Iilm Education Private Limited, Gurgaon v. Commissioner Of Income Tax, Gurgaon

ITA No. 120 of 2018 (O&M) ~|~ 174 IN THE HIGH COURT OF PUNJAB AND HARYANA|AT CHANDIGARH. ITA No. 120 of 2018 (O&M)Date of Decision : 13.07.2018 IILM Education Private Limited, Gurgaon, Appellant Versus Commissioner of Income Tax, Gurgaon Respondent CORAM: HON'BLE MR. JUSTICE AJAY KUMAR MITTALHON'BLE MR. JUSTICE AVNEESH JHINGAN Present ;Mr. Rohit Garg, Advocate forMr. Karanveer Jindal, Advocatefor the appellant. AVNEESH JHINGAN, J. The present appeal is against the order dated 16.08.2017 passedby the Income Tax Appellate Tribunal, New Delhi (for short ‘theTribunal')dismissing the appeal of the assessee. The assessment yearinvolved is 2012-13. 2 According to the appellant, following substantial questions oflaw arise for consideration:- ITWhether on thefacts and in the circumstances of the caseand in law, the Tribunal erred in not allowing entiredepreciation claimed by the appellant without appreciatingthat there was no cessation ofthe business of the Appellant ?? Whether on thefacts and in the circumstances of the caseand in law, the Tribunal erred in not adjudicating on merits thespecific ground of appeal raised by the appellant relating tosecurity fees received from the students which wasinadvertently not pressed by the counsel?5 Whether on thefacts and in the circumstances of the case ITA No. 120 of 2018 (O&M) ~)~ and in law, the Tribunal failed to appreciate that the abovesecurity fees could not be added as income of the appellantconsidering that the same remained outstanding as liability inthe balance sheet for the year under consideration and wassuo-moto written back as income by the Appellant in thesucceeding AY 2013-1474 Whether on thefacts and in the circumstances of the caseand in law, the findings offact arrived at by the Tribunal inimpugned order are vitiated inasmuch as they are perverse innature, having been arrived at by improper/incorrectappreciation of evidence/ material available on record of theproceedings. 5The facts narrated in brief are that the assessee was a privatelimited company having the main object of running educational institutionsto promote education. During the relevant assessment year, assessee filedreturn declaring income of=a1,25,786/-. The case was selected for scrutiny.The Assessing Officer issued a notice, that assessee had not carried anybusiness during that year and has only done some investment activities butseveral expenses not relatable to income shown have been debited. Theassessment was finalized vide order dated 13.03.2015 under Section 143(3)of the Income Tax Act [in short 'the Act']. An addition of=930,457/- wasmade. 4Aggrieved of the said order, an appeal was filed. TheCommissioner of Income Tax (Appeals) |CIT(A)]| partly allowed the appeavide order dated 28.09.2016. Expenses claimed by the appellant wereallowed. Fifty percent of the depreciation claimed amounting to —L3,96,044/-, was allowed as the business was stopped by appellant in|September, 2011. An addition made of=a3,60,000/- on account of securityfees received from students was upheld. 5]The assessee filed further appeal before the Tribunal. Theappeal was dismissed vide order dated 16.08.2017. It is pertinent to note ITA No. 120 of 2018 (O&M) here that before the Tribunal, only one ground regarding disallowance of50% of depreciation was pressed. onWe have heard learned counsel for the appellant. 4Aggrieved of the said order, an appeal was filed. TheCommissioner of Income Tax (Appeals) |CIT(A)]| partly allowed the appeavide order dated 28.09.2016. Expenses claimed by the appellant wereallowed. Fifty percent of the depreciation claimed amounting to —L3,96,044/-, was allowed as the business was stopped by appellant in|September, 2011. An addition made of=a3,60,000/- on account of securityfees received from students was upheld. 5]The assessee filed further appeal before the Tribunal. Theappeal was dismissed vide order dated 16.08.2017. It is pertinent to note ITA No. 120 of 2018 (O&M) here that before the Tribunal, only one ground regarding disallowance of50% of depreciation was pressed. onWe have heard learned counsel for the appellant. vaThe main object of the appellant company was running ofeducational institutions. As per the case of the appellant, the running ofeducational institutions was continued till 2009-10 and thereafter theactivities were discontinued. In September, 2011, the activities were finallystopped as the assessee became one of the partner in a Limited LiabilityPartnership namely IILM Enterprises LLP. Once it is established that nobusiness was done in second half of the relevant assessment year, therefore,no fault can be found in the order of the Tribunal upholding the order ofCIT(A) allowing 50% of the depreciation claimed. 8.The findings recorded by the Tribunal are quoted below:- The submissions of the parties in the light offinding offactrecorded by Ld. CIT(A) clearly prove that assessee is notentitled for 100% depreciation. It is an admitted fact thatassessee 1s @ company and stopped its business activities on20[th]September, 2011 when the assessee entered into theLimited Liability Partnership Agreement (LLP) with manyparties and agreed to form the LLP in the name and Style of“IILM Enterprse, LLP”, business would be carried out in thename of the new LLP. It was, therefore, proved that assesseecompany discontinued its business permanently and throughthe execution of LLP agreement dated 20[th]September, 20/1,the assessee company has become partner in the new LLP.Therefore, the Ld. CIT(A) was justified in holding that theactivities of the assessee were finally stopped in September,2011 when the assessee become partner in some other concernthough for the same activities. Therefore, the expenditurewere rightly allowed in the case of the assessee company tillthe closure of the business 1.e. September, 2011. Thedepreciation was also therefore, correctly allowed for half ofthe year 1.e. upto September, 2011 when business of theassessee company was completely stopped. Merely new LLPhas started doing the same activity would not give any right tothe assessee to claim depreciation for whole of the yearbecause assessee completely stopped its business activities as acompany in September, 201 1 ITA No. 120 of 2018 (O&M) ~4n Q Learned counsel for the appellant has not been able to point outany error in the findings recorded. The issue that the business was stoppedor not in September, 2011 is a question of fact. No interference is calledfor by this Court, as the question raised is not a substantial question of law. 10.The question Nos.2 and 3 do not arise from the order of theTribunal. The Tribunal has specifically recorded that the learned counselfor the assessee did not press ground Nos. 2 and 3 raised in the appeal. 11.Question No.4 claimed relates to the findings recorded by theTribunal to be perverse. The question raised has not been addressed. Evenotherwise, no error has been pointed out in the findings recorded by theTribunal much less to show perversity. | 12)No substantial question of law is involved. | 13,The appeal is dismissed. | AJAY KUMAR MITTAL]JUDGE 13.07.2018pankaj baweja Whether speaking/reasoned ? Whether reportable ? | AVNEESH JHINGAN |JUDGE Yes / NoYes / No