M/s. Gold Field Shiksh Sanstha, Faridabad v. CIT, Faridabad

ITA 1601/DEL/2009 | 2005-2006
Pronouncement Date: 28-01-2011 | Result: Allowed

Appeal Details

RSA Number 160120114 RSA 2009
Bench Delhi
Appeal Number ITA 1601/DEL/2009
Duration Of Justice 1 year(s) 9 month(s) 7 day(s)
Appellant M/s. Gold Field Shiksh Sanstha, Faridabad
Respondent CIT, Faridabad
Appeal Type Income Tax Appeal
Pronouncement Date 28-01-2011
Appeal Filed By Assessee
Order Result Allowed
Bench Allotted C
Tribunal Order Date 28-01-2011
Date Of Final Hearing 25-01-2011
Next Hearing Date 25-01-2011
Assessment Year 2005-2006
Appeal Filed On 20-04-2009
Judgment Text
ITA NOS. 1601 & CO 154/DEL/2009 AND ITA NO. 2659/DEL/2010 1 IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH C NEW DELHI BEFORE SHRI RAJPAL YADAV JUDICIAL MEMBER AND SHRI SHAMIM YAHYA ACCOUNTANT MEMBER I.T.A. NO. 1601/DEL/2009 A.Y. : 2005-06 GOLD FIELD SHIKHSA SANSTHA C/O RAKESH RAJ & ASSOCIATES CHARTERED ACCOUNTANTS 565 SECTOR-7-B FARIDABAD(PAN : AAATG-5277-D) VS. COMMISSIONER OF INCOME TAX FARIDABAD AND CROSS OBJECTION NO. 154/DEL/2009 (IN ITA NO. 1601/DEL/2009) A.Y. 2005-06 COMMISSIONER OF INCOME TAX 2 ND FLOOR BLOCK-B NEW CGO COMPLEX NH-IV FARIDABAD VS. GOLD FIELD SHIKHSA SANSTHA SECTOR-21-A FARIDABAD (PAN : AAATG-5277-D) AND ITA NO. 2659/DEL/2010) A.Y. 2005-06 ASSTT. COMMISSIONER OF INCOME TAX CIRCLE-II BLOCK-B CGO COMPLEX NH-IV FARIDABAD VS. GOLD FIELD SHIKHSA SANSTHA SECTOR-21-A FARIDABAD (PAN : AAATG-5277-D) ASSESSEE BY: SH. ASHWANI TANEJA CA & SH. TARUN AD V. DEPARTMENT BY : SHRI RIS GILL C.I.T.(D.R.) ORDER ORDER ORDER ORDER PER BENCH PER BENCH PER BENCH PER BENCH THESE CROSS APPEALS BY THE ASSESSEE AND REVENUE E MANATE OUT OF RESPECTIVE ORDERS OF LD. COMMISSIONER OF INCOME TA X. SINCE THE ISSUES ARE COMMON AND RELATED AND THE APPEALS AND CR OSS OBJECTION ITA NOS. 1601 & CO 154/DEL/2009 AND ITA NO. 2659/DEL/2010 2 WERE HEARD TOGETHER THESE ARE BEING CONSOLIDATED A ND DISPOSED OF TOGETHER BY WAY OF A COMMON ORDER FOR THE SAKE OF CO NVENIENCE. ASSESSES APPEAL (ITA NO. ASSESSES APPEAL (ITA NO. ASSESSES APPEAL (ITA NO. ASSESSES APPEAL (ITA NO. 1601 1601 1601 1601) )) ) 2. THIS APPEAL BY THE ASSESSEE. THE GROUND READS AS UNDER:- LD. COMMISSIONER OF INCOME TAX (APPEALS) HAS ERRED I N LAW AND ON FACTS IN ASSUMING JURISDICTION TO REVISE ASSE SSMENT ORDER U/S. 263 AND HAS FURTHER ERRED IN HOLDING TH E ASSESSMENT ORDER ERRONEOUS AND PREJUDICIAL TO THE IN TEREST OF REVENUE AND HAS ACCORDINGLY ERRED IN SETTING AS IDE THE ASSESSMENT ORDER. 