Sushila Devi Chhabil Dass Charitable Trust, Ghaziabad V. Addl. CIT, Ghaziabad

ITA 5261/DEL/2015

• Counselvise Citation: [2017] 127 COUNSELVISE.COM (IT) 5248 (ITAT-DELHI)
• Duration Of Justice: 1 year(s) 11 month(s) 18 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 11-08-2017
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Next Hearing Date: 31-05-2017
• Assessment Year: 2010-2011
• Appeal Filed On: 24-08-2015
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: T VASANTHAN
• Keywords: Capital asset; Depreciation; Charitable institution; Rule of consistency; Capital expenditure
• Section: 143(3); 80G; 12AA; 12; 11

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCHES SMC: NEW DELHI BEFORE SHRI BHAVNESH SAINI, JUDICIAL MEMBER ITA.NO.5261/DEL./2015 ASSESSMENT YEAR 2010-2011 SUSHILA DEVI CHHABIL DASS CHARITABLE TRUST, 15, G.T. ROAD, GHAZIABAD PAN AABTS1759D VS. ADDL. CIT, RANGE-1 GHAZIABAD. (APPELLANT) (RESPONDENT) FOR ASSESSEE : SHRI AJAY WADHWA, ADVOCATE & MS. BHARTI SHARMA, C.A. FOR REVENUE : SHRI T. VASANTHAN, SR. D.R. DATE OF HEARING : 12.07.2017 DATE OF PRONOUNCEMENT : 11.08.2017 ORDER THIS APPEAL BY ASSESSEE HAS BEEN DIRECTED AGAINST THE ORDER OF THE LD. CIT(A), GHAZIABAD DATED 4 TH MAY, 2015 FOR A.Y. 2010- 2011. EARLIER, THE APPEAL WAS DISMISSED FOR DEFAULT. HOWEVER, BY ALLOWING MISCELLANEOUS APPLICATION OF THE ASSESSEE THE APPEAL WAS RE- FIXED FOR HEARING ON MERITS. THE ASSESSEE HAS RAISED THE FOLLOWING GROUNDS IN ITS APPEAL. 1. THAT THE O R DE R OF THE H O N ' BLE COMM I SSIONER O F INCO ME T A X ( APPEALS ) , GHAZIABAD , DATED 0 4 05. 2015 IS BA D IN L A W AN D O N FA C T S AND HAS E R RED IN N O T APP R EC I AT ING TH E F ACT THAT THE TRANSPORT FAC ILIT I ES P R OV I DED TO THE S TU DEN TS BY THE A PP E L LANT S O CIETY IS AN ACTIV I TY I NC I DENTA L T O T HE ATTA I N M ENT OF THE MA I N OB JE C T I VE OF THE SOCIETY. 2. THAT THE HON ' BLE COM MIS SIONE R O F IN COME T A X ( APPEAL ), GHA Z IABAD HAS E R RED IN LAW AND ON FACTS IN U P HOL D I NG TH E ACTION OF THE A SS ESS I NG OFFIC ER TO A SS E SS THE SURPLUS OF RS.9,89,000/- WORKED OUT IN THE TRAN S PORT FACI L I T IE S P ROVID ED TO 2 ITA.NO.5261/DEL./2015 SMT. SUSHILA DEVI CHHABIL DASS CHARITABLE TRUST, GHAZIABAD. T HE STUD EN T S AS BUSINESS I NCOME IN THE HAND S OF THE APPELLANT SOCIETY. 3. THAT THE H O N ' B LE CO M MISSI ON ER OF INCOME T A X ( APPEA L) , GHA Z IABAD H AS E R RED IN LAW AND ON FACTS I N T RE A T I NG THE TRAN S P O RT FACIL I TY P R OV I DED TO THE STUDENTS OF I NSTITUT I O N AS A B U SINESS UNDERTAK I NG AND THUS U PH O LD ING THE ACTION O F THE ASS ES S IN G OFFICER AS TO THE REQ UI REMENT O F M A INT ENANCE OF SEPARATE BOOKS OF A CCOU NTS IN VIEW O F THE PROVI S I O NS CON TAIN E D UNDER S E C TI ON 1 1 ( 4A ) O F TH E INCO M E TAX ACT , 1961. 4. THAT THE H ON ' B LE COM MIS S I O NER OF I NCOM E T AX ( APPEAL ) , GHAZ IA BAD H AS ERRED IN LAW AND ON FACTS IN U P HOLDING THE A CTI ON OF ASS ESSI NG O FFICER TO DISA LLOW DEPRECIAT I ON CL A IM ED BY THE APPELLANT SOCIETY AT RS.83,17,641/- B Y DEBITIN G THE SA ME I N I N C O ME & EX P E NDITU R E ACCOUNT. 