DDIT, New Delhi V. Prakash Educational Society, New Delhi

ITA 916/DEL/2013

• Counselvise Citation: [2014] 140 COUNSELVISE.COM (IT) 74375 (ITAT-DELHI)
• Duration Of Justice: 1 year(s) 1 month(s) 7 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 21-03-2014
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: F
• Next Hearing Date: 23-01-2014
• Assessment Year: 2009-2010
• Appeal Filed On: 14-02-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: MANU K GIRI ADVS
• Keywords: Capital asset; Depreciation; Charitable institution; Benefit of exemption
• Section: 12A; 12AA; 10; 11

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCHES : F NEW DELHI BEFORE SHRI U.B.S.BEDI, JM AND SHRI J.SUDHAKAR REDDY, AM ITA NO. 916/DEL/2013 ASSESSMENT YEAR : 2009-10 DY.CIT (E), INV.CIRCLE II VS. PRAKASH EDUCATIONAL SOCIETY NEW DELHI 620 A, FAIZ ROAD, KAROL BAGH NEW DELHI PAN: AAATP 1227 G (APPELLANT) (RESPONDENT) APPELLANT BY:- MS.MEENAKSHI VOHRA , SR.D.R. RESPONDENT BY:- SH. ANOOP SHARMA & MANU K GIRI, ADVS. O R D E R PER J.SUDHAKAR REDDY, AM THIS APPEAL FILED BY THE REVENUE, IS DIRECTED AGA INST THE ORDER OF THE LD.COMMISSIONER OF INCOME TAX (APPEALS)-XXI, NEW DE LHI DATED 7.11.2012 PERTAINING TO THE ASSESSMENT YEAR 2009-10. 2. FACTS IN BRIEF :- THE ASSESSEE IS A REGISTERED SOCIETY. IT IS RE GISTERED U/S 12A OF THE INCOME TAX ACT AND IS ALSO NOTIFIED U/S 10 (23 C)(VI) OF THE INCOME TAX ACT. THE OBJECTS OF THE SOCIETY IS TO ESTABLIS H SCHOOLS, COLLEGES AND OTHER INSTITUTIONS FOR IMPARTING EDUCATION/FOR GRANT OF F INANCIAL ASSISTANCE AND DONATIONS ETC. TO THE EXISTING SCHOOLS, COLLEGES AN D OTHER INSTITUTIONS. THE A.O. DISALLOWED DEPRECIATION CLAIMED BY THE ASSESSE E ON THE GROUND OF NON PAGE 2 OF 4 PRODUCTION OF F.A. DETAILS. ON APPEAL THE FIRST AP PELLATE AUTHORITY FOLLOWED THE DECISION OF THE JURISDICTIONAL HIGH COURT IN THE CA SE OF DIT VS. VISHWA JAGRITI MISSION AND HELD THAT THE DEPRECIATION DEBITED TO A CCOUNTS OF CHARITABLE INSTITUTION HAS TO BE DEDUCTED TO ARRIVE AT INCOME AVAILABLE FOR APPLICATION TO CHARITABLE AND OTHER PURPOSES. LD.COMMISSIONER OF INCOME TAX (APPEALS) AT PARA 3.2 OF HIS ORDER, OBSERVED AS FOLLOWS. 3.2. ALONG WITH THE SUBMISSION, STATEMENT OF TOTAL INCOME AND COPY OF LETTER DT. 1.9.2011 SUBMITTED BEFORE THE ASSESSING OFFICER DUR ING THE COURSE OF ASSESSMENT PROCEEDINGS HAS ALSO BEEN ENCLOSED WHICH IS AVAILAB LE AT PAGE NO.11 OF THE PAPER BOOK AND I HAVE PERUSED THE SAME. IN SUPPORT OF HIS CLAIM, LD AR OF THE ASSESSEE HAS ALSO ATTACHED COPY OF ASSESSMENT ORDER FOR ASSESSEES OWN CASE FOR THE ASSESSMENT YEAR 2008-09, WHEREIN, ISSUE OF THE DEPRECIATION HAS BEEN ACCEPTED AND NO DISALLOWANCE WAS MADE AND ASSESSEE S ACTIVITIES HAVE BEEN FOUND TO BE CHARITABLE IN NATURE AND WITHIN THE MEA NING OF SECTION 2(15) AND BENEFIT OF EXEMPTION U/S 11 OF THE ACT HAS BEEN ALL OWED. 2.1. LATER, AT PARA 3.4, HE OBSERVED AS FOLLOWS. 