TMI Blog2019 (9) TMI 661X X X X Extracts X X X X X X X X Extracts X X X X ..... sessee trust - HELD THAT:- As decided in own case [ 2015 (8) TMI 89 - DELHI HIGH COURT] The equally plausible and consistent interpretation of clause (a) of Section 11(1) of the Act is that income derived from property must be calculated as per the principles of the Act. The said clause is not a computation provision and does not disturb the income earned or available but postulates that the income as computed in accordance with the provisions of the Act to the extent of 86% must be applied. Application of income may include purchase of a capital asset. The said purchase is valid and taken into consideration for the purpose of ensuring compliance, i.e., application of money or funds and is not a factor which determines and decides the quantum of income derived from property held under trust. Addition on a/c of space rent income on the basis of disclosure in Notes to Accounts of the assessee - HELD THAT:- We are of the considered view that when income on account of space rent has not been accrued, as in the instant case due to dispute, there cannot be any rent even though entry in the books of account have been made on account of notional income. So, when the income woul ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... l of the assessee by ignoring the fact that assessee is following mercantile system of accounting and rental income has not accounted in the books. The income as per mercantile method of accounting has to be offered to tax on accrual basis. Such income which has accrued but not received is shown as receivable or under the head Sundry Debtor as the case may be in the Balance Sheet. Such income is entitled as and to be written of subsequently when it actually becomes bad, as per provisions of the Act. 3. Briefly stated the facts necessary for adjudication of the issue at hand are : India Trade Promotion Organisation (ITPO), the assessee is an organisation incorporated under section 25 of the Companies Act, 1956 as not-for-profit organisation, registered under section 12A of the Income-tax Act, 1961 (for short the Act ) to carry on the objects of promoting the Indian Trade through medium of organizing trade fairs, exhibitions etc. in India and abroad and has also exempted from Incometax u/s 10(23)(iv) of the Act from 1989-90 onwards. It is wholly owned Apex Trade Promotion body of Government of India and Senior Officers of Government are appointed as Directors and M ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... case rendered in WP (C) 1872 / 2013 proceeded to hold that the assessee is entitled for benefit of exemption claimed u/s 10(23C)(iv) of the Act. Operative part of the aforesaid decision rendered by Hon ble Delhi High Court in assessee s own case (supra) is extracted for ready perusal as under :- 58. In conclusion, we may say that the expression charitable purpose , as defined in Section 2(15) cannot be construed literally and in absolute terms. It has to take colour and be considered in the context of Section 10(23C)(iv) of the said Act. It is also clear that if the literal interpretation is given to the proviso to Section 2(15) of the said Act, then the proviso would be at risk of running fowl of the principle of equality enshrined in Article 14 of the Constitution India. In order to save the Constitutional validity of the proviso, the same would have to be read down and interpreted in the context of Section 10(23C)(iv) because, in our view, the context requires such an interpretation. The correct interpretation of the proviso to Section 2(15) of the said Act would be that it carves out an exception from the charitable purpose of advancement ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lead to double deduction. However, the ld. CIT (A) allowed the depreciation by relying upon the decision rendered by Hon ble Delhi High Court in ITA No.7 / 2013 order dated 27.11.2013 rendered in assessee s own case . 10. Hon ble Delhi High Court in the aforesaid decision in assessee s own case (supra) vide order dated 06.09.2013 dismissed the appeal preferred by the Revenue challenging the order of the Tribunal; the operative part of the order is extracted for ready perusal as under :- 14. From the year 1984 onwards, there have been a number of decisions of various High Courts taking a similar and identical view, as that of Society of the Sisters of St. Anne (supra). These are as under:- Income Tax vs. Market Committee, Pipli (2011) 330 ITR 16 (P H), Income Tax vs. Tiny Tots Education Society, (2011) 330 ITR 21 (P H), Commissioner of Income Tax vs. Manav Mangal Society, (2010) 328 ITR 421 (P H), Commissioner of Income Tax vs. Sheth Manilal Ranchhoddas Vishram Bhavan Trust, (1992) 198 ITR 598 (Guj.), Commissioner of Income Tax vs. Raipur Pallottine Society, (1989) 180 ITR 579 (M.P.), Commissioner of Income Tax vs. Institute of Banking, (2003) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... determined against the Revenue. GROUND NO.3 IN AYs 2009-10, 2010-11 2011-12 12. AO made addition of ₹ 1,68,73,663, ₹ 2,01,86,003 ₹ 1,83,00,000 in AYs 2009-10, 2010-11 2011-12 respectively on a/c of space rent income on the basis of disclosure in Notes to Accounts of the assessee. However, ld. CIT(A) deleted the addition on the ground that since space rent account is disputed by two Government Departments viz. National Science Centre and Crafts Museum by contesting the ownership of land attracting rent by the assessee and claimed that they are in possession of the land and as such it is uncertain, no addition can be made. 13. Ld. CIT (A) has thrashed the facts in detail and by applying the decision rendered by various Hon ble High Courts and Hon ble Supreme Court, decided the issue in favour of the assessee on the ground that since the dispute has not been resolved till date, the addition is not sustainable. 14. Assessee has brought on record documents and letter of discussion to resolve the disputes between National Science Centre Crafts Museum and India Trade Promotion Org ..... X X X X Extracts X X X X X X X X Extracts X X X X
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