5. THAT THE H O N ' B LE CO M MIS S I ON ER OF INCOM E TAX ( APPEAL ) , GHA ZI ABA D HAS ERRED IN LAW AND ON FACTS I N U P HOLDING THE ACTI O N O F THE ASSE SS ING O FF ICER THAT T HE APPELLANT SOCIE T Y HAS AVAILED 1 00 % APPLICATION OF T H E V A LUE OF THE C A PIT A L EX P ENDITURE IN THE YEAR O F PUR CHASE O F F IXED ASSE T S O UT OF GROSS RECE I PTS AND C O N SE QUENTLY DISALLOWED THE C LAIM O F DEPRECIATION. 6. THE APPELLANT CRAVES LEAVE TO ADD, ALTER, AMEND, SU BSTITUTE, DELETE AND MODIFY ANY OR ALL GROUNDS OF APPEAL, WHI CH ARE WITHOUT PREJUDICE TO ONE ANOTHER, BEFORE OR AT THE TIME OF HEARING OF THE APPEAL. 2. BRIEFLY, THE FACTS OF THE CASE ARE THAT ASSESSEE-SOC IETY HAS BEEN REGISTERED UNDER THE SOCIETIES REGISTRATION ACT VIDE REGISTRATION DATED 5 TH DECEMBER, 1973 AND RENEWED FROM TIME TO TIME. AS PER THE MEMORANDUM OF SOCIETY, THE SOCIETY WAS ESTABLISHED WI TH THE AIM OF IMPARTING EDUCATION AND OTHER CHARITABLE ACTIVITIES COV ERED UNDER SECTION 2(15) OF THE I.T. ACT. THE CIT, KANPUR HAS GRA NTED REGISTRATION UNDER SECTION 12AA OF THE ACT TO THE ASSESSEE-SOCIETY VI DE ORDER DATED 16 TH APRIL, 1974 AND ALSO GRANTED EXEMPTION UNDER SECTION 80G OF THE I.T. ACT. THE ASSESSEE-SOCIETY RUNS VARIOUS SCHOOLS AND HOSPITALS AS NOTED IN THE ASSESSMENT ORDER. 3 ITA.NO.5261/DEL./2015 SMT. SUSHILA DEVI CHHABIL DASS CHARITABLE TRUST, GHAZIABAD. 2.1. THE ASSESSEE SOCIETY IS PROVIDING TRANSPORTATIO N FACILITIES TO THE STUDENTS ADMITTED TO EDUCATIONAL INSTITUTIONS. THE A.O. HAS OBSERVED THAT THE ASSESSEE-SOCIETY PROVIDED TRANSPORT FA CILITIES TO THE STUDENTS AND CHARGING A REGULAR AMOUNT OF TRANSPORTATION FEE ALONG WITH SCHOOL FEE AND OTHER CHARGES AS SCHEDULED. DURI NG THE YEAR UNDER CONSIDERATION ASSESSEE-SOCIETY HAS CHARGED A SUM OF RS.1,02,28,000 AS TRANSPORTATION CHARGES AND EXPENSES INCURRED ON TRAN SPORTATION WAS RS.92,39,000 THUS A NET SURPLUS OF RS.9,89,000 HA S ARRIVED. THE FIGURES OF TRANSPORTATION CHARGES AND EXPENSES THEREON HAVE BEEN SHOWN BY THE ASSESSEE-SOCIETY IN ITS COMPOSITE INCOME AND EXPENDITURE ACCOUNT. THE ASSESSEE-SOCIETY HAS NOT MA INTAINED ANY SEPARATE SET OF BOOKS OF ACCOUNT AS REQUIRED UNDER S ECTION 11(4A) OF THE I.T. ACT. THE A.O. THEREFORE, HELD THAT TRANSPORTATION ACTIVITY IS AN INDEPENDENT BUSINESS ACTIVITY AND IS NOT COVERED BY SE CTION 2(15) OF THE I.T. ACT. FURTHER, NO SEPARATE BOOKS OF ACCOUNT HAV E BEEN MAINTAINED. THE ASSESSEE HAS CLAIMED THAT ACTIVITY OF R UNNING VEHICLES FOR SCHOOL IS NOT BUSINESS ACTIVITY BECAUSE IT IS UTILI SED FOR CHARITABLE PURPOSES. THE A.O. HOWEVER, DID NOT ACCEPT THE CONTENTIO N OF ASSESSEE AND HELD THAT TRANSPORT ACTIVITY IS IN THE NATURE OF BUSIN ESS AND ACCORDINGLY, MADE ADDITION OF RS.9,89,000 BY DENYING THE BENEFIT UNDER SECTIONS 11 AND 12 OF THE I.T. ACT, 1961. 