CASE OF DCIT, EXEMPTION, GHAZIABAD VS JAI MAA 9 ITA NO.4258/DEL./2017 SAVITRI EDUCATION SOCIETY IN ITA NO. 4256/DEL/2017, SUNDER DEEP EDUCATION SOCIETY VS ACIT IN ITA NO. 2428/DEL/20 11 . IN VIEW OF THE DECISIONS, THE LEARNED COUNSEL FOR T HE ASSESSEE SUBMITTED THAT ONLY REQUIREMENT UNDER SECTION 115BB C(3) OF THE ACT IS MAINTENANCE OF NAME AND ADDRESS OF THE DONOR , WHICH THE ASSESSEE HAS COMPLIED AND THEREFORE DONATION CANNOT BE HELD ANONYMOUS INVOKING SECTION 115BBC OF THE ACT. 5.5 WE HAVE HEARD RIVAL SUBMISSION OF THE PARTIES AND P ERUSED RELEVANT MATERIAL ON RECORD. WE FIND THAT ASSESSING OFFICER HAS FOUND THE DONATION IN DISPUTE OF 1,69,00,000/- AS ANONYMOUS OBSERVING THAT DONOR COMPANIES ARE ONLY PAPER COMPA NIES. THE ASSESSEE FILED COMPLETE DETAILS IN RESPECT OF THOSE DONORS BEFORE THE LEARNED CIT(A), WHO FORWARDED THOSE DETAILS TO THE ASSESSING OFFICER FOR VERIFICATION AND THE ASSESSING OFFICER DID NOT DISPUTE GENUINENESS OF THE DOCUMENTS. THE REMAND REPORT SE NT BY THE ASSESSING OFFICER HAS BEEN REPRODUCED BY THE LD. CI T(A) IN PARA 10 ON PAGE 49 OF THE IMPUGNED ORDER. WE ARE OF THE OPINION THAT IN THE REMAND PROCEEDING, THE ASSESSING OFFICER HAS ACCEPTED THE DOCUMENTS TO SUPPORT THE IDENTITY OF THE DONOR. IN SUCH CIRCUMSTANCES, THE VERY SAME ASSESSING OFFICER IS N OT JUSTIFIED IN LITIGATING THE ISSUE BEFORE THE TRIBUNAL. FURTHER, WE FIND THAT TRIBUNAL IN THE CASE OF JAI MAA SAVITRI EDUCATION SOCIETY (SUPRA) OBSERVED THAT ALL THE DONATIONS INITIALLY F LAGGED BY THE ASSESSING OFFICER AS ANONYMOUS DONATIONS HAD BEEN DULY VERIFIED BY WAY OF CONFIRMATION, PAN, COPIES OF THE ITR, COPY OF BANK STATEMENT OF DONOR BY THE ASSESSING OFFICER AS WELL AS LD. CIT(A), AND THEREFORE THE TRIBUNAL DECLINED TO INTE RFERE IN THE FINDING OF THE LEARNED CIT(A) REJECTING CLAIM OF AN ONYMOUS 10 ITA NO.4258/DEL./2017 DONATION OF THE ASSESSING OFFICER. SIMILARLY, IN TH E CASE OF SUNDER DEEP EDUCATION SOCIETY (SUPRA) , THE TRIBUNAL HELD THAT SECTION 115 BBC, WHICH ASSESSES ANONYMOUS DONATION DOES N OT APPLY IF THE ASSESSEE HAS MAINTAINED A RECORD OF THE IDENTIT Y INDICATING THE NAME AND ADDRESS OF THE PERSON MAKING THE CONTRIBUT ION . IN THE INSTANT CASE ALSO, THE ASSESSEE HAS MAINTAINED NAME AND ADDRESS AND OTHER DETAILS, WHICH HAVE BEEN MADE AVAILABLE T O THE ASSESSING OFFICER. IN SUCH CIRCUMSTANCES, FOLLOWING THE DECISION OF THE TRIBUNAL (SUPRA) MENTIONED ABOVE AND THE FIN DING OF THE ASSESSING OFFICER IN REMAND PROCEEDING, WE DO NOT F IND ANY ERROR IN THE ORDER OF THE LD. CIT(A) ON THE ISSUE IN DISP UTE AND ACCORDINGLY, WE UPHOLD THE SAME. THE GROUND NO. 2 O F THE APPEAL OF THE REVENUE IS ACCORDINGLY DISMISSED. 