IN THE INCOME TAX APPELLATE TRIBUNAL
DELHI BENCH `B', NEW DELHI
BEFORE SH. R. K. PANDA, ACCOUNTANT MEMBER
AND
SH. KULDIP SINGH, JUDICIAL MEMBER
ITA No.4789/Del/2016
Assessment Year: 2012-13
Income Tax Officer Escorts Cardiac Diseases
(Exemption), Ward 1 (1), Vs Hospital Society, C/o. Escorts
New Delhi Heard Intt. & Research
Centre, Okhla Road,
New Delhi-110025
PAN No.AAAE0049G
(APPELLANT) (RESPONDENT)
Appellant by Smt. Nidhi Srivastava, CIT DR
Respondent by Sh. R. M. Mehta, Advocate
Date of hearing: 24/04/2019
Date of Pronouncement: 01/07/2019
ORDER
PER R.K. PANDA, AM:
This appeal filed by the revenue is directed against the order
dated 30.06.2016 of the CIT(A)-40 (Exemption), New Delhi
relating to A. Y. 2012-13.
2. The ground of appeal No.1 by the revenue reads as under :-
1 "On the facts and in the circumstances of the
case and in law, the Ld. CIT(A) has erred in allowing the
appeal of the assessee ignoring the fact that AO has
made addition on account of donation given to M/s
Subros Education Society on the basis of non-
availability of information on the part of assessee such
as purpose of donation , basis of selection of done and
reasons for utilization of fund that have been
accumulated for the purpose and objectives of the
assessee's trust, to a done whose objectives are on
altogether different track.
3. Facts of the case in brief are that the assessee is a society
registered under section 12A of the Act and also u/s. 80 G of the
Act. It filed its return of income on 30.03.2013 declaring nil
income. During the course of assessment proceedings the
Assessing Officer asked the assessee to produce complete details
of donation paid for Rs.2,05,02,400/- which includes amount
given to M/s. Subros Educational Society (registered) Rs. 2
crores. The assessee filed the details of payment made as
donation alongwith a certificate from M/s. Subros Educational
Society (registered) confirming that they have received donation of
Rs.2 crores.
4. The Assessing Officer, however, was not satisfied with the
above submission on the ground that the purpose of the donation
and the basis of selection of the donee is not satisfactorily
substantiated. According to him mere confirmation of the donee
is not sufficient to substantiate the allowablity. He observed that
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the donation to an educational society is not in consonence with
the aims and objects of the assessee society and the assessee did
not furnish the details of past accumulation u/s. 11(2) of the IT
Act. He, therefore, made addition of the above amount of Rs. 2
crores.
5. Before CIT(A) the assessee submitted that complete details of
the donation of Rs.2.00 cr. was filed including a resolution of the
Board of Governors approving the donation and the confirmation
of the donee. The AO could not enquire into the selection of the
donee or the purpose of the donation unless the genuineness was
under doubt more so when it is settled law that donation by one
charitable institution to another such institution was permissible
in law and would be treated as application of income. The fact
that the donee is a charitable institution is evidenced by the order
dated 31.03.2011 passed by the DIT(E) u/s 80G of the Act
covering the period A.Y. 2011-12 onwards. The allegation of the
Assessing Officer in the assessment order that the assessee had
not furnished details of past years accumulations etc. was stated
to be factually incorrect as the requisite information had been
filed vide letter dated 05.02.2015 addressed to the AO. It was
argued that the donation to Subros Educational society was
supported by the confirmation of the donee, resolution of the
Board of Governors and the order passed u/s 80G of the Act by
the DIT(E). Various decisions were relied upon to support the
proposition that donation to another charitable institution or
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society is permissible in law and treated as application of income.
The assessee relied on the following decisions :-
1) CIT vs. Shri Ram Memorial Foundation (2004) 269 ITR 35
(Del.)
2) CIT vs. Sarladevi Sarabhai Trust (1988) 172 ITR 698 (Guj.)
3) CIT vs. Hindustan Charity Trust (1983) 139 ITR 913 (Cal.)
4) CIT vs. Trustees of the Jadi Trust (1982) 133 ITR 393 (Bom.)