2.2. THE A.O. HAS ALSO NOTED THAT ASSESSEE HAS CLAIME D DEPRECIATION AMOUNTING TO RS.83,17,641 IN ITS INCOME/EX PENDITURE ACCOUNT. A SPECIFIC QUERY WAS RAISED TO THE ASSESSEE A S TO WHY DEPRECIATION SHOULD NOT BE DISALLOWED IN VIEW OF THE F ACT THAT 100% APPLICATION OF VALUE OF CAPITAL EXPENDITURE HAD ALREAD Y BEEN AVAILED BY THE ASSESSEE-SOCIETY IN THE YEAR OF INVESTMENT AND ON THE SAME VALUE ASSESSEE CLAIMED DEPRECIATION. THE A.O. AFTER CONSID ERING THE EXPLANATIONS OF THE ASSESSEE-SOCIETY HELD THAT ALLOWAN CE OF 4 ITA.NO.5261/DEL./2015 SMT. SUSHILA DEVI CHHABIL DASS CHARITABLE TRUST, GHAZIABAD. DEPRECIATION ON AN AMOUNT WHICH WAS TREATED AS APPLICA TION OF INCOME IN THE YEAR IN WHICH CAPITAL ASSET WAS ACQUIRED IS NO T PERMISSIBLE. HENCE, THE CONTENTION OF THE ASSESSEE WAS NOT ACCEPTED A ND DEPRECIATION CLAIMED WAS DISALLOWED. 2.3. THE ASSESSEE-SOCIETY REITERATED ITS SUBMISSION S BEFORE THE LD. CIT(A) AND ALSO SUBMITTED THAT IT IS WRONG TO OBSERV E THAT SURPLUS IS GENERATED FROM THE TRANSPORT EVERY YEAR. THE COMPOS ITE INCOME AND EXPENDITURE ACCOUNT FILED BY THE ASSESSEE CONTAINED ONL Y RECEIPT OF TRANSPORT CHARGES FROM CHILDREN AND MADE PAYMENT TO CON TRACTORS FOR HIRING BUSES. THE SCHOOL DOES NOT OWN ANY BUSES AND THUS, THEY ARE HIRING FROM THE MARKET WHERE PAYMENT IS MADE AFTER DED UCTING TAX AT SOURCE. THE A.O. IGNORED THE REALITIES AND FAILED TO A PPRECIATE THE RISK AND RESPONSIBILITY ATTACHED IN PROVIDING TRANSPORT FACI LITY TO THE STUDENTS. THE ASSESSEE-SOCIETY HAS PROVIDED TOUGH SECU RITY AND STAFF TO ACCOMPANY THE CHILDREN ON THE WAY FROM HOUSE TO THE SCHOOL AND BACK FOR PROPER HANDINGOVER OF THE CHILDREN TO THE PAR ENTS. IT IS THUS, STATED THAT APART FROM MAKING PAYMENTS TO THE CONTRACTOR FOR HIRING BUSES, ASSESSEE-SOCIETY INCURRED OTHER CONNECTED EX PENDITURE SUCH AS PROVIDING ATTENDANTS AND TEACHERS IN THE BUSES FOR SAFET Y OF THE STUDENTS, DEPUTING DEDICATED STAFF AT THE SCHOOL GATE TO RE CEIVE THE STUDENTS AND MARK THEIR PRESENCE IN THE SPECIALLY MAINTA INED RECORDS AND SIMILARLY MARK THE BOARDING OF THE STUDENTS IN THE EVENING AND ALSO TO MAINTAIN RECORD WHEN THE BUSES CAME BACK. ALL SUCH EXPENSES ARE MERGED WITH THE EXPENSES DEBITED UNDER DIFFERENT HEADS AND THEY HAVE NOT BEEN CONSIDERED BY THE A.O. IT WAS EXPLAINED THAT ASSESSEE- SOCIETY DID NOT EARN ANY PROFIT AND NO BUSINESS ACTIVI TY HAVE BEEN CONDUCTED BY THE ASSESSEE. THE LD. CIT(A) HOWEVER, ON THE SAME REASONING AS WAS GIVEN BY THE A.O. HELD THAT RUNNING O F TRANSPORT FOR STUDENTS IS NEITHER EDUCATION PER SE NOR IT IS AN INTEGRAL PART. FURTHER, 5 ITA.NO.5261/DEL./2015 SMT. SUSHILA DEVI CHHABIL DASS CHARITABLE TRUST, GHAZIABAD. NO SEPARATE BOOKS OF ACCOUNT WERE MAINTAINED FOR TRANS PORTATION. THEREFORE, THE ORDER OF THE A.O. WAS CONFIRMED BY HOL DING THAT PRINCIPLE OF RES-JUDICATA DID NOT APPLY TO THE INCOME TAX PROCEEDINGS. 3. THE LD. CIT(A) AS REGARDS THE CLAIM OF DEPRECIATI ON ALSO DISALLOWED THE CLAIM OF ASSESSEE BY FOLLOWING THE DEC ISION OF THE HONBLE SUPREME COURT IN THE CASE OF ESCORTS LTD., VS. UNION OF INDIA AIR 1993 SC 1325. THE LD. CIT(A) ALSO NOTED THAT AS PE R SCHEME OF THE ACT IN THE CASE OF CHARITABLE INSTITUTIONS, IF OTHER C ONDITIONS OF SECTIONS 11 AND 13 ARE FULFILLED, WHAT IS TAXABLE IS TH E INCOME ACCUMULATED FOR SET APART IN EXCESS OF 15%. IN THE PRES ENT CASE, THE A.O. HAS GIVEN A FINDING THAT WITHOUT CONSIDERING DEPR ECIATION AS APPLICATION OF INCOME, ASSESSEE HAS FULFILLED THE CRI TERIA OF APPLICATION OF 