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Income Tax Appellate Tribunal, DELHI BENCH “SMC-I”, NEW DELHI
Before: SHRI S.V. MEHROTRA
O R D E R PER S.V. MEHROTRA, A.M :
This is an appeal filed by the Revenue against the order dated 09.11.2015 passed by the Commissioner of Income Tax (Appeals)-40, New Delhi, u/s 143(3) of the Income Tax Act, 1961 (in short “the Act”) relating to assessment year 2011-12.
Brief facts of the case are that the assessee, registered u/s 12A of the Act and also approved u/s 80G(5)(vi) valid from the assessment years 2010-11 to 2012-13, filed its return of income in the status of AOP, declaring Nil income. The Assessing Officer has reproduced the main objections of society in the assessment order and after considering them and the details filed by assessee in the light of aims and objects with reference to amended provisions of section 2(15) of the Act, inter-alia, concluded as under :-
“The teaching of French Language is incidental to the main objects of promoting French thought cultural and language and to promote French Cultural Relations. However, letting out of the facilities of Art Gallery, Booking of AFD Premises and letting out Auditorium and conference Room, are not incidental to the activity of the assessee in respect of which it has been granted registration u/s 12A of the I.T Act, vide CIT's letter NO. CIT-II/TB(44)/72/3145 dated 23.09.75. The activities of the assessee for which registration was granted fall under the category of "advancement of any other object of general public utility " covered under the definition of charitable purpose as given in sec. 2(15) of the I.T Act,. The other activities of the assessee like giving Its premises, Art Gallery, Auditorium and Conference Room frequently fall under the category of (a) Any activity in the nature of trade, commerce or business, or (b) Any activity of rendering in relation to any trade, commerce, business; Since, the incomes from this activity exceeds Rs. 10 lakhs the advancement of any other object of general public utility shall not be a charitable purpose, irrespective of the nature of use or application, or retention, of the income from such activity Therefore, the benefit of exemption u/s 11 of the 1.T Act, cannot be given to the assessee in respect of such business activity and the assessee's contention in this regard is rejected and proviso to section 2(15) is invoked.”
He computed the income at Rs.48,57,825/- as under :-
Business Income other than the charitable activity as per aims and objects of the society from booking of AFD premises, Auditorium, Conference Room and Art gallery including income on cancellation of booking. Rs.25,42,775/- Add: Income from translation and interpretation Rs. 31,98,712/- Add: Depreciation as discussed above Rs.32,05,640/- Less: Depreciation on assets added during the year Rs.19,23,113/- Total business receipts Rs.70,24,014/- Less: Expenses against translation and interpretation income Rs.21,66,189/- (Expenses against income from booking already claimed
In the income & Expenditure A/c as expenses in the form of application of funds). Business income Rs.48,57,825/- Rounded off Rs.48,57,830/-
Ld. CIT(A) allowed the assessee’s appeal. Being aggrieved the Department is in appeal before the Tribunal and has taken the following grounds of appeal :-
“1. On the facts and in the circumstances of the case and in law, the Ld. CIT(A) is erred in ignoring the fact that the activities of the assessee do not qualify for charitable purpose in view of the provisions of Section 2(15) of the I.T.Act, hence, the income of the assessee does not qualify for exemption u/s 11 of the I.T.Act.
2. On the facts and in the circumstances of the case and in law, the Ld.CIT(A) is erred in allowing the claim of depreciation of Rs. 32,05,640/- to the assessee by not adjudication, 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.
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 of Rs. 32,05,640/- to the assessee by not adjudication in view of the recent decision 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.
4. The appellant craves leave to add, to alter or amend any ground of appeal raised above at the time of hearing.”
Ld. DR relied on the order of the Assessing Officer.
Apropos ground no.1, Ld. counsel for the assessee submitted that the issue is covered by the decision of the Tribunal in assessee’s own case dated 27.11.2015 vide wherein the Tribunal has dismissed the Revenue’s appeal.
Apropos ground nos.2 and 3, Ld. counsel pointed out that assessee had not claimed any depreciation in its computation of income and, therefore, the Assessing Officer had wrongly added the depreciation while computing income. He pointed out that application u/s 154 is pending before the Assessing Officer on this count and as regards non-adjudication of this ground before Ld. CIT(A) also the application u/s 154 is pending before Ld. CIT(A). He, therefore, submitted that direction may be given to the Assessing Officer to dispose of the petition filed u/s 154.
I have considered the submissions of both the parties and perused the record of the case. As far as aforesaid ground no.1 is concerned, I find that the Tribunal has observed at page 12 of its order in assessee’s own case as under :-
“Income of the assessee from art gallery, booking of AFC, income from letting out of auditorium and conference room etc, is not derived with the motive to earn profit but to further advance the charitable cause of teaching French language and promoting Indo-French cultural relations etc.
In view of what has been discussed above, finding no illegality or perversity in the findings returned by Ld. CIT(A) vide impugned order dated 03.09.2012, we are not inclined to interfere into the same. Hence, the appeal filed by the Revenue is hereby dismissed.”
Respectfully following the decision of the Tribunal in assessee’s own case the ground no.1 raised by the Revenue in its appeal is dismissed.
Apropos ground nos.2 and 3, the Assessing Officer is directed to dispose of the petition filed u/s 154 of the Act by assessee. Thus, the ground nos.2 and 3 are allowed for statistical purposes.
In the result, the appeal of the Revenue is partly allowed for statistical purposes. Order pronounced in the open court on this 08th day of December, 2016.