ITO(EXEMPTION), WARD-1(2), KOLKATA, KOLKTA vs. DEV SANGHA SEVA PRATISTHAN, KOLKATA

आयकर अपील�य अधीकरण, �यायपीठ – “D” कोलकाता, IN THE INCOME TAX APPELLATE TRIBUNAL KOLKATA BENCH “D” KOLKATA Before Shri S.S.Godara, Judicial Member and Dr. A.L. Saini, Accountant Member ITA No.1254/Kol/2017 Assessment Year :2013-14 Income Tax Officer V/s. Dev Sangha Seva (Exemption), Ward-1(2), Pratisthan, 28/2A, Hare 10B, Middle Ton Row, Kesto Sett Lane, Kolkata-71 Kolkata-700 050 [PAN No.AAAAD 1567 C] .. अपीलाथ� /Appellant ��यथ�/Respondent S.M.S Taoheed, Addl. CIT-SR-DR अपीलाथ� क� ओर से/By Appellant Shr K.M. Roy, AR ��यथ� क� ओर से/By Respondent 05-06-2018 सुनवाई क� तार�ख/Date of Hearing 13-06-2018 घोषणा क� तार�ख/Date of Pronouncement आदेश /O R D E R PER S.S.Godara, Judicial Member:- This Revenue’s appeal for assessment year 2013-14 arises against Commissioner of Income Tax (Appeals)-25. Kolkata’s order dated 17.03.2017 in case No. CIT(A)-25 Kolkata/FY 2016-17/ Dev Sangha Seva Pratishan, AY 2013-14_143(3)_B-1B/432, in proceedings u/s 143(3) of the Income Tax Act, 1961; in short, ‘the Act’. 2. The Revenue’s former substantive ground pleads that the CIT(A) has erred in law as well as on facts in reversing the Assessing Officer’s action deleting assessee’s administrative and establishment expenses disallowance of ₹56,08,823/- as application of its case for charitable purpose u/s 11A of the Act with the following detailed discussions:- “5. Accumulation / setting-apart u/s. 11(1)(a): Issue of ‘administrative and establishment expenses’. [Ground of appeal No.1] ₹56,08,823/-

ITA No.1254/Kol/2017 A.Y. 2013-14 ITO (Ex), Ward-1(2), Kol. Vs. Dev Sangha Seva Pratisthan Page 2 5.1 It will be better appreciated if at the outset the relevant extract from the statute is presented. The concerned section 11(1)(a), relevant extract, is hereunder: Income from property held for charitable or religious purposes. 11. (1) Subject to the provisions of…. The following income shall not be included in the total income of the prevus year of the person in receipt of the income- (a) Income derived from property held on the trust wholly for charitable or religious purposes, to the extent to which such income is applied such purposes in India; and, where any such income is accumulated or set apart for application to such purposes in India, to the extent to which the income so accumulated or set apart is not in excess of fifteen per cent of the income from such property. 5.2 Now, the impugned issue is concerning the 2nd part of the clause (a) – that is, the accumulation/setting apart. The accumulation/setting apart could come into consideration only when it is the case that 100% of the income has not been applied. So, if it were the case that 100% of the income has been applied, the impugned issue of ‘administrative and establishment expenses’ would not have arisen. And it should be so for the property is held ‘wholly’ for the charitable purposes – which is the purport of clause (a). So as regards the 1st part of the clause (a) – the issue will not arise. However, as regards the 2nd part of the clause (a), if by taking a restricted view that administrative and establishment expenses are not be considered as application of income this tantamount to taking contradictory views. That, as regards the 1st part [the income having been applied] that administrative and establishment expenses are incidental application of income, but when it comes to the 2nd part of accumulation/setting apart that such expenses are not incidental application of income. so a different interpretation is being taken for the 1st part [application of income], and a different interpretation is taken for the 2nd part [accumulation/setting apart]. Interpretation has to be wholistic and consistent for the entire clause (a). 5.3 Per se, administrative and establishment expenses are the very necessary incidental expenses required for the trust to exist in the first place itself. Else, how could it exists to carry out the objectives and activities for which it has been granted registration u/s. 12AA.” 4. It emerges that CIT(A) has thereafter followed hon'ble jurisdictional high court’s judgment in CIT vs. Birla Janhit Trust (1994) 208 ITR 372 (Cal) holding similar expenses to be allowable as application of income. He has also quoted hon'ble Madhya Pradesh high court’s decision in Deo Radha Madhava Lalji Genda Trust Vs. Property Tax Officer (1980) 125 ITR 531 (MP) that but for such administrative and establishment expenditure claimed, even existence of a charitable society itself may be jeopardized. The Revenue fails to indicate any distinction on facts or law therein particularly to the former case law of hon'ble jurisdictional high court (supra) holding very kind of expenses as

ITA No.1254/Kol/2017 A.Y. 2013-14 ITO (Ex), Ward-1(2), Kol. Vs. Dev Sangha Seva Pratisthan Page 3 allowable. We therefore hold as that the CIT(A) has rightly deleted the impugned disallowance. 5. Coming to latter disallowance of depreciation amounting to ₹13,96,642/- made by the Assessing Officer after holding the same as a case of double deduction on account of both application of income as cost of the impugned relief on assets as well depreciation, we find that the same is no more res integra as per hon'ble apex court’s recent decision in CIT Pune vs. Rajasthan and Gujarat Charitable Foundation Poona in Civil Appeal No.7186/2014 dated 10.12.2017 deciding the very issue against the Revenue. Their lordships also considered amendment to this effect in section 11(6) vide Finance Act 2/2014 w.e.f. 01.04.2015 whereas we are dealing with assessment year 2013-14 only. The said amendment is therefore not applicable with retrospective effect. The Revenue’s instant latter substantive ground is also rejected accordingly. 6. This Revenue’s appeal is dismissed. Order pronounced in the open court 13/06/2018 Sd/- Sd/- (लेखा सद%य) (�या'यक सद%य) (Dr. A.L. Saini) (S.S.Godara) (Accountant Member) (Judicial Member) Kolkata, *Dkp, Sr.P.S (दनांकः- 13/06/2018 कोलकाता । आदेश क� ��त�ल�प अ�े�षत / Copy of Order Forwarded to:- 1. अपीलाथ� / Appellant 2. ��यथ� / Respondent 3. संबं3धत आयकर आयु4त / Concerned CIT Kolkata 4. आयकर आयु4त- अपील / CIT (A) Kolkata 5. 7वभागीय �'त'न3ध, आयकर अपील�य अ3धकरण, कोलकाता / DR, ITAT, Kolkata 6. गाड< फाइल / Guard file. By order/आदेश से, /True Copy/ Sr. Private Secretary, Head of Office/DDO आयकर अपील�य अ3धकरण, कोलकाता ।