Tax Tribunal Upholds Religious Charity's Exemption & Depreciation Claims

ACIT (E), Circle 1 (1), New Delhi Versus Divya Jyoti Jagrati Sansthan

ACIT (E), Circle 1 (1), New Delhi Versus Divya Jyoti Jagrati Sansthan - TMI Issues Involved:
1. Classification of the assessee as a religious charitable society.
2. Deletion of addition under Section 115BBC of the Income Tax Act, 1961.
3. Treatment of corpus and other donations as anonymous donations under Section 115BBC.
4. Eligibility of the assessee for depreciation under Section 32.
5. Double deduction of capital expenditure and depreciation.

Issue-wise Detailed Analysis:

1. Classification of the Assessee as a Religious Charitable Society:
The Revenue challenged the CIT(A)'s decision to classify the assessee as a religious charitable society, arguing that the objects of the assessee and its registration under Section 80G(5)(vi) did not support this classification. The CIT(A) concluded that the assessee's activities were socio-spiritual and religious, aligning with the objectives outlined in the trust deed. The Tribunal upheld this view, noting that the assessee's activities were a mix of religious, charitable, and social, and that in Hinduism, religious and charitable activities are often intertwined.

2. Deletion of Addition under Section 115BBC:
The AO had taxed donations amounting to Rs. 18,36,05,498 under Section 115BBC, which deals with anonymous donations. The CIT(A) deleted this addition, citing that anonymous donations to wholly religious charitable institutions are exempt from Section 115BBC, as clarified by CBDT Circular No. 14/2006. The Tribunal supported this, stating that the assessee's activities were socio-spiritual, qualifying it for the exemption under Section 115BBC(2)(b).

3. Treatment of Corpus and Other Donations as Anonymous Donations:
The AO had disallowed corpus donations of Rs. 8,79,20,100 and voluntary donations of Rs. 10,97,53,280, treating them as anonymous due to incomplete donor details. The CIT(A) found that the assessee had provided substantial evidence for these donations and that the AO's disallowance was not justified. The Tribunal agreed, emphasizing that the assessee's activities were religious and charitable, thus falling within the exemption provided by Section 115BBC.

4. Eligibility for Depreciation under Section 32:
The AO disallowed the assessee's claim for depreciation of Rs. 3,85,61,953, arguing that it constituted double deduction. The CIT(A) allowed the depreciation, referencing the Delhi High Court's decision in DIT(E) vs. Indraprastha Cancer Society, which permitted depreciation for religious institutions. The Tribunal upheld this decision, noting that the amendment disallowing such depreciation was applicable only from AY 2015-16 onwards.

5. Double Deduction of Capital Expenditure and Depreciation:
The Revenue contended that allowing depreciation on assets whose cost had already been treated as application of income resulted in double deduction. The CIT(A) and the Tribunal rejected this argument, relying on judicial precedents that permitted such depreciation for charitable institutions.

Conclusion:
The Tribunal dismissed the Revenue's appeal, affirming the CIT(A)'s decisions on all counts. The assessee was recognized as a religious charitable society, exempt from the provisions of Section 115BBC for anonymous donations, and entitled to claim depreciation on its assets. The Tribunal emphasized the consistency in the Department's treatment of the assessee in previous and subsequent years.