3. IN THIS CASE LD. COMMISSIONER OF INCOME TAX OBSERV ED THAT ASSESSEES BALANCE SHEET REFLECTS AN AMOUNT OF ` 22 71 450/- ON ACCOUNT OF SCHOOL DEVELOPMENT FUNDS RECEIVED DURING THE YEAR 2004- 05 WHICH THE ASSESSEE HAD NOT INCLUDED IN ITS INCO ME. IN LD. COMMISSIONER OF INCOME TAXS OPINION THE SAME WAS TO BE INCLUDED IN THE INCOME. C.I.T. FURTHER NOTED THAT ASSESSEE AD VANCED LOAN OF ` 3 00 000/- TO SHIKSHA BHARTI PUBLIC SCHOOL. C.I.T. OPINED THAT GRANTING OF LOAN IS NOT AN OBJECT OF THE SOCIETY. THEREFO RE THIS AMOUNT WAS ALSO TO BE INCLUDED IN ITS TAXABLE INCOME. HOWEVER HE FOUND THAT THE ASSESSING OFFICER HAS FAILED TO MAKE APPLICATION OF HIS MIND AND FAILED TO MAKE THE NECESSARY ENQUIRY AND VERIFICATION WHI CH LED TO UNDER ASSESSMENT OF INCOME IN THIS CASE. AS SUCH THE C.I.T. ASSUMED JURISDICTION U/S 263 ISSUED SHOW CAUSE NOTICE TO THE ASSESSEE. IN THE ITA NOS. 1601 & CO 154/DEL/2009 AND ITA NO. 2659/DEL/2010 3 NOTICE U/S 263 APART FROM THE ITEMS MENTIONED ABOVE LD. COMMISSIONER OF INCOME TAX ALSO MENTIONED THAT FURTH ER PERUSAL OF INCOME AND EXPENDITURE ACCOUNT REVEAL THAT DEPRECI ATION AMOUNTING TO ` 15 88 410/- HAS ALSO BEEN INCLUDED WHICH IS NO T ADMISSIBLE AS THE ENTIRE EXPENDITURE ON WHICH DEPRECIATION HAS BEEN C LAIMED NOW WAS NEVER INCOME U/S 11(1)(D) OF INCOME TAX ACT 1961. I N HIS OPINION THEREFORE THIS AMOUNT WAS TO BE REDUCED FROM THE ACTUAL UTILIZATION DURING THE YEAR. ASSESSEE RESPONDED IN THIS REGA RD AS UNDER:- PLEASE REFER TO YOUR ERROR IN THE ASSESSMENT ORDER NOR SUCH ASSESSMENT ORDER IS PREJUDICIAL TO THE INTEREST OF REVENUE. 1. THERE IS NO ERROR IN THE ASSESSMENT ORDER NOR SUCH ASSESSMENT ORDER IS PREJUDICIAL TO THE INTEREST OF REVENUE. 2. IT IS SUBMITTED WITH GREAT RESPECT THAT ALL THE ISSU E RAISED IN THE NOTICE U/S 263 WERE CONSIDERED BY THE ASSESSING OFFICER DURING THE COURSE OF ASSESSMENT PROCEEDINGS AND AFT ER DUE APPLICATION OF MIND ASSESSMENT ORDER WAS PASSED. 3. IT IS SUBMITTED THAT A SCHOOL DEVELOPMENT FUND ARE T HE SPECIFIC DESIGNATED FUND TO BE UTILIZED FOR THE DEV ELOPMENT OF SCHOOL AND ITS UTILIZATION FOR SUCH SPECIFIC PU RPOSE IS MANDATED BY THE PERSONS CONTRIBUTING TO THIS FUND AN D THE SOCIETY DOES NOT HAVE ANY CHOICE OR DISCRETION OVER THIS ITA NOS. 1601 & CO 154/DEL/2009 AND ITA NO. 2659/DEL/2010 4 FUND IN ANY OTHER MANNER. THEREFORE SUCH TIED UP FUND NAMELY SCHOOL DEVELOPMENT FUND WAS THE CORPUS AND THIS ISSUE WAS CONSIDERED BY ASSESSING OFFICER IN THE ASSESSMENT PROCEEDINGS. SINCE SUCH FUND WAS FOR C ORPUS HENCE IT WAS NOT TO BE TREATED AS INCOME AS PER SEC TION 11(1)(D) AND SECTION 12 OF THE ACT. 4. REGARDING YOUR GOODSELFS CONTENTIONS THAT DEPRECIAT ION OF ` 15 88 410/- IS NOT BE