TMI Blog2023 (5) TMI 1061X X X X Extracts X X X X X X X X Extracts X X X X ..... how as any contrary view or finding of the Tribunal or any higher authority such as Hon ble High Court. Therefore, we hold that the issue is squarely covered in favour of assessee by the order of the coordinate bench of the Tribunal in assessee s own case for AY 2009-10. Accordingly, the ground no. 1 of Revenue is also dismissed. - I.T.A No.7074/Del/2018 - - - Dated:- 24-5-2023 - Shri Chandra Mohan Garg, Judicial Member And Shri Pradip Kumar Kedia, Accountant Member For the Revenue : Shri Anuj Garg, Sr. DR For the Assessee : Shri Ajay Baheti, CA ORDER PER SHRI C.M. GARG, JM This appeal has been filed by the Revenue against the order of Commissioner of Income Tax (Appeals)-40, Delhi dated 27.08.2018 for AY 2014-15. 2. The grounds raised by the Revenue read as follows: - 1. The Ld. ITO(E) failed to appreciate that the assessee is a charitable institution within the meaning of Sec. 2(15) of the Act and the various observations made in this regard are arbitrary, untenable and against the facts on record. 2. The Ld. ACIT(E) has erred both on facts and in law in restricting depreciation to Rs.137989/- as against Rs.13000586/- claimed and allowab ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ief to the assessee by deleting both the disallowances made by the AO, therefore, the impugned first appellate order may kindly be set aside by restoring that of the AO. 7. Replying to the above, the Ld. Assessee s Representative strongly supported the first appellate order and submitted that the assessee incurred an expense of Rs.1,66,650/- on repair and maintenance of vehicles, 60% of which i.e. Rs.99,990/- was disallowed by the AO on the ground that since no log books were maintained, it cannot be ruled out that the vehicles may have been used for personal purposes of specified person. 8. The Ld. AR submitted that identical issues were preceding AY 2009- 10 in the case of the assessee has been decided in favour of the assessee by order dated 21.02.2014 dismissing the ground of Revenue and the Ld.CIT(A) was right in following the same while granting relief to the assessee deleting the disallowance made by the AO on account on the allegation of personal use of vehicles. 9. Apropos ground no. 2 of Revenue the Ld. AR submitted that the AO disallowed depreciation amounting to Rs.1,28,62,597/- on the ground that this pertains to the assets purchased in the earlier years and t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and hence, income, to that extent, is considered as applied for charitable purpose and thus, not charged to tax u/s 11(1)(a) of the Act. The assessee having purchased the fixed assets and the same having been utilized in carrying out its activities, the income arising from the activities is to be computed by applying the normal principle of computation of income, which will include a charge on account of depreciation in respect of the fixed assets used for carrying out such activities. As such, depreciation is allowed while computing income of the year under consideration. It cannot be said that the fixed assets acquired had already been claimed as deduction. Depreciation is a normal expenditure incurred in the course of the activities and hence, the same need to be deducted while computing the income. This issue has been dealt with by the jurisdictional High Court in the case of Director of Income Vs. Vishwa Jagriti Mission , ITA No. 140/2012, vide order dated 29th March, 2012, while making a distinction with the judgment of the Supreme Court in Escorts Ltd. vs. Union of India , as under: - 13. The judgment of the Supreme Court in Escorts Limited vs. Union of India (supra ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... gment or factual position which may lead me to take a different view. Therefore, I hold that there is no ambiguity and perversity in the first appellate order, wherein the Ld.CIT(A) has allowed the claim of depreciation for assets purchased in the earlier years as application of income. 13. In the second part of ground no. 2 the Department has challenged the first appellate order on the ground that while the depreciation for the assets purchased in the earlier year cost of which has been allowed as application of income then the depreciation is not allowable. However, from the copy of the judgment of Hon ble Supreme Court in the case of Commissioner of Income Tax-III, Pune vs. Rajasthan Gujarati Charitable Foundation, Pune (supra), their lordships in concluding para held as under: - After hearing learned counsel for the parties, we are of the opinion that the aforesaid view taken by the Bombay High Court correctly states the principles of law and there is no need to interfere with the same. It may be mentioned that most of the High Courts have taken the aforesaid view with only exception thereto by the High Court of Kerala which has taken a contrary view in 'Liss ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cars and the expenses related to their purchase, repair and maintenance being borne by the society. In this regard I have gone through the records and I notice that during survey a specific question was put to the employee, Mr. S.K. Dhall on 31.01.2012 where in response to question no.4 he has clarified as under:- Vehicles owned by the IMM as per annexure A attached. These vehicles are used by the officers/ staffers/ faculty of IMM for attending various meetings/functions and also by other staff members for liaison work for IMM. These vehicles are also used by the speakers/ session chairman/ High dignitaries during the seminar/ training Programs. 5.12 The above statement recorded during the survey clearly shows that the vehicles are being used for the purposes of the society. I further notice that during the course of the survey nothing adverse on this account has been found. In the absence of any evidence the allegation of the AO cannot be sustained. The AO has just made the allegation and has not given any basis, material or information on the basis of which such allegation is being made. On the contrary, the assessee has given explanation which has not been controve ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s taken on rent by the Society, for setting up its Global Development Centre, which the society was running from Gurgaon. Thus, the adverse inference drawn by the AO in this regard is not tenable. 17. As regards the allegation of misuse of the credit card and the payments being personal in nature we are in agreement with the following finding given by the CIT(A) in para 5.23 of the order under appeal:- 5.23 The appellant-society has submitted an explanation that expenses incurred through credit card are not personal in nature. These credit cards have been used to incur expenses for and on behalf of the appellant-society. The credit card facility is a facility like bank. I have gone through the list of the expenses which has been stated in the assessment order. I notice that the total of such expenses comes to Rs.6,04,872/- only. Further the total payments made by the assessee through credit card is of Rs.16,19,243/-. Accordingly based on this figure the AO is not correct in considering that entire training expenses of Rs.99,21,943/- is through credit card and 60% of the same is personal in nature. The appellant-society has stated that these expenses are not personal in n ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... jected. 15. In view of foregoing discussion, we reached to a logical conclusion that the assessee is eligible for allowance of depreciation claimed on the cost of assets purchased during the preceding assessment years as application of income for present AY 2014-15 as the amendment in Sec. 11(6) of the Act is applicable from AY 2015-16 onwards and the same has no retrospective effect for present AY 2014-15. Therefore, in view of foregoing discussion, we reached to a logical conclusion that the Ld.CIT(A) right in holding that the assessee is eligible for claiming depreciation as application of income on the assets purchased during preceding assessment year and consequentially he is also eligible for benefit of exemption u/s 11 and other relevant provisions of the Act. Accordingly, second part of ground no. 2 of Revenue is also dismissed being devoid of merits. 16. From the copy of the order of ITAT in assessee s own case for AY 2009-10 reveals that, the disallowance made by the AO on account of personal use of car by office reasons, was deleted by the Ld.CIT(A) and findings of Ld. First Appellate Authority was uphold by the Tribunal with following observations and findings: ..... X X X X Extracts X X X X X X X X Extracts X X X X
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