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Before: SHRI AMIT SHUKLA & SHRI O.P. KANT
ORDER PER O.P. KANT, A.M.: These two appeals by the Revenue are directed against two separate orders dated 24/03/2015 passed by the Ld. Commissioner of Income-tax (Appeals)-40, New Delhi [in short ‘the Ld. CIT(A)’] for assessment year 2008-09 and 2010-11. As common issues-in-dispute are involved in both the appeals, same were heard together and disposed off by way of this consolidated order for convenience and avoid repetition of common discussion.
2 & 3632/Del/2 AY:2008-09 2. First, we take appeal having ITA No.3631/Del/2015 for assessment year 2008-09. The grounds raised in appeal for the assessment year 2008-09 are reproduced as under:
On the facts and in the circumstances of the case and in law, the Ld. ClT(A) has erred in allowing the benefit of Section 11 & 12 of the Act ignoring that the activities of the trust were not within the purview of section 2(15) of the Income Tax Act, 1961 during the year.
On the facts and in the circumstances of the case and in law, the Ld. CIT (A) has erred in directing the AO to allow benefits of Section 11 & 12 of the l.T Act, ignoring the fact the assessee was involved in business activity within the meaning of section 2(15) of the Income Tax Act, 1961 during the year under consideration. 3. On the facts and in the circumstances of the case and in law, the Ld. CIT (A) has erred in directing the AO to allow benefits of Section 11 & 12 of the l.T Act, ignoring the fact the assessee has violated the provision of Section 13 (1) (c) of the Act by providing the financial benefit to the persons specified u/s 13(3) of the Act. On the facts and in the circumstances of the case and in law, the Ld. 4. CIT(A) has erred in allowing the benefit of Section 11 & 12 of the Act ignoring the provision of Section 13(1) which provide that even if there is a single instance of violation of Section 13(1), the trust will lose the exemption in respect of entire income. 5. On the facts and in the circumstances of the case and in law, the Ld. CIT (A) has erred in allowing the claim of depreciation of Rs. 3,54,67,912/- to the assessee ignoring the fact that the assessee had claimed the amount incurred on purchase of assets in earlier years as application of income, on which depreciation is claimed now and further allowance of depreciation will be tantamount to double deduction. 6. On the facts and in the circumstances of the case and in law, the Ld. CIT(A) has erred in allowing the claim of depreciation or Rs. 3,54,67,912/- to the assessee in view of the recent decision of the Hon'ble Delhi High Court in the case of DIT(E) Vs. Charanjiv Charitable Trust dated 18.03.2014. On the facts and in the circumstances of the case and in law, the Ld. 7. CIT(A) has erred in deleting the addition of Rs. 2,26,522/- made on account of personal use of car. 8. On the facts and in the circumstances of the case and in law, the Ld. CIT(A) has erred in deleting the addition of Rs. 1,55,00,000/- made under the head excess admission of 31 students. On the facts and in the circumstances of the case and in law, the 9. Ld. ClT(A) has erred in deleting the addition of Rs. 1,44,97,952/ made on account of training expenses being personal in nature.
At the outset, the Ld. counsel of the assessee submitted that all the grounds raised
by the Revenue in the appeal are covered in favour of the assessee by the order of the Tribunal in its own case for assessment year 2009-10. He submitted that appeals filed by the Department against the said order before the Hon’ble High Court and Hon’ble Supreme Court have been dismissed. The Ld. counsel also submitted a chart of various grounds covered by the relevant paragraph of the order of the ITAT for assessment year 2009-10. The Ld. DR, though relied on the order of the Assessing Officer, he could not controvert the fact of various grounds of the appeal covered by the order of the Tribunal for assessment year 2009-10.
