M/s. Devi Shakuntala Thakral Charitable foundation, Bhopal V. The ACIT3(1), Bhopal

ITA 48/IND/2012

• Counselvise Citation: 4822714 RSA 2012
• Duration Of Justice: 3 month(s) 29 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 01-06-2012
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: DB
• Assessment Year: 2007-2008
• Appeal Filed On: 02-02-2012
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: DARSHAN SINGH
• Assessee Lawyers: R N GUPTA
• Keywords: Capital asset; Depreciation; Cost of acquisition; Notional interest
• Section: 12A; 12; 11

Judgement Text

1 IN THE INCOME TAX APPELATE TRIBUNAL INDORE BENCH, INDORE BEFORE SHRI JOGINDER SINGH, JM AND SHRI R.C. SHARMA , AM ITA NOS. 48 AND 49/IND/2012 A.Y. 2007-08 AND 2008-09 M/S DEVI SHAKUNTALA THAKRAL CHARITABLE FOUNDATION BHOPAL PAN AAATD 2943B :: APPELLANT VS ASSTT. COMMISSIONER OF INCOME TAX 3(1), BHOPAL :: RESPONDENT APPELLANT BY SHRI R.N. GUPTA RESPONDENT BY SHRI DARSHAN SINGH DATE OF HEARING 22 .05.2012 DATE OF PRONOUNCEMENT 01 .0 6 .2012 O R D E R PER R.C. SHARMA, AM THESE ARE THE APPEALS FILED BY THE ASSESSEE AGAINS T THE ORDER OF THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) DATED 9.12.2011 FOR THE ASSESSMENT YEARS 2007-08 AND 2008-09. 2 2. COMMON GROUNDS HAVE BEEN TAKEN BY THE ASSESSEE IN BOTH THE YEARS. WE ARE REPRODUCING HEREUNDER TH E GROUNDS TAKEN BY THE ASSESSEE FOR THE ASSESSMENT YE AR 2007-08 :- 1. THAT, ON THE FACTS & IN THE CIRCUMSTANCES OF TH E CASE AND IN LAW, THE ASSESSEE HAS FURNISHED RETURN IN THE STATUS OF ARTIFICIAL JUDICIAL PERSON AS DEFINED IN SECTION 2(31)(VII) OF THE I.T. ACT. THE LEARNED LOW ER AUTHORITIES HAS MADE AN ASSESSMENT IN THE STATUS OF SOCIETY WHICH STATUS DO NOT FIND PLACE IN SECTION 2(31) OF I.T. ACT. THE ASSESSMENT THUS MADE IS INVA LID AND WITHOUT JURISDICTION HENCE BE CANCELLED. 2. THAT, ON THE FACTS & IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE ASSESSEE INSTITUTION IS NOT AN ASSOCIATION OF PERSONS AND, THEREFORE, THE FINDINGS OF THE LEARNED LOWER AUTHORITIES THAT THE ASSESSEE IS AOP IS WHOLLY WRONG AND UNLAWFUL AND, THEREFORE, SUCH FINDINGS BE QUASHED. 3. THAT, ON THE FACTS & IN THE CIRCUMSTA NCES OF THE CASE AND IN LAW, THE LEARNED LOWER AUTHORITIE S ERRED THAT THE SOCIETY HAS GIVEN BENEFITS TO ITS MEMBERS IN THE FORM OF TELEPHONE EXPENSES & TRAVELI NG EXPENSES AND, THEREFORE, THE SOCIETY IS NOT ELIGIBL E FOR EXEMPTION U/S.11 & 12 OF THE I.T. ACT. SUCH FINDING S OF THE LEARNED LOWER AUTHORITIES BE QUASHED AND IT BE HELD THAT THE EXPENDITURE ON TELEPHONE & TRAVELLI NG WERE FOR THE PURPOSE AND THE BENEFITS OF THE SOCIET Y AND THERE IS NO PERSONAL BENEFITS OF THE MEMBERS OF THE SOCIETY IS INVOLVED IN SUCH EXPENSES. THUS IT B E HELD THAT THERE IS NO VIOLATION OF SECTION 13 AND T HE ASSESSEE IS FULLY ELIGIBLE FOR EXEMPTION U/S.11 & 1 2 OF THE I.T. ACT. 3 4. THAT, ON THE FACTS & IN THE CIRCUMSTAN CES OF THE CASE AND IN LAW, THE DISALLOWANCE OF RS. 6143 OUT OF TELEPHONE EXPENSES IS WHOLLY UNJUSTIFIED AND UNLAWFUL AND, THEREFORE, BE DELETED. 5. THAT, ON THE FACTS & IN THE CIRCUMSTAN CES OF THE CASE AND IN LAW, THE DISALLOWANCE OF RS. 498050 OUT OF TRAVELLING EXPENSES IS WHOLLY UNJUSTIFIED AN D UNLAWFUL AND, THEREFORE, BE DELETED. 6. THAT, ON THE FACTS & IN THE CIRCUMST ANCES OF THE CASE AND IN LAW, THE LEARNED LOWER AUTHORITIES ERRED AND NOT JUSTIFIED IN NOT ALLOWING THE DEDUCTI ON FOR THE APPLICATION OF INCOME ON ACQUISITION OF FIX ED ASSETS AT RS. 20,35,92,757/-. SUCH DEDUCTION BE KINDLY ALLOWED AS AN APPLICATION OF INCOME. 