6. THE GROUND NO. 3 OF THE APPEAL RELATES TO ADDITION OF 2,21,250/- ON ACCOUNT OF TRANSPORT ACTIVITIES. 6.1 THE ASSESSEE WAS ASKED TO FURNISH DETAILS OF LOGBO OK ETC. IN RESPECT OF THE BUS EXPENSES OF 7, 37, 500/- AND IN VIEW FAILURE OF THE ASSESSEE IN SUBMITTING THE REQUIRED DETAILS, TH E ASSESSING OFFICER ALLOWED 30% OF THE BUS EXPENSES AMOUNTING T O 2,21,250/-. THE LEARNED CIT(A) DELETED THE DISALLOW ANCE OBSERVING AS UNDER: FROM THE FACTS OF THE CASE IT IS NOTED THAT THE AO HAS MADE THE ABOVE DISALLOWANCE WITHOUT ANY BASIS AND WITHOUT BR INGING ANY SPECIFIC FINDING ON RECORD. EVER AFTER MAKING DISAL LOWANCE, THERE IS LOSS FROM RUNNING OF BUSES. UNDER THE FACTS IT IS H ELD THAT THE AO WAS NOT JUSTIFIED IN MAKING DISALLOWANCE AT RS.2,21 ,250/-. THE SAME IS HEREBY DELETED. GROUND OF APPEAL NO. 4 IS A LLOWED. 6.3 BEFORE US, THE LEARNED DR RELIED ON THE ORDER OF T HE LEARNED ASSESSING OFFICER, WHEREAS THE LEARNED COUNSEL OF T HE ASSESSEE 11 ITA NO.4258/DEL./2017 RELIED ON THE ORDER OF THE LD. CIT(A). THE LEARNED COUNSEL FURTHER SUBMITTED THAT BUSES WERE EXCLUSIVELY USED FOR CHAR ITABLE ACTIVITY OF THE ASSESSEE. HE FURTHER SUBMITTED THAT BUS EXPE NSES INCURRED ARE MORE THAN THE RECEIPT FROM BUS SERVICES AND EVE N AFTER DISALLOWANCE OF 30% OF EXPENSES, REMAINING BUS EXPE NSES OF 5,16,250/- ARE MORE THAN THE TOTAL BUS FARE RECEIVE D OF 3,95,100/- AND, THUS, THERE WILL BE NET LOSS FROM T HE BUS OPERATION AND NO NET INCOME. 6.4 WE HAVE HEARD RIVAL SUBMISSION OF THE PARTIES AND PERUSED THE MATERIAL ON RECORD. WE FIND THAT THE ASSESSING OFFICER HAS MADE DISALLOWANCE PURELY ON ESTIMATE AND ON AD-HOC BASIS WITHOUT POINTING OUT ANY SPECIFIC DEFECTS IN VOUCHE RS OF EXPENSES MAINTAINED BY THE ASSESSEE, WHICH IS NOT PERMITTED IN LAW. ACCORDINGLY, WE UPHOLD THE FINDING OF THE LD. CIT(A ) ON THE ISSUE IN DISPUTE AND DISMISS THE GROUND NO. 3 OF THE APPE AL OF THE REVENUE. 7. THE GROUND NO.4 OF THE APPEAL RELATES TO ADDITION OF 3,99,984/- MADE BY THE ASSESSING OFFICER ON ACCOUNT OF SURPLUS FROM HOSTEL ACTIVITY, WHICH HAS BEEN DELETED BY THE LEARNED CIT(A). 