INCLUDED IN INCOME AND EXPEND ITURE ACCOUNT IT IS SUBMITTED THAT THE HONBLE GUJRAT HIGH COURT IN THE CASE OF C.I.T. VS. SETH MANI LAL RANCHOODDAS V ISHRAM BHAVAN TRUST 105 CTR 303 HAVE HELD THAT DEPRECIATIO N SHOULD BE ALLOWED WHILE COMPUTING SUCH INCOME FOR THE PURPOSE OF SECTION 11. MOREOVER EVEN IF THE SAME IS EXCLUDED AS CONTENDED BY YOUR GOODSELF THOUGH DENI ED AND THOUGH AMOUNT OF SCHOOL DEVELOPMENT FUND IS INCLUDED AS INCOME AS CONTENDED BY YOUR GOODSELF THOUGH DENIED YET IT IS SUBMITTED THAT THERE IS NO DEFICIT IN APPLICATION OF INCOME AS SHOWN HEREUNDER BECAUSE INCOME APPLIED FOR CAPITA L PURPOSE AMOUNTING TO 1 29 68 663/- AS EVIDENT FROM FIXED ASSET SCHEDULES FORMING PART OF BALANCE SHEET WILL A LSO HAVE TO BE TAKEN INTO ACCOUNT AS APPLICATION AND IF THA T IS ITA NOS. 1601 & CO 154/DEL/2009 AND ITA NO. 2659/DEL/2010 5 INCLUDED THERE WILL BE EXCESS APPLICATION AND THER E IS NO UNDER ASSESSMENT OF ` 29 48 807/- AS CONTENDED BY YOUR GOODSELF IN THE IMPUGNED NOTICE. WORKING OF THE SAM E IS AS UNDER:- SOURCES OF FUND TOTAL INCOME AS PER INCOME 1 13 68 554/- & EXPENDITURE ACCOUNT SCHOOL DEVELOPMENT FUND 22 71 450/- TOTAL 1 36 40 004/- APPLICATION OF FUND EXPENSES EXCLUDING DEPRECIATION 86 45 194/- AS PER INCOME AND EXPENDITURE ACCOUNT ADDITION IN FIXED ASSETS DURING THE YEAR 1 29 68 663/- TOTAL 2 16 13 857/- 5. ADVANCE OF ` 3 00 000/- GIVEN TO ANOTHER EDUCATION INSTITUTION NAMELY SHIKSHA BHARTI PUBLIC SCHOOL IS IN PURSUANCE TO THE OBJECTIVE OF THE SOCIETY I.E. EDUCA TION PURPOSE ONLY AND THEREFORE THERE IS NO QUESTION OF ANY INCOME RESULTING OUT OF IT. IN FACT IT WAS NOT LOAN BUT ADVANCE AGAINST LAND TO BE PURCHASED BY THE SOCIETY FROM SHIKSHA BHARTI PUBLIC SCHOOL WITHOUT PREJUDICE TO A BOVE IT IS SUBMITTED THAT 15% OF INCOME IS AVAILABLE FOR APPL ICATION ITA NOS. 1601 & CO 154/DEL/2009 AND ITA NO. 2659/DEL/2010 6 IN ANY MANNER AS HELD BY HONBLE SUPREME COURT IN TH E CASE OF C.I.T. VS. ALN RAO CHARITABLE TRUST 216 ITR 697 AND SRMCM TRIUPANI TRUST VS. C.I.T. 230 ITR 636. THEREFORE IT IS REQUESTED THAT THE NOTICE MAY PLE ASE BE DROPPED. 3.1 COMMISSIONER OF INCOME TAX WAS NOT SATISFIED WI TH THE ABOVE EXPLANATION. HE FURTHER NOTED THAT A PERUSAL OF SCHEDULE-3 TO THE LOANS AND ADVANCES FORMING PART OF BALANCE SHEET AS ON 31.3.2005 ANNEXED WITH THE RETURN OF INCOME TOGETHER WITH A P ERUSAL OF THE ASSESSMENT RECORDS REVEALS THAT THE ASSESSEE HAS R AISED SECURED LOANS OF 2 72 17 616/- FROM ALLAHABAD BANK SECTOR-2 1-C FARIDABAD. PART-B OF ANNEXURE TO THE AUDIT REPORT IN FORM NOS. 3 CB AND 3CD ANNEXED WITH THE RETURN MENTIONS COMPARATIVE FIGURES OF THE