7. THAT, ON THE FACTS & IN THE CIRCUMST ANCES OF THE CASE AND IN LAW, THE LEARNED LOWER AUTHORITIES ERRED AND NOT JUSTIFIED IN NOT ALLOWING THE DEDUCTI ON FOR THE APPLICATION OF INCOME U/S.11(1)(A) OF I.T. ACT CLAIMED AT RS. 8235688. SUCH DEDUCTION BE KINDLY ALLOWED AS AN APPLICATION OF INCOME U/S.11(1)(A). 8. THAT, ON THE FACTS & IN THE CIRCUMSTAN CES OF THE CASE AND IN LAW, THE LEARNED LOWER AUTHORITIES ERRED AND NOT JUSTIFIED IN INCLUDING IN THE TOTAL I NCOME OF THE ASSESSEE CORPUS DONATION RS. 50500000. THE SAID DONATION BE KINDLY EXCLUDED FROM THE TOTAL INC OME ASSESSED BY THE LEARNED LOWER AUTHORITIES. 9. THAT, ON THE FACTS & IN THE CIRCUMSTA NCES OF THE CASE AND IN LAW, THE LEARNED LOWER AUTHORITIES ERRED AND NOT JUSTIFIED IN NOT ALLOWING THE CREDIT OF TDS. SUCH CREDIT BE DIRECTED TO BE ALLOWED. 4 10. THAT, ON THE FACTS & IN THE CIRCUMSTANCES O F THE CASE AND IN LAW, THE LEVY OF INTEREST U/S. 234A, 2 34B, 234C & 234D ARE UNLAWFUL AND HENCE BE CANCELLED. 3. RIVAL CONTENTIONS HAVE BEEN HEARD AND RECORD PERUSED. THE FACTS, IN BRIEF, ARE THAT THE ASSESSEE IS A SOCIETY REGISTERED UNDER M.P. SOCIETY REGISTRATION ACT. THE ASSESSEE SOCIETY IS RUNNING (I) ORIENTAL INSTIT UTE OF SCIENCE AND TECHNOLOGY (II) THAKRAL COLLEGE OF TECH NOLOGY (III) ORIENTAL COLLEGE OF MANAGEMENT (IV) ORIENTAL COLLEGE OF PHARMACY AT BHOPAL AND (V) ORIENTAL INSTITUTE OF SCIENCE AND TECHNOLOGY AT INDORE. IN THE RETURN OF INCOME THE ASSESSEE HAD CLAIMED EXEMPTION U/S 11. THE A.O. FOUND THAT CERTAIN DEFAULTS AS MENTIONED IN SE CTION 13 WERE COMMITTED BY THE SOCIETY. HENCE HE DENIED EXEMPTION U/S 11 OF THE ACT. HE ALSO MADE SOME OTH ER ADDITIONS IN THE TWO ASSESSMENT YEARS AND DISALLOWE D THE DEPRECIATION ON ASSETS PURCHASED BY APPLICATION OF INCOME EXEMPTED FROM TAX. 5 4. THE FIRST GRIEVANCE OF THE ASSESSEE IN BOTH THE YEARS IS THAT THE ASSESSEE HAS FURNISHED RETURN IN THE ST ATUS OF ARTIFICIAL JURIDICAL PERSON U/S 2(31)(VII) OF THE A CT. HOWEVER, THE LOWER AUTHORITIES HAVE MADE THE ASSESSMENT IN THE STATUS OF SOCIETY WHICH STATUS DOES NOT FIND PLACE IN SECTION 2(31) OF THE ACT. IT WAS ARGUED BY THE LD.COUNSEL FOR THE ASSESSEE THAT THE ASSESSE E HAS FILED ITS RETURN OF INCOME ONLY IN THE STATUS OF AR TIFICIAL JURIDICAL PERSON (HEREINAFTER REFERRED TO AJP). HOWEVER, WITHOUT GIVING ANY NOTICE OR REASON FOR SUCH CHANGE , THE ASSESSING OFFICER HAS ASSESSED THE INCOME IN THE ST ATUS OF SOCIETY. AS PER THE LD.COUNSEL FOR THE ASSESSEE , THE ASSESSMENT MADE IN THE STATUS OTHER THAN THE STATUS SHOWN IN THE RETURN IS VOID AB INITIO. ACCORDINGLY , IT WAS PRAYED THAT THE ASSESSMENT MADE BY THE ASSESSING OFFICER AND CONFIRMED BY CIT(A) SHOULD BE CANCELLE D. HE ALSO PLACED ON RECORD ORDERS OF THE COORDINATE BENC H IN THE CASE OF CHANDRAVADANI MAHILA SHIKSHA SAMITI, OR DER 6 DATED 8.2.2012 WHEREIN EXACTLY SIMILAR ISSUE WAS DECIDED. 5. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS OF THE PARTIES, GONE THROUGH THE ORDERS OF THE AUTHORITIES BELOW AND FIND FROM RECORD THAT THE ASSESSEE IS A REGISTE RED SOCIETY WITH THE REGISTRAR OF SOCIETIES. AFTER VER IFYING THE GENUINENESS OF THE ACTIVITIES OF THE SOCIETY AND SA TISFYING ABOUT ITS OBJECTS, THE REGISTRATION WAS GRANTED U/S 12AA(1)(B)(I) WITH EFFECT FROM 1.4.2002. THE RETUR N WAS ALSO FILED IN THE STATUS OF AJP. HOWEVER, WITHOUT GIVING ANY NOTICE OR ANY REASON MUCH LESS A COGENT REASON, THE ASSESSING OFFICER HAS ASSESSED THE SAME AS AOP. WE DO NOT FIND ANY JUSTIFICATION IN THE ACTION OF THE ASS ESSING OFFICER WHICH WAS CONFIRMED BY THE COMMISSIONER OF INCOME TAX (APPEALS). UNDER IDENTICAL FACTS, THE I .T.A.T., COORDINATE BENCH IN THE CASE OF CHANDRAVADANI MAHIL A SHIKSHA SAMITI; INCOME-TAX ACT, 1961, NOS. 141 TO 1 43 AND 281/IND/2011 ORDER DATED 8.2.2012, HELD THAT TH E 7 ASSESSING OFFICER WAS NOT JUSTIFIED IN CHANGING THE STATUS OF THE ASSESSEE WITHOUT GIVING ANY NOTICE. RESPECT FULLY FOLLOWING THE RATION LAID DOWN BY COORDINATE BENCH, WE DO NOT FIND ANY JUSTIFICATION FOR CHANGE OF STATUS OF THE ASSESSEE WITHOUT GIVING ANY COGENT REASON. 6. IN THE COURSE OF ASSESSMENT THE ASSESSING OFFICE R HAS DISALLOWED A SUM OF RS. 6143/- OUT OF TELEPHONE EXPENSES CLAIMED BY THE ASSESSEE AT RS. 38,602/- ON THE PLEA OF PERSONAL/OFFICIAL USE BY THE CHAIRMAN/PRESI DENT OF THE SOCIETY AND THEIR FAMILY MEMBERS. BY THE IMPUGNED ORDER, THE COMMISSIONER OF INCOME TAX (APPEALS) CONFIRMED THE DISALLOWANCE. 7. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS OF THE PARTIES, GONE THROUGH THE ORDERS OF THE AUTHORITIES BELOW AND FIND FROM RECORD THAT SHRI K.L. THAKRAL IS WORK ING AS CHAIRMAN OF THE INSTITUTION. MR. PRAVEEN THAKRAL I S WORKING AS MEMBER OF THE INSTITUTION. BOTH THE PER SONS ARE DULY QUALIFIED AND HAVE VAST EXPERIENCE OF MANA GING 8 AND RUNNING EDUCATIONAL INSTITUTION, BUSINESS AND INDUSTRY. BOTH THE PERSONS WERE ASSOCIATED WITH TH E INSTITUTION AND RENDERING THEIR SERVICES TO THE INS TITUTION FROM THE INITIAL STAGE. FOR THE PURPOSE OF CARRYIN G THE OBJECTS OF THE SOCIETY, THEY WERE PROVIDED MOBILE P HONES AND PHONE CALLS WERE ALSO DONE FOR VARIOUS ADMINIST RATIVE REASONS OF THE SOCIETY ITSELF. THERE WAS NO PERSON AL ELEMENT WHILE WORKING AS A CHAIRMAN AND MEMBER OF T HE MANAGING COMMITTEE. ACCORDINGLY, WE DO NOT FIND AN Y JUSTIFICATION FOR THE DISALLOWANCE OF RS. 6143/- MA DE BY THE ASSESSING OFFICER. 8. SIMILAR DISALLOWANCE HAS BEEN MADE ON ACCOUNT OF TRAVELLING EXPENSES. FROM RECORD WE FIND THAT THE TRAVELLING EXPENSES WERE INCURRED FOR VISIT TO DELH I, INDORE, JABALPUR, ETC. FOR THE PURPOSE OF THE SOCIE TY. ALL INDIA COUNCIL OF TECHNICAL EDUCATION IS THE REGULAT ORY BODY OF THE ENGINEERING COLLEGE UNDER THE MINISTRY OF HRD, THE CHAIRMAN AND THE MEMBER OF THE INSTITUTION 9 HAVE UNDERTAKEN VISIT TO THESE INSTITUTIONS FOR GET TING NECESSARY CLEARANCES. FURTHERMORE, THESE PERSONS W ERE REQUIRED TO ATTEND THE OFFICE OF THE COUNSEL, THERE FORE, VISIT TO DELHI WAS A REGULAR ROUTINE FOR THIS PURPO SE. THE ASSESSING OFFICER HAS DISALLOWED THE AMOUNT OF DAIL Y ALLOWANCE BEING PAID DURING THE PERIOD OF TRAVELLIN G. WE FIND THAT DA IS PAID ON DAILY BASIS FOR THE LODGING AND BOARDING EXPENSES. IN THE PRESENT DAYS IN THE METRO CITIES EVEN THE ROOM IN BUDGET HOTEL IS AVAILABLE I N THE RANGE OF RS. 2000-3000 PER DAY NORMALLY PLUS MEAL A ND OTHER EXPENSES PER DAY COMES TO NEARLY RS. 500 AND THEREFORE, THERE IS NO BENEFIT PROVIDED TO CHAIRMAN AS ALLEGED. THE OTHER EXPENDITURE RELATES ONLY TO COST OF AIR TICKET AND LOCAL CONVEYANCE. AT MANY TIMES TO ATTEN D THE MEETING IN TIME, EXPENDITURE ON AIR TICKET BECOMES NECESSARY AND THEREFORE, THE SAME WERE INCURRED. TH E PAYMENTS OF EXPENSES ARE, THEREFORE, FOR THE SERVIC ES RENDERED BY THE PERSONS FOR THE PURPOSE OF THE