Civil Services Institute, Dehradun V. DCIT, Circle- 1(4), Rishikesh

ITA 4485/DEL/2018

• Counselvise Citation: [2018] 124 COUNSELVISE.COM (IT) 9905 (ITAT-DELHI)
• Duration Of Justice: 3 month(s) 11 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 24-09-2018
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Assessment Year: 2015-2016
• Appeal Filed On: 13-06-2018
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: VIJAY KR. JIWANI; ANY SUM RECEIVED PURPOSES OF; ASSESSEE. IT IS
• Assessee Lawyers: ASHWANI TANEJA
• Keywords: Capital asset; Business income; Depreciation; Charitable institution; Principle of natural justice; Capital receipt; Capital expenditure
• Section: 12; 10; 142(1); 234B; 12AA; 201; 143(2); 43; 10(23C)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCHES: B , NEW DELHI BEFORE SHRI R.K.PANDA, ACCOUNTANT MEMBER AND SMT. BEENA A PILLAI, JUDICIAL MEMBER ITA NO. 4485/DEL/2018 AY: 2015 - 16 CIVIL SERVICES INSTITUTE NEAR MORAVIAN SCHOOL RAJPUR ROAD DEHRADUN PAN: AABTC600 0B VS . DCIT, CIRCLE - 1(4) RISHIKESH (APPELLANT) (RESPONDENT) APPELLANT BY : SH. ASHWANI TANEJA, ADV. SH. HEMANT ARORA , CA AND SH. SOURABH GOYAL, CA RESPONDENT BY : SH. VIJAY KR. JIWANI, SR.D.R. DATE OF HEARING : 31.07. 2018 DATE OF PRONOUNCEMENT : 24.09.2018 ORDER PER BEENA A PILLAI, JUDICIAL MEMBER THE PRESENT APPEAL HAS BEEN FILED BY ASSESSEE AGAINST ORDER DATED 18.05. 2018 PASSED BY LD. COMMISSIONER OF INCOME - TAX (APPEALS) , DEHRADUN FOR ASSESSMENT YEAR 201 5 - 16 ON THE FOLLOWING GROUNDS OF APPEAL. 1. THAT HAVING REGARD TO THE FACTS AND CIRCUMSTANCES OF THE C ASE, LD. CIT(A) HAS ERRED IN LAW AND ON FACTS IN CONFIRMING THE ACTION OF LD. AO IN MAKING ADDITION OF RS.5 CRORES ON ACCOUNT OF CORPUS FUND RECEIVED FRONT DIRECTOR SPORTS, GOVT, OF UTTARAKHAND BY TREATING IT AS ALLEGED INCOME OF THE APPELLANT SOCIETY AND THAT TOO BY ITA NO.4 4 85/DEL/2018 A.Y.:2015 - 16 CIVIL SERVICES INSTITUTE, DEHRADUN VS. DCIT, CIRCLE 1(4),RISHIKESH 2 RECORDING INCORRECT FACTS AND FINDINGS AND WITHOUT OBSERVING THE PRINCIPLES OF NATURAL JUSTICE. 2. THAT HAVING REGARD TO THE FACTS AND CIRCUMSTANCES OF THE CASE, LD. CIT(A) OUGHT TO HAVE TREATED THE 'CORPUS FUND' AS 'CAPITAL RECEIPT' IRRESPECT IVE OF THE FACT THAT APPELLANT SOCIETY WAS NOT REGISTERED U/S 12A/12AA OF INCOME TAX ACT, 1961 AND LD. CIT(A) OUGHT TO HAVE DELETED THE ADDITION. 