85% OF THE INCOME. IN SUCH A CASE, EVEN IF DEPREC IATION IS NOT TREATED TO BE APPLICATION OF INCOME, THIS WILL NOT RESUL T INTO ANY TAXABLE INCOME. THEREFORE, WHILE LEGAL ISSUE WHETHER DEPRECI ATION IS TO BE ALLOWED AS APPLICATION OF ASSET IS DECIDED AGAINST THE ASSESSEE, AT THE SAME TIME, IT IS ALSO NOTEWORTHY THAT EVEN IF DEPRECIATION IS DISALLOWED AS APPLICATION OF INCOME, IT IS NOT RESULTED INTO ANY AD DITION TO RETURN OF INCOME AS THE ASSESSEE MEETS THE CRITERIA OF APPLIC ATION OF 85% OF INCOME EXCLUDING DEPRECIATION ALSO. THIS GROUND WAS THEREFORE, REJECTED ON MERIT CONSIDERING IT TO BE ACADEMIC ISSUE. 4. I HAVE HEARD THE LEARNED REPRESENTATIVES OF BOTH TH E PARTIES AND PERUSED THE MATERIAL ON RECORD. LEARNED COUNSEL FOR THE ASSESSEE REITERATED THE SUBMISSIONS MADE BEFORE THE AUTHORITIES BELOW AND ALSO RELIED UPON VARIOUS ORDERS OF THE ITAT, AGRA BENCH A ND ITAT, DELHI BENCH AND SUBMITTED THAT IN SUBSEQUENT YEARS, ON TRANSPOR TATION CHARGES, A.O. PASSED THE ORDERS UNDER SECTION 143(3) BUT NO ADDITION HAVE BEEN MADE, THUS, A.O. ACCEPTED THAT TRANSPORTATION WAS INTEGRAL 6 ITA.NO.5261/DEL./2015 SMT. SUSHILA DEVI CHHABIL DASS CHARITABLE TRUST, GHAZIABAD. PART OF EDUCATIONAL ACTIVITY OF THE ASSESSEE. THEREFOR E, FOLLOWING THE RULE OF CONSISTENCY, A.O. SHOULD NOT HAVE DISALLOWED THE EXCESS OF TRANSPORT CHARGES. HE HAS ALSO SUBMITTED THAT THE INCIDENTA L SURPLUS HAVE BEEN USED BY THE ASSESSEE FOR EDUCATIONAL PURPO SES ONLY. 4.1. AS REGARDS THE DEPRECIATION, THE LEARNED COUNSEL FOR THE ASSESSEE HAS SUBMITTED THAT THE ISSUE IS COVERED BY THE DECISIONS OF DELHI HIGH COURT IN THE CASE OF DIT (EXEMPTIONS) VS. I NDRAPRASTHA CANCER SOCIETY (2015) 53 TAXMANN.COM 463 (DEL.), AND ORDER OF ITAT, DELHI BENCH IN THE CASE OF LAKSH EDUCATIONAL SOCIET Y, GHAZIABAD VS. ADDL. CIT, RANGE-1, GHAZIABAD ITA.NO.3549/DEL./2015 DATED 27.03.2017. COPIES OF THE ORDERS ARE PLACED ON RECOR D. HE HAS THEREFORE, SUBMITTED THAT ASSESSEE IS ENTITLED FOR DEPRECI ATION. 5. THE LD. D.R. RELIED UPON THE ORDERS OF THE AUTHORI TIES BELOW AND SUBMITTED THAT PRINCIPLE OF RES-JUDICATA DO NOT APPLY TO THE INCOME TAX PROCEEDINGS. 6. I HAVE CONSIDERED THE RIVAL SUBMISSIONS . IT IS AN ADMITTED FACT THAT ASSESSEE-SOCIETY HAS BEEN REGISTERED UNDER THE SOCIETIES REGISTRATION ACT. AS PER THE MEMORANDUM, THE ASSESSEE-S OCIETY WAS ESTABLISHED WITH THE AIM TO IMPART EDUCATION AND OTHER CH ARITABLE ACTIVITIES COVERED UNDER SECTION 2(15) OF THE I.T. ACT. IT IS ALSO AN ADMITTED FACT THAT ASSESSEE HAS BEEN GRANTED REGISTRATION UNDER SECTION 12AA OF THE I.T. ACT. IT IS ALSO AN ADMITTED FACT THAT ASSESSEE- SOCIETY IS RUNNING VARIOUS SCHOOLS AND HOSPITALS. LE ARNED COUNSEL FOR THE ASSESSEE RELIED UPON THE ORDER OF THE ITAT, AGRA BENCH IN THE CASE OF SOCIETY FOR ADVANCE HEALTH EDUCATION VS. CIT (201 3) 38 TAXMAN.COM. 280 (AGRA. TRIB.) IN WHICH IT WAS HELD AS FOLLOWS : WHERE ASSESSEE-INSTITUTION IMPARTING EDUCATION IN FIELD OF NURSING, CLAIMED REGISTRATION UNDER SECTION 12AA, I N VIEW OF FACT 7 ITA.NO.5261/DEL./2015 SMT. SUSHILA DEVI CHHABIL DASS CHARITABLE TRUST, GHAZIABAD. THAT ASSESSEE WAS CHARGING NOMINAL FEE FROM STUDENT S AND, MOREOVER, HOSTEL FACILITY RUN BY IT FOR STUDENTS WA S ONLY INCIDENTAL TO ITS MAIN OBJECTIVE, IT WAS TO BE CONCLUDED THAT ASSESSEES ACTIVITIES WERE CHARITABLE IN NATURE AND, THUS, ITS CLAIM FOR REGISTRATION WAS TO BE ALLOWED. 