ACIT, Central Circle-1(1), Hyd, Hyderabad V. Prathima Educational Society, Hyd, Hyderabad

ITA 1125/HYD/2015

• Counselvise Citation: 112522514 RSA 2015
• Duration Of Justice: 2 month(s) 20 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 18-11-2015
• Appeal Filed By: Department
• Bench Allotted: B
• Assessment Year: 2008-2009
• Appeal Filed On: 28-08-2015
• Court: TRIBUNAL
• Department Lawyers: B KURMI NAIDU
• Assessee Lawyers: M POORNA CHANDER RAO
• Keywords: Search and seizure
• Section: 12A; 12AA; 12

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD BENCHES B (SMC), HYDERABAD BEFORE SHRI B. RAMAKOTAIAH, ACCOUNTANT MEMBER ITA NO. A.Y. APPELLANT RESPONDENT 1123/HYD/15 2006 - 07 ASST. COMMISSIONER OF INCOME TAX, CENTRAL CIRCLE-1(1), HYDERABAD M/S. PRATHI MA EDUCATIONAL SOCIETY, HYDERABAD [PAN: AAATP3833E] 1124/HYD/15 2007 - 08 1125/HYD/15 2008 - 09 1126/HYD/15 2009 - 10 FOR REVENUE : SHRI B. KURMI NAIDU , DR FOR ASSESSEE : SHRI M. POORNA CHANDER RAO , AR DATE OF HEARING : 3 0 - 1 0 - 201 5 DATE OF PRON OUNCEMENT : 18 - 1 1 - 2015 O R D E R THESE FOUR APPEALS ARE BY REVENUE AGAINST THE ORDE R OF THE COMMISSIONER OF INCOME TAX (APPEALS)-XI, HYDERABAD, DATED 11-06-2015. THE ONLY ISSUE INVOLVED IN THIS APPEAL AS CONTENDED BY REVENUE IS WHETHER ASSESSEE IS ELIGIBLE FOR THE BENEFITS OF EXEMPTION FROM PROVISIONS OF FRINGE BENEFIT TAX [FB T] LIABILITY WHEN THE ISSUE ON REGISTRATION U/S. 12AA OF THE INC OME TAX ACT [ACT] IS NOT YET FINALIZED. 2. BRIEFLY STATED, ASSESSEE IS A REGISTERED SOCIETY IMPARTING EDUCATION. IT WAS ASSESSED IN THE STATUS OF AOP AN D THEREFORE FOUND LIABLE FOR FBT. A NOTICE U/S. 115WH OF THE A CT WAS ISSUED TO ASSESSEE ON 09-01-2013 CALLING FOR RETURN ON FBT. IN RESPONSE TO THAT, ASSESSEE FILED RETURNS FOR THE YEARS UNDER CO NSIDERATION DECLARING THE VALUE OF FRINGE BENEFITS AT RS. NIL. ASSESSING OFFICER I.T.A. NOS. 1123, 1124, 1125 & 1126/HYD/2015 M/S. PRATHIMA EDUCATIONAL SOCIETY :- 2 -: (AO) CALCULATED THE FBT AT 20% ON CERTAIN EXPENDITU RE AND BROUGHT THE VALUE OF FBT AS FOLLOWS: ASST. YEAR FBT (IN RS.) 2006 - 07 8,32,481 200 7 - 0 8 5 , 58 , 057 2008 - 09 4,0 5,634 2009 - 10 5,13,521 3. AGGRIEVED BY THE ABOVE ORDERS, ASSESSEE CONTENDE D THAT IT WAS INITIALLY REGISTERED AS A PUBLIC CHARITABLE ENT ITY U/S. 12AA OF THE ACT ON 04-10-2000 AND LATER IT WAS ALSO GRANTED EXEMPTION U/S. 10(23)(C) OF THE ACT ON 26-03-2008. A SEARCH AND SEIZURE OPERATION WAS CONDUCTED ON THE SOCIETY PREMISES ON 10-09-2009. THE AO ISSUED NOTICES U/S. 115WH STATING THE SOCIET Y WAS LIABLE TO PAY FBT AS ITS REGISTRATION U/S. 12AA WAS CANCELLED AND RECOGNITION U/S. 10(23C) OF THE ACT WAS RESCINDED. ASSESSEE STATED THAT IT WAS NOT LIABLE TO PAY FBT AS AT THE TIME OF FILING AS WELL AS COMPLETION OF THE ASSESSMENTS, REGISTRATION U/S. 12 AA WAS AVAILABLE AND IT WAS ONLY AFTER THE COMPLETION OF T HE ASSESSMENTS THAT 12AA REGISTRATION WAS CANCELLED. ASSESSEE POI NTED OUT THAT ANY ENTITY REGISTERED EITHER U/S. 12AA OR SECTION 1 0(23C) WAS NOT LIABLE FOR THE FBT. LATER, ASSESSEE HAD CHALLENGED THE RESCINDING ORDER OF DGIT (INV) IN THE HIGH COURT OF ANDHRA PRA DESH, HYDERABAD. THE HON'BLE HIGH COURT OF ANDHRA PRADES H SUSPENDED THE ORDERS OF DGIT TILL FURTHER ORDER AND