3. THAT IN ANY CASE AND IN ANY VIEW OF THE MATTER, ACTION OF LD. CTT(A) IN CONFIRMING THE ACTION OF LD. AO IN MAKING ADDITION OF RS.5 CRORES ON ACCOUNT OF CORPUS FUND AS ALLEGED INCOME OF ASSESSEE, IS BAD IN LAW AND AGAINST THE FACTS AND CIRCUMSTANCES OF THE CASE. 4. THAT HAVING REGARD TO THE FACTS AND CIRCUMSTANCES OF THE C ASE, LD. CIT(A) HAS ERRED IN LAW AND O N FACTS IN CONFIRMING THE ACTION OF LD. AO IN MAKING DISALLOWANCE OF RS.94,66,932/ - ON ACCOUNT OF DEPRECIATION CLAIMED BY ASSESSEE ON THE GROUND THAT G RANT/SUBSIDY RECEIVED FROM GOVT. OF UTTARAKHAND SHOULD NOT BE INCLUDED IN THE ACTUAL COST OF ASSET AND THAT TOO B Y RECORDING INCORRECT FACTS AND FINDINGS AND IN VIOLATION OF PRINCIPLES OF NATURAL JUSTICE. 5. THAT IN ANY CASE AND IN ANY VIEW OF THE MATTER, ACTION OF LD. CIT(A) IN CONFIRMING THE ACTION OF LD. AO IN MAKING DISALLOWANCE OF RS.94,66,932/ - ON A CCOUNT OF DEPRECIATION, IS BAD IN LAW AND AGAINST THE FACTS AND CIRCUMSTANCES OF THE CASE . 6. THAT HAVING REGARD TO THE FACTS AND CIRCUMSTANCES OF THE CASE, LD.CIT(A) HAS ERRED IN LAW AND ON FACTS IN CONFIRMING THE ACTION OF LD. AO IN MAKING ADDITION OF RS.55,21 , 641/ - ON ACCOUNT OF INTEREST INCOME BY TREATING IT AS ALLEGED INCOME FROM OTHER SOURCES' AND THAT TOO BY RECORDING INCORRECT FACTS AND FINDINGS AND IN VIOLATION OF PRINCIPLES OF NATURAL JUSTICE. 7. THAT IN ANY C ASE AND IN ANY VIEW OF THE MATTER, ACTION OF LD. CIT(A) IN CONFIRMING THE ACTION OF LD. AO IN MAKING ADDITION OF ITA NO.4 4 85/DEL/2018 A.Y.:2015 - 16 CIVIL SERVICES INSTITUTE, DEHRADUN VS. DCIT, CIRCLE 1(4),RISHIKESH 3 RS.55,21,641/ - ON ACCOUNT OF INTEREST INCOME, IS BAD IN LAW AND AGAINST THE FACTS AND CIRCUMSTANCES OF THE CASE. 8. THAT HAVING REGARD TO THE FACTS AND CIRC UMSTANCES OF THE CASE, LD. CIT(A) HAS ERRED IN LAW AND ON FACTS IN NOT REVERSING THE ACTION OF LD. AO IN TAKING THE PROFIT & GAINS FROM BUSINESS AT NIL INSTEAD OF LOSS WHILE COMPUTING THE ASSESSED INCOME. 9. THAT HAVING REGARD TO THE FACTS AND CIRCUMSTANC ES OF THE CASE, LD. CIT(A) HAS ERRED IN LAW AND ON FACTS IN NOT HOLDING THE IMPUGNED ASSESSMENT ORDER AS BAD IN LAW AS HAVING BEEN PASSED BY AN OFFICER WHO WAS NOT HAVING JURISDICTION ON THE APPELLANT. 10. THAT HAVING REGARD TO THE FACTS AND CIRCUMSTANCES OF THE CASE, LD. CIT(A) HAS ERRED IN LAW AND ON FACTS IN NOT REVERSING THE ACTION OF LD. AO IN CHARGING INTEREST U/S 234A, 234B AND 234C OF INCOME TAX ACT, 1961. 