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Assessee by : Shri Manu K. Giri, Adv.; Department by : Shri S. K. Jain, Sr. D. R.; Date of Hearing : 22.05.2017 Date of Pronouncement : 28.07.2017 O R D E R. PER I. C. SUDHIR, J. M. :
Both the appeals preferred by the Revenue for the assessment years 2008-09 and 2009-10 were heard together and are being disposed off, for the sake of convenience, by this common order.
2 I. T. Appeal Nos. 1313 & 1195/Del/2013 Assessment Years : 2008-09 and 2009-10.
I. T. Appeal No. 1313/Del/2013 :
In the assessment year 2008-09, the Revenue has questioned the first appellate order on the following grounds :-
“ 1. On the facts and in the circumstances of the case and in law, the ld. Commissioner of Income Tax (Appeal) has erred in granting claim of exemption to the assessee under section 11 and 12 of the Act;
2. On the facts and in the circumstances of the case and in law, the ld. Commissioner of Income Tax (Appeal) has erred in deleting the addition of Rs.17,35,865/- made by the Assessing Officer on account of excess of income over expenditure, being consultancy services paid for charge which makes it a commercial entity;
On the facts and in the circumstances of the case and in law, the ld. Commissioner of Income Tax (Appeal) has failed to appreciate the fact that the Assessing Officer denied the claim of exemption to the assessee under section 11 and 12, as assessee is found to be a commercial organization, as the benefit of section 11 and 12 has been denied in the assessment years 2003-04, 2004-05, 2005-06 and 2006-07 on the same grounds and the department is in appeal before the ITAT. ”
3 I. T. Appeal Nos. 1313 & 1195/Del/2013 Assessment Years : 2008-09 and 2009-10.
I. T. Appeal No. 1195/Del/2013 :
3. In the assessment year 2009-10 the Revenue has questioned the first appellate order on the following ground :-
“ 1. On the facts and in the circumstances of the case and in law, the ld. Commissioner of Income Tax (Appeal) has erred in deleting the addition of Rs.12,75,571/- made by the Assessing Officer on account of payment made to Koreth Pvt. Ltd. in which the chairman of the society is the managing director, in violation of provision of section 13(3) of the Income Tax Act, 1961. ”
Heard and considered the arguments advanced by the parties in view of orders of the authorities below, material available on record and the decisions relied upon.
In support of the grounds the ld. Sr. DR, Shri S. K. Jain, has basically placed reliance on the assessment orders. The ld. AR, Shri Manu K. Giri, Advocate, on the other hand, tried to justify the first appellate orders allowing the relief to the assessee.
Having gone through the orders of the authorities below, we note that the assessee, a registered society, was also registered as a charitable society under section 12A(a) of the Act on 16.07.1983, whereby the entire
4 I. T. Appeal Nos. 1313 & 1195/Del/2013 Assessment Years : 2008-09 and 2009-10. income of the society was exempt. The society was mainly engaged in activities / objects of general public utility covered within the definition and provisions of section 2(15) of the I. T. Act. The activities in brief being carried out by the assessee are the programmes and activities undertaken exclusively and entirely for disseminating knowledge, uplifting the living conditions of the masses, preparing youth for self employment; by giving them training on vocational courses, educating women and making them aware of their rights and also imparting training on them for self employment, building peoples partnership in good governance, holding seminars and programmes on HIV Aids, dowry system, health care, sanitation, safety, environment in association with MCD, Delhi Police, Delhi Jal Board, NDPL, Resident Welfare Associations (RAWs). Aao Delhi Savarein – A Radio FM Programme sponsored by Govt. of Delhi for citizens participation in improving Delhi, workshops for citizens – participation and awareness for Clean Yamuna Manch programme for MCD etc. etc.
6.1 In the assessment year 2008-09 the Assessing Officer after considering the reply filed by the assessee held that Ms. Kiron Wadhera, was an employee and she was a person falling under definition of sub section 3 of section 13 of the I. T. Act and benefit has been derived by 5 I. T. Appeal Nos. 1313 & 1195/Del/2013 Assessment Years : 2008-09 and 2009-10. her from the assessee society. Regarding charging of Service Tax, the Assessing Officer held that the same is mandatory and there is no exemption for persons claiming benefit of sections 11 and12 of the I. T. Act. The Assessing Officer also considered the reply of the assessee on its activities, but in view of past history, particularly the assessment for the assessment years 2003-04, 2004-05, 2006-07 the benefit of exemptions under sections 11 and 12 was denied. While doing so the Assessing Officer also took note of observations made by DDIT (E) in the orders rejecting the application for approval under section 10(23C)(iv) of the I. T. Act and withdrawal of registration under section 12A benefit.
6.2 In the assessment year 2009-10 the Assessing Officer alleged that the details and nature of payments of Rs.12,75,571 to Koreth Consulting Pvt. Ltd. were not filed to justify the reasonableness of such payments. He also took note of withdrawal of registration under section 12A of the Act and accordingly assessed the income of the assessee under section (iv) of the I. T. Act in the status of AOP making addition of Rs.12,75,571/-. He held that there was contravention to the provisions of section 13(3) of the Act. The contention of the assessee remained that each and every detail and explanation was duly furnished to the Assessing Officer as well as the details and nature
6 I. T. Appeal Nos. 1313 & 1195/Del/2013 Assessment Years : 2008-09 and 2009-10. of payments of Rs.12,75,571/- to Koreth Consultancy Pvt. Ltd. justifying the reasonableness of such payment to the effect that such prices / payments made were much lower as compared to the prices paid for similar services in the open market. It was submitted that the relevant documents were produced before the Assessing Officer, but he had no time to examine the same and acted totally in a bad manner, keeping in view that registration under section 12A was withdrawn.
6.3 In both the assessment years, the ld. CIT (Appeals), after considering the submissions of the assessee meeting out the objections of the Assessing Officer, has allowed the appeals with this finding that the assessee is eligible for exemption under sections 11 and 12 of the I. T. Act. The ld. CIT (Appeals) has basically observed that the Assessing Officer was not justified in denying the exemption to the assessee in both the assessment years under consideration, on the basis of assessments for the assessment years 2003-04, 2004-05 and 2006-07, wherein the benefit of exemption under sections 11 and 12 were not allowed and further that registration under section 12A and benefit provided under section 80-G(5)(vi) of the I. T. Act were withdrawn. The ld. CIT (Appeals) noted that his predecessor CIT (Appeals) had allowed the appeals of the assessee for the assessment years 2003-04 to 2006-07 vide order dated
7 I. T. Appeal Nos. 1313 & 1195/Del/2013 Assessment Years : 2008-09 and 2009-10.
27.04.2012 and in the assessment year 2008-09 no action was taken by the DIT (E) to withdraw the exemption made available by registration under section 12A for the assessment year 2008-09. In the appellate order for the assessment year 2009-10 the ld. CIT (Appeals) has noted that vide order dated 7.09.2012 the Tribunal held that the DIT (E) does not have powers to cancel the registration granted under section 12A of the Act prior to the amendment by the Finance Act, 2010 with effect from 1.06.2010 to sub section (iii) of section 12AA of the I. T. Act. The ld. CIT (Appeals) has also noted that in both the assessment years there was no violation of provisions laid down under section 13(3) of the Act. In absence of rebuttal of these findings of the ld. CIT (Appeals) by the Revenue, we do not find reason to interfere with the first appellate order in question. Both are upheld. The grounds are accordingly rejected.
In result, appeals are dismissed.
The order is pronounced in the Open Court on : 28th July, 2017.