ITO (E), New Delhi V. Maulana Azad Education Foundation, New Delhi

ITA 5397/DEL/2011

• Counselvise Citation: [2012] 140 COUNSELVISE.COM (IT) 65200 (ITAT-DELHI)
• Duration Of Justice: 8 month(s) 5 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 07-08-2012
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: SMC
• Next Hearing Date: 01-08-2012
• Assessment Year: 2008-2009
• Appeal Filed On: 02-12-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: DR B R R KUMAR
• Keywords: Depreciation; Charitable institution
• Section: 12AA

Judgement Text

I.T.A. NO. 5397/DEL/2011 1 IN THE INCOME TAX APPELATE TRIBUNAL DELHI BENCH SMC: NEW DELHI BEFORE SHRI SHAMIM YAHYA, ACCOUNTANT MEMBER ITA NO. 5397/DEL/2011 A.Y. : 2008-09 INCOME TAX OFFICER (E), VS. MAULANA AZAD EDUCAT ION FOUNDATION T.W.-IV, SOCIAL JUSTICE SERVICE CENRE, AAYAKAR BHAVAN, CHELMSFORD ROAD, LAXMI NAGAR, NEW DELHI 110 055 DISTT. CENTRE, (PAN : AAAJM0011B) DELHI 92 (APPELLANT) (RESPONDENT) ASSESSEE BY : NONE DEPARTMENT BY : DR. B.R.R. KUMAR, SR. D.R. O R D E R THIS APPEAL BY THE REVENUE IS DIRECTED AGAINST THE ORDER OF THE LD. COMMISSIONER OF INCOME TAX (APPEALS)-XXI, NEW DEL HI DATED 31.10.2011 PERTAINING TO ASSESSMENT YEAR 2008-09. 2. THE GROUNDS OF APPEAL READ AS UNDER:- I) ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E, THE LD. COMMISSIONER OF INCOME TAX (A) HAS RELIED UPON THE DECISION BY THE HONBLE PUNJAB AND HARYANA HIGH COURT IN THE CASE OF C.I.T. KARNAL VS. MARKET COMMITTEE, PIPLI (REPORTED IN (2010) 36(1) ITCL 537 (P&H-HC) AND DIRECTED TO ALLOW THE DEPRECIATION AS T HE ACTION OF THE ASSESSING OFFICER TREATING DEPRECIAT ION AS DOUBLE DEDUCTION IS FOUND TO BE TOTALLY MISCONCEIVED. THE DECISION OF LD. COMMISSIONER OF I.T.A. NO. 5397/DEL/2011 2 INCOME TAX (A) IS NOT ACCEPTABLE AS THERE IS NO DECISION OF JURISDICTIONAL HIGH COURT, DELHI OR HI GHER JUDICIAL COURT ON THE SAME ISSUE. II) THE APPELLANT CRAVES LEAVE TO ADD, TO ALTER OR AMEND ANY GROUND OF APPEAL RAISED ABOVE AT THE TIME OF HEARING. 3. THE ASSESSEE TRUST IS A VOLUNTARY, NON-POLITICA L, NON-PROFIT MAKING, SOCIAL SERVICE ORGANIZATION ESTABLISHED TO PROMOTE EDUCATION AMONGST THE EDUCATIONALLY BACKWARD MINORITIES. ASSE SSING OFFICER NOTED THAT AS PER THE INCOME AND EXPENDITURE ACCOUN T, ASSESSEE HAS CLAIMED DEPRECIATION OF ` 1,87,781/- AS APPLICATION OF INCOME. ASSESSING OFFICER OPINED THAT DEPRECIATION SHOULD BE DISALLOWED BECAUSE THE BENEFIT OF APPLICATION OF FUND HAS ALRE ADY BEEN TAKEN WHEN THE ASSETS WERE ACQUIRED. 4. UPON ASSESSEES APPEAL LD. COMMISSIONER OF INCOME TAX (A) CONSIDERED THE ASSESSES SUBMISSIONS AND REFERRE D TO THE DECISION OF C.I.T. VS. KARNAL MARKETING, PIPLI (SUPRA). IN THIS CASE, THE EXPOSITION WAS ASUNDER:- IN THE PRESENT CASE, THE ASSESSEE IS NOT CLAIMING DOUBLE DEDUCTION ON ACCOUNT OF DEPRECIATION AS HAS BEEN SUGGESTED BY THE LD. COUNSEL FOR THE REVENUE. THE INCOME OF THE ASSESSEE BEING EXEMPT, THE ASSESSEE IS ONLY CLAIMING THAT DEPRECIATION SHOULD BE REDUCED FROM THE INCOME FOR DETERMINING THE PERCENTAGE OF FUNDS WHICH HAVE TO BE APPLIED FOR TH E PURPOSES OF THE TRUST. THERE IS NO DOUBLE DEDUCTI ON CLAIMED BY THE ASSESSEE AS CANVASSED BY THE REVENUE. I.T.A. NO. 5397/DEL/2011 3 THE JUDGEMENT OF THE HONBLE SUPREME COURT IN ESCORTS LTD. AND ANOTHER (SUPRA) IS DISTINGUISHAB LE FOR THE ABOVE REASONS. IT CANNOT BE HELD THAT DOUBLE BENEFIT IS GIVEN IN ALLOWING CLAIM FOR DEPRECIATION FOR COMPUTING INCOME FOR PURPOSES OF SECTION 11. THE QUESTIONS PROPOSED HAVE, THUS, TO BE ANSWERED AGAINST THE REVENUE AND IN FAVOUR OF THE ASSESSEE. 