3.4. WITH REGARD TO AMOUNT DEPRECIATION ASSESSING OFFICER HAS DISALLOWED TO THE TUNE OF RS.1,40,25,060/- IN PLACE OF RS.66,25,8 81/-. IN THIS REGARD, IT HAS BEEN FOUND THAT THERE IS FACTUAL MISTAKE ON THE PAR T OF ASSESSING OFFICER AS SHE HAS NOT GONE THROUGH THE FIGURES AS PER STATEMENT O F TOTAL INCOME, WHEREIN, ACTUAL FIGURE HAS BEEN GIVEN AS RS.66,25,881/-. AS SESSING OFFICER IS DIRECTED TO VERIFY THE CLAIM AND ALLOW AS PER LAW. GROUND NO.2 IS PARTLY ALLOWED. 3. AGGRIEVED THE REVENUE IS IN APPEAL BEFORE US ON THE FOLLOWING GROUNDS. 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE C ASE AND IN LAW, THE LD.COMMISSIONER OF INCOME TAX (APPEALS) HAS ERRED I N ALLOWING DEPRECIATION OF PAGE 3 OF 4 RS.66,25,881/- IGNORING THE FACT THAT WHERE THE CAP ITAL EXPENDITURE HAS BEEN TREATED TO HAVE BEEN APPLIED FOR THE OBJECT OF THE TRUST, ALLOWANCE OF DEDUCTION ON ACCOUNT OF DEPRECIATION WILL AMOUNT TO DOUBLE DEDUC TION. 2. 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD.COMMISSIONER OF INCOME TAX (APPEALS) HAS ERRED I N IGNORING THE FACT THAT ASSESSEE HAS FAILED TO PRODUCE BILLS/VOUCHERS IN RE SPECT OF CAPITAL ASSETS ON WHICH DEPRECIATION WAS CLAIMED. 3. THE ASSESSEE CRAVES LEAVE TO ADD, ALTER OR AMEN D ANY GROUND OF APPEAL RAISED ABOVE AT THE TIME OF HEARING. 4. AFTER HEARING RIVAL CONTENTIONS, WE FIND THAT TH E GROUND RAISED BY THE REVENUE IS TO BE DISMISSED IN VIEW OF THE DECISION OF THE JURISDICTIONAL HIGH COURT IN THE CASE OF DIT VS. VISHWA JAGRITI MISSION , 73 DTR (DEL) 195, THE HONBLE HIGH COURT HELD AS FOLLOWS. HELD THE ASSESSEE HAS BEEN GRANTED REGISTRATION U/S 12AA VIDE ORDER DT. 11.9.2009 AND, THEREFORE, IT WAS ENTITLED TO EXEMPT ION OF ITS INCOME U/S 11. THE ONLY QUESTION IS WHETHER THE INCOME OF THE ASSESSEE SHOULD BE COMPUTED ON COMMERCIAL PRINCIPLES AND IN DOING SO WHETHER DEPRE CIATION ON FIXED ASSETS UTILIZED FOR THE CHARITABLE PURPOSES SHOULD BE ALLO WED. ON THIS ISSUE, THERE SEEMS TO BE A CONSENSUS OF JUDICIAL THINKING AS IS SEEN F ROM THE AUTHORITIES RELIED UPON BY THE CIT(A) AS WELL AS THE TRIBUNAL. IN COMPUTIN G THE INCOME OF A CHARITABLE INSTITUTION/TRUST, DEPRECIATION OF ASSETS OWNED BY THE TRUST/INSTITUTION IS A NECESSARY DEDUCTION ON COMMERCIAL PRINCIPLES. THE AMOUNT OF DEPRECIATION DEBITED TO THE ACCOUNTS OF CHARITABLE INSTITUTION H AS TO BE DEDUCTED TO ARRIVE AT THE INCOME AVAILABLE FOR APPLICATION TO CHARITABLE AND RELIGIOUS PURPOSES. HELD, IN FAVOUR OF ASSESSEE. PAGE 4 OF 4 4.1. AS THE LD.COMMISSIONER OF INCOME TAX (APPEALS) APPLIED THE ABOVE DECISION OF THE JURISDICTIONAL HIGH COURT, WE UPHOL D THE SAME AND DISMISS THIS APPEAL OF THE REVENUE. 5. IN THE RESULT, THE APPEAL BY THE REVENUE IS DISM ISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 21 ST MARCH, 2014. SD/- SD/- (U.B.S. BEDI) (J.SUDHA KAR REDDY) JUDICIAL MEMBER ACCOUNTANT MEMBE R DATED: THE 21 ST MARCH, 2014 *MANGA COPY OF THE ORDER FORWARDED TO: 1. APPELLANT; 2.RESPONDENT; 3.CIT; 4.CIT (A); 5.DR; 6.GUARD FILE BY ORDER ASST. REGISTRAR