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TMI Blog2014 (11) TMI 256X X X X Extracts X X X X X X X X Extracts X X X X ..... uts as capital expenditure – Held that:- The assessee has incurred this expenditure by dismantling the temporary structure which was constructed during construction of school building at Vasant Kunj - Since the CIT (A) has upheld this addition as capital expenditure but we note that the order is not a speaking order on the issue – the matter is remitted back to the CIT(A). Various expenses claimed by the assessee disallowed - Held that:- Simply payment made through cheque shall not justify the claim of the assessee - The expenditure has been debited in the books of account of assessee - It was for assessee to establish that the expenditure was genuine and was spent wholly and exclusively for the business purposes of the assessee - The genuineness of expenditure remains unverified. Depreciation on building at Virendra Gram disallowed – Held that:- The assets in the form of building were used for educational purposes - The buildings were shown in the balance sheet of the society while the other assets are shown in the balance sheet of the school - The AO himself has allowed depreciation in respect of the assets which have been shown in the balance sheet of school - It is only b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r of Income Tax (Appeals) has erred in facts and in law in confirming the action of assessing officer in denying exemption u/s 10(23C)(vi) of IT Act, 1961 to the assessee. 2. The Learned Commissioner of Income Tax (Appeals) has erred in facts and in law in confirming the action of assessing officer in denying exemption u/s 11 of the Act, 1961. 3. The Learned Commissioner of Income Tax (Appeals) has erred in facts and in law in confirming the disallowance of ₹ 7,44,802/- by treating the expenditure incurred on dismantling of huts as capital expenditure. 4. The Learned Commissioner of Income Tax (Appeals) has erred in facts and in law in confirming the disallowance of ₹ 70,000/- on account of professional fees paid to Sh. P.K. Agarwal. 5. The Learned Commissioner of Income Tax (Appeals) has erred in facts and in law in confirming the disallowance of ₹ 2,58,905/- under the various heads claimed by the assessee. 6. The Learned Commissioner of Income Tax (Appeals) has erred in facts and in law in confirming the disallowance of ₹ 19,65,425/- on account of depreciation on building at Vrindra Gram. 7. The Learned Commissioner of Income Tax (Appeals ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tory, if the defect in the act done in pursuance of it can be cured by permitting appropriate rectification to be carried out at a subsequent stage and having regard to the object of section 12A, it cannot be said that the legislature intended that even where the trust has got its accounts audited and the certificate obtained in Form No.10B before the assessment is completed, merely because such report could not be filed in the course of assessment proceedings, it would deprive a trust from getting the exemption if it is otherwise entitled to it in law. In view of these facts, we hold that the CIT (A) was not justified in confirming the denial of exemption u/s 11 of the Act only for the reason that the audited report was not submitted along with the return of income but during the assessment proceedings. 8.1 The other issue on which the exemption u/s 11A and section 13(1) of the Act was denied was for the reason that the amount has been invested in the common assets being buildings on the land belonging to Shri V.K. Bhatnagar and others. For this ld. AR submitted that denial of exemption is to be seen in each year separately and general observation cannot be made basis for denia ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 1. Ld. AR further submitted that on the similar facts, ITAT has allowed the exemption in the case of Laxmi Bai Foundation in ITA No.2496/Del/2006 dated 12.03.2010, Nav Manav Sansthan in ITA No.2001/Del/2009 dated 16.11.2009 and Aryabhatt Vidya Sansthan in ITA No.2002/Del/2009 dated 20.11.2010 and ld. AR provided the copies of these orders. Considering all these facts, we find that the assessee deserves to exemption u/s 11 in the year under consideration also. We order accordingly. 9. In the ground no.3, the issue is regarding disallowance of ₹ 7,44,802/- by treating the expenditure incurred on dismantling of huts as capital expenditure. The assessee claimed expenditure on account of dismantling of huts amounting to ₹ 8,27,558/-. The Assessing Officer treated the same as capital expenditure and allowed depreciation @ 10%. The CIT (A) accepted that no asset is created by these expenditure still held that this expenditure being capital in nature and the addition was sustained. The ld. AR submitted that the huts are temporary constructed by the assessee society during the construction of school building of Bhatnagar International School, Basant Kunj and the same was dism ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (iv) J.K. Travels ₹ 96,450/- Total Rs.4,16,355/- The notices were received back with the postal remarks there was no such person at the address . The Assessing Officer made the disallowance of ₹ 4,16,355/-. The CIT (A) confirmed the disallowance in respect of payments made to Surya National and Pragati Tours of ₹ 2,14,545/- and ₹ 44,360/- respectively. Ld. AR submitted that in the case of Surya National, it was confirmed by the CIT (A) only for the reason that the amount was not mentioned in the confirmations. He submitted that the amount paid to Surya National was recorded in the books of account and the same was paid by cheque and confirmation was also filed. Similarly, in the case of Pragati Tours, the assessee could not furnish the confirmations due to the death of proprietor, however, the payment was made by cheque. 17. Ld. DR relied on the orders of the authorities below. 18. We have heard both the sides on the issue. We find that simply payment made through cheque shall not justify the claim of the assessee. The expenditure ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ITAT. The relevant portion of the order read as under :- 4. First, I take up the departmental appeal. After hearing both the parties, Id o not find any infirmity in the order of the CIT (A) in as much as the assets in the form of building were used for educational purposes. The AO has stated that assessee carries no business other than school. That means, it has been admitted by him that running of school was a business activity and, therefore, the assessee is entitled to depreciation on the assets used for the purpose of running of school. I have gone through the statement of accounts furnished before me and found that income and expenditure account as well as balance sheet of school is separately prepared while, on the other hand, the income and expenditure account and balance sheet of the society is also separately prepared. The buildings were shown in the balance sheet of the society while the other assets are shown in the balance sheet of the school. The A.O. himself has allowed depreciation in respect of the assets which have been shown in the balance sheet of school. It is only because of accounting convenience that the assessee society has chosen to disclose the buildi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the school continued to run the school and he submitted that Assessing Officer s allegation that by transferring the caution money liability, the same has ceased to exist is without any basis. The asset and liability of caution money has been transferred by entering into written agreement between the assessee and the company. The Assessing Officer accepted the transfer of asset of the company but at the same time he assumed that caution money has not been transferred and thus ceased to exist. He submitted that the CIT (A) has rightly deleted the addition as the company continued to run the school after taking over land building and other assets from the society and also discharged the liability of caution money as and when demanded by the students. He pleaded to uphold the order of the CIT (A) on this issue. 26. We have heard both the sides on this issue. We have perused the documents placed at pages 37 to 39 of the paper book which is the sale agreement of the sale of the assets, list of the same is given in Annexure-A placed at page 39, which is reproduced as under :- S.NO. PARTICULARS AMOUNT 1. ..... X X X X Extracts X X X X X X X X Extracts X X X X
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