4.1 CONSIDERING THE ABOVE, LD. COMMISSIONER OF INCOM E TAX (A) HELD THAT ACTION OF THE ASSESSING OFFICER IN TREATING T HE DEPRECIATION AS DOUBLE DEDUCTION WAS TOTALLY MISCONCEIVED AND ASSESS EE GOT RELIEF ON THIS ACCOUNT. 5. AGAINST THE ABOVE ORDER THE REVENUE IS IN APPEAL BEFORE US. 6. I HAVE HEARD THE LD. DEPARTMENTAL REPRESENTATIVE. NONE APPEARED ON BEHALF OF THE ASSESSEE. IN MY CONSIDER ED OPINION, THE ISSUE CAN BE ADJUDICATED UPON HEARING THE LD. DEPA RTMENTAL REPRESENTATIVE AND PERUSING THE RECORDS. LD. DEPAR TMENTAL REPRESENTATIVE ON THIS ISSUE FAIRLY CONCEDED THAT T HIS ISSUE IS COVERED IN FAVOUR OF THE ASSESSEE BY THE DECISION OF HONB LE PUNJAB AND HARYANA HIGH COURT IN THE CASE OF C.I.T. VS. TINI TOTS EDUCATION SOCIETY 330 ITR 0021. IN THIS CASE, THE HONBLE H IGH COURT HAS HELD AS UNDER:- THE ASSESSEE WAS A CHARITABLE INSTITUTION REGISTER ED UNDER SECTION 12AA OF THE INCOME-TAX ACT, 1961. IN ITS AC COUNTS, I.T.A. NO. 5397/DEL/2011 4 THE ASSESSEE CALCULATED DEPRECIATION FOR THE PURPOS E OF SHOWING THE AMOUNT UTILIZED. THE ASSESSING OFFICER DIS- ALLOWED THE DEPRECIATION ON THE GROUND THAT THE INC OME OF THE ASSESSEE BEING EXEMPT, CLAIM FOR DEPRECIATION WO ULD AMOUNT TO TAKING OF DOUBLE BENEFIT. THE COMMISSIONER (APPEALS) HELD THAT DEDUCTION FOR COMPUTING INCOME TO PRESERVE THE CORPUS OF THE TRUST WAS PERMISSIBLE AND DID NOT AMOUNT TO DOUBLE BENEFIT. THIS VIEW WAS UPHELD BY TH E TRIBUNAL OBSERVING THAT APPLICATION OF INCOME WAS N OT COMPUTATION OF INCOME OF THE CHARITABLE INSTITUTION. THEREFORE, THE QUESTION WHETHER DEPRECIATION WAS TO BE ALLOWED OR NOT HAD NOTHING TO DO WITH THE APPLICATI ON OF INCOME. THE INCOME WAS ALWAYS TO BE COMPUTED ON COMMERCIAL PRINCIPLES AND AS PER THE SYSTEM OF ACCOU NTING FOLLOWED BY THE ASSESSEE, SUBJECT ALWAYS TO THE STA TUTORY PROVISIONS. ON APPEAL: HELD, DISMISSING THE APPEAL, THAT THE ASSESSEE WAS N OT CLAIMING DOUBLE DEDUCTION ON ACCOUNT OF DEPRECIATION . THE INCOME OF THE ASSESSEE BEING EXEMPT, THE ASSESSEE WA S ONLY CLAIMING THAT DEPRECIATION SHOULD BE REDUCED FR OM THE INCOME FOR DETERMINING THE PERCENTAGE OF FUNDS WHICH HAD I.T.A. NO. 5397/DEL/2011 5 TO BE APPLIED FOR THE PURPOSES OF THE TRUST. IT COU LD NOT BE HELD THAT DOUBLE BENEFIT WAS GIVEN IN ALLOWING THE CLAIM FOR DEPRECIATION FOR COMPUTING INCOME FOR PURPOSES OF SE CTION 11. 7. ACCORDINGLY, FOLLOWING THE AFORESAID PRECEDENT, I HOLD THAT THERE IS NO INFIRMITY IN THE ORDER OF THE LD. COMMISSIONER OF INCOME TAX (A). ACCORDINGLY, I AFFIRM THE SAME. 8. IN THE RESULT, THE APPEAL FILED BY THE REVENUE STANDS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 07/8/2012. SD/- [SHAMIM YAHYA] ACCOUNTANT MEMBER DATE: 07/8/2012 SRBHATNAGAR COPY FORWARDED TO: - 1. APPELLANT 2. RESPONDENT 3. CIT 4.CIT (A) 5. D R, ITAT TRUE COPY BY ORDER, ASSISTANT REGISTRAR, ITAT, DELHI BENCHES