IN THE ITAT, CHANDIGARH DIVISION BENCH
BHAVNESH SAINI, J.M. & RANO JAIN, A.M.
DCIT v. Indo Soviet Friendship College for Pharmacy Managing Committee
ITA No. 478 & 479/CHD/2013 & ITA No. 444, 445, 446/CHD/2013
A.Ys. 2004-05 to 2008-09
28 September, 2015
Department by: S.K. Mittal
Assessee by: Sudhir Sehgal
Bhavnesh Saini, J.M.
This order shall dispose of all the above appeals filed by the revenue and the assessee against the order of learned Commissioner (Appeals) Central, Gurgaon dated 26-2-2013 for assessment years 2004-05, 2006-07, 2007-08 and 2008-09.
2. In this case, search & seizure operation was conducted on 15-7-2008 at the residence and office premises at individual and group of concerns of M/s. B.R. Institute of Medical Sciences. The assessee society is granted registration under section 12AA of the Income Tax Act on 6-6-1997.
3. We have heard learned Representatives of both the parties, perused the findings of authorities below and considered the material available on record. All the appeals are decided as under.
ITA 478/2013 : assessment year 2004-05 (Departmental Appeal)
4. The revenue on ground No. 1 challenged the order of learned Commissioner (Appeals) in deleting disallowance made on account of vehicle running expenses and depreciation of car in terms of section 13(2)(b) of the Income Tax Act. The assessing officer noted that provisions of section 13(2)(b) and (c) applies in the case of the assessee and that disallowance out of salary, allowances or otherwise paid to the trustees out of the resources of the institution for services rendered by such persons to such institution need to be disallowed if there is any excess amount of what may be considered as reasonable payment for such services. The assessee trust maintained luxury cars such as Skoda, Ford Icon and Sonata. However, above cars were being used by Shri Anoop Garg, Chairman of the trust. The assessing officer noted that trust has no requirement to maintain such luxury cars. Cars have been used by the Chairman, therefore, assessing officer noted that the vehicle running expenses and depreciation must have been used for the benefit of trust as well and accordingly disallowed 50% of the expenses and addition was made in a sum of Rs. 8,84,410.
5. The learned Commissioner (Appeals), following his order for assessment year 2008-09 deleted the addition.
6. The learned Departmental Representative relied upon order of the assessing officer and submitted that since luxury cars have been used by the Chairman of the assessee trust, therefore, disallowance was correctly made by the assessing officer. On the other hand, learned counsel for the assessee reiterated the submissions made before authorities below. He has submitted that accounts of the assessee are audited and addition is made purely on estimate basis without finding as to which of the expenses are not wholly and exclusively incurred for the objectives of the trust. He has submitted that Chairman is mainly looking after the working of the assessee trust and has to visit several official departments like Dental Council of India, Delhi, Kurukshetra University, Pandit B.D. Sharma University and High Court and Supreme Court for legal cases alongwith CBSE, Panchkula and other departments of the Punjab and Delhi. He has submitted that cars have been owned by the assessee trust and Chairman uses the same for the purpose of trust only. Only one car is used by the Chairman i.e. Mercedes. It was also submitted that the Chairman Shri Anoop Garg is the keyman of the trust and has not been doing any other business activity. He has, therefore, submitted that ad hoc addition was wholly unjustified. He has referred to certain decisions of different Benches of the Tribunal relied upon before learned Commissioner (Appeals).