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2014 (7) TMI 682 - ITAT LUCKNOWExpenses on scholarship paid for charitable purposes – Exemption u/s 11 - Held that:- CIT(A) has brushed aside all the objections of the AO by stating that by way of trivial procedural lapses, this in itself does not change the nature of application of income towards charitable purposes which is factually verified and accepted by the AO as such - the address of the applicant is of Calcutta - The application is addressed to the President of the assessee society at Kanpur – it could not be understood as to how an application dated 16 th May, 2003, by a person residing in Calcutta, had reached to the President of the assessee society on 17th May, 2003 and thereafter, the managing committee of the assessee society had formed a scholarship committee who has called this person from Calcutta for interview and this person appeared before the scholarship committee for prolonged interview on 17th May, 2003 and thereafter, the said scholarship committee had reached to the conclusion to recommend granting of scholarship to Mr. Adheesh Bhagat as per the minutes signed on 18 th May, 2003 at 11.30 a.m. - The chronology and timing of the events support the case of the AO that there was no genuine process of selection/interview and it was all manipulation made by the assessee society and the scholarship was granted to Mr. Adheesh Bhagat at the sole discretion of the Vice President / President who intentionally avoided to appear before the Assessing Officer for fear of interrogation. It may be considered to be a good basis for considering the eligibility of applicant but when the application along with the enclosures cannot reach to the managing committee of the assessee society and the scholarship committee in time i.e. by 17th May, 2003 and it is not shown as to how Mr. Adheesh Bhagat was contacted for attending the interview and how he reached Kanpur for attending interview, all these material cannot justify his selection because these material cannot be available before the selection committee along with this fact that the candidate Mr. Adheesh Bhagat cannot be available for interview on 17 th May 2003 in the chronology of events discussed above - the impossibility of interview of Mr. Adheesh Bhagat by the selection committee, as claimed in the absence of any positive material having been brought on record by the assessee – thus, the order of CIT(A) is not sustainable – Decided in favour of Revenue. Allowability of depreciation as capital expenses - Entire cost of capital expenditure already allowed as deduction u/s 11 of the Act – Held that:- The decision in ACIT vs. Saraswati Gyan Mandir Shiksha Sansthan [2014 (7) TMI 626 - ITAT LUCKNOW] followed - allowing exemption u/s 11 is not equal to allowing deduction - allowing exemption means that the income is not liable to tax but the income remains the same and it does not get reduced, although such income is not taxable because of the operation of section 11(1) of the Act - exemption is allowed at the time of acquisition of assets and depreciation is allowed at the time of user of assets, it does not amount to double deduction – Decided partly in favour of Revenue.
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