THE MATTE R HAS NOT YET BECOME FINAL. THE HON'BLE ITAT RESTORED THE 12AA R EGISTRATION VIDE ITS ORDERS DT. 08-11-2013 AND THE RESTORATION ORDER CHALLENGED BY THE DEPARTMENT IN BEFORE THE HIGH COURT WAS ALSO DI SMISSED VIDE ORDER DT. 12-08-2014. ASSESSEE POINTED OUT THAT IT WAS HAVING A VALID REGISTRATION U/S. 12AA OF THE ACT FOR ALL THE SAID ASSESSMENT I.T.A. NOS. 1123, 1124, 1125 & 1126/HYD/2015 M/S. PRATHIMA EDUCATIONAL SOCIETY :- 3 -: YEARS AND WAS THEREFORE NOT LIABLE TO PAY TAX UNDER THE PROVISIONS OF FBT. 4. LD. CIT(A) AFTER CONSIDERING THE SUBMISSIONS OF ASSESSEE, DELETED THE FBT AS ASSESSEE WAS REGISTERED U/S. 12A A BY STATING AS UNDER: 6.0 THE ASSESSMENT ORDERS AND THE SUBMISSIONS OF T HE APPELLANT WERE CAREFULLY CONSIDERED. THE SOCIETY W AS REGISTERED AS A CHARITABLE ENTITY U/S. 12AA FROM 4.10.2000. IN P URSUANCE TO SEARCH & SEIZURE PROCEEDINGS, THE REGISTRATION U/S. 12AA WAS CANCELLED ON 23.2.2012. LATER HON'BLE ITAT, HYDERA BAD VIDE ITS ORDER DATED 8.11.2013 RESTORED THE REGISTRATION AND VACATED THE ORDER OF CIT. SIMILARLY, THE ORDER OF DGIT DATED 1 9.12.2011, RESCINDING THE RECOGNITION GRANTED TO THE SOCIETY U /S. 10(23C) WAS SUSPENDED BY THE HON'BLE HIGH COURT, HYDERABAD VIDE ITS ORDER DATED 12.1.2012. 6.1 ACCORDING TO THE PROVISO TO SECTION 115W OF THE IT ACT, ANY PERSON REGISTERED U/S. 12AA OR ELIGIBLE FOR EXE MPTION U/S. 10(23C) SHALL NOT BEEN DEEMED TO BE AN EMPLOYER FOR THE PURPOSES OF THE CHAPTER XII-4 OF THE IT ACT. IN OTHER OTHER S, THAT PERSON WILL NOT BE LIABLE TO PAY TAX UNDER THE PROVISIONS OF FR INGE BENEFIT TAX. FROM THE ABOVE, IT IS CLEAR THAT THE APPELLANT HAD BENEFIT OF SECTION 12AA OF THE IT ACT AND SINCE THE DENIAL OF APPROVAL OF U/S. 10(23C) OF THE IT ACT WAS SUSPENDED BY THE HON'BLE HIGH COU RT, ADVERSE INFERENCE CANNOT BE DRAWN AGAINST THE APPELLANT EVE N ON THAT GROUND. THE ELIGIBILITY OF THE EXEMPTION U/S. 10(2 3C) MAY BE QUESTIONABLE BUT THERE IS NO DOUBT ON ITS EXEMPTION U/S. 12AA AND THAT IS ENOUGH FOR EXEMPTION FROM FRINGE BENEFIT TA X. 6.2 THEREFORE, IN MY OPINION, THE APPELLANT IS NOT EXIGIBLE FOR FRINGE BENEFIT TAX FOR THESE YEARS. THE ADDITI ON MADE ON THIS ACCOUNT IS HEREBY DELETED. 5. AFTER CONSIDERING THE RIVAL CONTENTIONS, I SEE N O REASON TO INTERFERE WITH THE ORDERS OF LD. CIT(A). AT PRESEN T, ASSESSEE IS REGISTERED AS A CHARITABLE ENTITY U/S. 12AA, CONSEQ UENT TO THE ORDER OF ITAT AND APPROVED BY THE HON'BLE HIGH COUR T. THEREFORE, AS PER THE PROVISO TO SECTION 115W, ASSESSEE IS NOT COVERED BY THE I.T.A. NOS. 1123, 1124, 1125 & 1126/HYD/2015 M/S. PRATHIMA EDUCATIONAL SOCIETY :- 4 -: PROVISIONS OF CHAPTER XII-4 OF THE ACT. IN VIEW OF THIS, ORDER OF CIT(A) IS APPROVED AND ALL THE APPEALS OF REVENUE A RE CONSEQUENTLY DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 18 TH NOVEMBER, 2015 SD/- (B. RAMAKOTAIAH) ACCOUNTANT MEMBER HYDERABAD, DATED 18 TH NOVEMBER, 2015 TNMM COPY TO : 1. ASST. COMMISSIONER OF INCOME TAX, CENTRAL CIRCLE -1(1), 3 RD FLOOR, POSNETT BHAVAN, TILAK ROAD, RAMKOTI, HYDERABAD. 2. M/S. PRATHIMA EDUCATIONAL SOCIETY, PLOT NO. 213, PRATHIMA ROAD NO. 1, FILM NAGAR, HYDERABAD. 3 . CIT( APPEALS) - X I , HYDERABAD. 4 . THE PR. CIT , CENTRAL, HYDERABAD . 5. D.R. ITAT, HYDERABAD. 6. GUARD FILE.