WORK S OF THE INSTITUTION. THE PAYMENT OF DA OF RS. 2500/- PE R DAY 10 CONSIDERING THE COST OF HOTEL AND THE FOOD IN CITY LIKE DELHI COULD NOT BE CONSIDERED AS UNREASONABLE AND, THEREFORE, THE ASSESSEE SOCIETY HAS NOT PROVIDED AN Y BENEFIT WITHOUT ANY SERVICE TO THE PERSONS MENTIONE D U/S 13 OF THE ACT. 9. SIMILARLY, TRAVELLING TO INDORE AND JABALPUR WA S UNDERTAKEN FOR GETTING NECESSARY BUILDING APPROVALS , WHICH WAS UNDER CONSTRUCTION STAGE. THE CHAIRMAN/SECRETARY AND OTHER PERSONS WERE, THEREFOR E, REQUIRED TO VISIT FREQUENTLY FOR THE SUPERVISION OF WORKS, HOLDING INTERVIEWS AND MEETINGS WITH THE CONTRACTOR S, SITE SUPERVISORS/ENGINEERS AND ALSO THE CONCERNED GOVERNMENT AUTHORITIES FOR COORDINATING AND CLEARAN CE OF VARIOUS GOVERNMENT PERMISSIONS AND SANCTIONS. THE VISITS TO THESE PLACES WERE VERY FREQUENT. AT THESE TWO PLACES, THE ASSESSEE DID NOT HAVE ANY ACCOMMODATION/GUEST HOUSES AND, THEREFORE, THE MEETING ETC. WERE ESSENTIALLY TO BE HELD/ORGANIZED IN A 11 HOTEL ROOM AND FOR THAT PURPOSE, THE EXPENDITURE INCURRED. THE PAYMENT OF RS. 2500/- PER DAY AS DA WAS FOR THE LODGING, BOARDING INCURRED BY THE PERSONS. THE PAYMENTS OF EXPENSES ARE, THEREFORE, FOR THE SERVIC ES RENDERED BY THE PERSONS FOR THE PURPOSE OF THE WORK S OF THE INSTITUTION. THE PAYMENT OF DA OF RS. 2500/- PE R DAY CONSIDERING THE COST OF HOTEL AND THE FOOD IN CITIE S LIKE INDORE/JABALPUR COULD NOT BE CONSIDERED AS UNREASONABLE, THUS THE ASSESSEE SOCIETY HAS NOT PROVIDED ANY BENEFIT WITHOUT ANY SERVICE TO THE PER SONS MENTIONED U/S 13 OF THE ACT. 10. IN VIEW OF THE ABOVE OBSERVATIONS, WE HOLD THAT THE LOWER AUTHORITIES WERE NOT JUSTIFIED IN DECLINING T HE CLAIM OF EXEMPTION U/SS 11 AND 12 OF THE ACT ON THE PLEA OF CONTRAVENTION OF SECTION 13(2) AND 13(3) OF THE ACT . SUB- SCTION (2) OF SECTION 13 UNDER CLAUSE NO. PROVIDE S THE PAYMENT OF SALARY AND OTHER ALLOWANCE TO THE PERSON S REFERRED TO IN SUB-SECTION (3) OF SECTION 13 OUT OF THE 12 RESOURCES OF THE INSTITUTION FOR SERVICES RENDERED BY THAT PERSON TO THE INSTITUTION PROVIDED THE AMOUNT PAID IS NOT IN EXCESS OF WHAT MAY BE REASONABLY PAID FOR SUCH SERVICES. THE PAYMENT OF DA FOR THE PURPOSE OF TRA VELLING FOR THE WORK OF THE INSTITUTION IS NOT AT ALL EXCES SIVE AND THE PAYMENT OF SUCH EXPENDITURE IS NOT FOR THE PERS ONAL BENEFIT OF OFFICE BEARERS AND, THEREFORE, THERE IS NO VIOLATION OF SECTION 13 OF THE ACT. 11. SIMILAR ISSUE OF DISALLOWANCE HAS BEEN CONSIDER ED BY THE COORDINATE BENCH OF THE TRIBUNAL IN THE CASE OF VICHAR BHARATI EDUCATION SOCIETY; ITA NOS. 540 TO 542/IND/07 ORDER DATED 13.7.2010. SIMILARLY, DISALLOWANCE OF TRAVELING EXPENSES WAS DELETED BY T HE TRI UNDER SIMILAR FACTS AND CIRCUMSTANCES IN THE CASE O F VICHAR BHARTI; INCOME-TAX ACT, 1961, NO. 280/IND/20 11 ORDER DATED 7.5.2012. THE DISALLOWANCE ON ACCOUNT OF TELEPHONE EXPENSES WAS HELD TO BE NOT JUSTIFIED BY THE TRIBUNAL IN THE CASE OF CHANDRAMANI MAHILA SHIKSHA 13 SAMITI IN INCOME-TAX ACT, 1961, NOS. 141 TO 143 AND 281/IND/2011 ORDER DATED 8.2.2012. AS THE FACTS AN D CIRCUMSTANCES DURING BOTH THE YEARS, UNDER CONSIDERATION, ARE PERI MATERIA WITH THE FACTS AND CIRCUMSTANCES DISCUSSED BY THE TRIBUNAL IN THE AFOREMENTIONED ORDER, RESPECTFULLY FOLLOWING THE SA ME AND FOR THE REASONS GIVEN HEREINABOVE, WE DO NOT FI ND ANY JUSTIFICATION ON THE PART OF THE LOWER AUTHORIT IES FOR MAKING ANY PART DISALLOWANCE OUT OF TELEPHONE AND TRAVELING EXPENSES IN BOTH THE YEARS AND THEREBY DECLINING THE CLAIM OF EXEMPTION U/SS 11 AND 12 OF THE ACT. 12. ON THE PLEA THAT THE ASSESSEE HAS VIOLATED THE PROVISIONS OF SECTION 13(2) AND 13(1), THE ASSESSI NG OFFICER DECLINED THE CLAIM OF THE ASSESSEE FOR EXEM PTION U/SS 11 & 12 OF THE ACT. CONSEQUENTLY, THE APPLICAT ION OF INCOME FOR ACQUISITION OF ASSETS AT RS. 20,35,92,75 7/- 14 WAS ALSO DECLINED BY THE ASSESSING OFFICER AND CONF IRMED BY THE CIT(A). THE ASSESSEE IS IN FURTHER APPEAL BE FORE US. 13. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS OF THE PARTIES, GONE THROUGH THE ORDERS OF THE AUTHORITIES BELOW AND FIND FROM RECORD THAT THE ASSESSING OFFICER HAS DENIED THE BENEFIT OF SECTIONS 11 AND 12 OF THE ACT ON THE PLEA OF VIOLATION OF SECTION 13(1) AND 13 (2). ACC ORDINGLY, THE ASSESSING OFFICER HELD THAT DEDUCTION IN RESPEC T OF ACQUISITION OF CAPITAL ASSET CANNOT BE ALLOWED. 14. AS WE HAVE OBSERVED HEREINABOVE THAT THERE IS N O VIOLATION OF THE PROVISIONS OF SECTION 13, THE ASSE SSEE IS A REGISTERED SOCIETY U/S 12A, AND THEREFORE, THE CLAI M OF UTILIZATION OF RECEIPTS FOR THE PURPOSE OF ACQUISIT ION OF FIXED ASSETS FOR THE CHARITABLE OBJECTS OF SOCIETY CANNOT BE DECLINED. IN THE CASE OF VICHAR BHARTI EDUCATION SOCIETY (SUPRA) SIMILAR DISALLOWANCE WAS MADE ON IDENTICAL REASONS AND THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) DELETED ALL SUCH ADDITIONS. THE TRIBUNA L HAS 15 UPHELD THE ORDER OF CIT(A) IN THE ASSESSMENT YEAR 2 003- 04 DATED 29.1.2007. THE RELEVANT PARA OF THE I.T.A.T. ORDER DATED 13.07 .2010 IS PARA 27 WHICH IS REPRODUCED AS UNDER :- 27. AS REGARD TO ISSUE OF APPLICATION OF INCOME IN RESPECT OF ACQUISITION OF FIXED ASSETS, WE FIND THAT IT IS NOT IN DISPUTE THAT SUCH ASSETS HAVE BEEN ACQUIRED FOR THE PURPOSE OF ADVANCEMENT OF THE OBJECTS OF THE SOCIETY AND, THEREFORE, SUCH INVESTMENT SHOULD BE TREATED AS AN APPLICATION OF INCOME IN TERMS OF THE PROVISIONS OF SECTION 11 OF THE ACT. THUS, THESE GROUNDS OF THE REVENUE ARE WITHOUT ANY MERIT, HENCE, DISMISSED IN ALL THE YEARS. 15. IN VIEW OF THE ABOVE DISCUSSION, WE DO NOT FIND ANY MERIT IN THE ACTION OF THE LOWER AUTHORITIES FOR DE NIAL OF APPLICATION OF INCOME ON ACQUISITION OF FIXED ASSET S. 16 16. SIMILARLY, THE ASSESSING OFFICER HAS DECLINED T HE CLAIM FOR APPLICATION OF INCOME U/S 11(1)(A) OF THE ACT ON THE PLEA OF VIOLATION U/S 13 OF THE ACT. AS ALREAD Y DISCUSSED HEREINABOVE, THERE IS NO VIOLATION OF SEC TION 13 AND AS SUCH THE ASSESSING OFFICER WAS NOT JUSTIFIED IN DECLINING THE DEDUCTION FOR APPLICATION OF INCOME U /S 11(1)(A) OF THE ACT. 17. WITH REGARD TO INCLUSION OF CORPUS DONATION OF RS. 5.05 CORES, WE FIND THAT THE ASSESSEE HAS RECEIVED THE CORPUS DONATION FROM VICHAR BHARTI EDUCATION SOCIET Y OF RS. 50500000. SECTION 11(1)(D) PROVIDES THAT THE IN COME THE FORM OF CORPUS DONATION SHALL NOT BE INCLUDED I N THE TOTAL INCOME OF THE PERSON WHO IS IN RECEIPT OF SUC H INCOME. THE ASSESSING OFFICER SINCE HELD THAT SECTI ONS 11 AND 12 WILL NOT OPERATE AND, THEREFORE, HE HAS NOT TAKEN INTO CONSIDERATION THE PROVISIONS OF SECTION 11(1)( D) AND INCLUDED THE SAID AMOUNT IN THE ASSESSED TOTAL INCO ME. AS WE HAVE ALREADY HELD THAT THE ASSESSEES ELIGIBI LITY FOR 17 BENEFIT OF SECTIONS 11 AND 12 OF THE ACT CANNOT BE DECLINED AND THE CORPUS DONATION IS REQUIRED TO BE EXCLUDED FROM THE TOTAL INCOME AS PER THE PROVISION S OF SECTION 11(1)(D) OF THE ACT. SIMILAR ISSUE HAS