M/s. Raman Educational Society, Ghaziabad V. Addl. CIT, Ghaziabad

ITA 4641/DEL/2015

• Counselvise Citation: [2017] 130 COUNSELVISE.COM (IT) 6632 (ITAT-DELHI)
• Duration Of Justice: 1 year(s) 7 month(s) 1 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 15-02-2017
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC 1
• Next Hearing Date: 09-01-2017
• Assessment Year: 2011-2012
• Appeal Filed On: 14-07-2015
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: DR RAKESH GUPTA
• Keywords: Capital asset; Business income; Depreciation; Charitable institution; Principle of natural justice
• Section: 143(3); 80G; 12AA

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCHES : SMC: NEW DELHI BEFORE SHRI H.S. SIDHU, JUDICIAL MEMBER ITA NO. 4641/DEL/2015 ASSESSMENT YEAR : 2011-12 RAMAN EDUCATIONAL SOCIETY E-8, KAVI NAGAR INDUSTRIAL AREA, GHAZIABAD (PAN: AAAAR1010N) VS. ADDL. CIT, RANGE-2, GHAZIABAD (APPELLANT) (R ESPONDENT) ASSESSEE BY : DR. RAKESH GUPTA, ADV. & SH. SOMIL AGGARWAL, ADV. DEPARTMENT BY : SH. RAKESH KUMAR, SR. DR ORDER THIS APPEAL FILED BY THE ASSESSEE IS DIRECTED AGAINST THE ORDER PASSED BY THE CIT(A), GHAZIABAD ON 29.5.2015 IN RELATION TO THE ASSESSMENT YEAR 2011-12 ON THE FOLLOWING CONCISE GROUNDS:- 1. 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.25,37,255/- ON ACCOUNT OF HOSTEL SURPLUS FEE RECEIPTS B Y TREATING IT AS BUSINESS INCOME IN THE HANDS OF APPELLANT ULS 11 (4 )/11 (4A) AND THAT TOO BY RECORDING INCORRECT FA CTS 2 AND FINDINGS AND WITHOUT OBSERVING THE PRINCIPLES OF NATURAL JUSTICE. 2. THAT IN ANY CASE AND IN ANY VIEW OF MATTER, ACTION OF LD. CIT(A) IN CONFIRMING THE ACTION OF LD. AO IN MAKI NG ADDITION OF RS.25,37,255/- AS BUSINESS INCOME IN THE HANDS OF APPELLANT IS BAD IN LAW AND AGAINST THE FACTS A ND CIRCUMSTANCES OF THE CASE. 3. THAT HAVING, REGARD TO THE FACTS AND CIRCUMSTANCES OF THE CASE, LD. CIT (A) HAS ERRED IN LAW AND ON FACTS I N CONFIRMING THE ACTION OF LD. AO IN MAKING DISALLOWANCE OF RS.L,01,41,449/- ON ACCOUNT OF DEPRECIATION CLAIMED BY THE ASSESSEE AND THAT TOO BY RECORDING INCORRECT FACTS AND FINDINGS AND WITHOUT OBSERVING THE PRINCIPLES OF NATUR AL JUSTICE. 4. 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 WITHOUT PRE JUDICE TO EACH OTHER. 2. THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE IS A CH ARITABLE SOCIETY/ TRUST REGISTERED UNDER THE SOCIETY REGISTRATION ACT, 1860 W.E.F. 25.7.2008. THE SOCIETY WAS GRANTED U/S. 12AA OF THE INCOME TAX ACT, 1961 ON 21.12.2011 BY THE LD. CIT, GHAZIABAD. THE SOCIET Y IS ALSO APPROVED 3 U/S. 80G OF THE INCOME TAX ACT, 1961. THE RETURN OF I NCOME WAS FILED ON 20.12.2011 DECLARING NIL INCOME. THE CASE WAS PROCESSED U /S. 143(1) OF THE I.T. ACT, 1961. THE CASE WAS SELECTED FOR SCRUTINY ASSE SSMENT. THE AO MADE VARIOUS DISALLOWANCES, ADDITION AND THE ASSESSMENT WAS COMPLETED ON A TAXABLE INCOME OF RS. 25,37,255/- VIDE HIS ORDER DATED 7.3.2014 PASSED U/S. 143(3) OF THE I.T. ACT, 1961. 