DCIT(E), New Delhi V. M/s G.R. Goenka Education Society, New Delhi

ITA 5043/DEL/2015

• Counselvise Citation: [2018] 126 COUNSELVISE.COM (IT) 3024 (ITAT-DELHI)
• Duration Of Justice: 2 year(s) 7 month(s) 15 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 23-03-2018
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: B
• Assessment Year: 2012-2013
• Appeal Filed On: 07-08-2015
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: ASHIMA NEB
• Assessee Lawyers: AMIT GOEL
• Keywords: Depreciation; Benefit of exemption
• Section: 12; 11

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCHES : B : NEW DELHI BEFORE SHRI R.S. SYAL, VICE PRESIDENT AND MS SUCHITRA KAMBLE, JUDICIAL MEMBER ITA NO.5043/DEL/2015 ASSESSMENT YEAR : 2012-13 DCIT (E), CIRCLE 1(1), NEW DELHI. VS. G.R. GOENKA EDUCATION SOCIETY, SECTOR-B, POCKET 8-9, VASANT KUNJ, NEW DELHI. PAN: AAATG0617M (APPELLANT) (RESPONDENT) ASSESSEE BY : SHRI AMIT GOEL, CA DEPARTMENT BY : MS ASHIMA NEB, SR. DR DATE OF HEARING : 21.03.2018 DATE OF PRONOUNCEMENT : 23.03.2018 ORDER PER R.S. SYAL, VP: THIS APPEAL FILED BY THE REVENUE IS DIRECTED AGAIN ST THE ORDER PASSED BY THE CIT(A) ON 15.06.2015 IN RELATION TO THE ASSE SSMENT YEAR 2012-13. ITA NO.5043/DEL/2015 2 2. THE FIRST THREE GROUNDS IN THIS APPEAL DEALING W ITH A COMMON ISSUE ARE REPRODUCED AS UNDER:- ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD. CIT(A) HAS ERRED IN HOLDING THE ASSESSEE SOCIETY IS A CHARITABLE ORGANIZATION DESPITE THE FACT THAT THE ASSESSEE SOC IETY WAS DOING BUSINESS WITHIN THE MEANING OF AMENDED PROVISIONS OF SECTION 2(15) OF THE INCOME- TAX ACT, 1961. 2. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E AND IN LAW, THE LD. CIT(A) HAS ERRED IN DIRECTING THE A.O. TO ALLOW BEN EFITS OF SECTION 11 & 12 OF THE INCOME-TAX ACT DISREGARDING THE FACT THAT THE ASSESSEE HAS VIOLATED THE PROVISIONS OF SECTION 13(1)(C) OF THE ACT BY PROVIDING THE FINANCIAL BENEFIT TO THE PERSONS SPECIFIED U/S 13(3 ) OF THE ACT. 3. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E AND IN LAW, THE LD. CIT(A) HAS ERRED IN ALLOWING THE BENEFIT OF SECTION 11 &12 OF THE ACT IGNORING THE PROVISION OF SECTION 13(1) WHICH PROVI DE THAT EVEN IF THERE IS A SINGLE INSTANCE OF VIOLATION OF SECTION 13(1), TH E TRUST WILL LOSE THE EXEMPTION IN RESPECT OF ITS ENTIRE INCOME. 3. WE HAVE HEARD BOTH THE SIDES AND PERUSED THE REL EVANT MATERIAL ON RECORD. IT IS OBSERVED FROM THE ASSESSMENT ORDER T HAT THE ASSESSING OFFICER CONSIDERED THE CASE AS COVERED U/S 13(1)(C) BY FOLL OWING THE VIEW TAKEN BY HIM IN HIS ORDER FOR THE ASSESSMENT YEAR 2009-10 ON WARDS. THE LD. CIT(A) OVERTURNED THE ASSESSMENT ORDER ON THIS ISSUE. IT IS OBSERVED THAT THE TRIBUNAL CONSIDERED THE ASSESSMENT YEAR 2009-10 VID E ITS ORDER DATED 02.02.2017 IN ITA NO.3572/DEL/2013. A COPY OF SUCH ORDER HAS BEEN PLACED ON RECORD. AFTER CONSIDERING ALL THE RELEVA NT MATERIAL, THE TRIBUNAL ITA NO.5043/DEL/2015 3 HAS UPHELD THE ORDER OF THE FIRST APPELLATE AUTHORI TY IN GRANT THE BENEFIT OF SECTION 11 TO THIS EXTENT. IT IS FURTHER A MATTER OF RECORD THAT THE ORDER OF THE TRIBUNAL HAS BEEN APPROVED BY THE HON'BLE JURISDICT IONAL HIGH COURT. A COPY OF SUCH JUDGMENT OF THE HON'BLE HIGH COURT DAT ED 30.10.2017 HAS BEEN PLACED ON RECORD. IN VIEW OF THE FOREGOING FA CTS, WE ARE OF THE CONSIDERED OPINION THAT THE LD. CIT(A) WAS RIGHT IN GRANTING THE BENEFIT OF EXEMPTION U/S 11 TO THE EXTENT IMPUGNED IN THE ABOV E THREE GROUNDS. 4. THE ONLY OTHER ISSUE RAISED IN THIS APPEAL THROU GH THE REMAINING GROUNDS IS AGAINST ALLOWING THE CLAIM OF DEPRECIATI ON AMOUNTING TO RS.5,38,64,605/-. THE A.O. DID NOT ALLOW THE CLAIM OF DEPRECIATION ON THE PREMISE THAT THE PURCHASE OF ASSETS WAS AN APPLICAT ION OF INCOME AND HENCE THE GRANT OF DEPRECIATION WOULD AMOUNT TO DOUBLE BE NEFIT. THE LD. CIT(A) OVERTURNED THE ASSESSMENT ORDER ON THIS ISSUE. 5. IN THIS REGARD, WE FIND THAT SUB-SECTION (6 ) HAS BEEN INSERTED TO SECTION 11 BY THE FINANCE (NO.2) ACT, 2014 W.E.F. 01.04.201 5 PROVIDING THAT NO DEPRECIATION CAN BE ALLOWED ONCE THE PURCHASE OF AS SETS HAS BEEN TREATED AS APPLICATION OF INCOME. THE HON'BLE SUPREME COURT I N A RECENT DECISION ITA NO.5043/DEL/2015 4 DATED 13.12.2017 IN CIT VS. RAJASTHAN & GUJARATI CHARITABLE FOUNDATION, POONA (2018) 89 TAXMANN.COM 127(SC) HAS APPROVED THE GRANTING OF DEPRECIATION IN THE PERIOD PRIOR TO AMENDMENT OF SE CTION 11(6) BY HOLDING SUCH AMENDMENT TO BE PROSPECTIVE. WE, THEREFORE, U PHOLD THE IMPUGNED ORDER ON THIS SCORE. 6. IN THE RESULT, THE APPEAL IS DISMISSED. THE ORDER PRONOUNCED IN THE OPEN COURT ON 23.03.20 18. SD/- SD/- [SUCHITRA KAMBLE] [R.S. SYA L] JUDICIAL MEMBER VICE PRESIDENT DATED, 23 RD MARCH, 2018. DK COPY FORWARDED TO: APPELLANT RESPONDENT CIT CIT (A) DR, ITAT AR, ITAT, NEW DELHI.