11. THAT THE APPELLANT CRAVES THE LEAVE TO ADD, MODIFY, AMEND OR DELETE ANY OF THE GROUNDS OF APPEAL AT THE TIME OF HEARING AND ALL THE ABOVE GROUNDS ARE WILL EACH OTHER. 2 . FACTS OF THE CASE IN BRIEF ARE AS UNDER . ASSESSEE FILED ITS RETURN OF INCOME ON 06/09/15 DECLARING TOTAL INCOME OF RS. ( - )46,62,283/ - . SUBSEQUENTLY CASE WAS SELECT ED FOR LIMITED SCRUTINY AND NOTICE WAS ISSUED TO ASSESSEE UNDER SECTION 143(2) OF INCOME TAX ACT,1961 (THE ACT) ALONG WITH QUESTIONNAIRE , AND NOTICE UNDER SECTION 142(1) OF THE A CT. IN RESPONSE TO STATUTORY NOTICES, REPRESENTATIVE OF ASSESSEE APPEARED BEFORE LD. AO AND FURNISHED INFORMATION/DOCUMENTS/EXPLANATION FROM TIME TO TIME . 2.1. LD. AO OBSERVED THAT ASSESSEE IS A S OCIETY/A O P REGISTERED WITH R EGISTRAR OF S OCIET IES , UTTARAKHAND V IDE REGISTRATION NO. 39/2013 - 14 ON 0 6/05/2013, AND DECLARED ITS INCOME FROM PROFIT ITA NO.4 4 85/DEL/2018 A.Y.:2015 - 16 CIVIL SERVICES INSTITUTE, DEHRADUN VS. DCIT, CIRCLE 1(4),RISHIKESH 4 AND GAINS FROM BUSINESS AND PROFESSION . FROM DETAILS FILED BY ASSESSEE, LD.AO OBSERVED THAT ASSESSEE EARNED INTEREST OF RS.55,21,641/ - , ON WHICH NO TAX WAS PAID. IT WAS ALSO OBSERVED THAT ASSESSEE WAS NOT GRANTED EXEMPTION UNDER SECTION 12 A/12 AA OF THE A CT. UNDER THESE CIRCUMSTANCES , CASE OF ASSESSEE WAS CONVERTED INTO COMPLETE SCRUTINY, BASED ON WHICH NOTICE UNDER SECTION 142 (1) ALONG WITH QUESTIONNAIRE WAS ISSUED CALLING UPON ASSESSEE TO FILE VARIOUS DETAILS/INFORMATION REGARDING ORGANISATION AND ITS OBJECTS. FROM DETAILS SO FILED, LD.AO OBSERVED THAT ASSESSEE RECEIVED GRANT FROM GOVERNMENT OF UTT A RAKHAND AMOUNTING TO RS.5 CRORES, ON WHICH ASSESSEE EARNED INTEREST OF RS.55,21,641/ - . LD.AO ACCORDING LY CALLED UPON ASSESSEE TO SHOW CAUSE , AS TO WHY , GRANT RECEIVED FROM DIRECTOR OF SPORTS, SHOULD NOT BE TAXED AS INCOME OF SOCIETY, IN VIEW OF DEFINITION OF INCOME UNDER SECTION 2 (24) OF THE ACT AND, WHY, INTEREST INCOME EARNED ON FDS SHOULD NOT BE TREA TED AS INCOME FROM OTHER SOURCES . 