2017 (12) TMI 1827 - AT - Income Tax

Tribunal Upholds Income Tax Act Exemptions for Charitable Trust

ITO Ward 1 (2) New Delhi Versus Indian Youth Centre Trust

The tribunal upheld the exemptions u/s 11 & 12 of the Income Tax Act for the charitable trust and confirmed the right of the assessee to claim ... Benefit of exemption u/s 11 & 12 - activities of the trust were not within the purview of Section 2(15) - CIT-A allowed the deduction - HELD THAT:- CIT (A) held that the assessee is entitled to the benefit of exemption u/s 11 & 12 of the Income Tax Act, 1961 for the AY 2009-10, Department preferred an appeal before the Tribunal [2013 (9) TMI 84 - ITAT NEW DELHI] and such an appeal was dismissed by the Tribunal by way of order [2013 (9) TMI 84 - ITAT NEW DELHI] which also shows that it was held therein that the assessee is entitled to the benefit of the exemption u/s 11 & 12 of the Act Claim of depreciation to the assessee trust - Following the decision of jurisdictional High Court in DIT (E) vs. Indraprastha Cancer Society [2014 (11) TMI 733 - DELHI HIGH COURT] this Tribunal held for the AY 2011-12, that the assessee is entitled to claim depreciation on the fixed assets which were claimed on application of income in earlier years. Nothing contrary is brought on record by the Revenue to disturb the findings of the Tribunal in assessee’s own case for the assessment years 2009-10 & 2011-12 on the aspect of entitlement of the assessee to benefit u/s 11 & 12 of the Act and also to claim depreciation on fixed assets which were claimed as application of income in earlier years. Revenue appeal dismissed. Issues:1. Exemption u/s 11 & 12 of the Income Tax Act, 1961 for a charitable trust.2. Claim of depreciation on fixed assets by the assessee.Analysis:Issue 1: Exemption u/s 11 & 12 of the Income Tax ActThe case involved the denial of exemption u/s 11(1) to a charitable trust due to alleged involvement in business activities. The Assessing Officer (AO) contended that the trust's activities were not within the purview of Section 2(15) of the Act. However, the Commissioner of Income Tax (Appeals) [CIT (A)] allowed the exemption, emphasizing the trust's charitable work. The trust had a history of enjoying the exemption, which was reinstated for the relevant assessment year. The Revenue challenged this decision, citing the trust's alleged business activities. The tribunal, after reviewing past judgments and considering the trust's objectives and activities, upheld the CIT (A)'s decision, concluding that the trust was indeed entitled to the exemption u/s 11(1) and 12 of the Act.Issue 2: Claim of Depreciation on Fixed AssetsAnother contention revolved around the claim of depreciation on fixed assets by the assessee. The Revenue argued against allowing depreciation based on a recent judgment of the jurisdictional High Court. However, the assessee relied on previous tribunal decisions and High Court rulings in their favor regarding the entitlement to claim depreciation on fixed assets. The tribunal, in line with past decisions and legal precedents, upheld the assessee's right to claim depreciation on fixed assets, which were earlier treated as application of income. The tribunal found no grounds to interfere with the CIT (A)'s decision on this matter, ultimately dismissing the Revenue's appeal.In conclusion, the tribunal upheld the exemptions u/s 11 & 12 of the Income Tax Act for the charitable trust and confirmed the right of the assessee to claim depreciation on fixed assets. The Revenue's appeal was dismissed, and the tribunal's decision favored the assessee in both aspects.