TMI Blog2016 (5) TMI 1567X X X X Extracts X X X X X X X X Extracts X X X X ..... ty. This similarity of fact in the earlier year would be evident from order of the ITAT as held it would not be possible to ascertain the amount of canteen collection from those persons who were not stayed in the hostel. In any case it is bound to be very negligible and within permissible limits of section 2(15) of the Income Tax Act. It can be seen from the documents submitted that the trust serves buffet meals during the program / workshop conducted by Members Organizations and/or during own program and workshop but not for any other purposes. This can be reviewed form the related documents enclosed herewith for your kind perusal i.e. Bills of buffets served during workshop and seminars. We also like to submit that for the booking of the facilities (Buffet, Auditorium, Conference Hall etc.) of the Trust, officials of the trust designated for the said purposes (at the rank of Manager) are only authorized. Hence, as regard the remarks made by our Canteen staff they had merely given the information in regard to tariff rate both for vegetarian and non vegetarian buffets arrangement. There is nothing wrong in what has been stated by them and no where they had committed that it w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 ₹ 33,34,307/- to the assessee ignoring the recent judgement of the jurisdictional High Court in the case of Charanjiv Charitable Trust vs DIT(E) in ITA No.321, 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. 5. The appellant craves leave to add, to alter or amend any ground of appeal raised above at the time of hearing. 2. Right at the outset, it was submitted by the ld.AR that the point at issue is fully covered in favour of the assessee as the CIT(A) has followed the order of the ITAT passed in the immediately preceding assessment year on identical facts and circumstances. The position was not disputed by the Revenue. Accordingly the Ld.AR was required to show how it is claimed that the issues are same. T ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... llowed. 3. The Ld. Sr. DR, Sh. K.K.Jaiswal considering the order of the ITAT merely placed reliance on the assessment order. No distinguishing facts or circumstance was brought to the notice of the Bench in order to canvass a contrary view. 4. We have heard the rival submissions and perused the material available on record. It is seen that the AO in the year under consideration as in the earlier year formed the view that the assessee fell in the scope of general utility as per section 2(15) of the Income Tax Act, 1961. It is an admitted fact that the facts and circumstances in the year under consideration continue to remain the same as in the earlier years and that there is no change in the Memorandum of Association and the activities of the assessee as compared to the earlier years. The AO took into consideration the fact that the assessee is registered u/s 12A of the Income Tax Act, 1961 vide registration dated 15.05.1971. The Trust also received order u/s 80G(5)(vi) vide DIT (Exemption) Delhi order dated 02.12.2009 applicable for period commencing from A.Y.2010-11 to A.Y.2012-13. The objects of the Society the AO noticed was claimed to be to maintain and conduct one or m ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... led in appeal before the CIT(A) where relying upon the order of the ITAT for 2009-10 A.Y. and taking note of the fact that there was a similar denial in 2010-11 A.Y. also on identical fact which issue also stood concluded in favour of the assessee, the appeal of the assessee was allowed by the CIT(A) holding as under:- 4. The facts emanating from the order of the AO and the submissions of the assessee is that the assessee is charitable Trust and is registered as per Trust Deed dated 10.08.1961. The Trust is registered u/s 12AA(1) dated 15.05.11974 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 Trust was founded by the World Assembly of Youth, India and the following trustees were appointed:- i) Shri Morari Desai (Chairman) ii) Smt. Indira Gandhi iii) Shri Naval H.tata iv) Shri Ravindra Verma v) Shri Viren J.Shah vi) Shri Ram Krishna Bajaj (Managing Trustee) 4.5. I have considered the order of the AO and the submissions of the assessee and I find considerable merit in the submissions of the assessee that the AO is not justified to deny the exempti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 26.04.2008 3650 C/o S I S India Ltd. 30.04.2008 14700 C/o IMT Faridabad 01.05.2008 3678 C/o electronic Media Pvt. Ltd. 11.05.2008 9750 C/o Trips Treks Tours 27.06.2008 50100 C/o Project Concern International 08.07.2008 9100 C/o Proviti Consulting Private Limited 21.07.2008 14600 C/o Titan Energy Systems Ltd. 21.08.2008 3650 C/o Matrix Laboratories Limited 07.10.2008 3700 C/o SPC Management Services Pvt. Ltd. 05.11.2008 80850 C/o Microcosm Integrated Solutions (P) Ltd. 19.11.2008 273500 M/s Fair Trade Forum-India ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... for which tax had been deducted by various corporates as per Form No.-26AS, it was held will not make the trust non-charitable. The reliance placed upon the decisions by the AO which were assailed by the assessee and argued to be distinguishable after discussion were found to be rightly objected to by the assessee. Addressing the advertisement in the newspaper objected to by the AO, the CIT(A) accepted the explanation of the assessee and held that there was nothing wrong in attracting more and more youths to become its members by way of advertisements. (emphasis provided) 4.7. The aforesaid conclusion of the CIT(A) was vehemently contested by the Revenue. This fact would be evident from the following para which brings out the arguments advanced on behalf of the Revenue before the ITAT:- 5.1. The Ld. Sr. DR, Ms. Shamuna Sen placed heavily reliance on the assessment order so as to contend that the activities of the trust are not in consonance with the requirements of the Act. It was her submission relying upon the Inspector s Report that canteen facilities were available to everyone and was being run as a commercial activity. It was