TaxTMI 
TaxTMI 
2023 (5) TMI 1061
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....red in allowing the assessee the benefit of exemption even though the assessee has violated the provisions of Sec. 13(1)(c) r.w.s. 13(3) of the Income Tax Act, 1961, when assessee has failed to produce any documentary evidence which would substantiate that use of vehicles was for charitable purposes. He further submitted that on the facts and circumstances of the case and in law, Ld.CIT(A) has erred in allowing the claim of depreciation for the assets purchased in earlier years cost of which has been allowed as application of income, such claim being consequential in nature of allowance of benefit of exemption to the assessee. 4. Drawing our attention towards relevant part of the assessment order the Ld. Sr. DR submitted that no log book or any documentary evidence of maintaining proper record for usage of car by various specified person has been produced by the assessee and in absence of these documents, it cannot be denied that to a certain extent expenses incurred on account of repairs and maintenance of vehicles have been applied for personal use of the specified persons. 5. The Ld. Sr. DR further submitted that therefore 60% of expenses incurred on account of repairs and mai....
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....rder of the Tribunal dated 21.02.2014 for AY 2009-10, wherein para 21 to 23 the Tribunal while dismissing the ground of Revenue, held that the depreciation is a normal expenditure incurred in the course of the activities and hence, the same needs to be deducted while computing the income. The Ld. AR also submitted that the identical issue has been adjudicated by the Hon'ble Supreme Court in the case of CIT vs. Rajasthan & Gujarat Charitable Foundation, Pune Judgment dated 13.12.2017 in civil appeal no. 7186/2014, wherein their lordships held that the amendment in Sec. 11(6) of the Act introduced through Finance Act 2/2014 is effective from AY 2015-16 onwards and it has no retrospective effect to present AY 2014-15. 10. On careful consideration of the rival submissions, first of all we may point out that identical issue has been decided by the coordinate bench of the Tribunal in assessee's own case in the order dated 21.02.2014 in Revenue appeal ITA No. 4182/Del/2013, wherein the Tribunal dismissing ground no. 2 & 3 of assessee placing reliance on the judgment of Hon'ble Jurisdictional High Court of Delhi in the case of DIT vs. Vishwa Jagriti Mission held that the depreciation is i....
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....able trust/institution involving the question as to whether its income should be computed on commercial principles in order to determine the amount of income available for application to charitable purposes. It was a case where the assessee was carrying on business and the statutory computation provisions of Chapter IV- D of the Act were applicable. In the present case, we are not concerned with the applicability of these provisions. We are concerned only with the concept of commercial income as understood from the accounting point of view. Even under normal commercial accounting principles, there is authority for the proposition that depreciation is a necessary charge in computing the net income. Secondly, the Supreme Court was the cost of the asset u/s 35(1) of the Act, which allowed deduction for capital expenditure incurred on scientific research. The question was whether after claiming deduction in respect of the cost of the asset u/s 35(1), can the assessee again claim deduction on account of depreciation in respect of the same asset. The Supreme Court ruled that, under general principles of taxation, double deduction in regard to the same business outgoing is not intended un....
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....n 11(6) of the Act vide Finance Act No. 2/2014 which became effective from the Assessment Year 2015-2016. The Delhi High Court has taken the view and rightly so, that the said amendment is prospective in nature. It also follows that once assessee is allowed depreciation, he shall be entitled to carry forward the depreciation as well. For the aforesaid reasons, we affirm the view taken by the High Courts in these cases and dismiss these matters." 14. From the above judgment of the Hon'ble Apex Court, we respectfully further note that the amendment made in Sec. 11(6) of the Act vide Finance Act No. II/2014 is effective from AY 2015-16 onwards and the same has no retrospective effect for immediately preceding AY 2014-15 i.e. year under consideration. Furthermore, coordinate bench of the Tribunal in assessee's own case for AY 2009-10 (supra) dealt with the issue of eligibility of assessee u/s 11 of the Act and dismissing the ground nos. 1, 4, 5, 6 & 8 of Department held as follows: - "12. Further, as regards the allegation of the AO that the facilities of the society are being misused by the office bearers regarding cars, premises, etc., we notice that this issue got clarified d....
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....impugned order in the following manner:- "5.13 The AO further alleged that the Executive President and the Director General have been staying on the 4th and 5th floor of the building of the Institute. In this regard the society has clarified that they have been occupying this in their capacity as the Executive President of the Society. In items of provisions of Section 13(2)(c) salary allowance or otherwise can be paid to such person for services rendered by such person. The only condition is that the amount so paid should not be in excess of what may be reasonably paid for such services. Allowing occupation of the premises to Executive President cannot be considered to be unreasonable. The AO has just made the allegation and has not even bothered to examine the same in the context of section 13(2)(c) of the Act. Accordingly I found that finding of the AO is not justified" 14. In this regard, Section 13(2)(c) specifically provides regarding payment of salary and allowances to the persons rendering services. It is not the case of the AO, as we notice from the assessment order, that the salary or the perquisites paid to the office bearers are either unreasonable, or excessive. As....
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.... could not bring any material that these expenses are personal. He has gone by the nomenclature of the expense assuming that the governing council members have bought these items for their personal use. In the absence of any evidence particularly keeping in view the fact that the survey was carried out and nothing incriminating on this aspect was found during the survey I am of the view that the allegation of the AO do not have any merit." 18. The society is an educational institution. It has made payment through credit card of only Rs. 16,19,243/-. As against this, the AO has considered the entire training expenses of Rs. 99,21,943/- and disallowed 60% of the same as being personal in nature. The society had submitted details of the same before the AO and AO has not been able to point out any particular item of the expenditure which can be considered to be personal in nature. A survey was conducted. Nothing adverse to the assessee emerged during survey on this account. The assessee has given an explanation that the expenses incurred through credit card were meant for the society. It organized various seminars and conferences, through which an eminent faculty was invited. Thus, t....
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....cific question, stated that the vehicles were being used by the officers, staffers/faculty and also by other staff members, for liaison work of the society. This statement clearly addresses the concern of the AO. This statement being a statement recorded during the survey, it cannot be ignored, particularly when the AO has not brought any material to substantiate his allegation against the assessee. The survey report was also before the AO and in case he had any doubt about the same, he could have made further investigation, which he chose not to do. Having failed to do so, he cannot ignore the statement and draw adverse inference merely on the basis of assumptions. The CIT(A) has dealt with this issue in paras 5.11 and 5.12 as follows:- "The other allegation of the AO on this account is the office bearers are maintaining luxurious 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 an....