ITO (E), New Delhi V. M/s. N.P. Goel Educational Trust, New Delhi

ITA 73/DEL/2017

• Counselvise Citation: [2017] 127 COUNSELVISE.COM (IT) 2846 (ITAT-DELHI)
• Duration Of Justice: 11 month(s) 17 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 21-12-2017
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: SMC
• Next Hearing Date: 13-07-2017
• Assessment Year: 2012-2013
• Appeal Filed On: 04-01-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Depreciation
• Section: 12A

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCHES : SMC : NEW DELHI BEFORE SHRI R.S. SYAL, VICE PRESIDENT ITA NO.73/DEL/2017 ASSESSMENT YEAR : 2012-13 ITO (E), WARD-2(4), ROOM NO.2409, DR. S.P. MUKHERJEE CIVIC CENTRE, NEW DELHI. VS. N.P. GOEL EDUCATIONAL TRUST, 208, FRIENDS CHAMBER, S-11, SCHOOL BLOCK, SHAKARPUR, NEW DELHI. PAN: AAATN9714E ASSESSEE BY : SHRI K. SAMPATH & SHRI V. RAJA KUMAR, ADVOCATES DEPTT. BY : SHRI AMIT JAIN, SR. DR DATE OF HEARING : 21.12.2017 DATE OF PRONOUNCEMENT : 21.12.2017 ORDER THIS APPEAL BY THE REVENUE ARISES OUT OF THE ORDER PASSED BY THE CIT(A) ON 13.10.2016 IN RELATION TO THE ASSE SSMENT YEAR 2012-13. ITA NO.73/DEL/2017 2 2. THE FIRST GROUND IS AGAINST ALLOWING OF EXEMP TION U/S 11(1)(A) IN RESPECT OF ROYALTY PAYMENT OF RS.65,59,081/- TO G.D . GOENKA PVT. LTD. 3. BRIEFLY STATED, THE FACTS OF THE CASE ARE THAT T HE ASSESSEE-TRUST IS REGISTERED U/S 12A OF THE INCOME-TAX ACT, 1961 AND IS ALSO NOTIFIED U/S 80G. THE ASSESSEE-TRUST IS RUNNING A SCHOOL UNDER THE NAME AND STYLE OF G.D. GOENKA PUBLIC SCHOOL AT GHAZIABAD. DURING THE YEAR UNDER CONSIDERATION, THE ASSESSEE PAID A SUM OF RS.65,59, 081/- AS ROYALTY FEE TO G.D. GOENKA PVT. LTD. AND CLAIMED THE SAME AS DE DUCTIBLE EXPENDITURE. THE ASSESSING OFFICER DISALLOWED THE SAME ON THE GROUND THAT SUCH A PAYMENT WAS UNWARRANTED. THE LD. CIT(A ), FOLLOWING HIS ORDER FOR ASSESSMENT YEAR 2010-11, ACCEPTED THE ASS ESSEES CLAIM. THE REVENUE IS AGGRIEVED AGAINST SUCH DELETION OF ADDIT ION. 4. HAVING HEARD BOTH THE SIDES AND PERUSED THE RE LEVANT MATERIAL, IT IS FOUND AS AN ADMITTED POSITION, AS ALSO CONCEDED BY THE LD. DR, THAT THE VIEW ON THIS ISSUE TAKEN IN FAVOUR OF THE ASSESSEE BY THE LD. CIT(A) FOR THE ASSESSMENT YEAR 2010-11, HAS BEEN ACCEPTED BY T HE DEPARTMENT AND NO FURTHER APPEAL WAS FILED. IN THE LIGHT OF THESE FACTS, IT IS CLEAR THAT THE ITA NO.73/DEL/2017 3 DEPARTMENT HAS ACCEPTED THE DEDUCTIBILITY OF ROYALT Y FEE TO G.D. GOENKA FOR THE PRECEDING YEARS. AS SUCH, THERE IS NO REASON TO TAKE A DIFFERENT VIEW. THIS GROUND IS NOT ALLOWED. 5. GROUND NO.2 IS AGAINST THE DELETION OF ADDITION OF RS.12 LAC ON ACCOUNT OF DEEMED INTEREST ON INTEREST FREE DEPOSIT OF RS.1 CRORE GIVEN TO G.D. GOENKA PVT. LTD. THE ASSESSING OFFICER CAME T O HOLD THAT THE ASSESSEE OUGHT TO HAVE CHARGED INTEREST ON INTEREST -FREE DEPOSIT OF RS.1 CRORE GIVEN TO G.D. GOENKA PVT. LTD. APPLYING THE I NTEREST RATE OF 12%, HE ADDED A SUM OF RS.12 LAC TO THE ASSESSEES INCOM E. THE LD. CIT(A) DELETED THE ADDITION. 6. HAVING HEARD BOTH THE SIDES AND GONE THROUGH THE RELEVANT MATERIAL ON RECORD, IT IS SEEN THAT SIMILAR ADDITION WAS MAD E BY THE ASSESSING OFFICER FOR THE ASSESSMENT YEAR 2011-12 WHICH GOT D ELETED AT THE HANDS OF THE LD. CIT(A). THE LD. DR FRANKLY ACCEPTED THA T NO SECOND APPEAL WAS PREFERRED ON THIS ISSUE AND THE VIEW IN FAVOUR OF THE ASSESSEE HAS BEEN ACCEPTED BY THE DEPARTMENT. IN THIS HUE, WE D O NOT FIND ANY RAISON ITA NO.73/DEL/2017 4 DETRE TO DEVIATE FROM THE DECISION RENDERED BY THE LD. CI T(A) ON THIS SCORE. THIS GROUND IS ALSO NOT ALLOWED. 7. THE LAST GROUND IS AGAINST THE DELETION OF AD DITION ON ACCOUNT OF DEPRECIATION AMOUNTING TO RS.1,04,03,824/-. 8. HAVING HEARD BOTH THE SIDES IT IS NOTED THAT THI S ISSUE IS NO MORE RES INTEGRA IN VIEW OF THE INSERTION OF SECTION 11(6) BY THE F INANCE (NO.2) ACT, 2014 W.E.F. 01.04.2015 PROVIDING THAT DEPRECI ATION ON AN ASSET CANT BE TREATED AS APPLICATION OF INCOME. THUS, W .E.F. THE INSERTION OF THIS PROVISION THE CLAIM OF DEPRECIATION HAS BECOME INELIGIBLE FOR DEDUCTION. THE HON'BLE KARNATAKA HIGH COURT IN CIT VS. KARNATAKA REDDY JANASANGHA (2016) 389 ITR 229 (KAR), HAS HELD THAT THE INSERTION OF SECTION 11(6) BY THE FINANCE (NO.2) ACT, 2014 W. E.F. 01.04.2015 IS PROSPECTIVE. WE, THEREFORE, COUNTENANCE THE VIEW T AKEN BY THE LD. CIT(A) ON THIS SCORE. ITA NO.73/DEL/2017 5 9. IN THE RESULT, THE APPEAL FILED BY THE REV ENUE IS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 21.12.2017. SD/- [R.S. SYAL] VICE PRESIDENT DATED, 21 ST DECEMBER, 2017. DK COPY FORWARDED TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT (A) 5. DR, ITAT AR, ITAT, NEW DELHI.