her submission that the AO has co ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rely a list and in the face of the Inspector s Report appearing on page 489 which was heavily relied upon by the Revenue. It was argued that it clearly brings out the fact that the facilities are open to the anyone and everyone and is running on commercial lines. For ready-reference, the said Report is reproduced hreunder :- I was sent by ADIT(E), TC-II, New Delhi, for enquiry in case of India Youth Centre Trust, Circular Road, Chanakya Puri, New Delhi on 02.12.2011. After reaching Vishwa Yuvak Kendra (India Youth Centre Trust), We went to Dining Hall alongwith Sr. TA Sh. Omvir Singh and TA Sh. Arun Kumar, for taking Lunch. We were offered Buffet as well as Item-wise Lunch option and we opted for item-wise Lunch and took food items costing ₹ 957/- (approx.). Various other persons were also taking Lunch on payment basis and there was no check in the Centre for outsiders taking food at the Dining Hall. After taking this Lunch we enquired about a get-together arrangement from the persons invoicing bills Mr. Rakesh Chopra and Mr. Vipin and told him that we want a Buffet arrangement of around 25 persons and asked him to give the costing details. He stated that & ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... doubted to be a non-charitable merely because the canteen staff in good faith allowed the Inspector and her team of two tax advisors to have a meal. The queries answered in good faith by the canteen staff also do not make trust to be operating on commercial lines. It was his submission that auditorium and seminar halls are made routinely available to Government Education Bodies etc. and NGOs having the same aims and objects as the assessee and stringent documentations is maintained by the assessee trust which he would address which has been before the AO and the CIT(A). Accordingly mere oral queries casually answered by canteen staff who definitely were not making the booking does not lead to any conclusion against the assessee s trust. It was his submission that the assessee trust started with a very humble corpus of ₹ 1000/- towards its laudable aim. The hostel facilities it was submitted are utilized by various students either from different parts of the country or the world and provides a platform where the youth can be exposed to conferences and activities in the auditorium which co-incide with the aims and objects of the assessee trust. It was submitted that as and when ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he AO vide letter dated 19.12.2011. (emphasis provided) 5.2.1. As an illustration from the list of membership of NGO s etc, attention was invited to page 650 which would show that the Membership Registration Form has been filled by Samvedna Foundation giving its contact, address, telephone no, the source of its funds (herein Government) mentioning, the no. of staff visiting and the State from where they belong (herein Gujarat). The aims and the objects of the organizations are mentioned in the Column indicated therein for Samvedna Foundation is as under :- To improve life standard of women at poor section through making them skillful and self reliant. The information required to be mentioned under the target group is as under :- Women and child The Column requiring information on thrust area is given as under :- We are running vocational training, classes for poor section women in rural area 5.2.2. It was submitted that the said information is accompanied by the copy of the Memorandum of Association, registration certificate, audited statement of the accounts of the said trust which are appearing in the following pag ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... elied upon by the assessee are reproduced from the assessment order hereunder:- 5.5 In addition to the above we would also like to submit here that the total receipts of Canteen is ₹ 82.95 laces which include ₹ 61.19 laces against the workshop / seminar in which buffet lunch was served to participants and ₹ 13.14 laces for the personnel stayed in the Hostels. Balance ₹ 8.62 laces from others that includes from Staff/Staffs' Guest/Trust Guest (viz. Auditors, Lowers, Architect, Contractors etc) and those who had come to attend some function or other. Therefore, it would not be possible to ascertain the amount of canteen collection from those persons who were not stayed in the hostel. In any case it is bound to be very negligible and within permissible limits of section 2(15) of the Income Tax Act. Further, it can be seen from the documents submitted that the trust serves buffet meals during the program / workshop conducted by Members Organizations and/or during own program and workshop but not for any other purposes. This can be reviewed form the related documents enclosed herewith for your kind perusal i.e. Bills of buffets served during work ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e for also sponsor programmes for bilateral ..of youth leaders, young workers and students with a view to better National Integration and international understanding and co-operation. (f) The Trustee may join, contribute to or ..financially or otherwise, any other institutions with similar objects to carry out or implement any of the objects of this Trust. 