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TMI Blog2018 (6) TMI 92X X X X Extracts X X X X X X X X Extracts X X X X ..... f the Hon’ble Supreme Court in the case of Rajasthan Gujarati Charitable Foundation, Poona [2017 (12) TMI 1067 - SUPREME COURT] is not applicable and the assessee is not eligible for application of loan repayment against the income for charitable purposes. We also note that the Tribunal in order [2016 (11) TMI 527 - ITAT DELHI] has also disallowed application of loan repayment - Decided against assessee. - ITA No. 6629/Del/2015 - - - Dated:- 30-5-2018 - Sh. Amit Shukla, Judicial Member And Sh. O. P. Kant, Accountant Member Appellant by : Ms. Paramita Tripathi, CIT (DR) Respondent by : Sh. R. K. Kapoor, CA ORDER PER O.P. KANT, A.M.: This appeal by the Revenue is directed against order dated 11/09/2015 passed by the Ld. Commissioner of Income-tax (Appeals)-40, New Delhi, [in short the Ld. CIT(A) ] for assessment year 2011-12, raising following grounds: On the facts and in the circumstances of the case and in law, the Ld. CIT(A) has erred in allowing the exemption u/s 11 disregarding the facts of the case. 1. On the facts and in the circumstances of the case and in law, the Ld. CIT(A) has erred in ignoring that fact that assessee s services fall unde ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the exemption has been claimed under section 10(21) of the Act. 2.2 The Ld. Assessing Officer, further observed that the assessee requested before the Central Board of Direct Taxes (in short the CBDT ) for change of category from other institution to research Association but the said request of the assessee was not accepted and against which the assessee filed writ petition before the Hon ble High Court. The Hon ble High Court remanded the matter to the CBDT for deciding a fresh. Again the CBDT vide letter dated 20/03/2012, rejected the request of the assessee for change of category from other institution to research Association . On further Writ by the assessee, the Hon ble High Court quashed the order of the CBDT and directed the CBDT to refer the matter to the Central Government. According to the Assessing Officer, against the said order of the Hon ble High Court, the CBDT has filed a review petition, which is pending for adjudication. 2.3 In view of the above facts, the Assessing Officer held that the assessee has not been notified by the CBDT as Scientific research Association for granting benefit under section 10(21) of the Act and, therefore, no benefit of S ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the case, I am of the view that there is no proper justification for denying the exemption and the Proviso of section 2(15) is not attracted in this case and accordingly the AO is directed to allow the exemption u/s 11(1) with all the consequential benefits. The additional ground of appeal taken by the assessee is allowed. 2.8 The Ld. CIT(A) also allowed exemption under section 10(21) of the Act, relying on the decision of the Tribunal dated 16/11/2004 for assessment years 1997-97 to 1998-99. The Ld. CIT(A) also allowed repayment of loan as application of income. 2.9 Aggrieved, the Revenue is in appeal before the Tribunal raising the grounds as reproduced above. 3. The first ground of the appeal relates to exemption allowed under section 11(1) of the Act. In ground No. 2 of the appeal, the Revenue has challenged admitting of additional ground for allowing exemption under section 11(1) of the Act by the Ld. CIT(A), without giving an opportunity of being heard to the assessee. In ground No.2, it is mentioned that in view of Rule 46A of Income Tax Rules, 1962, the Assessing Officer should have been given opportunity to comment/counter the additional grounds. 3.1 In relat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hich was claimed by the assessee in the return of income. The assessee has not made any claim of exemption under section 11(1) of the Act in the return of income. The Assessing Officer has given historical background of the exemption claimed under section 11(1) of the Act, which was claimed up to the assessment year 2008-09. In our opinion, though the Assessing Officer has given reference to section 2(15) of the Act and its proviso, the facts of the case have not been examined from the perspective of claim of the assessee under section 11(1) of the Act. We have also noted that the Ld. CIT(A) has also not made any analysis of the facts of the case in hand and comparison of the facts of the case of India Trade Promotion Organization (supra) relied upon by him. The kind of activity carried out during the year under consideration and, whether the same are hit by the proviso to section 2(15) of the Act, need to be examined properly before arriving at any conclusion, whether the assessee was engaged in any kind of activity in the nature of trade, commerce or business. In view of the fact, we feel it appropriate to restore this issue to the file of the Ld. CIT(A) for deciding afresh in ac ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nst the assessee by the Tribunal in ITA No. 920/Del/2012 for assessment year 2008-09. 5.2 The Ld. counsel of the assessee also accepted that the issue in dispute has been decided against the assessee by the Tribunal in assessment year 2008-09. But the Ld. counsel of the assessee submitted that recently that the Hon ble Supreme Court in the case of Rajasthan and Gujarati Charitable Foundation, Poona (2018) 253 Taxman 165, has allowed application of depreciation in respect of the assets, although the expenditure for acquisition of the capital asset was already allowed as application of income for charitable purposes. According to him, following the above decision, the repayment of loan should also be allowed to the assessee. 5.3 We have heard the rival submission and perused the relevant material on record. The issue of application of loan repayment against the income for charitable purposes has been discussed at length in the case of the assessee in ITA No. 920/Del/2012 for assessment year 2008-09. The relevant extract of the said order are reproduced as under: 13. We have heard the rival submissions and perused the material on record. The additional evidences have been f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the statement of computation of income, we find that in the assessment years from 1992-93 to assessment year 1998-99, the depreciation provided in the books of accounts has been reduced from the expenditure claimed towards application of income, which means the depreciation has not been claimed as application of income. From the assessment year 1999-2000 onwards till the assessment year under consideration also the depreciation has not been claimed towards application of the income. 16. In view of above observations, it is clear that the assessee has not shown the loans received as its income or receipt, in the year in which such loan was received by the assessee and, therefore, the repayment also cannot be allowed as an expenditure or application of income. Further, we find that loan money obtained has been shown as application on acquisition of fixed assets and, therefore, the assessee has already claimed loan as deduction or application of income and therefore, in our opinion, allowing application of repayment of loan will amount to double deduction. 17. As regard the CBDT Circular, the Hon ble Supreme Court in the case of CIT Vs. Rajendra Poddar Charitable Trust (1 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d out of the loan or the borrowed money have already been claimed as application of income. In subsequent years, the assessee started repaying the loans to the lenders. Now, the assessee wants to claim repayment of the loan as application towards the income for charitable purposes. In normal course of business, loans received by the assessee are not part of the profit and loss account. The loans received are reflected in the balance sheet. Similarly, the loan repaid is also not part of the profit and loss account in normal course of the accounting. The section 29 of the Act provides that income under the head profit and gains of business shall be computed in accordance with section 30 to section 43C of the Act. The repayment of loan is not an allowable deduction against profit and gains of the business even under section 30 to 43C of the Act. In the case of Rajasthan Gujarati Charitable Foundation (supra), the Hon ble Supreme Court allowed the application of the depreciation, which being allowable as one of the items under the head profit and gains of the business . The Hon ble Court held that normal depreciation can be considered as legitimate deduction in computing the real in ..... X X X X Extracts X X X X X X X X Extracts X X X X
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