2.2. IN RESPONSE TO QUERY RAISED , ASSESSEE SUBMITTED THAT MONEY RECEIVED BY S OCIETY FROM G OVERNMENT OF UTT A RAKHAND WAS TOWARDS CORPUS , AS IS EVIDENT FROM LETTER OF APPROVAL ISSUED IN RESPECT OF THE SAME. IT WAS SUBMITTED BY ASSESSEE THAT THESE FUND S W ERE TO BE EXPENDED ONLY AFTER BUDGET , AND NOT TO BE USED FOR DAY - TO - DAY ACTIVITIES OF SOCIETY , THEREFORE , DID NOT FALL UNDER PURVIEW OF SECTION 2 (24) (IIA) OF THE A CT. AFTER CONSIDERING SUBMISSIONS OF ASSESSEE, LD. AO CAME TO CONCLUSION THAT , MERELY BECAUSE INCIDENTAL INCOME WAS EARNED BY ASSESSEE SOCIETY , FOR ACHIEVING ITS DOMINANT OBJECT FROM PROVIDING HOSTEL AND CATERING ACTIVITIES , IT CANNOT BE SAID THAT ASSESSEE WAS DOING TRADE OR ITA NO.4 4 85/DEL/2018 A.Y.:2015 - 16 CIVIL SERVICES INSTITUTE, DEHRADUN VS. DCIT, CIRCLE 1(4),RISHIKESH 5 BUSINESS AS C ONTEMPLATED UNDER P ROVISO TO S ECTION 2 (15) OF THE A CT AND , THEREFORE , AMOUNT RECEIVED DO NOT FALL WITHIN THE AMBIT OF CHARITABLE PURPOSE AS DEFINED UNDER SECTION 2 (15) OF THE A CT. LD. AO THUS TREATED AMOUNT RECEIVED FROM G OVERNMENT OF UTT A RAKHAND AS REVENUE RECEIPT. ASSESSING O FFICER ALSO DENIED DEPRECIATION CLAIMED ON CAPITAL ASSET, ON THE GROUND THAT, IT HAS BEEN ACQUIRED BY OTHERS, AND ASSESSEE WAS NOT ELIGIBLE FOR CLAIM OF DEPRECIATION. LD. AO ALSO TREATED INTEREST INCOME EARNED BY ASSESSEE AS I NCOME FROM O THER S OURCES . 2.3. AGGRIEVED BY ORDER OF LD. A.O. , ASSESSEE PREFERRED APPEAL BEFORE LD. CIT (A) , WHO UPHELD ADDITIONS MADE BY LD. AO. 3. AGGRIEVED BY ORDER OF LD. CIT (A) , ASSESSEE IS IN APPEAL BEFORE US NOW. 4. GROUND NO. 1 - 3 HAS BEEN RAISED BY ASSESSEE , AGAINST ADDITION OF RS. 5 CRORES MADE BY LD.AO IN RESPECT OF ALLEGED CAPITAL CORPUS FUND GRANTED BY G OVERNMENT OF UTT A RAKHAND AS REVENUE RECEIPT ON THE GROUND THAT , ASSESSEE IS NOT REGIS TERED UNDER SECTION 12 A/12 AA OF THE ACT. 4.1 . L D.AR SUBMITTED THAT ASSESSEE S O C I E T Y W A S FORMED WITH CERTAIN O BJECTS, TO PROMOTE WELFARE OF O FFICERS OF CIVIL SERVICES . T H E S O C I E T Y W A S F O R M E D UNDER DIRECTIVES OF DIRECTOR SPORTS, AND T H E SERVICES ARE EXCLUSIVELY FOR ITS MEMBERS, WHO SE NAMES CAN BE ENTERED IN R EGISTER OF M EMBERS , AS PER ELIGIBILITY. LD . AR SUBMITTED THAT ASSESSEE RECEIVED A SUM OF RS. 5 CRORE S TOWARDS CORPUS FUND VIDE LETTER NO. 563/VI - 2/2014 - 4 (5) 2004/T.C., DATED 04/12/2014 FROM THE SECRETARY, UTT A RAKHAND . LD.AR REFERRED TO AND RELIED UPON PAGE 30 OF PAPER BOOK, WHEREIN COPY OF LETTER SANCTIONING FUNDS HAS BEEN PLACED , AND TRANSLATED ITA NO.4 4 85/DEL/2018 A.Y.:2015 - 16 CIVIL SERVICES INSTITUTE, DEHRADUN VS. DCIT, CIRCLE 1(4),RISHIKESH 6 VERSION OF THE SAME HAS BEEN PLACED AT PAGE 104 - 105 OF PAPER BOOK. LD.AR SUBMITTED THAT SAID