BEEN CONSIDERED BY THE COORDINATE BENCH IN THE CASE OF V ICHAR BHARTI EDUCATION SOCIETY; ITA NOS. 540 TO 542/IND/0 07 ORDER DATED 13.7.2010. AS THE FACTS AND CIRCUMSTANC ES ARE IN PARA MATERIA, RESPECTFULLY FOLLOWING THE ORD ER OF THE COORDINATE BENCH AND FOR THE REASONS DISCUSSED HEREINABOVE, WE REVERSE THE ACTION OF THE LOWER AUTHORITIES IN DECLINING THE CLAIM OF CORPUS DONATI ON U/S 11(1)(D) OF THE ACT. 18. GROUND NO. 9 WITH REGARD TO NOT ALLOWING TDS CREDIT, WAS NOT PRESSED DURING THE COURSE OF HEARIN G. THE SAME IS, THEREFORE, DISMISSED IN LIMINE AS NOT PRES SED. 19. IN THE ASSESSMENT YEAR 2008-09 IDENTICAL GROUND HAS BEEN TAKEN BY THE ASSESSEE WITH REGARD TO ASSESSMENT MADE IN DIFFERENT STATUS, DISALLOWANCE O F 18 TELEPHONE AND TRAVELLING EXPENSES. WE HAVE ALREADY DISCUSSED THESE ISSUES WHILE DISPOSING OF RELEVANT GROUND IN THE ASSESSMENT YEAR 2007-08. FOR THE REAS ONS STATED THEREIN, ALL THESE GROUNDS ARE ALLOWED IN FA VOUR OF THE ASSESSEE. 20. IN THE ASSESSMENT YEAR 2008-09, THE ASSESSEE IS AGGRIEVED FOR ADDITION ON ACCOUNT OF ACCRUED INTERE ST AND CESSATION OF LIABILITY IN RESPECT OF LOAN TO K.L.TH AKRAL. 21. RIVAL CONTENTIONS HAVE BEEN HEARD AND RECORD PERUSED. IN THE ASSESSMENT ORDER, THE ASSESSING OF FICER OBSERVED THAT THE ASSESSEE SOCIETY HAS GIVEN INTERE ST FREE LOAN OF RS. 9,03,502/- TO SHRI K.L. THAKRAL WHO IS A PRESIDENT OF THE ASSESSEE SOCIETY. THE ASSESSEE SOC IETY HAS GIVEN SUCH LOAN WITHOUT EVEN CHARGING ANY INTER EST. IF AT ALL, SHRI K.L.THAKRAL HAS PROCURED SUCH LOAN FROM BANK, INTEREST COULD HAVE BEEN PAID TO THE BANK. SI NCE THE ASSESSEE SOCIETY IS RELATED TO SHRI K.L. THAKRA L AS PRESIDENT, THE LOAN WAS GIVEN WITHOUT INTEREST. THI S 19 SHOWS THAT BENEFIT HAS BEEN TRANSFERRED BY THE ASSE SSEE SOCIETY TO SHRI K.L. THAKRAL. IT WAS ALSO OBSERVED THAT THE FUNDS HAVE BEEN TRANSFERRED BY THE ASSESSEE SOC IETY TO SHRI K.L. THAKRAL AND THAT THE FUNDS HAVE BEEN TRANSFERRED AS PER THE CONVENIENCE OF THE PEOPLE WH O RUN AND MANAGE THE AFFAIRS OF THE SOCIETY. SUCH ADVANCE MENT OF INTEREST FREE LOAN TO RELATED PERSONS AS HAS BEE N MADE BY THE ASSESSEE SOCIETY IS NOT IN ACCORDANCE WITH T HE OBJECTIVE OF THE ASSESSEE SOCIETY AS ADVANCEMENT OF INTEREST FREE LOAN OR EVEN INTEREST BEARING LOANS I S NOT ONE OF THE OBJECTIVES OF THE ASSESSEE SOCIETY. MORE SO , WHEN THERE ARE NO STIPULATIONS ATTACHED TO GOVERN, THE E ND USE OF THIS FUND WHICH MAY BE USED AS PER THE REQUIREME NTS AND SWEET WILL OF RELATED CONCERNED. WHEN SUCH AMOU NT IS GIVEN AS INTEREST FREE LOANS TO RELATED CONCERNS , IRRESPECTIVE OF THE END USE OF SUCH FUND BY RELATED CONCERN, IT CAN BE SAID THAT THE ASSESSEE SOCIETY H AS APPLIED A PORTION OF ITS INCOME TOWARDS FURTHERANCE OF THE PERSONAL INTEREST OF ITS MEMBERS AND OFFICE BEARERS . THE 20 ASSESSING OFFICER ALSO OBSERVED THAT BY GIVING INTE REST FREE LOANS TO RELATED CONCERNS I.E. PRESIDENT OF TH E SOCIETY SHRI K.L.THAKRAL, THE ASSESSEE SOCIETY HAS ALSO ATT RACTED THE PROVISIONS OF SECTION 13(3)(E). SECTION 13(3) SPEAKS OF PERSONS TO WHOM IF ANY BENEFIT HAS BEEN GIVEN BY TH E SOCIETY THEN SECTION 11 AND 12 SHALL NOT OPERATE. 22. BY THE IMPUGNED ORDER, THE COMMISSIONER OF INCO ME TAX (APPEALS) CONFIRMED THE ACTION OF THE ASSESSING OFFICER. 23. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS OF THE PARTIES, GONE THROUGH THE ORDERS OF THE AUTHORITIES BELOW AND FIND FROM RECORD THAT BOTH THE LOWER AUTHORITIE S HAVE WRONGLY CONCLUDED THAT THE ASSESSEE HAS GIVEN ANY ADVANCE TO SHRI K.L. THAKRAL, CHAIRMAN OF THE SOCI ETY, THEREFORE, VIOLATED THE PROVISIONS OF SECTION 13(1) (D). THE ASSESSING OFFICER HAS MADE ADDITION OF RS.108420/- FOR THE NOTIONAL INTEREST ON THE GROUND THAT THE ASSESS EE HAS PROVIDED INTEREST FREE LOAN TO K.L. THAKRAL. HE HA S ALSO 21 MADE AN ADDITION OF RS. 1126928 FOR THE CESSATION O F LIABILITY OF K.L. THAKRAL. THE FINDING OF THE ASSES SING OFFICER IN PARA 5.3 ARE THAT THE ASSESSEE SOCIETY H AS GIVEN INTEREST FREE LOAN OF RS. 903502 TO K.L. THAKRAL AN D ON THIS LOAN HE MADE AN ADDITION OF RS. 108420/- FOR T HE NOTIONAL INTEREST. THE ASSESSING OFFICER ALSO HELD THAT SINCE THE INTEREST FREE LOAN HAS PROVIDED, THEREFOR E, THERE IS A VIOLATION OF SECTION 13(1)(D)(I) AND HENCE THE BENEFIT OF SECTIONS 11 & 12 WILL NOT BE ALLOWED. FURTHER IN PA RA 7 OF THE ORDER, THE ASSESSING OFFICER SAYS THAT ON GOING THROUGH THE BALANCE SHEET AND DETAILS OF SUNDRY CRE DITORS IT IS OBSERVED THAT IN CASE OF ALKA INDUSTRIES, RS. 1076928 AND IN THE NAME OF K.L. THAKRAL RS. 50000 A RE OUTSTANDING. THE TWO AMOUNTS AGGREGATE TO RS. 1126 928 (1076928 + 50000). THE ASSESSING OFFICER FURTHER OBSERVED THAT THESE TWO AMOUNTS ARE OUTSTANDING AND THE ASSESSEE DID NOT PROVIDE THE DETAILS AND THE LE DGER ACCOUNT SHOWS TRANSACTIONS IN THE LAST THREE YEARS, THEREFORE, THE ASSESSING OFFICER TREATED THE SAID A MOUNT 22 AS CESSATION OF LIABILITY AND ADDED TO THE INCOME O F THE ASSESSEE INSTITUTION. 24. ON GOING THROUGH THE REPLY FURNISHED BEFORE THE LOWER AUTHORITIES, WE FIND THAT THERE WAS CREDIT BA LANCE OF M/S ALKA INDUSTRIES, WHICH IS PROPRIETORY CONCERN O F T.L. THAKRAL, RS. 10,76,928/-. THIS LOAN WAS TAKEN BY TH E ASSESSEE SOCIETY FOR THE PURPOSE OF THE SOCIETYS I NFRA- STRUCTURE DEVELOPMENT. SIMILARLY, LOAN WAS ALSO TA KEN FROM K.L. THAKRAL AMOUNTING TO RS.50,000/-. THUS, THE AGGREGATE CREDIT BALANCE IN THE ACCOUNT OF K.L. THA KRAL AS ON 1.4.2007 WAS RS. 11,26,928/- (RS.10,76,928 + 50,000). DURING THE FINANCIAL YEAR 2007-08, THE AS SESSEE SOCIETY HAS REPAID THE LOAN TO SHRI K.L. THAKRAL. T HE SAME WAS DEBITED IN A SEPARATE ACCOUNT AND ERRONEOU SLY REFLECTED IN THE BALANCE SHEET AT RS. 9,03,502/-. THIS ENTRY MISLED THE ASSESSING OFFICER TO PRESUME THAT THE ASSESSEE SOCIETY HAS GIVEN LOAN OF RS. 9,03,502/- T O K.L. THAKRAL WHO WAS CHAIRMAN OF THE ASSESSEE SOCIETY. 23 ACTUALLY THIS WAS NOT A LOAN GIVEN BY THE ASSESSEE SOCIETY TO K.L. THAKRAL BUT WAS REPAYMENT OF THE EARLIER LO AN TAKEN BY THE SOCIETY FROM THE PROPRIETARY CONCERN O F K.L. THAKRAL M/S ALKA INDUSTRIES AND ALSO FROM K.L. THAK RAL HIMSELF. WE FIND THAT EVEN AFTER PAYMENT OF RS. 9,03,502/- THERE WAS NET CREDIT BALANCE PAYABLE TO K.L. THAKRAL AS ON 31.3.2008 AT RS. 2,23,426/-. FROM RE CORD WE FIND THAT THE ASSESSEE SOCIETY IN EARLIER YEAR F OR THE PURPOSE OF SOCIETYS INFRASTRUCTURE DEVELOPMENT WOR K, TOOK LOAN FROM K.L. THAKRAL WHICH WAS OUTSTANDING A S PAYABLE TO K.L. THAKRAL AS ON 1.4.2007 AT RS. 11269 28 AND IN THE RELEVANT YEARS AGAINST THIS OUTSTANDING LOAN, THE REPAYMENT WAS RS. 903502/-. THE ASSESSING OFFI CER HAD NOT APPRECIATED THE EXPLANATION OF THE ASSESSEE IN THIS REGARD FURNISHED BEFORE HIM VIDE LETTER DATED 14.12.2010 AND AT HIS OWN ASSUMPTIONS HE HAS TAKEN RS. 1126928 AS THE CESSATION OF LIABILITY AND ADDED AS INCOME AND THE REPAYMENT AMOUNT OF RS. 903502 OF TH E SAID LOAN LIABILITY HAS BEEN ASSUMED BY HIM AS INTE REST 24 FREE LOAN TO K.L. THAKRAL. SINCE NO LOAN WAS GIVEN BY THE ASSESSEE SOCIETY TO K.L. THAKRAL, THE FINDINGS OF T HE ASSESSING OFFICER AS TO THE APPLICABILITY OF SECTIO N 13 ARE ALSO WRONG AND, THEREFORE, THE ASSESSEE IS ELIGIBLE FOR THE BENEFIT OF SECTIONS 11 AND 12. 