6.1. THE LEARNED COUNSEL FOR THE ASSESSEE ALSO RELI ED UPON THE ORDER OF ITAT, DELHI BENCH IN THE CASE OF DR. K.N. M ODI INSTITUTE OF PHARMACEUTICALS EDUCATIONAL & RESEARCH TRUST, GHAZIAB AD VS. JCIT IN ITA.NO.4232/DEL./2015 DATED 26.04.2017 (SUPRA) WHERE IN IT HAS BEEN HELD IN PARAS 8 TO 10 AS UNDER : 8. WE HAVE CONSIDERED RI V AL SUBMISSIONS. IT IS NOT IN DISPUTE THA T ASSESSEE TRUST IS RUNNING EDUCATIONAL INST I TUTIONS IN VARIOUS NAMES. IT IS ALSO NOT IN DISPUTE THAT AS PE R MEMORANDUM OF ASSOCIATION OF A SSESSEE TRUST, THE MAIN OBJECTIVES ARE TO ESTABLISH AND MAINTAIN EDUCATIONA L INSTITUTION TO : PROVIDE AND . PROMOTE PHARMACEUTICAL EDUC A T I ON AND RESEARCH. IT IS ALSO NO T IN DISPUTE THAT ASSESSEE HAS BE E N GRA N T E D REGISTRATION U/S ' 12AA BY LEARNED CIT, MEERUT VIDE ORDER DA TED 4 TH M AY, 2000 . LEARNED COUNSEL FOR T HE ASSESSEE R E F ER R E D TO PB 97 W HICH IS ASSESSMEN T O R D E R FOR PR E C E D ING YE AR 2009- 1 0 U/S 1 4 3 (3) D A T E D 25 TH M A RCH , 201] IN W H I CH ON IDENT I CAL ' FACTS , N O ADDI TI ON H AS B EEN MADE ON ACCOUN T O F R ECEI P TS/INCOME RECEI V ED O N A CC OUN T OF HO STE L A ND TRANSPORTA T ION, PB 87 IS COP Y OF THE A S SESS M ENT O R D ER U / S 143( 3 ) . D A TED ' 2 3 RD J ANU AR Y , 2 014 FOR S U B SE QUENT A SSES S MENT YEAR 2011- 1 2 I N W HICH AO DI D N OT M AK E THE A DD ITION ON ACC OU NT O F SAME IN C OME EAR N ED F R OM HOSTEL A N D TRA N SPORTATION. P.B. 82 I S AS S ESS M ENT ORD ER FOR ASSE S SME N T Y EA R 2012-13 U/S. 143(3) DATED 23 RD D E CEMBE R, 201 4 I N WHICH A LS O ON T HE SA M E FAC T S AO DID NO T M A K E AN Y ADD IT ION O N A C COU N T OF I N C OME E A RNED O N AC COU NT OF HO S T E L AN D T R ANS POR T A T I ON . IT IS TH US ES TA BLI S H ED ON RECORD T H A T O N IDE N TICAL FA C T S IN P RE CE DIN G AN D S UB SE Q U E NT AS S ESS M EN T Y E A RS , IN THE CASE OF AS S E SSEE T H E A UTHO RIT I ES BELOW H AVE AC C EPTED T HAT I N C O ME E A RNED ON ACCOU N T O F H OSTE L AN D T R ANS PO RTATI ON I S CHARITABLE IN NATURE AND IS PART A N D . P AR CEL OF E DU CA T I ON AL AC T I V ITIE S OF THE ASSESSEE. LEAR N E D D R SUBMIT T ED THAT THE RUL E OF RES-JUDICATA D O ES NOT APPLY T O THE INC O ME TAX PROCEED I NGS AND AL SO S UBMI TT ED TH AT PRINCIP L E OF CONSISTENCY I S NOT ABSOLUTE . HOWEVER, THE F AC T S N O TE D A B O V E CLEAR L Y ESTAB L ISHED THAT I N EARLIER AS WELL AS IN S UB SEQ U E N T YEARS , TH E ASSESSING OFFIC E R T AK E N A CONSCIOUS DECISION AND H A S 8 ITA.NO.5261/DEL./2015 SMT. SUSHILA DEVI CHHABIL DASS CHARITABLE TRUST, GHAZIABAD. A C C E PTED TH A T H OSTE L A ND TRAN SPORTA TI ON A C TIVI T IES ARE INCIDENTAL TO THE AIMS AND OBJECTS OF THE TRUST I.E., EDUCATION. THEREFORE, UNLESS NEW FACTS HAVE BEEN HAVE BEEN BROUGHT ON RECORD, THE INCOME TAX AUTHORITIES SHOULD FOLLOW RULE OF CONSISTENCY. HON' BLE DELHI HIGH COURT IN THE CASE OF A.R.J . SECURITIES