LETTER VERY CATEGORICALLY REMARKS SAID FUND TO BE CORPUS FUND WHICH SHALL BE UTILISED AS PER THE TERMS AND CONDITION MENTIONED THEREIN. HE THUS SUBMITTED THAT THESE CORPUS FUND S WERE NOT TAXABLE , BY RELYING UPON DECISION OF CO - O RDINATE B ENCH OF THIS TRIBUNAL, MUMBAI BENCH ES, IN CHANDRAPRABHU JAIN SWETAMBER MANDIR VS ACIT, REPORTED IN (2017) 82 TAXMANN.COM 245. LD.AR SUBMITTED THAT LD. CIT (A) REJECTED ASSESSEE S CLAIM ONLY FOR THE REASON THAT WORD CORPUS IS NOT MENTIONED IN LETTER SPECIFICALLY. 4.2. LD.AR FURTHER SUBMI TTED THAT TAXABILITY OF CONTRIBUTIONS TOWARDS CORPUS FUND OF AN I NSTITUTION IS DE HORS REGISTRATION , UNDER SECTION 12 A /12 AA OF THE A CT , AND THEREFORE AUTHORITIES BELOW ERRED IN TREATING THE AMOUNT RECEIVED TOWARDS CORPUS FUND AS REVENU E RECEIPT IN THE HANDS OF ASSESSEE. HE SUBMITTED THAT ASSESSEE RECEIVED SAID FUND FROM G OVERNMENT OF UTT A RAKHAND , WITH SPECIFIC DIRECTIONS IN THE MANNER IT HAS TO BE APPLIED TOWARDS SPECIFIC PURPOSE. HE THUS SUBMITTED THAT AMOUNT RECEIVED FROM S TATE G OVERNMENT CANNOT BE REGARDED AS INCOME UNDER SECTION 2 (24) (IIA) OF THE A CT , WHICH APPLIES ONLY TO VOLUNTARY CONTRIBUTIONS. 4.3. ON THE CONTRARY LD.SR.DR PLACED RELIANCE UPON ORDERS OF AUTHORITIES BELOW , AND SUBMITTED THAT FUNDS RECEIVED BY ASSESSEE FALLS UNDER THE PURVIEW OF SECTION 2 (24) (IIA) OF THE A CT. IT HAS BEEN SUBMITTED THAT ASSESSEE IS NOT CARRYING OUT ANY CHARITABLE ACTIVITY AS DEFINED UNDER SECTION 2 (15) OF THE A CT, AND ASSESSEE BENEFITS O NLY A SMALL SET OF INDIVIDUALS. FURTHER IT HAS BEEN SUBMITTED BY LD.SR.DR THAT ASSESSEE HAS NEITHER OBTAINED ITA NO.4 4 85/DEL/2018 A.Y.:2015 - 16 CIVIL SERVICES INSTITUTE, DEHRADUN VS. DCIT, CIRCLE 1(4),RISHIKESH 7 ANY REGISTRATION UNDER SECTION 10(23C) (IV) , OR REGISTRATION UNDER SECTION 12 A/12 AA OF THE A CT. HE THUS SUBMITTED THAT LD. CIT (A) WAS RIGHT IN D ISALLOWING THE CLAIM OF ASSESSEE 5. WE HAVE PERUSED SUBMISSIONS ADVANCED BY BOTH SIDES IN LIGHT OF RECORDS PLACED BEFORE US. 6. IT IS OBSERVED FROM COMMUNICATION BETWEEN ASSESSEE AND GOVERNMENT OF UTT A RAKHAND DEPARTMENT OF CULTURE, TOURIS M AND GAMES, DEHRADUN, DATED 01/12/14, T H A T FUNDS WERE RELEASED, AS CORPUS FUND FOR OPERATION OF CIVIL SERVICES INSTITUTE CONSTRUCTION AT DEHRADUN. IT IS ALSO OBSERVED THAT ONLY REASON FOR DISALLOWANCE OF CLAIM OF ASSESSEE IS BECAUSE, PHRASE CORPUS FUND HAS NOT BEEN