COMMISSIONER OF INCOME TAX EXEMPTINOS vs. M/S COMPUCOM FOUNDATIONS

In both appeals common questions of law and facts are involved, hence, they are decided by this common judgment.

By way of these appeals, the appellant has assailed the judgment and order of the Tribunal whereby the Tribunal has (2 of 5) [ITA-209/2017]

This Court while admitting the matter framed following questions of law:- In DBITA No. 209/2017 “Whether on the facts and circumstances of the case the Hon’ble ITAT was legally correct in holding that the assessee is eligible to claim deduction of depreciation of Rs. 1,25,68,398/- on the assets which were claimed as application u/s 11 at the time of purchase?” In DBITA No. 253/2017 “Whether on the facts and circumstances of the case the ld. ITAT is legally correct in holding that the depreciation of Rs. 69,30,996/- on the asset which were claimed as application u/s 11 at the time of purchase?”

Now the issue is squarely covered as stated by counsel for the respondent in case of Commissioner of Income Tax-II vs. Krishi Upaj Mandi Samiti (DBITA No. 32/2010) decided on 16th January, 2015 wherein it has been held as under:- “5. The assessee is a charitable institution registered under Section 12-A of the Act of 1961 and 100% capital expenditure was availed by it against the asset concerned i.e. a building. Section 32(1) of the Act of 1961 provides for depreciation in respect of building, plant and machinery owned by the assessee and used for business purposes. Income of a charitable trust like the present assessee derived from the depreciable heads is also liable to be computed on commercial basis, however, while doing so it is to be kept in mind that ultimately assessee is a charitable institution and its income for tax purposes is required to be determined by taking into consideration provisions of Section 11 of the (3 of 5) [ITA-209/2017]

He has relied upon another decision in case of Commissioner of Income Tax vs. Mahima Shiksha Samiti (DBITA No. 262/2017) decided on 3rd October, 2017 wherein it has been held as under:- “17. On the other issue, whether the expenses which are granted or which has been considered by the authority, he relied upon the judgment of this court in Commissioner of Income Tax, Jaipur-II vs. Consulting Engineering Group Ltd. (2014) 365 ITR 284 wherein it has been held as under:-

In view of what we have discussed hereinabove, on all the three issues, the Tribunal, after appreciation of evidence, has come to the conclusion that the disallowance out of job work charges, soil testing and surveying charges and directors' remuneration is not proper and it had been rightly deleted by the CIT(A) and we do not find any infirmity or perversity in the said order of the Tribunal. It is purely a finding of fact and no question of law much less substantial question of law can be said to emerge out of the said order of the Tribunal so as to call for any interference of this Court. In our view, no substantial question of law arises out of the order passed by the Tribunal. Consequently, the appeal, being

Learned counsel for the assessee Mr. Jhanwar submits that the amount of salary claimed on account of payment to the sons i.e., Anoop and Alock was reasonable, as both are looking after the business and assessee has got paralytic attack in the year 1983, therefore, the payment of salary to these persons at the rate of Rs. 6,000 and Rs. 5,000 per month, respectively, was justified.

The facts on record reveal that both are graduates and Anoop, to whom assessee has paid Rs. 6,000 p.m. in the year under consideration was getting only Rs. 1,000 p.m. just in the preceding year. So far paralytic attack to the assessee is concerned, it happened in the year 1983. The assessee has carried on the business even after paralytic attack without the help of these two sons.

We also notice that in the preceding year i.e., 1991, assessee has disclosed income of Rs, 70,000. This year he has disclosed only income of Rs. 45,673. On these facts, there is no justification of paying such heavy salary to the sons of the assessee, who are employed by the assessee for the purpose of his business.

It is also pertinent to note that what should be the reasonable salary is basically a question of fact and Tribunal is a fact-finding final body in this regard. Finding of the Tribunal cannot be said to be perverse on these facts. No interference is called for in the order of Tribunal. In the result, we answer the question in affirmative i.e., in favour of the Revenue and against the assessee.

On the first issue as stated above, the same is required to be answered in favour of the assessee that u/s 11 & 13, the expenses which are transferred to the private university while holding Sec.13 definition and (5 of 5) [ITA-209/2017]

In that view of the matter, depreciation is rightly allowed. On the question of foreign trip after taking into consideration the student exchange programme the tribunal has come to the conclusion that it is covered under the purpose of the trust object and are done for the educational institution and benefit of the students, in our considered opinion, the expenses of foreign trip are also rightly allowed.”

In view of the above, the issue is required to be answered in favour of the assessee against the department. The appeals stand dismissed. (VIJAY KUMAR VYAS),J. (K.S. JHAVERI),J. A.Sharma/45-46