4. We have heard the rival submission and perused the relevant material on record. The assessee is a society registered under the Societies Registration Act, 1860 and also registered under section 12AA(1) of the Income-tax Act, 1961 (in short ‘the Act’) vide order dated 4/4/1975 as a charitable society. The assessee is running educational institution for BBA and MBA courses, which are affiliated with AICTE (All India Council of Technical Education). In assessment year 2009-10, the exemption under section 11(1) of the Act was denied on the ground that the assessee was charging huge fees and assessee had also taken excess admission of the students. The assessment year under consideration was reopened by the Assessing Officer by way of issue of notice under section 148 of the Act on the ground that in the assessment year 2009-10, the assessee has been denied exemption under section 11(1) of the Act. In the assessment completed on 28/03/2013 under section 147 read with section 4 & 3632/Del/2015 143 of the Act the Assessing Officer computed net taxable income of Rs.4,20,46,945/-. Before the Ld. CIT(A), the assessee contended that it is not involved in any trade, commerce and business and the mischief of the provision of section 2(15) of the Act was not applicable in the case of assessee. The assessee submitted that it was actually in the field of education and imparting the education in the form of BBA and MBA courses. The Ld. CIT(A), after considering the decision of the Tribunal in the case of the assessee for assessment year 2009-10 and also the decision of the Hon’ble Delhi High Court in the case of India Trade Promotion Organisation Vs. DGIT, 53 taxmann.com 404 (Delhi) (order dated 22/01/2015) allowed the appeal of the assessee, deleting all the additions made by the Assessing Officer. Aggrieved, the Revenue is in appeal before the Tribunal, raising the grounds as reproduced above.
5. The chart furnished by the Ld. counsel of the assessee stating various grounds covered by the respective paragraphs of the order of the Tribunal in ITA No. 4182/Del/2013 for assessment year 2009-10 is reproduced as under:
Covered in AY 2009- Grounds Grounds of Appeal
AY 2008-09 10 order of ITAT Ground 1. On the facts and in the circumstances of the case and in law, the Ld. Para 6 & Para 7 of CIT(A) has erred in allowing the benefit of Section 11 & 12 or the Act the ITAT Order ignoring that the activities of the trust were not within the purview of section 2(15) of the Income Tax Act, 1961 during the year. Ground 2. Para 6 & Para 7 of On the facts and in the circumstances of the case and in law, the Ld. the ITAT Order CIT(A) has erred in directing the AO to allow benefits of Section 11 & 12 of the I.T. Act, ignoring the fact the assessee was involved in business activity within the meaning of section 2(15) of the Income Tax Act, 1961 during the year under consideration.
Ground 3 Para 6 & Point 7 of On the facts and in the circumstances of the case and in law, the Ld. the ITAT Order CIT(A) has erred in directing the AO to allow benefits of Section 11 & 12 of the I.T. Act, ignoring the fact the assessee has violated the provision of Section 13(l)(c) of the Act by providing the financial benefit to the persons specified u/s 13(3) of the Act Ground 4 Para 10 & Para 11 of On the facts and in the circumstances of the case and in law, the Ld. the ITAT Order CIT(A) has erred in allowing the benefit of Section 11 & 12 of the Act ignoring the provision of Section 13(1) which provide that even if there is a single instance of violation of Section 13(1), the trust will lose the exemption in respect of entire income. Ground 5 Para 21 of the ITAT On the facts and in the circumstances of the case and in law, the Ld. Order CIT(A) has erred in allowing the claim of depreciation of Rs. 3,54,67,912/- to the assessee ignoring the fact that the assessee had claimed the amount incurred on purchase of assets in earlier years as application of income, on which depreciation is claimed now and further allowance of depreciation will be tantamount to double deduction Ground 6 Para 21 of the On the facts and in the circumstances of the case and in law, the Ld. ITAT Order CIT(A) has erred in allowing the claim of depreciation of Rs. 3,54,67,912/- to the assessee in view of the recent decision of the Hon'ble Delhi High Court in case of DIT(E) vs Charanjiv Charitable Trust dated 18.03.2014 Ground 7 Para 12 of the ITAT On the facts and in the circumstances of the case and in law, the Ld. Order CIT(A) has erred in deleting the addition of Rs. 2,26,522/- made on account of personal use of car. Ground 8 Para 7 of the ITAT On the facts and in the circumstances of the case and in law, the Ld. Order CIT(A) has erred in deleting the addition of Rs. 1,55,00,000/- made under the head excess admission of 31 students. Ground 9 Para 18 of the ITAT On the facts and in the circumstances of the case and in law, the Ld. Order CIT(A) has erred in deleting the addition of Rs. 1,44,97,952/- made on account of training expenses being personal in nature.
On perusal of the order of the Tribunal (supra), we find that grounds of appeal
raised in the year under consideration are covered by the finding of the Tribunal.