MENTIONED IN LETTER DATED 23/03/11, ISSUED BY PRINCIPAL SECRETARY, GOVERNMENT OF UTT A RAKHAND TO DIRECTOR OF SPORTS , UTT A RAKHAND CULTURE, TOURISM AND GAMES. HOWEVER IT IS OBSERVED THAT IN MINUTES OF MEETING BY GOVERNMENT OF UTT A RAKHAND DEPARTMENT OF CULTURE, TOURISM AND GAMES, DATED 31/05/13 PRESIDED OVER BY CHIEF SECRETARY, THERE IS A SPECIFIC REFERENCE REGARDING BUDGET ALLOCATION OF RS. 5 CRORE AS CORPUS FUND FROM S PORTS DEPARTMENT TO ASSESSEE , FOR ITS DAILY FUNCTIONING IN CLAUSE (V II). FOR SAKE OF CONVENIENCE SAID CLAUSE(VII) IS REPRODUCED HEREIN: (VII) BUT DETAILED DISCUSSION WAS MADE IN RESPECT OF DAILY FUNCTIONING OF THE INSTITUTION. THIS YEAR ONE - TIME BUDGET ALLOCATION OF RS. 5 CRORES AS CORPUS FUNDS FROM SPORTS DEPARTMENT HAS BEEN MADE. DURING THE DISCUSSION IT WAS ALSO FELT THAT THERE IS A NEED FOR FURTHER OF ADDITIONAL FUND, SO THAT THERE IS NO HINDRANCE IN THE FUNCTIONING. IT WAS DIRECTED THAT FOR SANCTION OF ADDITIONAL CORPUS ITA NO.4 4 85/DEL/2018 A.Y.:2015 - 16 CIVIL SERVICES INSTITUTE, DEHRADUN VS. DCIT, CIRCLE 1(4),RISHIKESH 8 FUND THE FILE TO BE SUBMITTED TO HON BLE CHIEF M INISTER THROUGH PROPER CHANNEL. 6.1 . WE THEREFORE DO NOT HAVE ANY DOUBT ON NATURE OF FUNDS TO BE TOWARDS CORPUS . FURTHER ASSESSEE HAS BEEN ABLE TO PROVE THAT CORPUS FUND WAS RECEIVED FOR MEETING OUT CAPITAL EXPENDITURE WHICH ACCORDING TO EXPLANATION OF ASSESSEE HAVE BEEN USED ACTUALLY TO MEET THE CAPITAL EXPENDITURE. THUS , IN OUR CONSIDERED OPINION , CORPUS FUND WH ICH IS MEANT FOR SPECIFIC PURPOSE TO MEET OUT CAPITAL EXPENDITURE COULD NOT BE PART OF ANNUAL RECEIPTS OF T H E S O C I E T Y , EVEN IF NO REGISTRATION U/S 12AA HA S BEEN GRANTED. 6.2. ACCORDINGLY GROUND N O S . 1 T O 3 RAISED BY ASSESSEE STAND ALLOWED . 7. GROUND NO. 4 - 5 HAS BEEN RAISED BY ASSESSEE ON DISALLOWANCE OF DEPRECIATION CLAIMED AMOUNTING TO RS. 94, 66, 932/ - . 7.1. LD.AR SUBMITTED THAT LD.AO DISALLOWED DEPRECIATION CLAIMED, IN LIGHT OF EXPLANATION 10 TO SECTION 43 (1) OF THE ACT. HE SUBMITTED THAT DISALLOWANCE MADE BY LD. AO IS ON THE GROUND THAT, ABOVE FUNDS RECEIVED FROM SECRETARY SPORTS DEPARTMENT, UTT A RAKHAND, WAS TREATED BY LD.AO AS SUBSIDY AND CONSTRUCTION HAVING OWNED BY SPORTS DEPARTMENT, UTT A RAKHAND. LD.AR EMPHASISED THAT PRINCIPAL SECRETARY , SPORTS DEPARTMENT, UTT A RAKHAND IS CHAIRPERSON FOR REGULATING AND MONITORING CONSTRUCTION OF CIVIL WORKS