2019 (1) TMI 2023 - AT - Income Tax

Exemption u/s 11 12 - assessee activities are not within the purview of the section 2(15) - activity of charging fee against the barcode technology to the customers is purely in the nature of commercial and business activity - assessee has been granted registration under section 12AA(1) as well as approved under section 10(23C)(vi) - HELD THAT - As decided in assessee own case 2017 (11) TMI 1049 - ITAT DELHI activities of the assessee are covered u/s 2(15) of the Act under the sixth limb and that the assessee is eligible for exemption u/s 11(1) of the Act. There is no change of circumstances since the date of the order of the Hon' High Court and also from the facts relevant to the assessment years 2009-10 and 2010-11. Allowing depreciation despite claiming benefit of application of the purchase of the assets Tribunal 2018 (6) TMI 443 - ITAT DELHI following the decision of the Hon ble Supreme Court in the case of CIT Vs. Rajasthan and Gujarat Charitable Foundation Poona 2017 (12) TMI 1067 - SUPREME COURT allowed the claim of the assessee. Claim of the accumulated funds was also allowed by the Tribunal as upheld that the activity of the assessee are charitable in nature and, thus, the claim of the assessee for carry forward under section 11(2) has been rightly allowed by the Ld. CIT(A) - Decided against revenue.

Summary

Issues:
1. Benefit of section 11 & 12 of the Income Tax Act.
2. Claim of depreciation and potential double deduction.
3. Recent decision of the Hon'ble Delhi High Court.
4. Accumulated funds under section 11(2).
5. Additional grounds for appeal.

Issue 1: Benefit of section 11 & 12 of the Income Tax Act:
The Appellate Tribunal addressed the issue of whether the activities of the appellant fell within the purview of section 2(15) of the Income Tax Act, 1961. The Assessing Officer argued that the appellant's activities were commercial in nature, not charitable, and thus not eligible for exemptions under sections 11 & 12. The Tribunal noted that subsequent to the Assessing Officer's order, the appellant had been granted registration under section 12AA(1) and approval under section 10(23C)(vi) by the Hon'ble High Court, which supported the charitable nature of the appellant's activities. Citing previous judgments and findings, the Tribunal upheld the benefit of sections 11 & 12 for the appellant, dismissing the Revenue's appeal.

Issue 2: Claim of depreciation and potential double deduction:
The Assessing Officer disallowed the claim of depreciation to the appellant, citing that the assets' purchase amount had been claimed as application of income in earlier years. This led to the potential of double deduction. However, the Tribunal, following the decision of the Hon'ble Supreme Court, allowed the claim of depreciation. The Tribunal noted that the amendment in section 11(6) of the Act was held prospective by the Hon'ble Delhi High Court, supporting the appellant's claim. Consequently, the Tribunal dismissed the Revenue's appeal on this issue.

Issue 3: Recent decision of the Hon'ble Delhi High Court:
The Tribunal considered a recent decision of the Hon'ble Delhi High Court in the case of DIT(E) Vs. Charanjiv Charitable Trust dated 18.03.2014, which was relevant to the claim of depreciation by the appellant. The Tribunal's decision aligned with the High Court's ruling, supporting the appellant's position and dismissing the Revenue's appeal on this ground.

Issue 4: Accumulated funds under section 11(2):
The Assessing Officer disallowed the claim of accumulated funds under section 11(2) by the appellant. However, the Tribunal, having upheld the charitable nature of the appellant's activities, allowed the claim of accumulated funds. By following the previous judgments and findings, the Tribunal dismissed the Revenue's appeal concerning the accumulated funds.

Issue 5: Additional grounds for appeal:
The Revenue sought to alter or amend the grounds of appeal during the hearing. However, the Tribunal, having considered and addressed all the primary issues raised, dismissed the appeal of the Revenue in its entirety. The Tribunal's decision was based on the findings supporting the appellant's entitlement to the benefits under the Income Tax Act, as established through legal precedents and judgments.

In conclusion, the Appellate Tribunal, in the case under consideration, ruled in favor of the appellant on all primary issues raised by the Revenue. The Tribunal's decision was based on the appellant's eligibility for exemptions under sections 11 & 12, the allowance of depreciation, the recent High Court decisions, and the treatment of accumulated funds under section 11(2). The Tribunal's thorough analysis and alignment with legal precedents led to the dismissal of the Revenue's appeal.