25. AS THE ASSESSEE IS A REGISTERED SOCIETY U/S 12A OF THE ACT AND THERE WAS NO VIOLATION OF SECTION 13, WE DO NOT FIND ANY MERIT IN THE ASSESSING OFFICERS ACTION FO R DECLINING THE CLAIM OF CLAIM OF APPLICATION OF INCO ME FOR THE ACQUISITION OF FIXED ASSETS. AS ALREADY DISCUS SED HEREINABOVE WHILE DISPOSING OF APPEAL FOR THE ASSES SMENT YEAR 2007-08, WE REVERSE THE CONCLUSION OF THE LOWE R AUTHORITIES IN DECLINING THE DEDUCTION ON ACCOUNT O F COST OF ACQUISITION OF FIXED ASSETS. 26. SIMILARLY, THE ASSESSING OFFICERS DENIAL OF ST ATUTORY DEDUCTION U/S 11(1)(A) OF THE ACT AMOUNTING TO RS.2,62,13,965/- ON THE GROUND OF VIOLATION OF SECT ION 13 WAS NOT JUSTIFIED IN VIEW OF THE OBSERVATIONS MADE 25 HEREINABOVE IN THE ASSESSMENT YEAR 2007-08. AS THE RE WAS NO VIOLATION OF SECTION 13, THE ASSESSEE IS ELI GIBLE FOR DEDUCTION ON ACCOUNT OF APPLICATION OF INCOME. 27. THE ISSUE WITH REGARD TO DECLINE OF CLAIM OF DEPRECIATION IS ALREADY COVERED IN FAVOUR OF THE AS SESSEE BY THE DECISION OF THE JURISDICTIONAL HIGH COURT IN THE CASE OF GUJARATI SAMAJ AND REPORTED AT 64 DTR 76. SIMILAR DISALLOWANCE WAS MADE IN ASSESSEES CASE IN THE ASSESSMENT YEARS 20904-05 AND 2005-06 WHICH WAS ALLOWED BY THE COMMISSIONER OF INCOME TAX (APPEALS) VIDE ORDER DATED 15.7.2009 AND THE SAID ORDER HAS A LSO BEEN CONFIRMED BY THE TRIBUNAL VIDE ITS ORDER DATED 5.8.2010. 28. IN VIEW OF THE ABOVE, FOLLOWING THE DECISION OF THE COORDINATE BENCH OF THE TRIBUNAL IN THE ASSESSEES OWN CASE FOR THE ASSESSMENT YEARS 2004-05 AND 2005-06 A ND ALSO THE DECISION OF THE JURISDICTIONAL HIGH COURT, WE DO 26 NOT FIND ANY MERIT IN THE ACTION OF THE ASSESSING O FFICER IN DECLINING THE CLAIM OF DEPRECIATION. 29. THE ASSESSING OFFICER HAS ALSO DISALLOWED RS. 57,55/- ON THE PLEA THAT THE ASSESSEE HAS PAID LAND DIVERSION CHARGES WHICH ARE IN VIOLATION OF SECTION 40A(3). FROM RECORD WE FIND THAT THE LAND DIVERSION CHARGES WERE PAID BY THE ASSESSEE TO STATE GOVERNMENT WHICH DOES NOT VIOLATE THE PROVISIONS OF SECTION 40A(3), HENCE, DISALLOWANCE MADE BY THE ASSESSING OFFICER AND CONFIRMED BY COMMISSIONER OF INCOME TAX (APPEALS) IS NOT JUSTIFIED. 30. GROUND NOS. 5 AND 6 RELATE TO DECLINE OF APPLICATION OF INCOME FOR THE PURPOSE OF ACQUISITIO N OF FIXED ASSETS AND APPLICATION OF INCOME U/S 11(1)(A) OF THE ACT. IN TERMS OF OUR DETAILED OBSERVATIONS IN THE ASSESSMENT YEAR 2007-08, WE ALLOW GROUND NOS. 5 AND 6 IN FAVOUR OF THE ASSESSEE. 27 31. GROUND NO. 8 IS GENERAL IN NATURE. THE SAME IS DISMISSED IN LIMINE. 32. THE ASSESSEE IS ALSO AGGRIEVED FOR THE ACTION O F THE ASSESSING OFFICER IN NOT GIVING CREDIT FOR TDS. FR OM THE ASSESSMENT ORDER, WE DO NOT FIND ANY REASON MUCH LE SS A COGENT REASON FOR NOT ALLOWING THE BENEFIT OF TDS OF RS. 5,88,270/-. IN THE INTEREST OF JUSTICE, THE ASSESSING OFFICER IS DIRECTED TO VERIFY THE TDS CER TIFICATE AND ALLOW CREDIT FOR THE SAME AS PER LAW. 33. IN THE RESULT, BOTH THE APPEALS ARE ALLOWED IN PART IN THE TERMS INDICATED ABOVE ORDER PRONOUNCED IN OPEN COURT ON IST JUNE, 2012 SD/- SD/- (JOGINDER SINGH) ( R.C. SHARMA) JUDICIAL MEMBER ACCOUNTANT MEMBER IST JUNE, 2012 DN/- 28 2223.5