OF ASSESSEE . HE IS IN THE CAPACITY OF A TRUSTEE FOR ASSESSEE AND ANY SUM RECEIVED FOR PURPOSES OF CONSTRUCTION , WOULD BE TOWARDS CORPUS . IT IS ALSO SUBMITTED THAT ANY CONSTRUCTION SO MADE WOULD BE INCLUDED IN ASSETS OF ASSESSEE ON WHICH DEPRECIATION CAN NOT BE DENIED. ITA NO.4 4 85/DEL/2018 A.Y.:2015 - 16 CIVIL SERVICES INSTITUTE, DEHRADUN VS. DCIT, CIRCLE 1(4),RISHIKESH 9 7.2. LD. SR. DR PLACED RELIANCE UPON THE ORDERS OF AUTHORITIES BELOW. 8. WE HAVE PERUSED SUBMISSIONS ADVANCED BY BOTH THE SIDES IN THE LIGHT OF RECORDS PLACED BEFORE US. 8.1 . IT IS OBSERVED THAT PRINCIPAL S ECRETARY , UTT A RAKHAND ON 29 /03/11 DIRECTED S PORTS DEPARTMENT, UTT A RAKHAND TO BRING ASSESSEE INTO EXISTENCE. HE NOMINATED BUDGET FUND TO MEET PLANNED COST FOR CONSTRUCTION OF BUILDING FOR ASSESSEE. IT IS OBSERVED THAT LD. A.O. RELIED UPON THE VIEW THAT THE BUILDING OWNED BY ASSESSEE HAS BEEN CONSTRUCTED BY THE GRANT SANCTIONED BY G OVERNMENT OF UTT A RAKHAND AND , THEREFORE , IN VIEW OF EXPLANATION 10 TO S ECTION 43(1), DEPRECIATION COULD NOT BE ALLOWED ON SUCH CONSTRUCTION. 8.2 AS WE HAVE ALREADY HELD IN PRECEDING PARAGRAPHS THAT THE MONEY RECEIVED BY ASSESSEE FROM G OVERNMENT OF UTT A RAKHAND WAS IN THE NATURE OF CORPUS WHICH WAS TO BE UTILISED FOR CAPITAL EXPENDITURE OF ASSESSEE, WE DIFFER TO FOLLOW THE VIEW TAKEN BY LD.CIT(A). F URTHER IT IS OBSERVED THAT OBJECTS OF SOCIETY WORKS ON PRINCIPLE OF MUTUALITY AND HAS BEEN CREATED FOR BENEFIT OF ITS MEMBERS. 8.3 . WE THEREFORE DIRECT LD. AO TO ALLOW THE DEPRECIATION ON SUCH BUILDING AS CLAIMED BY ASSESSEE. 8.4. ACCORDING LY GROUND N O S . 4 & 5 RAISED BY ASSESSEE STAND ALLOWED. 9. GROUND NO. 6 & 7 ARE IN RESPECT OF TREATMENT OF INTEREST EARNED BY ASSESSEE AS I NCOME FROM O THER S OURCES . 9.1 . LD. AR SUBMITTED THAT ASSESSEE HAD DEPOSITED FUNDS RECEIVED TOWARDS CORPUS WITH BANK, ON WHICH INTEREST WAS ITA NO.4 4 85/DEL/2018 A.Y.:2015 - 16 CIVIL SERVICES INSTITUTE, DEHRADUN VS. DCIT, CIRCLE 1(4),RISHIKESH 10 EARNED TO AN EXTENT OF RS.55,21,641/ - . ASSESSEE TREATED INTEREST INCOME AS BUSINESS INCOME, WHICH WAS DISALLOWED BY LD.AO, BY TREATING IT AS INCO ME FROM OTHER SOURCES . LD. AR SUBMITTED THAT THE RATIO LAID DOWN BY HON BLE SUPREME COURT IN CASE OF BANGALORE C LUB REPORTED IN 350 ITR 509 IS SQUARELY APPLICABLE TO FACTS OF PRESENT CASE. 9.2 . ON THE CONTRARY LD.SR.DR PLACED RELIANCE UPON ORDERS PASS ED BY AUTHORITIES BELOW. 