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2021 (10) TMI 830 - AT - Income TaxAssessment of trust - Exemption u/s 11 - Development fund receipts were directly taken to the balance sheet as liability and the same were added back - HELD THAT - As per the direction of the Directorate of Education, the school is entitled to collect development fee up to 10 to 15% of tuition fee. The issue is squarely covered in assessee's own case for AY 2012-13 by the Hon'ble High Court's decision 2015 (4) TMI 1066 - DELHI HIGH COURT . Hence, Ground No. 1 to 3 are dismissed. Depreciation in the case of charitable or religious institutions - CIT(A) has relied upon the decision of the Hon'ble Delhi High Court in case of DIT (Exemption) Vs. Indraprastha Cancer Society 2014 (11) TMI 733 - DELHI HIGH COURT wherein it has been held that the assessee is eligible for depreciation in the case of charitable or religious institutions also. As regards the amendment to Section 11 which is effective from AY 2015-16 and subsequent years, the depreciation has to be allowed in relation to income from property which are in respect of charitable purposes. As in case of CIT vs. Rajasthani Gujarati Charitable Foundation Poona 2017 (12) TMI 1067 - SUPREME COURT held that the depreciation in respect of cost of the assets allowed to the assessee as expenditure is allowable. The issue contested by the Revenue is squarely covered against the Revenue in light of the Hon'ble Supreme Court decision in case of Rajasthani Gujarati Charitable Foundation Poona (supra). Appeal of the Revenue is dismissed.
Issues:
1. Whether the assessee society correctly accounted for the development fund in the Income and Expenditure Account. 2. Whether the assessee society is eligible for exemption under sections 11 and 12 of the Income Tax Act. 3. Whether the assessee society's claim for depreciation on capital assets is valid. Analysis: 1. The appeal was filed by the Revenue against the order passed by CIT(A)-40, Delhi for the assessment year 2013-14. The Revenue contended that the assessee society did not account for the development fund correctly in the Income and Expenditure Account. However, the tribunal found that the development fund receipts were directly taken to the balance sheet as a liability, as per the Directorate of Education's direction. The issue was deemed to be covered in favor of the assessee by the Hon'ble High Court's decision in a previous assessment year. Therefore, Grounds 1 to 3 were dismissed. 2. The assessee society, running a school since 1954, was registered under section 12A(a) of the Income Tax Act and granted a Certificate under section 80G. The main object of the society was to provide education, and it had consistently received benefits under sections 11 and 12 for the same activity. The tribunal noted that the CIT(A) had relied on a decision of the Hon'ble Delhi High Court to allow depreciation for charitable institutions. The tribunal also referred to a Supreme Court decision that supported allowing depreciation on assets. Consequently, the tribunal dismissed the Revenue's appeal on the grounds related to exemption under sections 11 and 12. 3. The Revenue contested the allowance of depreciation on capital assets claimed by the assessee society. The tribunal, however, upheld the CIT(A)'s decision based on the Delhi High Court's ruling and the Supreme Court's decision that depreciation on assets is allowable for charitable institutions. The tribunal concluded that the issue raised by the Revenue was covered against them by the Supreme Court's decision. Therefore, Ground 4 was dismissed, and the appeal of the Revenue was ultimately dismissed. In conclusion, the tribunal upheld the decisions made by the CIT(A) in favor of the assessee society regarding the correct accounting of the development fund, eligibility for exemption under sections 11 and 12, and the validity of claiming depreciation on capital assets. The appeal of the Revenue was dismissed accordingly.
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