7. The grounds No. 1 to 2 of the present appeal are covered by the finding of the Tribunal (supra) in paragraph 6 and 7, which are reproduced as under:
“6. We have perused the assessment order as well as the order of the CIT(A). On going through the above order of the CIT(A) we notice that each of the allegations levied by the Assessing 6 & 3632/Del/2015 Officer has been examined by the CIT(A) and a finding has been given based on the facts. As regards the allegation that it has violated certain guidelines of AICTE, the CIT(A) has dealt this issue in para 5.7 of its order as under:- “5.7 For denying this benefit either the AO has to co- relate the allegation so as to make out a case under the Income Tax Act. Thus, assessee is a society which is engaged in educational activity. If it has admitted students in excess of the norms prescribed by the AICTE it can be an issue connected with appellant society and AICTE and not connected with AO and that appellant society unless there is a requirement or a condition in any of the Income Tax provisions to the effect that exemption will be denied if the guidelines of AICTE is violated. Moreover in this case, the excess admission has been regularized by the AICTE. As per provision of section 2(15) charitable purpose include "education" there is no rider attached to this word 'education'. Accordingly so long the activities are in the field of education irrespective of the fact whether it is accredited or whether it is approved in accordance with the guidelines or norms, it shall be eligible for exemption if it fulfills and does not violate the other conditions of the Income Tax Act. Thus I hold that AO is not justified in drawing adverse inference on this account.
We notice that the allegations are mainly related to running some programmes, and that too, educational. Further, the allegations are related to students being admitted in excess of the norms prescribed by the AICTE. But the fact remains that these are educational activities falling within the meaning of the object of the society and also falling within the meaning of 'charitable purposes' under Section 2(15) of the Act. From the facts we notice that the AO has not appreciated the facts regarding the allegation of violation of the guidelines of AICTE. The allegation of the AO was that the number of students was in excess of the students allowed by the AICTE. The AICTE has regularized this by charging a fee for the same, which means, that the stand of the assessee stood rectified by the AICTE. The second allegation was regarding running a triple degree programme in the same campus of the Institute despite there being guidelines by AICTE that no other programme could be run on the same campus. We are of the view that this cannot be a ground for denying exemption under Section 11 read with Section 2(15) of the Act. Both the allegations are regarding educational programmes being conducted by the assessee. Such activities of the society will fail within the meaning of 'charitable purpose' under Section 2(15) of the Income Tax Act. As per the provisions of Section 11, exemption is allowed in case the income has been applied for charitable purposes. 'Charitable purpose' includes education. Further, for claiming 7 & 3632/Del/2015 exemption, the conditions prescribed under Section 12A have to be complied with. The assessee society has duly complied with these conditions. Its activities are educational and as such, it is eligible for exemption under Section 11 of the Act. Thus, the CIT(A) was correct in holding that these allegations cannot be the basis for denying exemption under Section 11 of the Act.”
7.1 Accordingly, respectfully following the finding of the Tribunal (supra), the grounds No. 1 & 2 of the Revenue’s appeal are dismissed. 8. The ground No. 3 & 4 of the present appeal seeking denial of exemption under section 11 and 12 of the Act for alleged violation of section 13 of the Act is covered by the finding of the Tribunal (supra) in paragraph 10 and 11. For ready reference, the said finding is reproduced as under:
“10. As regards the allegation of the AO that the assessee has violated the provisions of Section 13 the allegation of the AO is that the office bearers of the assessee Society are related to each other and this affects the democratic working of the assessee. This issue has been dealt with by the CIT(A) in para 5.11 as under:- "5.11 The next issue is the allegation of violation of provisions of section 13(3) of the Income Tax Act. These allegations have to be read with the specific clauses of this section 13(3). In fact section 13(3) talks about only the persons who have obligation under section 13(1) and 13(2). Thus the issue is whether those specified persons have violated any of the provisions of section 13(1) or 13(2). In this regard the first allegation of the AO is that the office bearers of the society are related to each other and as such they have direct impact on the democratic working of the society. This allegation nowhere contradicts or violates the provisions of section 13."