CURRENT YEAR VIS A VIS LAST YEAR AND SHOWS THAT DURING THE YEAR THE SECURED LOANS ARE TO THE TUNE OF ` 2 72 17 616/- AS AGAINST ` 5 01 757/- LAST YEAR. THIS MEANS THAT THE ASSESSEE HAS RAISED SECURE D LOANS TO THE TUNE OF ` 2 67 15 859/- DURING THE YEAR UNDER CONSI DERATION. SINCE THE AMOUNTS AVAILABLE WITH THE ASSESSEE IN EXCESS OF THE BORROWED FUNDS DURING THE YEAR REMAINED INVESTED IN THE BANKS AND OTHERWISE. LD. COMMISSIONER OF INCOME TAX CONCLUDED THAT BORROWED FUNDS INSTEAD OF INCOME WERE UTILIZED TOWARDS FIXED ASSETS. IN VI EW OF THE ABOVE ITA NOS. 1601 & CO 154/DEL/2009 AND ITA NO. 2659/DEL/2010 7 C.I.T. HELD THAT ASSESSMENT ORDER PASSED BY THE ASSE SSING OFFICER WAS ERRONEOUS AND PREJUDICIAL TO THE INTEREST OF REVENUE . THEREFORE HE CANCELLED THE SAID ASSESSMENT AND DIRECTED THE ASSE SSING OFFICER TO FRAME A FRESH ASSESSMENT. 4. AGAINST THIS ORDER THE ASSESSEE IS IN APPEAL BEF ORE US. 5. LD. COUNSEL OF THE ASSESSEE SUBMITTED BEFORE US T HAT ASSESSING OFFICER HAS MADE DUE ENQUIRIES AND PASSED A REASON ABLE ORDER AS THERE WAS NO QUESTION OF ERRONEOUS AND PREJUDICIAL TO THE INTEREST OF REVENUE. HE TOOK US TO THE NOTICES ISSUED BY THE ASSESSING OFFICER IN THIS REGARD ON VARIOUS ASPECTS WHICH SUPPORTS THE CONTENTION THAT THE ASSESSING OFFICER HAS MADE DUE ENQUIRIES ON AL L THE SUBJECTS. IN THIS REGARD LD. COUNSEL OF THE ASSESSEE REFERRED A LETTER DATED 12.1.2007 ISSUED BY THE ASSESSING OFFICER AND ASSE SSEES REPLY DATED 12.2.2007 IN CONNECTION WITH ASSESSMENT. AS REPROD UCED IN PAPER BOOK PAGE NO. 33-36. THERE WERE COMPREHENSIVE AND ELABORATE QUESTION AND QUESTIONNAIRE AND HENCE IN VIEW OF TH EM LD. COUNSEL OF THE ASSESSEE SUBMITTED THAT ASSESSING OFFICER HAS M ADE DUE ENQUIRES. HENCE THIS ORDER CANNOT BE CONSIDERED TO BE ERRONE OUS. IT CANNOT BE SAID THAT ASSESSING OFFICER HAS NOT APPLIED HIS MIN D. APART FROM THE SUBMISSIONS ALREADY MADE BEFORE THE C.I.T. LD. COUN SEL OF THE ASSESSEE SUBMITTED BEFORE US THAT AS REGARDS THE STUDENTS D EVELOPMENT FUND ITA NOS. 1601 & CO 154/DEL/2009 AND ITA NO. 2659/DEL/2010 8 EVEN IF STUDENT DEVELOPMENT FUND IS TAKEN AS INCOME THE ASSESSEE HAD BEEN ABLE TO UTILIZE 85% OF ITS INCOME FOR EDU CATIONAL CHARITABLE PURPOSES AS SHOWN LATER AND THEREFORE THIS OBJEC TION OF THE C.I.T. EVEN IF TAKEN AS CORRECT DOES NOT CAUSE PREJUDICE TO THE REVENUE. AS REGARDS THE VIEW OF THE C.I.T. THE DEPRECIATION CAN NOT BE TREATED AS APPLICATION OF INCOME ASSESSEE HAS SUBMITTED THAT DE PRECIATION IS VERY MUCH PART OF ALLOWABLE EXPENDITURE WHILE COMPU TING INCOME EVEN IF THE COST OF THE ASSET HAS BEEN TREATED AS APPLICATION IN VIEW OF THE FOLLOWING JUDICIAL DECISIONS: - C.I.T. VS. SETH MUNILAL RANCHHOD DAS VISHRAM BHAVA N TRUST 105 CTR 303 (GUJ) - C.I.T. VS. INSTITUTE OF BANKING PERSONNEL SELECTI ON 131 TAXMAN 386 (BOM). 