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<h1>Tribunal upholds Revenue on scholarship expenses, partially allows appeal on depreciation for assessment years 2004-05, 2006-07, and 2007-08.</h1> <h3>Dy. CIT. -1, Kanpu Versus M/s. Seth Anand Ram Jaipuria Education Society</h3> Dy. CIT. -1, Kanpu Versus M/s. Seth Anand Ram Jaipuria Education Society - TMI Issues Involved:1. Deletion of addition on account of scholarship expenditure.2. Allowance of depreciation on capital expenditure for charitable trusts.Detailed Analysis:Issue 1: Deletion of Addition on Account of Scholarship ExpenditureAssessment Year 2004-05:The Revenue challenged the deletion of an addition of Rs. 14,20,640/- made by the Assessing Officer (AO) on account of scholarship expenditure. The AO argued that the scholarship granted to Mr. Adheesh Bhagat was not for charitable purposes, citing several procedural lapses and inconsistencies in the selection process. The CIT(A) had deleted the addition, relying on a previous Tribunal decision for the assessment year 2005-06, which was later found to be based on misrepresented facts. The Tribunal, upon independent examination, found that the selection process for the scholarship lacked transparency and genuine procedure, thus reversing the CIT(A)'s decision and restoring the AO's addition.Assessment Year 2006-07:The Revenue raised a similar issue for the assessment year 2006-07, where an addition of Rs. 17,66,435/- was made by the AO on account of the same scholarship. The Tribunal, following its decision for the assessment year 2004-05, allowed the Revenue's appeal, thereby sustaining the AO's addition.Assessment Year 2007-08:For the assessment year 2007-08, the Revenue's appeal involved a similar addition of Rs. 16,40,236/-. Consistent with its previous decisions, the Tribunal allowed the Revenue's appeal, sustaining the AO's addition.Issue 2: Allowance of Depreciation on Capital ExpenditureAssessment Year 2006-07:The Revenue contested the CIT(A)'s decision to allow depreciation of Rs. 1,66,49,749/- on capital expenditure, arguing that it amounted to double deduction since the entire cost of capital expenditure had already been allowed as a deduction under Section 11. The CIT(A) followed the Tribunal's decision in the case of ACIT vs. Saraswati Gyan Mandir Shiksha Sansthan, which allowed depreciation on the grounds that exemption under Section 11 is not equivalent to a deduction. The Tribunal upheld the CIT(A)'s decision, rejecting the Revenue's appeal, and noted that the judgment of the Hon'ble Kerala High Court in Lissie Medical Institutions Vs Commissioner of Income-tax was not applicable.Assessment Year 2007-08:For the assessment year 2007-08, the Revenue raised a similar issue regarding the allowance of depreciation of Rs. 1,66,97,767/-. The Tribunal, consistent with its decision for the assessment year 2006-07, rejected the Revenue's appeal, thereby upholding the CIT(A)'s decision to allow depreciation.Combined Result:- The appeal of the Revenue for the assessment year 2004-05 is allowed.- The appeals for the assessment years 2006-07 and 2007-08 are partly allowed, with the Tribunal sustaining the AO's additions on scholarship expenditure but rejecting the Revenue's challenge on the allowance of depreciation.(Order was pronounced in the open court on the date mentioned on the caption page)