7.1 THE FACTS IN BRIEF QUA THE ISSUE IN DISPUTE ARE TH AT ASSESSING OFFICER HAS MADE ADDITION OF 3,99,984/- AS SURPLUS FROM HOSTEL ACTIVITY UNDER SECTION 11(4A) OF THE ACT AND IN VIE W OF NO SEPARATE BOOKS OF ACCOUNT MAINTAINED BY THE ASSESSEE FOR HOS TEL ACTIVITY. ON THE OTHER HAND, THE AUTHORIZED REPRESENTATIVE OF THE ASSESSEE SUBMITTED BEFORE THE LD. CIT(A) THAT THE ASSESSEE W AS MAINTAINING HOSTEL FACILITY FOR THE COLLEGE STUDENT STUDYING WITH THE ASSESSEE, WHICH IS MANDATORY REQUIREMENT UNDER RULES AND 12 ITA NO.4258/DEL./2017 REGULATION OF AICTE (I.E. REGULATORY AUTHORITY FOR TECHNICAL EDUCATION). THE LEARNED AUTHORIZED REPRESENTATIVE A LSO SUBMITTED THAT SEPARATE BOOKS OF ACCOUNT WERE MAINTAINED FOR HOSTEL RECEIPT AND EXPENSES AND, THEREFORE, LEARNED ASSESSING OFFI CER WAS NOT JUSTIFIED IN WORKING SURPLUS OF 3,99,984/- AND MAKING ADDITION FOR THE SAME. THE LD. CIT(A) DELETED THE ADDITION O BSERVING AS UNDER: ON CONSIDERATION OF FACTS OF THE CASE IT IS NOTED THAT THE AO ON PAGE NO. 10 OF THE ASSESSMENT ORDER HAS MENTIONED THAT I T IS MANDATORY TO MAINTAIN HOSTEL FACILITY AS PER THE RULES FRAMED BY AICTE. IN THE AUDITED FINANCIAL STATEMENT AS ON 31.03.2010 IN RES PECT OF HOSTEL ACTIVITY, IT IS NOTED THAT THERE IS LOSS OF RS. 115 2879/-. THE AO HAS ONLY CONSIDERED SOME OF THE DIRECT EXPENDITURE WITH OUT CONSIDERING OTHER INDIRECT EXPENDITURE IN THE ASSESSMENT ORDER. IT IS NOTED FROM THE FACTS OF THE CASE THAT RUNNING OF HOSTEL FACILI TY IS INCIDENTAL TO THE PROVIDING EDUCATION BY THE APPELLANT AND SEPARATE B OOKS OF ACCOUNT ARE BEING MAINTAINED IN THIS RESPECT. UNDER THE FAC TS IT IS HELD THAT THE AO WAS NOT JUSTIFIED TO BRING TO TAX AMOUNT OF RS.3,99,984/- U/S 11(4A) OF THE ACT. EVEN OTHERWISE THERE IS NO INCOM E FROM THE HOSTEL ACTIVITY. THE SAME IS HEREBY DELETED. GROUNDS OF AP PEAL NOL.2 & 3 ARE ALLOWED. 7.2 BEFORE US, THE LEARNED DR RELIED ON THE ORDER OF T HE ASSESSING OFFICER. 