2017 (11) TMI 1936 - AT - Income Tax

Exemption u/s 11 - Denial of exemption as franchisee fees received by the DPS Society from different satellite schools which are running under the name and logo of Delhi Public School having different management that the DPS Society - HELD THAT - It is seen from various orders placed in the paper book for the various assessment years in assessee s own case passed by this Tribunal that this issue now stands settled in favour of assessee and against revenue. It is also observed that Ld.CIT (A) followed the binding decision of this Tribunal in assessee s own case for the previous assessment years. In view of the above we do not find any infirmity in the order passed by Ld. CIT (A) and the ground raised by revenue stands dismissed Deduction on account of depreciation denied - AO was of the opinion that assessee was a trust and it was deriving income from depreciable assets and held that depreciation could not be taken into account because full capital expenditure has been allowed in the year of acquisition of the assets - HELD THAT - As relying in own case 2012 (10) TMI 786 - ITAT DELHI and case of Indraprastha Cancer Society Abul Kalam Azad Islamic Awakening 2014 (11) TMI 733 - DELHI HIGH COURT By Finance (No. 2) Act of 2014 sub-section (6) to Section 11 stands inserted with effect from 1st April 2015 to the effect that where any income is required to be applied accumulated or set apart for application then for such purposes the income shall be determined without any deduction or allowance by way of depreciation or otherwise in respect of an asset the acquisition of which has been claimed as application of income under this Section in the same or any other previous year. The legal position therefore would undergo a change in terms of Section 11(6) which has been inserted and applicable with effect from 1st April 2015 and not to the assessment years in question. The newly enacted sub-section relates to application of income Set off of loss and carry forward of claim for excess application for the year - HELD THAT - As decided in own case 2012 (10) TMI 786 - ITAT DELHI adjustment of the expenses incurred by the trust for charitable and religious purposes in the earlier year against the income earned by the trust in the subsequent year would amount to applying the income of the trust for charitable and religious purposes in the subsequent year in which such adjustment has been made and will have to be excluded from the income of the trust u/s 11(1)(a) - decided in favour of assessee.

Summary

Issues:
1. Addition of franchisee fees received by the DPS Society from satellite schools.
2. Claim of depreciation and double deduction.
3. Claim of depreciation in view of recent court decision.
4. Set off of losses under sections 11, 12, and 13.
5. Carry forward of losses under sections 70, 71, 72, 73, and 74.

Analysis:

Issue 1 - Addition of Franchisee Fees:
The appeal was against the deletion of an addition of franchisee fees received by the DPS Society from satellite schools. The Tribunal noted that similar issues had been settled in favor of the assessee in previous cases. The CIT (A) followed the Tribunal's decision from previous assessment years, leading to the dismissal of the revenue's ground.

Issue 2 & 3 - Claim of Depreciation:
The revenue challenged the allowance of depreciation by the CIT (A), arguing that full capital expenditure had already been allowed. The Tribunal considered previous decisions and the conflicting views of the Delhi High Court. Citing relevant case law, the Tribunal upheld the CIT (A)'s decision, dismissing the revenue's grounds.

Issue 4 & 5 - Set Off and Carry Forward of Losses:
The revenue contested the set off of excess expenditure and the carry forward of claims for the year. The Tribunal referred to a previous decision involving a charitable trust and held that the issue was covered in favor of the assessee. Relying on the jurisdictional High Court's ruling, the Tribunal upheld the CIT (A)'s order, dismissing the revenue's grounds.

Overall, the Tribunal dismissed the revenue's appeal, upholding the CIT (A)'s decision in favor of the assessee. The judgment provided detailed analysis and legal reasoning for each issue raised, referencing relevant case law and previous decisions to support the conclusions reached.