6.1. The Inspector s Report reproduced in the earlier part of this order in para 5.1 has also been taken into consideration. It is seen that the AO has been guided by the fact that the assessee is charging fees for hostel facilities and has also in its income shown receipts from canteen facilities over and above receipts from hiring of conference hall/auditorium etc. Apart from that he has also been guided by the fact that the Inspector accompanied by tax advisors was allowed to utilize the canteen facilities without any effort or the part of the serving personnel to ensure that only inmates of the hostel were being served. The explanation of the assessee that its hostel facilities are utilized by NGOs and Government schools, Education Departments etc. who stay/attend for a few days as students, professors, schol ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 28 days and the Ld. AR has said that as per the Rules the hostel cannot be used for more than 28 days by the person/organization as evidently hostel inmates are not admitted for an academic year as is normally done in hostel of colleges etc. where students are studying for graduation and postgraduation courses. The hostel of the trust is only for students, scholars, professors attending seminars/conferences which aim to build leadership qualities in the youth; educate, inform, encourage and empower them by knowledge etc. by programmes/conference held by NGOs or by foreign visiting organizations whose aims are identical. Consequently at the time of admission it is seen that hostel facilities are made available only after the assessee trust is satisfied that the aims and objects of the charitable trust organizations are also for promotion of youth activities evidenced by relevant financial statement, certifications of registration narrating the purpose of visit etc and only then hostel facilities are made available for a maximum period of only 28 days which results at times where odd figures may be worked out depending on facilities used. We may reproduce for ready-reference from pag ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... objects of the organization the purpose of visiting the target group and thrust area qua the visit or programme contemplated. A perusal of the sample form of enrolment placed at page 517 and Membership Form at page 518 has been demonstrated to show that it is strictly adhered to in strict and specific compliance. Reference may also be made to page 63 of the paper book addressed to the ADIT(E) dated 08.08.2011 referring to the position for 2009-10 wherein column-8, it is said that the assessee trust has not given any donation and neither any donation has been received. Similarly in regard to the contribution to the corpus column-9 indicates that the assessee s trust has not received any contribution to corpus during the year. A perusal of page 815-816 addressed again to the ADIT(E) dated 29.12.2011 indicate that the accumulated Fund has been utilized in the time limit as prescribed in the Income Tax Act for the purpose of construction of the Annex Building of trust and renovation of old building. The details of this surplus for the five years and its utilization as per page 816 indicated as under :- Asst. Years Total Surplus/(Deficit) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... road including girl participants. It is found explained on behalf of the assessee that sometimes the guardians of the girl participants come to the centre to meet them and canteen staff had been instructed not to stop them from taking snacks and lunch if they so want, keeping in mind the fact that the location of the trust was not close to the commercial areas where the guardians of these girls visiting them could have gone. The mere affording of such a courtesy does not lead to the conclusion that the trust was operating on commercial lines. In the courtesy so afforded if the lady Inspector accompanied by two tax advisors were allowed to have lunch/snacks without requiring them to show any identification in no way detracts from the merits of the case. On a consideration of the facts. Evidences, material and arguments advanced by the parties before the Bench, we do not find any infirmity arrived at by the CIT(A) in the impugned order which warrants our interference. We have taken into consideration the decisions relied upon by the AO and find no fault in the conclusion of the CIT(A) who has held the judgement of Jalandhar Development Authority to be inapplicable on facts as the sai ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rt has been referred to for our consideration. It is seen that the issue was decided by the CIT(A) in the following manner :- 8.2. I have considered the submission made by the appellant and I have perused the record. On going through the same, I have noticed that the issue of depreciation is covered by the judgment of Delhi Tribunal in the case of ACIT vs. Tiny Tots Education Society ITA No. 3182/Del/2008 which has also been confirmed by the Punjab and Haryana High Court in the case of CIT vs. Tiny Tots Education Society 330 ITR 21. The contention of the Assessing Officer that depreciation on assets purchased in earlier years cannot be allowed because those assets have been claimed as application of income in earlier years is not correct. As per the provisions of section 11(1)(a) income of the charitable trust to the extent it is applied towards charitable purpose is considered to be exempt. Accordingly, for the purpose of computation of income, it is mandatory to compute the same applying the ordinary principle of computation of income. This will include depreciation of the assets used in earning such income. After having determined such income, the application thereof has ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rust for deriving the income. The circularNo.5-P (LXX-6) of 1968, dated July 19,1968 was reproduced in the judgment in which the Board has taken the view that the income of the trust should be understood in its commercial sense. The circular is as under:- Where the trust derives income from house property, interest on securities. capital gains, or other sources, the word 'income' should be understood in its commercial sense, i.e., book income, after adding back any appropriations or applications thereof towards the purpose of the trust or otherwise, and also after adding back any debits made for capital expenditure incurred for the purposes of the trust or otherwise. It should be noted, in this connection, that the amounts so added back will become chargeable to tax u/s. 11(3) to the extent that they represent outgoings for purposes other than those of the trust. The amounts spent or applied for the purposes of the trust from out of the income computed in the aforesaid manner, should be not less than 75 per cent. of the latter, if the trust is to get the full benefit of the exemption u/s. 11(1). 12. A similar view was earlier expressed by the Andhra Pradesh H ..... 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