10. WE HAVE PERUSED SUBMISSIONS ADVANCED BY BOTH THE SIDES IN THE LIGHT OF RECORDS PLACED BEFORE US. 10.1 . IN OUR CONSIDERED OPINION, AMOUNT ON WHICH INTEREST HAS BEEN EARNED BY ASSESSEE, ITSELF IS EXEMPT FROM TAX UNDER DOCTRINE OF MUTUALITY . FURTHER IT HAS BEEN OBSERVED FROM OBJECTS OF THE SOCIETY THAT TREATMENT OF EXCESS FUNDS MUST BE IN FURTHERANCE OF OBJECT S OF SOCIETY. IN THE INSTANT CASE, SURPLUS FUNDS WERE TO BE USED FOR ANY SPECIFIC SERVICE, INFRASTRU CTURE, MAINTENANCE OR FOR ANY OTHER DIRECT BENEFIT FOR MEMBERS. FURTHER FROM SUBMISSIONS OF ASSESSEE BEFORE LD. CIT (A) IT IS OBSERVED THAT BANK WITH WHOM FIXED DEPOSITS ARE MAINTAINED ARE NOT ITS MEMBERS AND ASSESSEE DID NOT CLAIM FOR ANY EXEMPTI ON OF INTEREST INCOME ON THE BASIS OF DOCTRINE OF MUTUALITY , INSTEAD HAS CONSIDERED FOR TAXABILITY UNDER HEAD I NCOME FROM B USINESS . WE THEREFORE DO NOT FIND ANY REASON TO CHANGE THE HEAD OF INTEREST INCOME TO INCOME FROM OTHER SOURCES . 10.2 . A CCORDINGLY G ROUND N O S . 6 A N D 7 RAISED BY ASSESSEE STANDS ALLOWED. 11. GROUND NO. 8, 9 AND 11 ARE GENERAL IN NATURE AND DO NOT REQUIRE ANY ADJUDICATION. ITA NO.4 4 85/DEL/2018 A.Y.:2015 - 16 CIVIL SERVICES INSTITUTE, DEHRADUN VS. DCIT, CIRCLE 1(4),RISHIKESH 11 12. GROUND NO. 10 IS IN RESPECT OF INTEREST UNDER SECTION 234 B, C OF THE ACT, WHICH IS C O N S E Q U E N T I A L I N N A T U R E . ACCORDINGLY A L L GROUNDS RAISED BY ASSESSEE STAND ALLOWED. 13. IN THE RESULT APPEAL FILED BY ASSESSEE STANDS ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 2 4 / 0 9 / 2018. S D / - S D / - (R.K.PANDA) (BEENA A PILLAI) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED: THE 2 4 T H SEPTEMBER, 2018. GMV COPY OF THE ORDER FORWARDED TO: 1. APPEL LANT 2. RESPONDENT 3. CIT 4. CIT(A) 5. DR 6. GUARD FILE BY ORDER ASST. REGISTRAR ITAT, DELHI BENCHES, NEW DELHI ITA NO.4 4 85/DEL/2018 A.Y.:2015 - 16 CIVIL SERVICES INSTITUTE, DEHRADUN VS. DCIT, CIRCLE 1(4),RISHIKESH 12 S.NO. DETAILS DATE 1. DRAFT DICTATED ON 20.09.18 2. DRAFT PLACED BEFORE AUTHOR 3. DRAFT PROPOSED & PLACED BEFORE THE SECOND MEMBER 4. DRAFT DISCUSSED/APPROVED BY SECOND MEMBER 5. APPROVED DRAFT COMES TO THE SR. PS/PS 6. KEPT FOR PRONOUNCEMENT 7. ORDER UPLOADED ON 8. FILE SENT TO BENCH CLERK 9. DATE ON WHICH THE FILE GOES TO HEAD CLERK 10. DATE ON WHICH FILE GOES TO A.R. 11. DATE OF DISPATCH OF ORDER