2023 (5) TMI 1061 - AT - Income Tax

Exemption u/s 11 - assessee a charitable institution u/s 2(15) - assessee eligibility for allowance of depreciation claimed on the cost of assets purchased during the preceding assessment years - HELD THAT - As we reached to a logical conclusion that the Ld.CIT(A) right in holding that the assessee is eligible for claiming depreciation as application of income on the assets purchased during preceding assessment year and consequentially he is also eligible for benefit of exemption u/s 11 and other relevant provisions of the Act. We reached to a logical conclusion that the Ld.CIT(A) right in holding that the assessee is eligible for claiming depreciation as application of income on the assets purchased during preceding assessment year and consequentially he is also eligible for benefit of exemption u/s 11 and other relevant provisions of the Act. Ground no. 2 of Revenue dismissed being devoid of merits. Disallowance on account of personal use of car by office reasons - HELD THAT - In view of above on being asked by the bench the Ld. Sr. DR could not show as any contrary view or finding of the Tribunal or any higher authority such as Hon ble High Court. Therefore, we hold that the issue is squarely covered in favour of assessee by the order of the coordinate bench of the Tribunal in assessee s own case for AY 2009-10. Accordingly, the ground no. 1 of Revenue is also dismissed.

Summary

Issues Involved:
1. Eligibility of the assessee as a charitable institution under Section 2(15) of the Income Tax Act.
2. Disallowance of depreciation claimed on assets purchased in earlier years.
3. Personal use of vehicles and related expenses.
4. Eligibility for exemption under Section 11 and 12 of the Income Tax Act.

Summary:

1. Eligibility of the Assessee as a Charitable Institution:
The Revenue argued that the assessee failed to prove its status as a charitable institution under Section 2(15) of the Income Tax Act. The Tribunal referred to previous decisions and the Hon'ble Supreme Court's judgment in CIT vs. Rajasthan & Gujarat Charitable Foundation, Pune, affirming that the assessee qualifies as a charitable institution. The Tribunal upheld the CIT(A)'s decision, confirming the assessee's eligibility for exemption under Section 11.

2. Disallowance of Depreciation on Assets Purchased in Earlier Years:
The Revenue contended that depreciation should not be allowed on assets purchased in earlier years as their cost was already treated as application of income. The Tribunal relied on the coordinate bench's decision in the assessee's own case for AY 2009-10 and the Hon'ble Supreme Court's judgment, which stated that depreciation is a normal expenditure and needs to be deducted while computing income. The Tribunal upheld the CIT(A)'s decision, allowing depreciation on assets purchased in earlier years.

3. Personal Use of Vehicles and Related Expenses:
The Revenue argued that 60% of vehicle expenses were for personal use and should be disallowed. The Tribunal referred to the survey conducted and the statement of an employee, Mr. S.K. Dhall, which clarified that vehicles were used for the society's purposes. The Tribunal found no evidence to support the AO's allegations and upheld the CIT(A)'s decision, deleting the disallowance.

4. Eligibility for Exemption under Section 11 and 12:
The Tribunal noted that the assessee's eligibility for exemption under Sections 11 and 12 was previously upheld by the coordinate bench for AY 2009-10. The Tribunal found no contrary judgment or factual position to take a different view and upheld the CIT(A)'s decision, confirming the assessee's eligibility for exemption.

Conclusion:
The Tribunal dismissed the Revenue's appeal, upholding the CIT(A)'s order in favor of the assessee on all grounds. The Tribunal confirmed the assessee's status as a charitable institution, allowed depreciation on assets purchased in earlier years, and deleted the disallowance of vehicle expenses. The assessee's eligibility for exemption under Sections 11 and 12 was also upheld.