2021 (9) TMI 503 - AT - Income Tax

Denial of exemption u/s 11 - Charitable activity u/s 2(15) - violation of provisions of section 13(1)(c) of the Act while using trademark G.D. Goenka by Shri Anjani Kumar Goenka; that the activities of the assessee society are commercial in nature; and that there is excess income over expenditure; that assessee is not entitled for depreciation as claimed - HELD THAT - So far as question of using the trademark G.D. Goenka having goodwill and monetary value of the trademark which has been built up in the course of the assessee society s activities is concerned, this issue has already been examined by the Hon ble Delhi High Court in assessee s own case 2017 (10) TMI 1584 - DELHI HIGH COURT We are of the considered view that ld. CIT (A) has decided the issue in favour of the assessee by following the decisions rendered by Hon ble Delhi High Court and coordinate Bench of the Tribunal in assessee s own case for preceding years. Ld. CIT (A) has allowed the depreciation on fixed assets by following the decision rendered by Hon ble Supreme Court in case of CIT-III, Pune vs. Rajasthan Gujarati Charitable Foundation Poona 2017 (12) TMI 1067 - SUPREME COURT . Since no distinguishing facts qua the year under assessment vis- -vis preceding years have come on record, we find no infirmity or illegality in the impugned order passed by the ld. CIT (A), hence present appeal filed by the Revenue is hereby dismissed.

Summary

Issues:
1. Denial of exemption under section 11 of the Income Tax Act, 1961
2. Allowance of depreciation

Analysis:
1. The case involved an appeal by the Revenue seeking to set aside the order passed by the Commissioner of Income-tax (Appeals) regarding the denial of exemption under section 11 of the Income Tax Act, 1961, and allowance of depreciation for the assessment year 2014-15. The appellant, a society running an educational institution, had its exemption claim denied by the Assessing Officer (AO) due to commercial activities not meeting the definition of charitable under section 2(15) of the Act, resulting in an addition to the total income. The Commissioner partially allowed the appeal, leading to the Revenue's challenge before the Tribunal.

2. The Revenue contended that there were violations of section 13(1)(c) of the Act, including the registration of a trademark and lack of a depreciation reserve fund. It argued that the society's activities were commercial and against public policy. However, the society argued that its income was used for charitable purposes and exceeded its obligations, citing previous tribunal decisions and high court orders in its favor for other assessment years.

3. The Tribunal examined the arguments presented by both sides and reviewed past decisions favoring the society. It noted the lack of distinguishing facts for the current year compared to previous years where the society had succeeded. The Tribunal found no merit in the Revenue's contentions and dismissed the appeal, upholding the Commissioner's order.

4. The Tribunal further discussed the issue of using the trademark 'G.D. Goenka' and the goodwill associated with it. It referenced a High Court decision affirming the owner's rights to the trademark and dismissed the Revenue's claims of diversion under section 13(3) of the Act. The Tribunal also highlighted the society's application of income for charitable purposes and the absence of profit motive, supported by relevant case law and circulars.

5. Ultimately, the Tribunal upheld the Commissioner's decision to allow depreciation on fixed assets, following Supreme Court precedent. It concluded that there were no distinguishing facts for the current year that would warrant a different outcome from previous years. Therefore, the Tribunal dismissed the Revenue's appeal, emphasizing the correctness of the Commissioner's order based on legal precedents and factual considerations.

This detailed analysis of the judgment provides a comprehensive overview of the issues raised, arguments presented by both parties, and the Tribunal's reasoning leading to the dismissal of the Revenue's appeal.