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Income Tax Appellate Tribunal, DELHI BENCHES : “A” NEW DELHI
Before: SHRI J.SUDHAKAR REDDY, AM & SHRI A.T. VARKEY, J.M.
O R D E R PER J.SUDHAKAR REDDY, ACCOUNTANT MEMBER This is an appeal filed by the Assessee directed against the order of the Ld.Commissioner of Income Tax (Appeals)-XXI, New Delhi dated 14.09.2012 pertaining to the Assessment Year (A.Y.) 2009-10.
Facts in brief:- The Assessee is a Society and is registered u/s 12A of the Income Tax Act, 1961 (the Act). It is engaged in educational activities and Satya Bharti School is the flagship programme of Bharti Foundation. It filed its original return of income on 29.9.2009 declaring ‘nil’ income. The Assessing Officer (AO) completed assessment u/s 143(3) of the Act on 21.11.2001 determining the total income at Rs.33,67,844/-. The issue in dispute is the computation of application of income towards charitable purposes during the year. The assessee had written off assets amounting to Rs.57,72,443/-. The AO was of the view that this write off , which is claimed under the head ‘administrative expenses’, has resulted in a claim of ITA 5333/Del/2012 A.Y. 2009-10 Bharti Foundation, N.Del double deduction. In other words, the finding of the A.O. was that this amount was claimed twice as application of funds. The assessee carried the matter in appeal without success. Further aggrieved the assessee is before us on the following grounds . “1. The learned CIT(A) has erred both on facts and in law in upholding the action of the learned Assessing Officer in allowing short the application of income during the year in respect of capital expenditure at Rs.20,36,74,390/- instead of Rs.20,94,46,833/- actually applied, by not appreciating that the impugned amount of Rs.57,72,443/- reflected as survey expenses written off, though shown as a separate entry in the Income and Expenditure Account was in fact part of the amount of Rs.20,94,46,833/- applied by the assessee trust on account of capital expenditure. 1.1 The learned CIT(A) has erred in not appreciating the accounting whereby the amount actually applied and claimed as capital expenditure during the year amounting to Rs.20,94,46,833/- was not claimed in excess by Rs.57,72,443/-.
2. Without prejudice, the assessee is aggrieved by the action of Revenue who wrongly considered entire amount of Survey expenses written off pertaining to earlier years and not taking cognisance that Survey expenses amounting to Rs.37,79,493/- pertaining to financial year 2008-09 relevant to AY 2009-10.”
3. We have heard Shri Anil Bhalla, the Ld.Counsel for the assessee and Shri SK Jurin, Ld.D.R. on behalf of the Revenue. On a careful consideration of the facts and circumstances of the case, perusal of material on record, orders of lower authorities, case laws cited, we hold as follows.
4. The assessee had started its computation of income with a figure of Rs.23,60,02,861/- from the Profit & Loss account. From the above the assessee reduced gross expenditure of Rs.24,40,18,525/-. To this amount, the assessee added back the following amounts, which are not considered as application of money. (a) Depreciation Rs.2,40,84,893/-; (b) Retirement benefits provision Rs.49,05,978/-; (c) Assets written off Rs.6,95,013/-.
ITA 5333/Del/2012 A.Y. 2009-10 Bharti Foundation, N.Del 4.1. This results in the gross expenditure coming to Rs.21,43,32,641/-, which is claimed as application of income. This application of income is increased by the amount of addition to fixed assets which is Rs.25,88,91,995/-. The assessee adjusted the difference between the opening capital, work in progress and closing capital work in progress to these additions to assets. During the year there was a reduction in closing work in progress. This resulted in the assessee claiming a sum of Rs.20,36,74,390/- as application of funds by way of additions to fixed assets.
The view of the A.O. was confirmed by the Ld.CIT(A) holding that an amount of Rs.57,72,443/- was debited to survey expenses from capital work in progress. He was of the view that this amount was included in the gross expenditure in the last year as part of the capital work in progress and hence cannot be claimed this year as survey expenses.
The assessee’s case is that the amount in question has already been reduced from closing work in progress and thereafter gross expenditure has been increased. Had the closing work in progress not been reduced by this amount, the reduction in closing work in progress would be lower figure and resultantly the amount shown as application on account of fixed assets i.e. Rs.20,36,74,390/- would have gone up. Thus he argues it is not a case of double deduction.
We are convinced with the calculation as well as the accounting entries passed by the assessee. In our view there is no double claim of the same amount as application of funds. Had the closing work in progress not been reduced by this amount of Rs.57,72,443/-, then it would have resulted in claim of double deduction. Thus we uphold the argument of the Ld.Counsel for the assessee and allow this ground.
ITA 5333/Del/2012 A.Y. 2009-10 Bharti Foundation, N.Del
In the result the appeal of the assessee is allowed. Order pronounced in the Open Court on 23rd February, 2016.