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Income Tax Appellate Tribunal, ‘C’ BENCH, CHENNAI
Before: SHRI N.R.S. GANESAN & SHRI A. MOHAN ALANKAMONY
आदेश /O R D E R
PER N.R.S. GANESAN, JUDICIAL MEMBER:
This appeal of the assessee is directed against the order of the Commissioner of Income Tax (Appeals) – 17, Chennai, dated 27.03.2015 and pertains to assessment year 2009-10.
The only issue arises for consideration is with regard to levy of surcharge by the Assessing Officer.
Sh. R. Vijayaraghavan, the Ld.counsel for the assessee, submitted that the assessee filed the revised return. However, the exemption under Section 11 of the Income-tax Act, 1961 (in short "the Act") was not claimed. In the original return, the assessee wrongly claimed exemption under Section 11 of the Act. Therefore, by way of revised return, the assessee computed taxable income.
The Assessing Officer treated the assessee as Association of Person under Section 164(2) of the Act and levied tax. The Assessing Officer has also levied surcharge. According to the Ld. counsel, the assessee is a company under Section 25 of the Companies Act and also registered under Section 12AA of the Act as charitable institution. However, the assessee is not claiming exemption under Section 11 of the Act. Therefore, the assessee has to be necessarily treated as Association of Person under Section 164(2) of the Act and tax has to be levied accordingly.
However, according to the Ld. counsel, the charitable institution is not liable to pay surcharge. Referring to the Finance Act, 2008, the Ld. counsel submitted that in the case of Association of Person, as
per Paragraph A of Part I, the assessee has to pay income-tax.
While coming to surcharge in the case of companies, surcharge can be levied only if it exceeds `1 Crore. In this case the income has not exceeded `1 Crore since it is a company, according to the Ld. counsel, as per the Finance Act, 2008, the assessee is not liable for surcharge.
On the contrary, Shri A.V. Sreekanth, the Ld. Departmental Representative, submitted that he is placing his reliance on the observation made by the CIT(Appeals).
We have considered the rival submissions on either side and perused the relevant material available on record. Article 271 of Constitution of India enables the Parliament to levy surcharge on certain duties and taxes. The Apex Court in Sarojini Tea Co.(P) Ltd. v. Collector of Dibrugarh AIR 1992 SC 1264 and in CIT v.
Srinivasan (1972) 83 ITR 346, while interpreting Articles 265 and 271 of Constitution of India held that surcharge levied under the Income-tax Act, is part of the tax. Accordingly, the levy of surcharge is upheld by the Apex Court. The assessee before this Tribunal admits that it is not entitled for exemption under Section 11 of the Act, therefore, it has to be necessarily assessed as Association of Person under Section 164(2) of the Act.
Now in view of Finance Act, 2008, the assessee claims before this Tribunal that in the case of companies, surcharge can be levied only if the income exceeds `1 Crore. In the case before us, even though the assessee is registered under Section 25 of the Companies Act, it is registered as charitable institution under Section 12AA of the Income-tax Act, 1961. Since the assessee is not eligible for exemption under Section 11 of the Act, it is treated as Association of Person under Section 164(2) of the Act. In other words, the assessee-company is treated as Association of Person for assessment under Income-tax Act. In view of the judgment of Apex Court in K. Srinivasan (supra), surcharge being a part of income-tax, the assessee cannot be treated separately as company. In other words, once the assessee was treated as Association of Person under Section 164(2) of the Act, for levy of income-tax, the same status shall continue for levy of surcharge also. Therefore, the claim of the assessee that it has to be treated as company for the purpose of surcharge is misconstrued. This Tribunal do not find any merit in the contention of the assessee.
Accordingly, the orders of the authorities below are confirmed.
In the result, the appeal of the assessee is dismissed.
Order pronounced on 9th September, 2016 at Chennai.