5.1 IN THIS REGARD ASSESSEE HAS FURTHER SUBMITTED TH AT THE DECISION RELIED UPON BY THE C.I.T. ADDRESS ENTIRELY DIFFERE NT ISSUE. AS REGARDS THE ISSUE OF ADDITION TO FIXED ASSETS PURCHASED FRO M LOANS. FIRSTLY ASSESSEE SUBMITTED THAT C.I.T. HAS NEVER RAISED THI S ISSUE IN THE NOTICE. IN THIS REGARD ASSESSEES SUBMISSION IS THAT LOAN WAS RAISED IN THE MONTH OF JANUARY 2005 WHEREAS TILL DECEMBER 2004 IN VESTMENT IN ITA NOS. 1601 & CO 154/DEL/2009 AND ITA NO. 2659/DEL/2010 9 FIXED ASSETS WERE ALREADY MADE TO THE TUNE OF ` 68 20 408/- AND IF THIS AMOUNT IS TAKEN AS APPLICATION THERE IS NO SHORT FA LL. 5.2 ASSESSEE FURTHER SUBMITTED THAT C.I.T. HAS WRON GLY MENTIONED THAT ASSESSEE HAS NOT FURNISHED ANY DOCUMENTARY EVI DENCE IN SUPPORT OF CLAIM THAT LOAN OF ` 3 LAKHS WAS GIVEN TO SHIKSHA BHARTI PUBLIC SCHOOL AS ADVANCE AND NOT AS A LOAN. IT WAS REITERATED T HAT IT WAS AN ADVANCE AGAINST THE LAND TO BE PURCHASED FROM THAT SCHOOL AN D ALTERNATIVELY. IN THIS REGARD ASSESSEE HAS PLACED RELIANCE BY THE HO NBLE JURISDICTIONAL HIGH COURT DECISION IN THE CASE OF DIRECTOR OF INCO ME TAX (EXEMPTION) VS. ALARIPPU 244 ITR 358 FOR THE FOLLOWING PROPOSI TION. THE ASSESSEE WAS A SOCIETY REGISTERED UNDER SECTI ON 12A(A). THE ASSESSEE WAS A VOLUNTARY GROUP WHICH IN ASSOCIA TION WITH OTHER VOLUNTARY ORGANIZATIONS STAGED PLAYS TO EDU CATE PEOPLE ON SOCIAL PROBLEMS. DURING THE ASSESSMENT YEAR 1988-8 9 THE ASSESSEE SOCIETY HAD GIVEN ` 50 000 TO ONE MAHILA H AAT. THE ASSESSING OFFICER HELD THAT THERE WAS INFRINGEMENT IN TERMS OF SECTION 13(1)(D) READ WITH SECTION 11(5) OF THE ACT AND AS SUCH DENIED BENEFIT OF EXEMPTION UNDER SECTION 11. ON APPEAL THE TRIBUNAL HELD THAT THE EXPRESSIONS INVESTMENT AND DEPOSIT HAD NO APPLICATION TO THE FACTS OF THE CASE AND THE SUM OF ` 50 000/- WAS NOT AN INVESTMENT OR DEPOSIT TO CONSTITUTE INFRI NGEMENT AS ITA NOS. 1601 & CO 154/DEL/2009 AND ITA NO. 2659/DEL/2010 10 ALLEGED BY THE REVENUE. ON A REFERENCE APPLICATI ON UNDER SECTION 256(2): HELD THAT THE TRIBUNAL HAD TAKEN NOTE OF THE FACTU AL POSITION THAT THE ASSESSEE HAD GIVEN AN AMOUNT OF ` 50 000 TO MAHI LA HAAT THROUGH MVS AS DIRECTED BY THE DONOR AGENCY VIZ. O XFAM AMERICA. THE LATTER HAD INFORMED THE ASSESSEE THAT A SUM OF ` 2 15 400/- WAS SENT TO THE SOCIETY ALONGWITH 2 24 0 00/- SENT TO MAHILLA HAAT AND THE ASSESSEE WAS REQUESTED TO GIVE A TEMPORARY LOAN UPTO ` 50 000 TO MAHILA HAAT IN CASE THERE WAS DELAY