7.3 ON THE CONTRARY, THE LEARNED COUNSEL OF THE ASSESS EE SUBMITTED THAT DURING THE YEAR UNDER CONSIDERATION, THE ASSESSEE RECEIVED A TOTAL SUM OF 22,76,000/- TOWARDS HOSTEL FEE AND INCURRED DIRECT EXPENSES SUCH AS HOSTEL RENT, HOSTE L EXPENSES, MESS EXPENSES AS WELL AS VARIOUS COMMON EXPENSES SU CH AS ELECTRICITY, GENERATOR, HOUSEKEEPING, DEPRECIATION ON BUILDING /MESS EQUIPMENT/FURNITURE/ELECTRICFITTINGS/GENERATO R/WATER COOLER ETC, THE MAINTENANCE, AND OTHER EXPENSES. TH E LEARNED COUNSEL SUBMITTED THAT THE ASSESSEE IS MAINTAINING SEPARATE 13 ITA NO.4258/DEL./2017 BOOKS OF ACCOUNT IN RESPECT OF HOSTEL RECEIPTS AND COMMON EXPENSES HAVE BEEN APPORTIONED AT THE END OF THE YE AR. IT IS THE SUBMISSION OF THE LEARNED COUNSEL THAT THE ASSESSIN G OFFICER WHILE COMPUTING SURPLUS FROM HOSTEL, HAS CONSIDERED ONLY DIRECT EXPENSES SUCH AS RENT, MESS EXPENSES AND COMPLETELY IGNORED THE COMMON EXPENSES INCURRED. THE LEARNED COUNSEL SUBMI TTED THAT STATUTORY NORMS PRESCRIBED BY THE AICTE FOR APPROVA L OF COLLEGE, RUNNING AND MAINTENANCE OF THE HOSTEL AND MESS FACI LITY IS INTERTWINED WITH THE EDUCATIONAL ACTIVITY. HE SUBMI TTED THAT WITHOUT HOSTEL FACILITY, THE COLLEGE WILL NOT BE AP PROVED. ACCORDING TO HIM, THE HOSTEL FACILITY WAS EXCLUSIVELY MEANT F OR THE PURPOSE OF THE STUDENT STUDYING IN THE COLLEGE RUN BY THE ASSE SSEE AND IT WAS NOT FOR OUTSIDE PERSON OR STUDENTS. 7.4 WE HAVE HEARD RIVAL SUBMISSION OF THE PARTIES ON T HE ISSUE IN DISPUTE AND PERUSED THE RELEVANT MATERIAL ON REC ORD. THE ASSESSEE SUBMITTED THAT IT HAS MAINTAINED SEPARATE BOOKS OF ACCOUNT AS REQUIRED UNDER THE PROVISIONS OF THE ACT AND FURTHER THE HOSTEL FACILITIES MAINTAINED FOR THE STUDENTS O F THE COLLEGE BELONGING TO THE ASSESSEE SOCIETY AND THE FACILITY IS NOT BEEN EXTENDED TO ANY STUDENT NOT STUDYING IN THE COLLEGE BY THE ASSESSEE. IN SUCH CIRCUMSTANCES, THE HOSTEL ACTIVIT Y HAS BEEN MAINTAINED AS PART OF THE EDUCATION ACTIVITY. FURTH ER, AFTER APPORTIONING THE COMMON EXPENSES, THERE IS NO SURPL US FROM HOSTEL ACTIVITY. THE LEARNED DR COULD NOT CONTROVER T ABOVE SUBMISSION OF THE LEARNED COUNSEL OF THE ASSESSEE. IN SUCH CIRCUMSTANCES, WE DO NOT FIND ANY ERROR IN THE ORDE R OF THE LEARNED CIT(A) AND ACCORDINGLY UPHOLD THE SAME. THE GROUND NO. 4 OF THE APPEAL OF THE REVENUE IS DISMISSED. 14 ITA NO.4258/DEL./2017 8. IN THE RESULT, THE APPEAL OF THE REVENUE IS DISMIS SED. ORDER PRONOUNCED IN THE OPEN COURT ON 14 TH OCTOBER, 2021 SD/- SD/- (KUL BHARAT) (O.P. KANT) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED: 14 TH OCTOBER, 2021. RK/- (DTDC) COPY FORWARDED TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(A) 5. DR ASST. REGISTRAR, ITAT, NEW DELHI