3. BEING AGGRIEVED THE ASSESSEE CARRIED THE MATTER TO THE LD. CIT(A) WHO CONFIRMED SOME ACTIONS OF THE AO AND PAR TLY ALLOWED THE APPEAL OF THE ASSESSEE VIDE HIS ORDER DATED 29. 5.2015. 4. NOW THE ASSESSEE IS AGGRIEVED BY THE IMPUGNED OR DER AND FILED THE PRESENT APPEAL BEFORE THE TRIBUNAL. 5. AT THE TIME OF HEARING, LD. COUNSEL OF THE ASSES SEE STATED THAT THE LOWER AUTHORITIES HAVE WRONGLY MADE THE A DDITION OF RS. 25,37,255/- ON ACCOUNT OF HOSTEL SURPLUS FEE RECEIP TS BY TREATING IT AS BUSINESS INCOME IN THE HANDS OF THE ASSESSEE U/S. 11(4)/11(4A) AND THAT TOO BY RECORDING INCORRECT FA CTS AND FINDINGS AND WITHOUT OBSERVING THE PRINCIPLES OF NA TURAL JUSTICE. HE FURTHER STATED THAT THE LOWER AUTHORITIES CONF IRMED THE DISALLOWANCE OF DEPRECIATION RS. 1,01,41,449/- WITH OUT PROPERLY APPRECIATING THE LAW ON THE ISSUE AND ARGUMENTS PU T FORWARD BY THE ASSESSEE INCLUDING THE ONE THAT WHERE THERE ARE TWO VIEWS THAN THE ONE WHICH IS FAVOUR TO ASSESSEE SHALL PREV AIL. HENCE, HE 4 REQUESTED THAT DISALLOWANCE IN DISPUTE MAY BE DELET ED. IN SUPPORT OF HIS CONTENTION, HE RELIED UPON THE DECISION OF T HE HONBLE HIGH COURT IN THE CASE OF DIRECTOR OF INCOME TAX (EXEMPT ION) VS. INDRAPRASTHA CANCER SOCIETY REPORTED IN [2015] 53 T AXMANN.COM 463 (DELHI) AND STATED THAT THE PRESENT ISSUE IN D ISPUTE IS SQUARELY BY THE AFORESAID DECISION OF THE HONBLE D ELHI HIGH COURT. 6. ON THE OTHER HAND, LD. DR RELIED UPON THE ORDERS OF THE AUTHORITIES BELOW AND STATED THAT THE SAME MAY BE AFFIRMED. 7. I HAVE HEARD BOTH THE PARTIES AND PERUSED THE RECOR DS ESPECIALLY THE ORDER OF THE LD. CIT(A) AND THE ORDER OF THE HONBLE HIGH COURT OF DELHI IN THE CASE OF DIRECTOR OF INCOME TAX (EXEMPTION) VS. I NDRAPRASTHA CANCER SOCIETY REPORTED IN [2015] 53 TAXMANN.COM 46 3 (DELHI), WHEREIN THE HONBLE DELHI HIGH COURT HAS HELD THAT WHERE A CHARITABLE INSTITUTION, WHICH HAS PURCHASED CAPITAL ASSETS AND TREATED AMOUNT SPENT ON PURCHASE OF CAPITAL ASSET A S APPLICATION OF INCOME, IS ENTITLED TO CLAIM DEPRECIATION ON SAM E CAPITAL ASSET UTILIZED FOR BUSINESS. 8. AFTER PERUSING THE AFORESAID DECISION OF THE HONB LE HIGH COURT AS AFORESAID, I AM OF THE CONSIDERED VIEW THAT THE ISSUE I N DISPUTE IS SIMILAR AND SQUARELY COVERED BY THE AFORESAID DECISION, THEREFOR E, RESPECTFULLY 5 FOLLOWING THE ABOVE PRECEDENTS, THE ADDITIONS IN DISPUT E ARE HEREBY DELETED AND ACCORDINGLY, THE ISSUES IN DISPUTE ARE ALLOWED. 9. IN THE RESULT, THE APPEAL OF THE ASSESSEE STANDS ALLOW ED. THE ORDER PRONOUNCED IN THE OPEN COURT ON 15-2-2017. SD/- [H.S. SIDHU] JUDICIAL MEMBER DATED, 15-2-2017. SRBHATNAGAR COPY FORWARDED TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT (A) DR, ITAT AR, ITAT, NEW DELHI.