6. Based on the arguments advanced by the assessee the Ld.
CIT(A) deleted the addition. While doing so he noted that the
assessee had filed submissions on various occasions alongwith
details as called for although partial and not in one go. The
details filed were in conformity with past assessments which had
accorded the status of a charitable institution to the assessee.
He noted that asking the assessee to justify the selection of the
donor and purpose in respect of the sum of Rs. 2 crores is
uncalled for when the genuineness was not doubted and the
Assessing Officer could have made enquiries from the donee
which he did not do. So far as the observation of the Assessing
Officer that assessee has not filed the details of past
accumulation and their utilization is concerned, he noted that the
assessee has filed all those details. He further noted that the
various adverse inferences drawn by the Assessing Officer are
uncalled for. He accordingly deleted the addition.
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7. Aggrieved with such order of the CIT(A), the revenue is in
appeal before the Tribunal.
8. We have considered the rival arguments made by both the
sides and perused the material available on record. From the
various details filed in the paper book we find the assessee,
during the course of assessment proceedings has filed complete
details of donation of Rs. 2 crores including a resolution of the
Board of Governors approving the donation and the confirmation
of the donee. We find merit in the arguments of the Ld. Counsel
for the assesee that the Assessing Officer could not enquire into
the selection of the donee or the purpose of the donation unless
the genuineness is doubted. It has been held in various decisions
that donation by one charitable institution to another such
institution is permissible in law and would be treated as
application of income. The donee in the instant case is a
charitable institution which is evidenced by the order passed by
the DIT (Exemption) u/s. 80G on 31.03.2011 which covers the
period for A. Y. 2011-12 onwards. The observation of the
Assessing Officer that the assessee had not furnished details of
past years accumulations etc is also factually incorrect since
such information was filed by the assesse vide letter dated
05.02.2005 addressed to the Assessing Officer, copy of which is
placed at page No. 87 to 90 of the paper book. In view of the
above discussion we are of the considered opinion that the Ld.
CIT(A) is fully justified in deleting the addition made by the
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Assessing Officer on account of donation given to M/s. Subros
Educational Society (registered). The ground raised by the
revenue is accordingly dismissed.
9. Ground of appeal No. 2 by the revenue reads as under :-
2. " On the facts and in the circumstances of the case
and in law, the Ld.CIT(A) has erred in allowing the
appeal of the assessee by ignoring the fact that
allowance of depreciation will lead to double
deduction as assessee has already claimed gross
amount of such assets as application of income in the
year in which such assests were purchased.
10. Facts of the case, in brief are that the Assessing Officer
during the course of assessment proceedings observed that a sum
of Rs. 1,50,00,000/- had been claimed as sponsorship fee payable
to M/s Escorts Heart Institute & Research Centre Ltd. for
organizing seminars and continuing medical education (CMEs)
events by eminent cardio surgeons/cardiologists and the assessee
had furnished only two vouchers for Rs. 11,16,000/-. According
to the Assessing Officer the details furnished by the assessee were
brief and it was not possible to examine the allowability of said
expenditure. He observed that the reports of activities undertaken
along with relevant bills and vouchers were not placed on record
and the co-relation of the expenditure with the aims and objects
of the assessee was not established. In view of the above and in
absence of supporting documents the Assessing Officer made
addition of Rs.1,38,84000/- to the total income of the assessee.
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11. Before CIT(A) it was submitted that the payment of Rs.1.50
cores to EHIRC Ltd. was substantiated by details and evidence
including a request letter and there was no requirement in law to
provide copies of vouchers evidencing expenses incurred by the
donee. The sum of Rs.1.50 crores was paid by cheque minus
TDS and related to the area of charity in which the assessee was
engaged i.e. medical relief. As it was a routine item of
expenditure incurred even in earlier years, a resolution of
governing body as sought by the Assessing Officer was not
required.
12. Based on the arguments advanced by the Ld. CIT(A) deleted
the addition by observing as under :-
"As regards Ground No.4 the solitary ground on which the
disallowance has been made is the non-production of the relevant
vouchers pertaining to the expenses incurred by EHIRC Ltd. out of
the sponsorship fee of Rs.1.5 crores paid to the said institution.