PRINTERS, 264 ITR I76 HELD THAT 'FOR SAKE OF CONSISTENCY AND FINALITY OF LITIGATION' EARLIER DECISIONS ON SAME QUESTION SHOULD NOT BE REOPENED UNLESS NEW FACTS CAME TO THE KNOWLEDGE.' IT IS WELL SETTLED LAW THAT RULE OF CONSISTENCY SHOULD BE - ADOPTED BY THE INCOME TAX AUTHORITIES. WE RELY UPON DECISION OF DELHI HIGH COURT IN THE CASE OF ESCORTS LIMITED 338 ITR 435, DECISION OF M.P. HIGH COURT IN THE CASE OF GODAVARI CORPORATION LIMITED, 156I1TR 835, DECISION OF PUNJAB AND HARYANA HIGH COURT IN THE CA SE OF VIKAS CHEMI GUM INDIA, 276 ITR 32 AND DECISION OF T HE HON'BLE SUPREME COURT IN THE CASE OF RADHASOAMI SATSANG VS. CIT 193 ITR 321. THE BOARD CIRCULAR RELIED UPON BY LEARNED COUNSEL FOR THE ASSESSEE ALSO SUPPORT THE CASE OF THE ASSES S EE THAT THE ENTITY WH O SE - O B JE C T IS EDUCATION WOULD - CONTINUE TO BE ELIGIBLE FOR EXEMPTION A S CH ARI T AB L E INSTITUTIONS, EVEN IF THEY INCIDENTALLY CARRY ON COMMERCIAL ACTI VITY. THE P ROVISION FOR HOSTEL AND TRANSPORTATION FACILITY TO THE STUDENTS ADMITTED TO THE E DUCATIONAL INSTITUTION OF THE ASSESSEE WAS ONLY INCIDENT A L TO THE AIMS AND OBJECTS OF THE ASSESSEE AND THERE WAS NO MATERIAL ON RECORD S HOWIN G THAT ASSESSEE WAS RUNNING HOSTEL AND TRANSPORTATION FOR BUSINES S PURPO S E . THUS THE ASSESSEE DID NOT CARRY OUT ANY BUSINESS AC TIVITY ' WHILE PROVIDIN G HOSTEL AND TRANSPORTATION FACILITY TO ITS STUDENTS THEREFORE ASSESSEE NEED NOT TO MAINTAIN SEPARATE BOOKS OF ACC OUNTS U/S. 11(4A) OF THE INCOME TAX ACT. LEARNED COUNSEL FOR THE ASSE SSEE ALSO CONTENDED THAT THE A.O. HAS RELIED UPON DECISION IN THE CASE OF MUNICIPAL CORPORATION OF DELHI VS. CHILDREN BANK TRUST WHICH IS CONNECTED WITH HOUSE TAX MATTER ONLY. LEARNED COUNSEL FOR THE ASSE SSEE ALSO FILED THE NORMS AND STANDARD TO BE MAINTAINED BY EDUCATIONAL INSTITUTIONS AS PER GUIDELINE OF ACITE IN WHICH THE EDUCATIONAL INSTITU TIONS SHALL HAVE TO PROVIDE HOSTEL FACILITY AS PER STANDARD PRESCRIBED BY THEM. LEARNED COUNSEL FOR THE ASSESSEE THEREFORE RIGHTLY CONTENDE D THAT THE HOSTEL . AND TRANSPORTATION ACTIVITIES WERE CARRIED ON ' BY ASSESSEE WHICH WERE PART AND PARCEL OF EDUCATIONAL ACTIVITIE S AND IS INCIDENTAL TO THE ATTAINMENT OF OBJECTIVES OF THE A SSESSEE TRUST I.E., EDUCATION. 9. CONSIDERING THE ABOVE DISCUSSIONS AND IN THE LI GHT OF ABOVE DECISIONS AND HISTORY OF THE ASSESSEE IT IS CLEAR T HAT NO BUSINESS ACTIVITIES HAVE BEEN CARRIED OUT OF THE ASSESSEE WH ILE CARRYING OUT ACTIVITIES OF HOSTEL AND TRANSPORT FOR ITS STUDENTS FOR EDUCATIONAL PURPOSES THEREFORE THERE WERE NO NEED FOR ASSESSEE TO MAINTAIN TO SEPARATE BOOKS OF ACCOUNTS. THE ASSESSEE HAS BEEN A BLE TO PROVE THAT IT 9 ITA.NO.5261/DEL./2015 SMT. SUSHILA DEVI CHHABIL DASS CHARITABLE TRUST, GHAZIABAD. PROVIDES EDUCATION ONLY WHICH IS CHARITABLE IN NATU RE ITSELF. IN THE ABSENCE OF ANY SPECIFIC MATERIAL ON RECORD AGAINST THE ASSESSEE AS AGAINST THE HISTORY OF THE ASSESSEE CONSIDERED IN E ARLIER AND SUBSEQUENT YEARS, THE AUTHORITIES BELOW SHOULD NOT HAVE TAKEN A DIFFERENT VIEW IN ASSESSMENT YEAR UNDER APPEAL AND SHOULD HAVE FOLLOW ED THE RULE OF CONSISTENCY IN THE MATTER. THE APPROACH OF THE AUTH ORITIES BELOW IN DENYING DEDUCTION/EXEMPTION U/S.11 OF THE INCOME TA X ACT IS WHOLLY UNJUSTIFIED. THE ORDERS OF AUTHORITIES BELOW CANNOT BE SUSTAINED IN LAW. WE, ACCORDINGLY, SET ASIDE THE ORDERS OF AUTHORITIE S BELOW AND DELETE THE ADDITION OF RS.3,76,21,720/-. 