IN RECEIPT OF THE MONEY. COMPLYING WITH THE REQUEST THE ASSESSEE SENT THE MONEY TO MAHILA HAAT AS CERTIFIED BY MVS. THE AMOUNT GIVEN TO MAHILA HAAT WAS NEITHER FOR T HE PURPOSE OF INVESTMENT NOR FOR THE PURPOSE OF DEPOSIT. THE TRA NSACTION WITH WHICH THE DEPOSIT WAS LINKED COULD NOT BE TREATED A S AN INVESTMENT OR DEPOSIT AS FOUND BY THE TRIBUNAL. ACCORDINGLY NO REFERABLE QUESTION OF LAW AROSE FOR REFERENCE. 5.3 FURTHER LD. COUNSEL OF THE ASSESSEE PLACED RELI ANCE UPON THE HONBLE PUNJAB AND HARYANA HIGH COURT DECISION IN T HE CASE OF C.I.T. VS. M/S TINY TOTS EDUCATION SOCIETY IN ITA NO. 93 O F 2010. THE HONBLE HIGH COURT CONCLUDED AS UNDER:- ITA NOS. 1601 & CO 154/DEL/2009 AND ITA NO. 2659/DEL/2010 11 6. THE MATTER WAS DISCUSSED IN OUR RECENT JUDGEMENT DATED 5.7.2010 IN ITA NO. 535 OF 2009 THE COMMISSIONER OF INCOME TAX KARNAL V. MARKET COMMITTEE PIPLI. AFTER REFERRING TO JUDGEMENTS IN C.I.T. V. SETH MANILAL RANCHHODDAS VISHRAM BHAWAN TRUST (1992) 198 ITR 598 (GUJ) AND C.I.T. VS. INSTITUTE OF BANKING PERSONAL SE LECTION (IBPS) (2003) 131 TAXMAN 386 (BOM) C.I.T. V. RAO B AHADUR CALAVALA CUNNAN CHETTY CHARITIES (1982) 135 ITR 485 (MAD) C.I.T. V. SOCIETY OF THE SISTERS OF ST. ANNE (1984) 146 ITR 28 (KAR) AND C.I.T. V. RAJPUR PALLOTTINIE SOCIETY (1989 ) 180 ITR 579 (M.P.) THE JUDGEMENT OF THE HONBLE SUPREME COURT IN ESCORTS LTD. (SUPRA) WAS HELD NOT TO BE APPLICABLE TO THE SITUATION WHERE DEPRECIATION WAS CLAIMED BY A CHAR ITABLE INSTITUTION IN DETERMINING PERCENTAGE OF FUNDS APPLI ED FOR THE PURPOSES OF CHARITABLE OBJECTS. IT WAS OBSERVE D:- 9. IN THE PRESENT CASE THE ASSESSEE IS NOT CLAIMI NG DOUBLE DEDUCTION ON ACCOUNT OF DEPRECIATION AS HAS BEEN SUGGESTED BY LEARNED COUNSEL FOR THE REVENUE. THE INCOME OF THE ASSESSEE BEING EXEMPT THE ASSESSEE IS ONLY CLAIMING THAT DEPRECIATION SHOULD BE REDUCED FROM THE INCOME ITA NOS. 1601 & CO 154/DEL/2009 AND ITA NO. 2659/DEL/2010 12 FOR DETERMINING THE PERCENTAGE OF FUNDS WHICH HAVE TO BE APPLIED FOR THE PURPOSES OF THE TRUST. THERE IS NO DOUBLE DEDUCTION CLAIMED BY THE ASSESSEE AS CANVASSED BY THE REVENUE. JUDGEMENT OF THE HONBLE SUPREME COURT IN ESCORTS LTD. AND ANOTHER (SUPRA) IS DISTINGUISHABLE FOR THE ABOVE REASONS. IT CANNOT BE HELD THAT DOUBLE BENEFIT IS GIVEN IN ALLOWING CLAIM FOR DEPRECIATION FOR COMPUTING INCOME FOR PURPOSES OF SECTION 11. THE QUESTIONS PROPOSED HAVE THUS TO BE ANSWERED AGAINST THE REVENUE AND IN FAVOUR OF THE ASSESSEE. 