In my view the assessee was not expected to produce
vouchers of expenses incurred by EHIRC Ltd. and the evidence
produced namely the request letter from EHIRC Ltd. which ran a
medical facility of international repute, the nexus of the amount paid
with the category of charity in which the assessee was engaged i.e.
medical relief and the allowance of a part of the expenditure for
which vouchers were produced on sample basis collectively proved
the bonafides of the claim. Being of the view that the partial
disallowance of Rs.1,38,84,000/- was not called for I delete the
same."
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13. Aggrieved with such order of the CIT(A), the revenue is in
appeal before the Tribunal.
14. After hearing both the sides we find the Assessing Officer
made an addition of Rs.1,38,84,000/- out of the sponsorship
expenses of Rs.1,50,000/-payable to M/s. Escort Heart Institute
and Research Centre on the ground that assessee did not
produce the necessary details. We find the Ld. CIT(A) allowed the
deduction so claimed, the reasons of which have already been
reproduced in the preceding paragraph. Although the amount of
Rs.1.50 crores has been claimed as sponsorship fee payable for
organizing seminars and continuing medical education events,
however, the assessee furnished only 2 vouchers for
Rs.11,16,000/- which the Assessing Officer has allowed. In our
opinion the assessee is duty bound to furnish all the requisite
details for the examination of the Assessing Officer especially
when an amount has been claimed as deduction on the basis of
the claim made by another institution as sponsorship fees.
Assessee cannot be absolved of its responsibility by not producing
requisite details for the examination/ verification of the Assessing
Officer. Considering the totality of the facts of the case and in the
interest of justice we deem it proper to restore the issue to the file
of the Assessing Officer with a direction to give one more
opportunity to the assessee to substantiate with evidence to his
satisfaction regarding the allowability of the balance amount of
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Rs.1,38,84,000/- by filing the details of bills and vouchers. The
Ground of appeal No.2 raised by the revenue is allowed for
statistical purpose.
15. Ground of appeal No.3 reads as under :-
3. " On the facts and in the circumstances of the case
and in law, the Ld.CIT(A) has erred in allowing the
appeal of the assessee by ignoring the fact that
allowance of depreciation will lead to double
deduction as assessee has already claimed gross
amount of such assets as application of income in the
year in which such assests were purchased.
16. After hearing both the sides we find the Assessing Officer
disallowed depreciation of Rs.3,82,216/- claimed in the income
and expenditure account on the ground that the assessee has
already claimed gross of amount of such assets as application of
income in the year in which it was purchased. He, therefore, held
that the same is not allowable and accordingly made the addition.
We find the CIT(A) relying on various decisions held that assessee
is entitled to claim depreciation even if the value of the asset has
been claimed as application of income in the year of purchase in
the light of various decision and in conformity with the past
assessment. According to the CIT(A) the Act was amended w.e.f.
01.04.2015 to deny deduction on account of depreciation and not
for the earlier years. We do not find any infirmity in the order of
the Ld. CIT(A) on this issue. The Hon'ble Supreme Court in the
case of CIT Vs. Rajasthan and Gujarati Charitable Foundation
Poona in Civil Appeal No.7186/2014 order dated 13.12.2017 has
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already decided the issue in favour of the assessee by holding
that depreciation is allowable on the assets, the cost of which is
fully allowed as application of income u/s. 11 in the past years.
The ground raised by the revenue is, therefore, dismissed.
17. In the result, the appeal filed by the revenue is partly
allowed for statistical purpose.
Order pronounced in the open court on 01.07.2019.
Sd/- Sd/-
(KULDIP SINGH) (R.K PANDA)
JUDICIAL MEMBER ACCOUNTANT MEMBER
*Neha*
Date:- 01.07.2019
Copy forwarded to:
1. Appellant
2. Respondent
3. CIT
4. CIT(Appeals)
5. DR: ITAT
ASSISTANT REGISTRAR
ITAT NEW DELHI
Date of dictation
Date on which the typed draft is placed before the dictating
Member
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Date on which the fair order is placed before the Dictating
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Date on which the fair order comes back to the Sr. PS/ PS
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ITAT
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