10. IN THE RESULT, APPEAL OF THE ASSESSEE IS ALLOW ED. 6.2. THE ASSESSEE EXPLAINED BEFORE THE AUTHORITIES BELOW THAT COMPOSITE INCOME AND EXPENDITURE ACCOUNT WAS FILED WHICH CONTAIN ONLY THE RECEIPTS OF THE TRANSPORT CHARGES FROM THE STUDENTS AND PAYMENTS MADE TO THE CONTRACTORS FOR HIRING BUSES. THE ASSESSEE DID NOT OWN ANY BUSES. THE ASSESSEE EXPLAINED THAT IT WAS THE RESPONSIBILITY O F THE ASSESSEE EDUCATIONAL INSTITUTION TO PROVIDE TRANSPORT FACILITY TO THE ST UDENTS FOR ATTENDING THE SCHOOL AND FOR SENDING BACK THE CHILDREN TO THEIR R ESPECTIVE HOMES WITH PROPER SECURITY AND ATTACHMENTS. IT IS NOT A DENYIN G FACT THAT NOW-A-DAYS THE EDUCATIONAL INSTITUTIONS ARE PROVIDING TRANSPOR T FACILITIES TO THE STUDENTS FOR THEIR SAFETY AND PROPER ATTENDANCE IN EDUCATION AL INSTITUTIONS. THEREFORE, THE EXPLANATION OF ASSESSEE CLEARLY SHOWS THAT WHAT EVER TRANSPORT CHARGES WERE RECEIVED BY THE ASSESSEE WERE FOR PROVIDING TR ANSPORT FACILITIES BY HIRING OF BUSINESS THROUGH THE CONTRACTORS. THE ASSESSEE A LSO EXPLAINED THAT WHATEVER SURPLUS IS LEFT IS ALSO USED FOR EDUCATION AL PURPOSES. THE CONTENTION OF THE ASSESSEE HAVE NOT BEEN DISPUTED B Y THE AUTHORITIES BELOW. THESE FACTS THEREFORE, CLEARLY PROVE THAT TRANSPORT FACILITY PROVIDED FOR THE STUDENTS WAS ONLY INCIDENTAL TO THE MAIN ACTIVITIES OF THE ASSESSEE FOR PROVIDING EDUCATION TO THE STUDENTS. THE ASSESSEE T HUS, WOULD NOT BE DOING ANY TRANSPORTATION BUSINESS IN THIS REGARD. THE ASS ESSEE FILED DETAILS BEFORE THE A.O. AS PER THEIR REPLY COPY OF WHICH IS FILED AT PAGE-32 OF THE PAPER BOOK TO SHOW THAT IN ASSESSMENT YEAR UNDER APPEAL THE NE T SURPLUS OUT OF 10 ITA.NO.5261/DEL./2015 SMT. SUSHILA DEVI CHHABIL DASS CHARITABLE TRUST, GHAZIABAD. TRANSPORT FEES HAS COME TO RS.9,89,000 AND IN SUBSE QUENT A.YS. 2011-2012 AND 2012-2013 IT IS RS.1.93 LAKHS AND (-) RS.8.72 L AKHS RESPECTIVELY. THUS, PERCENTAGE OF THE NET SURPLUS IN THE TRANSPORT FEES HAS COME TO 9.6% IN A.Y. UNDER APPEAL I.E., 2010-2011 AND IN SUBSEQUENT A.YS . 2011-2012 AND 2012- 2013 IT IS 1.7% (-) 7.6%. IT IS, THEREFORE, CLEAR T HAT IT IS NOT ALWAYS THAT ASSESSEE WAS GETTING HUGE SURPLUS AFTER CHARGING TR ANSPORTATION FEES. THE LEARNED COUNSEL FOR THE ASSESSEE ALSO FILED COPIES OF THE FINANCIAL STATEMENTS FOR SUBSEQUENT YEARS IN THE PAPER BOOK T O SHOW THE SAME POSITION OF SOME TIME GETTING SURPLUS OUT OF TRANSP ORTATION FEES. THE LEARNED COUNSEL FOR THE ASSESSEE ALSO REFERRED TO THE ASSES SMENT ORDERS PASSED UNDER SECTION 143(3) FOR A.YS. 2012-2013, 2013-2014 AND 2014-2015 (PAPER BOOK PAGE NOS.49 TO 57) IN WHICH YEARS THE A SSESSEE PROVIDED THE SAME TRANSPORTATION FACILITY TO THE STUDENTS BUT TH E A.O. DID NOT TAKE ANY ADVERSE VIEW AGAINST THE ASSESSEE OF DOING ANY BUSI NESS ACTIVITY. THE A.O. ACCEPTED IN SUBSEQUENT YEARS IN SCRUTINY ASSESSMENT S THAT TRANSPORTATION FACILITY WAS INTEGRAL PART OF THE