11. As per the provisions of Section 13, there are certain conditions which, if violated, would lead to denial of the benefit under Section 11, if some advantage or benefit has been taken by the persons who are in the governance of the institution. However, there is no condition specified, that the persons in governance should not be relatives. The functioning of the 8 & 3632/Del/2015 institution cannot be considered to be undemocratic, if two relatives are occupying the position in the management. In fact, Section 13 itself provides for payment of salary, and allowance to the persons in the management, in case such payment does not exceed what may be reasonably paid for such services. Thus, we are in agreement with CIT(A) that there is no such restriction in Section 13 regarding relatives holding position in the charitable society or institution. 8.1 Thus, respectfully following the finding of the Tribunal (supra), the grounds No. 3 & 4 of the appeal of the Revenue are dismissed.
The grounds No. 5 and 6 relate to claim of depreciation despite purchase of assets considered towards application of income in earlier years. The identical issue has been decided by the Tribunal (supra) in para 21 to 23 of the order, which are reproduced as under:
“21. Ground no. 2 and 3 are regarding allowing depreciation despite the fact that the society has already claimed the same as deduction of income at the time of addition to the fixed assets. The AO allowed depreciation on the assets purchased during the current year only, and depreciation of assets purchased in earlier years was disallowed. The CIT(A) has deleted these additions following the judgment of the Hon'ble Delhi High Court in the case of 'Director of income Tax vs. Vishwa Jagriti Mission', 73 DTR 195 (Del). We are in agreement with the order of the CIT(A). The assessee-society is a charitable institution and when income is applied towards charitable purposes including towards purchase of fixed assess, it is considered to be deduction of income and hence, income, to that extent, is considered as applied for charitable purpose and thus, not charged to tax under Section ll(l)(a) of the Act. The assessee having purchased the fixed assets and the same having been utilized in carrying out its activities, the income arising from the activities is to be computed by applying the normal principle of computation of income, which will include a charge on account of depreciation in respect of the fixed assets used for carrying out such activities. As such, depreciation is allowed while computing income of the year under consideration. It cannot be said that the fixed assets acquired had already been claimed as deduction. Depreciation is a normal expenditure incurred in the course of the activities and hence, the same need to be deducted while computing the income. This issue has been 9 & 3632/Del/2015 dealt with by the jurisdictional High Court in the case of 'Director of Income Tax vs. Vishwa jagriti Mission', ITA No. 140/2012, vide order dated 29th March, 2012, while making a distinction with the judgment of the Supreme Court in 'Escorts Ltd. vs. Union of India’, as under:- "13. The judgment of the Supreme Court in Escorts Limited vs. Union of India (supra) has been rightly held to be inapplicable to the present case. There are two reasons as to why the judgment cannot be applied to the present case. Firstly, the Supreme Court was not concerned with the case of a charitable trust/institution involving the question as to whether its income should be computed on commercial principles in order to determine the amount of income available for application to charitable purposes. It was a case where the assessee was carrying on business and the statutory computation provisions of Chapter IV-D or the Act were applicable. In the present case, we are not concerned with the applicability of these provisions. We are concerned only with the concept of commercial income as understood from the accounting point of view. Even under normal commercial accounting principles, there is authority for the proposition that depreciation is a necessary charge in computing the net income. Secondly, the Supreme Court was concerned with the case where the assessee had claimed deduction of the cost of the asset under Section 35(1) of the Act, which deduction for capital expenditure incurred on scientific research, me question was whether after claiming deduction in respect of the cost of the asset under Section 35(1), can the assessee again claim deduction on account of depreciation in respect of the same asset. The Supreme Court ruled that, under general principles of taxation, double deduction in regard to the same business outgoing is not intended unless clearly expressed. The present case is not one of this type, as rightly distinguished by the CIT(Appeals).”
The above view is also supported by ‘CIT Vs. Tiny Tots Educational Society’, 330 ITR 21 (P&H), ‘CIT Vs. Shri Gujrati Samaj (Regd.), (2012) 349 ITR 559(MP) and ‘ CIT Vs. Market Committee, Pipli, (2011) 330 ITR 16 (P&H).
In view of the above settled position of law, we uphold the order of the CIT(A) and reject ground nos. 2 and 3.”
