DDIT (E), NEW DELHI vs. M/S. ACCURATE EDUCATION & RESEARCH SOCIETY, GHAZIABAD

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ITA 5819/DEL/2013Status: DisposedITAT Delhi20 June 2016AY 2010-114 pages

In favour of the assessee: the Revenue's appeal was dismissed. From the AI summary of this appeal.

AI SummaryDismissed

What did the Tribunal hold?

The Tribunal held that the matter was covered by previous ITAT orders which allowed exemption under Section 11 and found no violation of Section 13(1)(c). The Tribunal also noted that no disallowance of salary was made in subsequent assessment years.

What were the facts?

The Assessing Officer made additions to the assessee's income on account of exemption claimed under Section 11, salary paid to trustees, and income from license fees. The CIT(A) deleted these additions, relying on earlier orders.

What were the issues?

Whether the assessee society is entitled to exemption under Section 11, and whether the salary paid to trustees and their relatives was disallowable.

Which sections of the Income-tax Act were involved?

Section 11,Section 13(1)(c),Section 13(3)

AI-generated summary — verify with the full judgment below

Before: SHRI J. SUDHAKAR REDDY & SMT SUCHITRA KAMBLE

Hearing: 02.06.2016Pronounced: 20.06.2016

PER SUCHITRA KAMBLE, JM

1.

This appeal is filed against the order dated 02/02/3013 passed by CIT (A)-III, New Delhi, for Assessment Year 2010-11.

2.

The grounds of appeal

are as follows: “1. On the facts and in the circumstances of the case and in law, the Ld.CIT(A) has erred in deleting the addition of Rs. 4,13,63,389/- on account of income shown in the profit and loss account after allowing exemption u/s 11, accepting assessee’s version that the society is not running for profit purposes.

2. On the facts and in the circumstances of the case and in law, the Ld.CIT(A) has erred in deleting the addition of Rs.58,80,000/- made by the A.O on account of disallowance of salary paid relatives.

3. On the facts and in the circumstances of the case and in law, the Ld.CIT(A) has erred in deleting the addition of Rs.14,74,677/- made by the A.O on a/c. of Income from License Fee. 3. The assessee society is in the business of running educational institute in the name of Accurate Institute of Management and Technology for providing education in the field of Engineering and Management. The assessee has been granted registration u/s. 12AA of the Income Tax Act, 1961 since inception and the said registration u/s. 12AA granted to the assessee is still continuing and has never been withdrawn. During the year the society has paid salary to Trustees mentioned in the assessment order. The Assessing Officer observed that the details of duties, responsibilities and the educational qualification were not furnished and there was no justification given regarding the payment of huge salary to the trustees and their relatives. The assessee replied to the Assessing Officer saying that the salary paid to the six persons was on the basis of their qualifications and contribution to the running of the institute. The Assessing Officer do not agree and thus made disallowance of Rs.58,80,000/-. The CIT (A) by relying on his order of the earlier assessment year 2007-08 allowed the appeal of the assessee. The relevant extracts are as follows:

“6.1 ….. Accordingly, relying on my order dated 26.02.2013 for assessment year 2007-08, I hold:

(a) that the appellant is entitled to exemption under Section 11 of the Act and therefore, the amount of Rs. 4,13,63,389 deserves to be deleted. (b) The AO is not right in disallowing the salary of Rs. 58,80,000/- paid to the trustees namely Ms. Poonam Sharma, Ms. Meera Sharma and Ms. Anupam Sharma.

7. In a result the appeal is allowed.”

4.

The Ld. AR submitted that for the last four Assessment Years the disallowance was quashed by the ITAT in (Assessment Year 2006-07) dated 22/1/2013, ITA No. 2537/Del/2013 dated 29/8/2014, ITA No. 2538 & 2539/Del/2013 Assessment Year 2008-09 & 2009-10 dated 23/2/2016.

5.

The Ld. DR could not refute the said orders which are in the favour of the assessee.

6.

We have perused all the records and relevant materials and heard both the parties. This matter is covered by the earlier ITAT Orders mentioned hereinabove. The ITAT has held that the assessee is entitled to exemption u/s. 11 of the Act. The order of the Ld. CIT(A) dated 26.02.2013 for A.Y. 2007- 08 that the assessee has not violated S. 13(1)(c) r.w.s. 13(3) of the Act has attained finality. The A.O. has not invoked provision of S. 13(1)(c) for the A.Y. 2011-12, 2012-13 and 2013-14. No disallowance of salary was made. Thus, the Revenue appeal is dismissed.

7.

In the result, the appeal of the Revenue is dismissed.

The order is pronounced in the open court on 20th of June, 2016.

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