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Income Tax Appellate Tribunal, DELHI BENCH “B” BENCH NEW DELHI
Before: SHRI N.K. SAINI & SHRI AMIT SHUKLA
ORDER
PER AMIT SHUKLA, JUDICIAL MEMBER:
The aforesaid appeal has been filed by the assessee against the impugned order dated 13.6.2016 was passed by the ld. CIT (A) - 1, Noida for the quantum of assessment passed u/s 143(3) for the A.Y. 2013-14. The assessee has raised following grounds:- “1. That the learned Commissioner of Income Tax (Appeals) has grossly erred both in law and on facts in confirming the Page 1 of 6
order of assessment dated 29.01.2016 framed under section 143(3) of the Act at an income of Rs. 1,39,280/- as against returned income of Nil/-. 2 That the learned Commissioner of Income Tax (Appeals) has erred both in law and on facts in failing to appreciate that the assessee is a “Mutual Benefit Society” and hence the receipt of the assessee is not taxable on the principles of “Mutuality”. 3 That the learned Commissioner of Income Tax (Appeals) has erred both in law and on facts in failing to appreciate that receipt by way of interest, cannot be brought to tax in the hands of the assessee. 4 Without prejudice to the aforesaid, learned Commissioner of Income Tax (Appeals) and assessing officer both have erred in failing to appreciate that appellant has been taxed as AOP at maximum marginal rates, whereas in the case of AOP rate of tax should be charged as provided in Paragraph A of Part-I of the First Schedule of the Finance Act i.e. basic exemption limit is also available in the case of the AOP which has not been provided while computing the income. 5 That learned Commissioner of Income Tax (Appeals) and assessing officer both have erred in failing to appreciate that appellant is a registered Society under the Societies Registration Act 1860, as such, rate of tax provided in section 167A of the Act is inapplicable in the case of the appellant. 6 That the learned Commissioner of Income Tax (Appeals) has further erred by sustaining of levy of interest u/s 234B of the Act, which is not leviable on the facts of the appellant company." Page 2 of 6
At the outset, it is noticed that the appeal of the assessee is barred by limitation by 91 days. In the petition for condonation of delay, it has been submitted that the Chartered Accountant who was looking after the matter, had advised the assessee there is no need to file appeal because of smallness tax liability and also the president looking after the assessee’s association was very old and suffering from illness did not took other second opinion. Later on the assessee was advised to file the appeal because the rate of taxation would be subject matter of issue in every year. Along with the said application affidavit of Chartered Accountant as well as the president of the association has also been filed. After hearing both the parties and considering the contents mentioned in the affidavit, we are condoning the delay of 91 days and admitting the appeal for hearing on merits.
The brief facts qua the issue involved the assessee is welfare association of air force navy farm owners the said association has been registered under the “Society Registered Act, 1860”. It has also applied for a PAN under the status artificial juridical person (AJP), which was given by the concerned authorities. It has filed its return of income for the A.Y. 2013-14 declaring a surplus of Rs. 37,080/- income assessment has been completed, income of Rs. 1,39,820/-. In the assessment order itself Assessing Officer has noted that personally association is functioning on the basis of mutuality and has been set up as no profit association and does not indulged in any business activity, secondly, it is registered under the Society Registration Act; and lastly, only interest income from none members is to be taxed and accordingly interest income of Rs. 1,39,820/- has been assessed by the Assessing Officer.
However the Assessing Officer has taxed the said assessee at a maximum marginal rate after invoking section 167B.
The Learned CIT(Appeals) held that the assessee is to be taxed as AOP because AJP is only to be deemed have an existence only where does not covered in any other clauses of section 2(31). Before us the only limited point made by the ld. counsel Ms. Sumangala Saxena is that the ld. Assessing Officer while applying the maximum marginal rate after invoking provision of section 167B has failed to consider the fact that under the said provision itself, exception has been carved out for Societies Registration Act 1860. Thus even if the assessee is to be charged of tax as AOP then also it cannot be taxed at maximum marginal rate. In support of he drew our attention to the copy of registered certificate issued by the Registrar of Societies placed at page 1 of the paper book. Thus, she submitted that the assessee should not be taxed as maximum marginal rate.
On the other hand ld. DR submitted that none of the authorities have examined this issue and therefore the matter should be set aside to the file of the Assessing Officer. After considering the rival submissions and also perusing the material placed on record we find that the assessee an Air Force, Navy Farm owner’s welfare association has been registered under the Societies Registered Act 1860. Vide certificate dated 23.10.2000 this fact has been acknowledged by the ld. Assessing Officer also in the second para of the assessment order. The only dispute is that whether the Page 4 of 6 assessee should be taxed @ maximum marginal rate applicable, AOP or not. The assessee has also claimed that status is of an artificial juridical person and not AOP. However the Learned CIT(Appeals) has rejected this contention and held that the assessee is an AOP. However we find that neither the Assessing Officer nor the Learned CIT(Appeals) have examined the aspect from the provisions of section 167B which provide exception for application of maximum marginal rate in the case of society which is registered in the Societies Registered Act 1860. Accordingly we are of the opinion that the only falls limited purposes the matter is set aside to the file of the Assessing Officer to examine the applicability of section 167B in the case of the assessee accordingly to decide the issue in accordance with the law.
In the result, the appeal of the assessee is partly allowed for statistical purposes.
Pronounced in the open court on 12.04.2017.