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Asstt. DIT (E) TC-II, New Delhi Vs. India Islamic Cultural Centre, Opp. Mausam Bhawan 87-88, Lodhi Estate New Delhi-110003
August, 05th 2014

                              ITA No. 4127/Del/2012
                             Assessment Year: 2009-10

Asstt. DIT (E)                    v.           India Islamic Cultural Centre,
TC-II, New Delhi                               Opp. Mausam Bhawan
                                               87-88, Lodhi Estate
                                               New Delhi-110003
                                               PAN: AAAT1277F

                     Revenue by: Shri Satpal Singh, Sr.DR
                     Assessee by: Shri R. S. Singhvi, CA.


      Appeal filed by the Revenue is directed against the order passed by the ld.

CIT(A) on 30th May, 2012 for assessment year 2009-10, on the following grounds:

      "1.    On the facts and in the circumstances of the case and in law,
      the Ld. CIT(A) has erred in treating Inspector Report as baseless on
      account of absence of managing committee members statements
      and verification from service provider when bills / invoices from the
      facilities have been procured by the Inspector on independent basis.

      2.     Ld. CIT(A) has erred in treating gross sale consideration taken
      from service provider on revenue sharing basis, as rent and not
      commercial / business receipt.

      3.     Ld. CIT(A) has erred in treating the assessee under the field
      of "Education" whereas the activities and accounts show it as
      `General Public Utility'.

      4.     Ld. CIT(A) has erred in applying `The proova Sanskriti Kendra'
      decision of Hon'ble ITAT, when the facts have been distinguished by
      the AO.
                                        2                           ITA 4127/Del/2012

      5.     Ld. CIT(A) has erred in allowing double deduction on account
      of allowing depreciation on capital assets which have already been
      claimed as application of income. Further whether Ld. CIT(A) is
      justified in allowing this claim which was not made at the time of
      assessment as `Doctrine of Estoppel' applies here.

      6.     Ld. CIT(A) has erred in treating membership fees corpus
      income and not revenue receipt as held in the assessment order.

      7.     The appellant craves to add, to alter or amend any ground of
      appeal raised above at the time of hearing."

2.    The assessee is a society registered under the Societies Registration Act. Its

aims and objects, as per its Memorandum of Association are, briefly, to promote

mutual understanding and tolerance amongst various members of the society, to

remove misunderstanding about Islam and its teachings, to promote an

awareness of the ethos of Islamic culture, to promote mutual understanding,

appreciation and amity in the society, etc. The assessee is also registered as a

charitable institution u/s 12A of the Income-tax Act with the Commissioner of

Income-tax. The said registration was operative in the year under appeal. The

assessee filed its return of income for the year under appeal on 29.09.2009

declaring `Nil' income. During the course of scrutiny by the AO, the assessee was

found to be engaged in running a cafeteria and coffee shop. After examination of

the accounts, the AO felt that the assessee was engaged in the business of

running cafeteria and coffee shop with profit motive. He, therefore, did not allow

the benefit of exemption u/s 11 of the Income-tax Act to the assessee and

consequently assessed the total income of the assessee at Rs.1,07,19,773/-. On
                                          3                           ITA 4127/Del/2012

appeal, the ld. CIT(A) has decided the issue in favour of the assessee, for the

detailed reasons given by him in his appellate order.

3.     Aggrieved by the order passed by the ld. CIT(A), the assessee is now in

appeal before this Tribunal. In support of appeal, the ld. DR relied upon the

findings recorded in the assessment order.

4.     In reply, the ld. AR for the assessee relied upon the order passed by the ld.

CIT(A). He submitted that identical issue has been considered by this Tribunal in

the case of ADIT v. Indian Youth Centre, ITA No. 5502/Del/2012 for the

Assessment Year 2009-10 and thus the issue is squarely covered in favour of the


5.     We have heard both the parties. As already stated earlier, the assessee is

registered as a charitable institution u/s 12A with the Commissioner of Income-

tax. As per income and expenditure account for the year under appeal, the

assessee had surplus of expenditure of Rs.73,34,469/- over income. In other

words, the assessee had not generated any profit from its activities as a charitable

institution. It is not in dispute that the aims and objects of the society are objects

of general public utility inasmuch as they attempt to promote better understanding

amongst various sections of the society. Establishing communal harmony and

better understanding between various sections of the society are purely in the

nature of objects of general public utility.

6.     It is true that the assessee had generated profit from cafeteria and coffee

shop but the fact of the matter is that these facilities were created for the

members of the assessee-society. The profit so generated from cafeteria and
                                           4                         ITA 4127/Del/2012

coffee shop was utilized for achieving the aims and objects of the society. The

society had no overall profit in the year under appeal. Profits so generated from

cafeteria and coffee shop were ultimately used for achieving aims and objects of

the institution. Therefore, such profits generated from a few activities of the

institution cannot be used to convert a purely charitable institution into non-

charitable institution. The view that we are taking in the matter is supported by

the order passed by a Coordinate Bench of this tribunal referred to by the ld. AR

for the assessee at the time of hearing.

7.    As regards admissibility for depreciation on capital assets for the purpose of

application of income, the issue stands covered by the judgment of the Hon'ble

Delhi High Court relied upon by the ld. CIT(A). The issue is also covered against

the Revenue by the decision of a Coordinate Bench of this Tribunal in the matter

referred to by the ld. AR for the assessee at the time of hearing.

8.    In view of the foregoing, appeal filed by the Revenue is dismissed.

       Sd./-                                                      Sd./-
  (R.P. TOLANI)                                           (D. K. SRIVASTAVA)
JUDICIAL MEMBER                                          ACCOUNTANT MEMBER
Dated: 30/07/2014

               Order pronounced on 30.07.2014
      Sd/-                                                         Sd/-
  (I C SUDHIR)                                            (D. K. SRIVASTAVA)
JUDICIAL MEMBER                                          ACCOUNTANT MEMBER

Copy forwarded to:
1. Appellant
2. Respondent
3. CIT
4. CIT(Appeals)
5           ITA 4127/Del/2012

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