5.4 IN VIEW OF THE AFORESAID SUBMISSIONS LD. COUNSEL OF THE ASSESSEE PRAYED THAT THE ORDER OF THE ASSESSING OFFICER CA NNOT BE CONSTRUED TO BE ERRONEOUS AND PREJUDICIAL TO THE INTEREST OF REV ENUE. 5.5 LD. DEPARTMENTAL REPRESENTATIVE ON THE OTHER H AND RELIED UPON THE ORDERS OF THE C.I.T. 6. WE HAVE CAREFULLY CONSIDERED THE SUBMISSIONS. WE FIND CONSIDERABLE COGENCY IN THE SUBMISSIONS OF THE ASSES SEE. ASSESSING OFFICER HAS CLEARLY ISSUED NOTICE TO THE ASSESSEE SEEKING VARIOUS ITA NOS. 1601 & CO 154/DEL/2009 AND ITA NO. 2659/DEL/2010 13 DETAILS. AFTER OBTAINING THE VARIOUS DETAILS HE HA S PASSED AN ORDER. HENCE IT CANNOT BE SAID THAT HIS ORDER PASSED WIT HOUT PROPER ENQUIRY. IN THIS REGARD WE REFER TO THE DECISION OF THE HON BLE APEX COURT IN THE CASE OF MALABAR INDUSTRIAL COMPANY VS. C.I.T. [243 I TR 83] (SC). IN THIS CASE IT WAS HELD THAT FOR EXERCISING POWER U/S 263 IT IS ESSENTIAL THAT THE ASSESSMENT ORDER WHICH IS PASSED BY THE ASSESSI NG OFFICER AND WHICH IS SUBJECT TO SECTION 263 SHOULD BE ERRONEOUS AS WELL AS PREJUDICIAL TO THE INTEREST OF REVENUE. IT WAS OBS ERVED THAT IN ORDER TO INVOKE SECTION 263 THE COMMISSIONER HAS TO BE SATIS FIED ON TWO CONDITIONS : (I) THE ORDER OF THE ASSESSING OFFICER SOUGHT TO BE REVISED IS ERRONEOUS; AND (II) IT IS PREJUDICIAL TO THE INT EREST OF THE REVENUE. IF ONE OF THEM IS ABSENT IF THE ORDER OF THE INCOME TA X OFFICER IS NOT ERRONEOUS BUT IS PREJUDICIAL TO THE INTEREST OF RE VENUE OR IF IT IS NOT ERRONEOUS BUT IS PREJUDICIAL TO THE INTEREST OF RE VENUE OR IF IT IS NOT ERRONEOUS BUT IS PREJUDICIAL TO THE INTEREST OF RE VENUE RECOURCE CANNOT BE TAKEN TO SECTION 263(1) OF THE ACT. IT WA S OBSERVED THAT THE PROVISIONS OF SECTION 263 CANNOT BE INVOKED TO CORR ECT EACH AND EVERY TYPE OF MISTAKE OR ERROR COMMITTED BY THE ASSESSING OF FICER. IT IS ONLY WHEN AN ORDER IS ERRONEOUS SECTION 263 WILL BE ATT RACTED. DEFINING THE WORD ERRONEOUS IT WAS OBSERVED THAT AN INCORRECT ASSUMPTION OF FACTS OR AN INCORRECT APPLICATION OF LAW WILL SATI SFY THE REQUIREMENT OF ITA NOS. 1601 & CO 154/DEL/2009 AND ITA NO. 2659/DEL/2010 14 THE ORDER BEING ERRONEOUS. THEREFORE IN ORDER TO HOLD AN ORDER TO BE ERRONEOUS IT MUST BE PASSED EITHER ON AN INCORRECT ASSUMPTION OF FACTS OR THERE MUST BE AN INCORRECT APPLICATION OF LAW. 6.1 FURTHER WE FIND CONSIDERABLE COGENCY IN THE ASS ESSEES SUBMISSION THAT EVEN IF STUDENT DEVELOPMENT FUND I S TAKEN AS INCOME ASSESSEE HAS BEEN ABLE TO UTILIZED THE 85% OF ITS I NCOME FOR EDUCATIONAL PURPOSES AS THE COMPUTATION SHOWS. AS REGARDS THE ISSUE OF DEPRECIATION THE DECISION OF THE HONBL E PUNJAB AND HARYANA HIGH COURT DECISION IN THE CASE OF C.I.T. VS. M/S T INY TOTS EDUCATION SOCIETY (SUPRA) COVERS THE ISSUE IN FAVOUR OF THE A SSESSEE. 