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Income Tax Appellate Tribunal, DELHI BENCH: ‘D’ NEW DELHI
Before: SHRI S.V. MEHROTRA & SMT. BEENA A. PILLAI
PER BEENA A. PILLAI, JM
The present appeal arises from the order of the ld. CIT(A)- XXI, New Delhi vide order dated 23.10.2013 for assessment year 2010-11 on the following grounds of appeal:-
“1. "On the facts and in the circumstances of the case and in law, the Ld. CIT(A) has erred in excluding the development fees of Rs. 93,02,137/- out of the gross receipts as computed by the A.O. 3. "On the facts and in the circumstances of the case and in law, the Ld. CIT(A) has erred in allowing Assessment year 2010-11 the benefit of exemption u/s 11 & 12 of the Act ignoring the fact that the society was involved in violating the Rules/guidelines frames in this matter." 3. "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 Act ignoring the fact that assessee does not satisfy the first and main pre-condition i.e. "Charitable purposes" in as much as concerned the objects as defined in the MOA of the society. 4. "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 ignoring the fact that the assessee society was imparting education on commercial principle with having profit motto. 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. 23,29,584/- to the assessee.”
Brief facts of the case as recorded by the ld. Assessing Officer are as under:-
2.1. The assessee had filed its income declaring Nil on 29.9.2010. The return was processed u/s 143(1) and the case was selected for scrutiny. Accordingly, notices were issued to the assessee. The assessee society has been registered with the Registrar of Societies, Delhi on 28.04.1955. The assessee society is engaged in running school in the name of M/s J.D. Tytler School, Rajinder Nagar, Delhi. The main aims & objects are to establish, maintain and run schools, colleges, laboratories, training centres for the formation, education and diffusion of science, literature, fine arts and in general for imparting any useful knowledge, to Assessment year 2010-11 construct, demolish, alter or rent any buildings which may be necessary for its objectives, to provide hotels and residence for students, for its members and for such persons as may work for it, to establish, organize, maintain and run, libraries, reading rooms, common rooms for the general use of members, students and the general public, etc.
2.2. Ld. Assessing Officer observed that the assessee is registered u/s 12A(a) of the Act vide order no. CIT-II/TE (128)/78-79/1168 to 1169 dated 28.1.1980. During the assessment proceedings, the ld. Assessing Officer observed that the assessee has received development fund of Rs. 93,02,137/-. Ld. Assessing Officer called for various details in respect of Development Fund received by the assessee. After going through the submissions of the assessee, the ld. Assessing Officer held that the assessee does not fall within the scope of charitable purposes as defined in section 2(15) of the Act. He therefore denied the benefit of section 11 and 12 and made an addition of Rs. 93,02,137/- being the Development Fund received by the assessee. The ld.AO further made addition by disallowing the depreciation of Rs.23,29,584 and held that the claim amounted to double deduction on account of the claim of capital expenditure as application of fund.
Aggrieved by the order of the ld. Assessing Officer, the assessee preferred an appeal before the ld. CIT(A).
3.1. The Ld. CIT(A) relying upon the submissions of the assessee had deleted the addition in respect of the development fee collected by the assessee. Ld. CIT(A) also deleted the addition Assessment year 2010-11 made by the Assessing Officer in respect of the depreciation being denied in the hands of the assessee by relying upon the order of his predecessor for assessment year 2008-09. Ld. CIT(A) held that the assessee runs a school and has been imparting education and, therefore, is eligible for exemption u/s 11 of the Act. He also held that the activities of the assessee come under education within the definition of charitable purposes u/s 2(15) of the Act.
4. Aggrieved by the order of the ld. CIT(A), the department is in appeal before us. Ld. DR has placed his reliance on the order passed by the Assessing Officer.
Ground no. 1
Ld. AR, at the outset, submitted that this ground stands covered by the order of this Tribunal for assessment year 2009- 10 in in the assessee’s own case. He submitted that the Senior Deputy Accountant General (Commercial) of CAG Office has certified that the general conditions of the accounts of the assessee have been found satisfactory. Ld. AR submitted that the amount of development fund was taken as per the norms fixed under Delhi Education Act and, therefore, was not in violation of any statutory provisions in regard to fees.