9.1 This issue has also been decided by the Hon’ble Supreme Court in the case of Rajasthan and Gujarati Charitable 10 & 3632/Del/2015 Foundation, Poona, 402 ITR 441 (SC) in favour of the assessee. Thus, respectfully following the decision of the Hon’ble Supreme Court and the decision of the Tribunal in the case of the assessee, the grounds No. 5 and 6 of the appeal of the Revenue are dismissed.
The ground No. 7 of the appeal relate to addition of Rs.2,26,522/-made on account of personal use of car. The identical issue has been decided by the Tribunal (supra) in para 12 of the order as under:
“12. Further, as regards the allegation of the AO that the facilities of the society are being misused by the office bearers regarding cars, premises, etc., we notice that this issue got clarified during the course of the survey itself, where one of the employee, Mr. S.K. Dhall, in response to a specific question, stated that the vehicles were being used by the officers, staffers/faculty and also by other staff members, for liaison work of the society. This statement clearly addresses the concern of the AO. This statement being a statement recorded during the survey, it cannot be ignored, particularly when the AO has not brought any material to substantiate his allegation against the assessee. The survey report was also before the AO and in case he had any doubt about the same, he could have made further investigation, which he chose not to do. Having failed to do so, he cannot ignore the statement and draw adverse inference merely on the basis of assumptions. The CIT(A) has dealt with this issue in paras 5.11 and 5.12 as follows:- "The other allegation of the AO on this account is the office bearers are maintaining luxurious cars and the expenses related to their purchase, repair and maintenance being borne by the society. In this regard I have gone through the records and I notice that during survey a specific question was put to the employee, Mr. S.K. Dhall on 31.01.2012 where in response to question no.4 he has clarified as under:- "Vehicles owned by the IMM as per annexure A attached. These vehicles are used by the officers/ staffers/ faculty of IMM for attending various meetings/functions and also by other staff members for liaison work for IMM. These vehicles are also 11 & 3632/Del/2015 used by the speakers/ session chairman/ High dignitaries during the seminar/training Programs." 5.12 The above statement recorded during the survey clearly shows that the vehicles are being used for the purposes of the society. I further notice that during the course of the survey nothing adverse on this account has been found. In absence of any evidence the allegation of the AO cannot be sustained. The AO has just made the allegation and has not given any basis, material or information on the basis of which such allegation is being made. On the contrary, the assessee has given explanation which has not been controverted.”
10.1 Thus, respectfully following the finding of the Tribunal on the issue in dispute, the ground No. 7 of the appeal is dismissed.
In ground No. 8, the Revenue, has challenged addition of Rs.1,55,00,000/-made under the head ‘excess admission’ of 31 students. The Tribunal (supra) in the order for assessment year 2009-10 has rejected the allegation of the AO of denial of exemption in respect of fee received from students admitted in excess of number in violation of AICTE guidelines. The Tribunal observed that AICTE has regularized this violation by way of charging a fee, which means that the stand of the assessee stood rectified by the AICTE. The relevant finding of the Tribunal (supra) has though been reproduced in above paras, for ready reference the said paragraph of the order of the Tribunal is reproduced as under:
7. We notice that the allegations are mainly related to running some programmes, and that too, educational. Further, the allegations are related to students being admitted in excess of the norms prescribed by the AICTE. But the fact remains that these are educational activities falling within the meaning of the object of the society and also falling within the meaning of 'charitable purposes' under Section 2(15) of the Act. From the facts we notice that the AO has not appreciated the facts regarding the allegation of violation of the guidelines of AICTE. The allegation of the AO was that the number of students was in excess of the students allowed by the 12 & 3632/Del/2015 AICTE. The AICTE has regularized this by charging a fee for the same, which means, that the stand of the assessee stood rectified by the AICTE. The second allegation was regarding running a triple degree programme in the same campus of the Institute despite there being guidelines by AICTE that no other programme could be run on the same campus. We are of the view that this cannot be a ground for denying exemption under Section 11 read with Section 2(15) of the Act. Both the allegations are regarding educational programmes being conducted by the assessee. Such activities of the society will fall within the meaning of 'charitable purpose' under Section 2(15) of the income Tax Act. As per the provisions of Section 11, exemption is allowed in case the income has been applied for charitable purposes. 'Charitable purpose' includes education. Further, for claiming exemption, the conditions prescribed under Section 12A have to be complied with. The assessee society has duly complied with these conditions. Its activities are educational and as such, it is eligible for exemption under section 11 of the Act. Thus, the CIT(A) was correct in holding that these allegations cannot be the basis for denying exemption under Section 11 of the Act.