6.2 FURTHER ASSESSEE SUBMITTED THAT THE C.I.T. HAS M ENTIONED THE ADDITION TO FIXED ASSETS CANNOT BE TREATED AS APPLI CATION AS THESE ASSETS HAS BEEN PURCHASED FROM LOANS. ASSESSEE IN THIS REGARD SUBMITTED THAT THOUGH THE C.I.T. RAISED THE ISSUE O F APPLICATION OF INCOME TO THE TUNE OF 85% IN HIS NOTICE YET HE C ONFINED HIMSELF TO THE REASON OF DEPRECIATION. HENCE THIS WAS TOTALL Y NEW ISSUE INCORPORATED IN HIS ORDER WHICH WAS NOT IN THE NO TICE IN THIS REGARD. FURTHER ASSESSEE HAS ENCLOSED A CHART WHICH SHOWS T HAT LOAN WAS RAISED IN JANUARY 2005 WHEREAS TILL DECEMBER 2004 INVESTMENT IN FIXED ASSETS WERE ALREADY MADE TO THE TUNE OF ` 68 20 408/- AND IF THIS ITA NOS. 1601 & CO 154/DEL/2009 AND ITA NO. 2659/DEL/2010 15 AMOUNT IS TAKEN AS APPLICATION THERE IS NO SHORT FA LL AS SHOWN AS UNDER:- SOURCES OF FUND: SOURCES OF FUND: SOURCES OF FUND: SOURCES OF FUND:- -- - TOTAL INCOME AS PER INCOME AND 11368554/- EXPENDITURE ACCOUNT + STUDENT DEVELOPMENT FUND 2271450/- 1 36 40 004/- 85% OF SUCH INCOME 1 15 94 003/- APPLICATION OF FUND APPLICATION OF FUND APPLICATION OF FUND APPLICATION OF FUND EXPENSES EXCLUDING DEPRECIATION AS PER INCOME AND EXPENDITURE ACCOUNT 86 45 194/- ADDITION TO FIXED ASSET DEPRECIATION 68 20 40 8/- TO DEC. 2004 1 54 65 602/- 6.3 IN THE BACKGROUND OF THE AFORESAID DISCUSSIONS AND PRECEDENTS IN OUR CONSIDERED OPINION THE ORDER OF THE ASSESSING OFFICER CANNOT BE SAID TO BE ERRONEOUS AND PREJUDICIAL TO THE INTERES T OF REVENUE. HENCE WE SET ASIDE THE ORDER OF THE COMMISSIONER OF INCOME TAX AND DECIDE THE ISSUE IN FAVOUR OF THE ASSESSEE. 7. SINCE WE HAVE QUASHED THE ORDER U/S. 263 IN ASSE SSEES APPEAL BEING ITA NO. 1601/DEL/2009 THE REVENUES CROSS O BJECTION NO. 154/DEL/2009 AND REVENUES APPEAL BEING ITA NO. 2659 /DEL/2010 HAVE BECOME INFRUCTUOUS AND THEY ARE DISMISSED AS INFRUCT UOUS. ITA NOS. 1601 & CO 154/DEL/2009 AND ITA NO. 2659/DEL/2010 16 8. IN THE RESULT ASSESSEES APPEAL BEING ITA NO . 1601/DEL/2009 IS ALLOWED AND BOTH THE REVENUES CROSS OBJECTION NO. 154/DEL/2009 AND APPEAL BEING ITA NO. 2659/DEL/2010 STAND DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 28/01/2011. SD/- SD/- [R [R[R [RAJPAL YADAV AJPAL YADAV AJPAL YADAV AJPAL YADAV] ]] ] [SHAMIM YAHYA] [SHAMIM YAHYA] [SHAMIM YAHYA] [SHAMIM YAHYA] JUDICIAL MEMBER JUDICIAL MEMBER JUDICIAL MEMBER JUDICIAL MEMBER ACCOUNTANT MEMBER ACCOUNTANT MEMBER ACCOUNTANT MEMBER ACCOUNTANT MEMBER DATE 28/01/2011 SRB COPY FORWARDED TO: COPY FORWARDED TO: COPY FORWARDED TO: COPY FORWARDED TO: - -- - 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT (A) 5. DR ITAT TRUE COPY BY ORDER DEPUTY REGISTRAR ITAT DELHI BENCHES