4.1. Ld. AR submitted that the fees were charged from the students only up to limitation allowed as per the applicable provisions of law. Ld. AR further submitted that exemption granted by the CIT/DIT(E) u/s 12AA of the Act has not yet been Assessment year 2010-11 cancelled and that the assessee has and is still being considered as charitable society. Ld. AR has placed reliance upon the decision of this Tribunal for assessment year 2008-09 in assessee’s own case in I.T.A. No. 4476/Del/2011 vide order dated 8.1.2014.
Ld. AR submitted that in this decision of this Tribunal in the assessee’s own case, where it has been held that the assessee is entitled to collect development fees for the purposes of supplementing the resources for purchase/up gradation and replacement of furniture, fixtures and equipment. Ld. AR submits that the revenue had preferred an appeal against the order of this Tribunal for assessment year 2008-09 before the Hon’ble Jurisdictional High Court in I.T.A. No. 424/2014. The Hon’ble High Court vide its order dated 8.4.15 has decided the issue in favour of the assessee.
We, accordingly, following the decision of the Hon’ble Jurisdictional High Court and the consistent findings of this Tribunal in assessee’s own case in the preceding years, dismiss this ground of appeal raised by the revenue.
Ground No.5
This ground relates to the claim of deprecation amounting to Rs. 23,29,584/- to be treated as application of fund for the purposes of exemption. Ld. DR relied upon the order of ld. Assessing Officer.
7.1. On the contrary, ld. AR submits that this addition has been made for the first time in the year 2008-09 by holding that the Assessment year 2010-11 claim of depreciation made by the assessee amounts to double deduction on account of the claim of capital expenditure as application of funds. The income of the Respondent Assessee is already exempt and the Respondent Assessee is only claiming that depreciation should be reduced from the income for the percentage of funds which have to be applied for the purpose of trust.
7.2. Ld. AR has relied upon the order of this Tribunal in assessee’s own case for assessment year 2008-09 in I.T.A. No. 4476/Del/2011. This Tribunal has deleted the addition made by the Assessing Officer on the claim of depreciation by relying upon the decision of Hon'ble Punjab & Haryana High Court in the case of Tiny Tots Education Society in ITA No. 93/2010. It is further brought to our notice that aggrieved by this deletion, the Revenue had preferred an appeal before the Hon'ble Jurisdictional High Court in wherein the Hon'ble High Court had upheld the decision of this Tribunal by relying upon the decision of DIT vs Indraprastha Cancer Society vide order dated 18.11.2014 in I.T.A. No. 240/2014.
We accordingly, following the consistency and the ratio laid down by Hon'ble High Court in the assessee ‘s own case as well as in the case of Indraprastha Cancer Society (supra) dismissed this ground of appeal raised by the revenue.
8. Ground no. 2, 3 & 4 relate to allowing the benefit of exemption u/s 11 and 12 of the Act. Assessment year 2010-11 8.1. It is an undisputed fact that the assessee society is engaged in running school in the name of M/s J.D. Tytler School, Rajinder Nagar, Delhi. The authorities below have recorded the main aims & objects of the assessee are to establish, maintain and run schools, colleges, laboratories, training centres for the formation, education and diffusion of science, literature, fine arts and in general for imparting any useful knowledge, to construct, demolish, alter or rent any buildings which may be necessary for its objectives, to provide hotels and residence for students, for its members and for such persons as may work for it, to establish, organize, maintain and run, libraries, reading rooms, common rooms for the general use of members, students and the general public, etc.
8.2. It has also been observed by the Ld. Assessing Officer observed that the assessee is registered u/s 12A(a) of the Act vide order no. CIT-II/TE (128)/78-79/1168 to 1169 dated 28.1.1980, which stands valid till date.
8.3. From the above, it is very clear that the activities carried out by the Assessee certainly amounts to charitable purpose, as it is being covered under the limb “education” to the definition of charitable purpose is contained in section 2(15) of the Act. Therefore, the Assessee has to be necessarily considered a genuine charitable organization eligible to claim exemption u/s 11 & 12 of the Act and the provisions of the first proviso to section 2(15) do not apply to the case of the appellant.
These grounds of the Revenue therefore stand dismissed/ Assessment year 2010-11 10. In the result, the appeal of the Revenue is dismissed.
Order pronounced in the open court on 18.01.2016