EDUCATIONAL ACTIV ITY OF THE ASSESSEE FOR PROVIDING AND IMPARTING EDUCATION TO THE STUDENTS. THESE FACTS THEREFORE, PROVED THAT THE PROVISION FOR TRANSPORTATION FACILI TIES TO THE STUDENTS ADMITTED TO THE EDUCATIONAL INSTITUTION OF THE ASSE SSEE-SOCIETY WAS ONLY INCIDENTAL TO THE AIMS AND OBJECTS OF THE ASSESSEE-S OCIETY AND THERE WERE NO MATERIAL ON RECORD SHOWING THAT ASSESSEE-SOCIETY WAS RUNNING TRANSPORTATION FOR BUSINESS PURPOSES. THUS THE ASSE SSEE-SOCIETY DID NOT CARRY OUT ANY BUSINESS ACTIVITY WHILE PROVIDING TRA NSPORT FACILITY TO ITS STUDENTS. THEREFORE, ASSESSEE NEED NOT TO MAINTAIN SEPARATE BOOKS OF ACCOUNT UNDER SECTION 11(4A) OF THE I.T. ACT. AN ID ENTICAL ISSUE HAS BEEN CONSIDERED BY THE DIVISION BENCH OF ITAT, DELHI BEN CH IN THE CASE OF DR. K.N. MODI INSTITUTE OF PHARMACEUTICALS EDUCATIONAL & RESEARCH TRUST, GHAZIABAD VS. JCIT, RANGE-2, GHAZIABAD (SUPRA) IN W HICH THE APPEAL OF THE ASSESSEE HAS BEEN ALLOWED GRANTING EXEMPTION UNDER SECTION 11 OF THE I.T. ACT. IT IS ALSO WELL SETTLED LAW THAT THOUGH THE PR INCIPLE OF RES-JUDICATA DO NOT 11 ITA.NO.5261/DEL./2015 SMT. SUSHILA DEVI CHHABIL DASS CHARITABLE TRUST, GHAZIABAD. APPLY TO THE INCOME TAX PROCEEDINGS BUT RULE OF CONSISTENCY DO APPLY TO THE INCOME TAX PROCEEDINGS. VARIOUS CASE LAWS HAVE ALSO BEEN CONSIDERED IN THE ABOVE DECISIONS OF DR. K.N. MODI INSTITUTE OF PHARM ACEUTICALS EDUCATIONAL & RESEARCH TRUST, GHAZIABAD VS. JCIT, RANGE-2, GHAZIA BAD (SUPRA). THESE FACTS CLEARLY PROVED THAT ADDITION WAS WHOLLY UNJUSTIFIED AND ASSESSEE IS ENTITLED FOR EXEMPTION OF INCOME ON ACCOUNT OF TRANSPORTATIO N FEES UNDER SECTIONS 11 AND 12 OF THE INCOME TAX ACT. I, ACCORDINGLY, SET A SIDE THE ORDERS OF THE AUTHORITIES BELOW AND DELETE THE ADDITION OF RS.9,8 9,000. THIS GROUND OF APPEAL IS ALLOWED. 7. AS REGARDS THE DEPRECIATION IS CONCERN ED, THE ISSUE IS COVERED IN FAVOUR OF THE ASSESSEE BY THE JUDGMENT OF THE HONB LE DELHI HIGH COURT IN THE CASE OF DIT (EXEMPTIONS) VS. INDRAPRASTHA CANCE R SOCIETY (2015) 53 TAXMANN.COM 463 (DEL.)IN WHICH IT WAS HELD AS FOLLO WS : WHERE A CHARITABLE INSTITUTION HAS PURCHASED A CAP ITAL ASSET AND TREATED AMOUNT SPENT ON SAID ASSET AS APPLICATION O F INCOME, IS ENTITLED TO CLAIM DEPRECIATION ON SAID ASSET UTILISED FOR BU SINESS. 8. THE ITAT, DELHI SMC BENCH IN THE CASE OF L AKSH EDUCATIONAL SOCIETY, GHAZIABAD VS. ADDL. CIT, RANGE-1, GHAZIABA D (SUPRA), HELD THAT ASSESSEE IS ENTITLED TO CLAIM DEPRECIATION ON THE S AME CAPITAL ASSET WHICH IS TREATED AS APPLICATION OF INCOME. FOLLOWING THE ABO VE DECISIONS, I SET ASIDE THE ORDERS OF THE AUTHORITIES BELOW AND DIRECT THE A.O. TO GRANT DEPRECIATION TO THE ASSESSEE. THIS GROUND OF APPEAL OF ASSESSEE IS ALLOWED. 9. IN THE RESULT, APPEAL OF ASSESSEE IS ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT. SD/- (BHAVNESH SAINI) JUDICIAL MEMBER DELHI, DATED 11 TH AUGUST, 2017 VBP/- 12 ITA.NO.5261/DEL./2015 SMT. SUSHILA DEVI CHHABIL DASS CHARITABLE TRUST, GHAZIABAD. COPY TO 1. THE APPELLANT 2. THE RESPONDENT 3. CIT(A) CONCERNED 4. CIT CONCERNED 5. D.R. ITAT SMC BENCH 6. GUARD FILE // BY ORDER // ASST. REGISTRAR ITAT, DELHI BENCHES DELHI.