2017 (10) TMI 1592 - AT - Income Tax

Tribunal upholds CIT(A)'s decision on tax exemption & depreciation claim for charitable organization

Income Tax Officer (E), Ward 1 (2), New Delhi Versus M/s. Indian Youth Centre Trust

Income Tax Officer (E), Ward 1 (2), New Delhi Versus M/s. Indian Youth Centre Trust - TMI Issues involved:1. Exemption claimed under section 11 of the Income Tax Act.2. Disallowance of depreciation claimed by the assessee.Analysis:Exemption claimed under section 11 of the Income Tax Act:The case involved an appeal by the Revenue against the Ld. CIT(A)'s order dated 24/06/2016 relevant to assessment years 2012-13. The AO had denied exemption claimed under section 11 of the Act to the assessee, alleging that the activities of running a hostel, canteen, and providing Auditorium and Conference Hall on hire were commercial in nature, invoking the proviso to Section 2(15) of the Income Tax Act. The Ld. CIT(A) allowed the appeal of the assessee. The Tribunal noted that similar issues were previously decided in favor of the assessee for A.Y. 2009-10 and A.Y. 2011-12. The Tribunal held that the assessee was eligible for exemption under section 11 of the Act. The Hon'ble High Court also affirmed the Tribunal's decision. The Tribunal found the facts of the present case identical to preceding years and held that the AO was not justified in denying the exemption as the assessee was engaged in charitable work. Therefore, the Tribunal affirmed the Ld. CIT(A)'s order directing the AO to allow the exemption under section 11(1) of the Act to the assessee.Disallowance of depreciation claimed by the assessee:The AO had disallowed the claim of depreciation amounting to &8377;39,60,948 to the assessee, alleging that the amount incurred on purchase of assets in earlier years was claimed as application of income, and allowing depreciation would result in double deduction. The Ld. CIT(A) allowed the claim of depreciation. The Tribunal noted that similar issues were decided in favor of the assessee for A.Y. 2009-10, where the claim of depreciation was allowed. The Tribunal affirmed the Ld. CIT(A)'s order allowing the claim of depreciation to the assessee. The Tribunal dismissed the appeal filed by the Department, affirming the Ld. CIT(A)'s order on both issues in dispute.In conclusion, the Tribunal upheld the Ld. CIT(A)'s decision, allowing the exemption under section 11 of the Act and the claim of depreciation to the assessee, dismissing the appeal filed by the Revenue.