ITO, NEW DELHI vs. M/S. INDIAN YOUTH CENTRE TRUST VISHWA YUVAK KENDRA, NEW DELHI

ORDER PER K. NARSIMHA CHARY, J.M. Aggrieved by the order dated 15.09.2014 in appeal no. 242/2013-14 Revenue preferred this appeal on the following grounds:

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 exemption u/s 11 & 12 of the Income Tax Act, 1961, ignoring that the activities of the trust were not within the purview of Section 2(15) of the Income Tax Act, 1961.

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 IT Act ignoring this fact that the assessee was involved in business activity 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 allowing the claim of depreciation to the assessee on the fixed assets which were claimed as application of income in earlier years.

4. 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. 32,95,848/- to the assessee ignoring the recent judgment of the jurisdictional High Court in the case of Charanjiv Charitable Trust vs. DIT (E) in 322, and 323/2013 dated 18.03.2014, wherein the Hon’ble Court has held that the Tribunal was not justified in directing the allowance of depreciation in respect of such assets.

raised above at the time of hearing.”

2. Briefly stated facts, relevant for the purpose of the appeal, are that the assessee is a charitable Trust and is registered as per trust deed dated 10.08.1961. The trust is registered u/s 12AA(1) dated 15.05.1974 and also u/s 80G dated 02.12.2009. The trust was founded with the object of charitable work of promoting the welfare with youth etc. The assessee has been doing the charitable work of promoting the welfare and cause of the youth and is having hostels, dormitory, cafeteria and conference hall etc. and is earning income from them and also earning the rental income. The assessee is having a center in Chanakyapuri in Delhi and in Calcutta. The assessee has been enjoying the exemption u/s 11(1) but the same was denied during the AY 2009-10 mainly on the ground that the assessee was involved in business activities. But the appeal of the assessee was allowed by the Ld.CIT (A) vide the appellate order dated 31.08.2012 in Appeal No. 370/2011-12. The department had referred appeal against the order of the Ld. CIT (A) but the same was dismissed by the a coordinate Bench of this Tribunal vide the appellate order dated 23.08.2013 in ITA No. 5502/Del/2012. The AO has again denied the exemption u/s 11(1) to the assessee during the current AY 2010-11 following the order of the earlier AY 2009-10 as above mainly on the ground that the assessee is involved in business activity vide the order of the AO. In the appeal while following the order of the Tribunal in ITA No. 5502/Del/2012 in assessee’s own case for the AY 2009-10 the Ld. CIT (A) held that the assessee is involved in the charitable work of promoting the welfare and cause of the youth and allowed exemption u/s 11(1) of the Act to the assessee. Hence, the Revenue is in this appeal before us.

3. Ld. DR contended that the Ld. CIT (A) has committed an error in allowing the benefit of exemption u/s 11 & 12 of the Act by ignoring the activities of the Trust which were not within the purview of Section 2(15) of the Act and he also failed to take note that the assessee was involved in business activities. It is further contended that, in view of the judgment of the jurisdictional High Court in Chiranjiv Charitable Trust vs. DIT (E) in ITA N. 321, 322 and 323/2013 dated 18.09.2014, the assessee is not entitled to claim the depreciation in respect of assets. Per contra, it is the argument on behalf of the assessee that the issue of the entitlement of the assessee to the benefit of exemption u/s 11 & 12 of the Act was considered at length by the Tribunal in assessee’s own case for the assessment years 2009-10 & 2011-12 in and ITA No. 3635/Del/2015 and the Hon’ble High Court in ITA No. 867 to 869/Del/2016 confirmed the same. Further the issue of depreciation was considered by the ITAT in ITA 3635/Del/2015 for the AY 2011-12and while following the decision of the Hon’ble High Court in DIT(E) vs. Indraprastha Cancer Society (2015) 229 taxman 93 (Del) and after considering the facts and circumstances of the case and case law on this aspect, found that the assessee is entitled to claim depreciation on the fixed assets which were claimed as application of income in earlier years. It is, therefore, submitted on behalf of the assessee that there are no sufficient grounds to interfere with the order of the Ld. CIT (A).

4. We have perused the material papers on record, in the light of the decisions relied upon by the assessee. Ld. CIT (A) vide paragraph no. 3.1 recorded a finding that when the Ld. CIT (A) held that the assessee is entitled to the benefit of exemption u/s 11 & 12 of the Income Tax 3 Act, 1961 for the AY 2009-10, Department preferred an appeal before the Tribunal in and such an appeal was dismissed by the Tribunal by way of order dated 23.08.2013. Order dated 23.05.2016 in ITA No. 3635/Del/2015 for the AY 2011-12 also shows that it was held therein that the assessee is entitled to the benefit of the exemption u/s 11 & 12 of the Act. Further by way of order dated 14.12.2016 of the Hon’ble High Court in ITA 867 to 869/Del/2016, the Hon’ble High Court held that the decision of the ITAT is sound in law and facts and no substantial question of law arises.

5. Further while following the decision of jurisdictional High Court in DIT (E) vs. Indraprastha Cancer Society (supra), this Tribunal held in for the AY 2011-12, that the assessee is entitled to claim depreciation on the fixed assets which were claimed on application of income in earlier years. Nothing contrary is brought on record by the Revenue to disturb the findings of the Tribunal in assessee’s own case for the assessment years 2009-10 & 2011-12 on the aspect of entitlement of the assessee to benefit u/s 11 & 12 of the Act and also to claim depreciation on fixed assets which were claimed as application of income in earlier years. We, therefore, while respectfully following the same, find that there are no grounds to interfere with the impugned order or to sustain the additions made by the AO in the assessment order. The appeal of the Revenue is liable to be dismissed, and we dismiss the same.