11.1 Thus, respectfully, following the decision of the Tribunal (supra), the finding of the Ld. CIT(A) in deleting the addition is sustained and the ground of the appeal of the Revenue is dismissed. 12. The ground 9 of the appeal relate to addition of Rs.1,44,97,952/-made on account of training expenses being personal in nature. The identical issue has been decided by the Tribunal (supra) in para 18 of the order, which is reproduced as under:
18. The society is an educational institution. It has made payment through credit card of only Rs.16,19,243/-. As against this, the AO has considered the entire training expenses of Rs.99,21,943/- and disallowed 60% of the same as being personal in nature. The society had submitted details of the same before the AO and AO has not been able to point out any particular item of the expenditure which can be considered to be personal in nature. A survey was conducted. Nothing adverse to the assessee emerged during survey on this account. The assessee has given an explanation that the expenses incurred 13 & 3632/Del/2015 through credit card were meant for the society. It organized various seminars and conferences, through which an eminent faculty was invited. Thus, the assumption of the AO that the expenditure incurred through credit card was personal, is not correct. The CIT(A) has correctly held that the facility of the credit card is a facility like that of a bank. The credit card has been used to incur expenses for and on behalf of the assessee society.
12.1 In the year under consideration also, the Revenue has not pointed out any particular item of expenditure, which could be considered as personal in nature. In view the facts, respectfully following the decision of the Tribunal (supra), the issue in dispute is decided in favour of the assessee and the ground of appeal of the Revenue is dismissed.
13. In the result, appeal of the Revenue for assessment year 2008-09 is dismissed.
ITA No.3632/Del/2015 for AY: 2010-11 14. Now, we take up the appeal of the Revenue in for assessment year 2010-11. The grounds raised in the appeal are reproduced as under:
1. On the facts and in the circumstances of the case and in law, the Ld. CIT(A) has erred in allowing the benefit of Section 11 & 12 of the Act ignoring that the activities of the trust were not within the purview of section 2(15) of the Income Tax Act, 1961 during the year.
2. On the facts and in the circumstances of the case and in law, the Ld. CIT (A) has erred in directing the AO to allow benefits of Section 11 & 12 of the I.T Act, ignoring the fact the assessee was involved in business activity within the meaning of section 2(15) of the Income Tax Act, 1961 during the year under consideration.
14 & 3632/Del/2015 3. On the facts and in the circumstances of the case and in law, the Ld. CIT (A) has erred in directing the AO to allow benefits of Section 11 & 12 of the I.T Act, ignoring the fact the assessee has violated the provision of Section 13 (1) (c) of the Act by providing the financial benefit to the persons specified u/s 13(3) of the Act.
On the facts and in the circumstances of the case and in law, the Ld. CIT(A) has erred in allowing the benefit of Section 11 & 12 of the Act ignoring the provision of Section 13(1) which provide that even if there is a single instance of violation of Section 13(1), the trust will lose the exemption in respect of entire income.
On the facts and in the circumstances of the case and in law, the Ld. CIT (A) has erred in allowing the claim of depreciation of Rs. 3,82,85,475/- to the assessee ignoring the fact that the assessee had claimed the amount incurred on purchase of assets in earlier years as application of income, on which depreciation is claimed now and further allowance of depreciation will be tantamount to double deduction. 6. n the facts and in the circumstances of the case and in law, the Ld. CIT(A) has erred in allowing the claim of depreciation or Rs. 3,82,85,475/- to the assessee in view of the recent decision of the Hon'ble Delhi High Court in the case of DIT(E) Vs. Charanjiv Charitable Trust dated 18.03.2014.
7. On the facts and in the circumstances of the case and in law, the Ld. CIT(A) has erred in deleting the addition of Rs. 2,51,784/- made on account of personal use of car.
On the facts and in the circumstances of the case and in law, the Ld. CIT(A) has erred in deleting the addition of Rs. 1,72,50,000/- on account of penalty paid to AICTE.
9. On the facts and in the circumstances of the case and in law, the Ld. CIT(A) ha; erred in deleting the addition of Rs.74,57,789/- made on account of training expenses being personal in nature.
15 & 3632/Del/2015 10. On the facts and in the circumstances of the case and in law, the Ld. CIT(A) has erred in deleting the addition of Rs.1,51,62,896/- made on account of computer expenses.
11. On the facts and in the circumstances of the case and in law, the Ld. CIT(A) has erred in deleting the addition of Rs. 26,08,911/- made on account of deletion in fixed assets not included in income. 15. The facts and circumstances of the case for the year under consideration are identical to the facts and circumstances for AY 2008-09, except that in the year under consideration the assessment was completed u/s 143(3) of the Act, whereas in assessment year 2008-09, the assessment was completed u/s 147 r.w.s. 143(3) of the Act. 16. The Grounds No. 1 to 9 of the present appeal, i.e., for AY: 2010-11 are identical to Grounds No. 1 to 9 of the appeal having 2008-09, which have been adjudicated in earlier Paras of this order. Thus, following the findings in respective paras, the Grounds No. 1 to 9 of the present appeal are also dismissed. 17. In ground No. 10 of the appeal, the Revenue has raised the issue of addition of Rs.1,51,62,896/- made on account of computer expenses, which has been deleted by the Ld. CIT(A). We find that identical issue of distribution of 260 laptops was considered by the Tribunal while disposing the appeal for assessment year 2009-10. The relevant finding of the Tribunal is reproduced as under: “24. Ground no.7 is regarding allowance of expenditure claimed by the assessee for purchasing 260 laptops. In this regard, the allegation of the AO was to the effect that 260 laptops were allegedly purchased for distribution to students and were found to have been wrongly claimed as fixed assets. The CIT(A) has dealt with this issue in para 5.18 of his order, as under:-
5.18 The allegation of the AO that 260 laptops has been wrongly claimed as fixed assets is also untenable in view of the clarification given by the appellant-society. The purchase of these laptops is not in dispute. In case these laptops have been distributed and are not to be recovered back then the expenditure to be recovered back, then the expenditure on such purchase will be revenue in nature and allowable in the hands of the appellant-society. In case the laptops are to be recovered back from the person to whom it has been given the same will be fixed assets of the appellant-society and eligible for depreciation. Thus it does not make any difference so far provisions of section 13 read with section 11 are concerned. The finding of the AO is found to be without any merit on this account.
The issue before the AO and the CIT(A) was, as to whether the amount spent on laptops should be considered as expenditure, or as fixed assets. The CIT(A) has clearly held that in case it is to be considered as expenditure, it will be an application of income, and if, the same is to be considered as fixed assets, it will still be an application of income and either way, the society is eligible to claim the amount as application of its income. In the course of the hearing, we asked the Id. DR to respond to the allegation that the assessee has used bogus bills, and the ground of appeal
in the absence of any finding by the Assessing Officer in this regard. The learned DR, however, could not substantiate this allegation. As such, we are in agreement with the finding of the CIT(A) that no adverse inference needs to be drawn on this issue, particularly in the year under consideration. Accordingly, this ground of appeal is rejected.” 17.1 On perusal of the above findings of the Tribunal, we find that the computer expenditure has been considered towards application of income. In the year under consideration, the Ld. CIT(A) has also allowed the said expenses towards application of the income. As such, we do not find any error in the order of the Ld. CIT(A) on the issue in dispute and accordingly, reject the ground No. 10 of the appeal of the Revenue.
18. In ground no. 11, the Revenue has raised the issue of addition of Rs.26,08,911/- made on account of deletion in fixed assets not included income, which has been deleted by the Ld. CIT(A). The contention of the Revenue is that the said deletion in 17 & 3632/Del/2015 fixed assets should have been taken as income in the year under consideration. While disposing the grounds no. 5 and 6 of the appeal, we have already held that the depreciation claim on the fixed assets, despite purchase of the assets considered as application of income, is allowable. Since the deletion in fixed assets has been considered while computing the depreciation on the block of assets, issue-in-dispute stands covered by our findings in grounds no. 6 & 7 of the appeal. Accordingly, the ground no. 11 of the appeal is also dismissed.
In the result, the appeal for the assessment year 2010-11 is dismissed.
To sum up, both the appeals filed by the Revenue are dismissed.
Order is pronounced in the open court on 25th January, 2019.