Central Red Cross Bolld Bank, Cuttack V. ACIT, Cuttack

ITA 16/CTK/2013

• Counselvise Citation: 1622114 RSA 2013
• Duration Of Justice: 1 year(s) 5 month(s) 6 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 13-06-2014
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB
• Next Hearing Date: 29-04-2014
• Assessment Year: 2009-2010
• Appeal Filed On: 07-01-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: N K NEB
• Assessee Lawyers: P K MISHRA
• Keywords: Charitable institution
• Section: 143(3); 142(1); 12A; 12AA; 12; 11

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL CUTTACK BENCH, CUTTACK BEFORE SHRI P.K. BANSAL, HONBLE ACCOUNTANT MEMBER AND SHRI D.T. GARASIA, HONBLE JUDICIAL MEMBER ITA NOS. 14 TO 16/CTK/2013 : (ASST. YEARS : 2006 - 07, 2008 - 09 & 2009 - 10) CENTRAL RED CROSS BLOOD BANK MEDICAL ROAD, MANGALABAG, CUTTACK PAN : AAAAR3700K (APPELLANT) VS. ASST. COMMISSIONER OF INCOME TAX, CIRCLE - 2(1), CUTTACK (RESPONDENT) ASSESSEE BY : P.K. MISHRA REVENUE BY : N.K. NEB, DR DATE OF HEARING : 29/04/2014 DATE OF PRONOUNCEMENT : 13 /06/2014 O R D E R PER P.K. BANSAL : 1. ALL THESE APPEALS HAVE BEEN FILED BY THE ASSESSEE AGAINST THE RESPECTIVE ORDERS OF CIT(A) , CUTTACK , ALL DT. 22.11.2012. 2. SINCE THE ISSUE INVOLVED IN ALL THESE APPEALS ARE COMMON, THEREFORE, ALL THESE APPEALS ARE DISPOSED OFF BY THIS COMMON ORDER. 3. IN ALL THE YEARS, THE ASSESSEE HAS TAKEN THE FOLLOWING COMMON GROUNDS EXCEPT FOR THE CHANGE IN THE FIGURES. GROUNDS FOR A.Y 2006 - 07 ARE REPRODUCED AS UNDER : 1. FOR THAT THE IMPUGNED ORDER PASSED BY THE AUTHORITIES BELOW ARE NOT JUST AND PROPER AND WITHOUT THE JURISDICTION OF LAW UNDER THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND HENCE IS LIABLE TO BE Q UASHED IN THE INTEREST OF JUSTICE. 2 ITA NOS. 14 TO 16/CTK/2013 (ASST. YEARS : 2006 - 07, 2008 - 09 & 2009 - 10) 2. FOR THAT THE LEARNED C.I.T(A) SHOULD NOT HAVE CONFIRMED THE ASSESSMENT MADE BY THE A.O BY BRINGING TO TAX THE EXCESS OF INCOME OVER EXPENDITURE OF RS.32,87,340.00. 3. FOR THAT THE LEARNED C.I.T(A) SHOULD NOT HAVE CON FIRMED THE ADDITION MADE BY THE LEARNED A.O, WHEN THE APPELLANT HAS NO LEGAL IDENTITY AND IS NOT AN ASSESSEE AT ALL. 4. FOR THAT THE LEARNED FORUM BELOW SHOULD NOT HAVE IGNORED THE FACT THAT THE APPELLANT IS A BRANCH OFFICE OF THE RED CROSS ORISSA STATE B RANCH, THEREFORE CANNOT BE ASSESSED INDEPENDENTLY AND THE SURPLUS IS KEPT FOR APPLICATION IN FUTURE AND THE APPELLANT HAS NO CONTROL OVER THE SAID SURPLUS AMOUNT. 5. FOR THAT THE LEARNED FOR A BELOW HAVE COMMITTED GROSS ERROR OF LAW IN GIVING A CONTRARY F INDING TO THE FACTS ON RECORD FOR WHICH THE ORDERS PASSED BY THE FOR A BELOW ARE NOT MAINTAINABLE AND/OR SUSTAINABLE IN THE EYE OF AND IS LIABLE TO BE QUASHED IN THE INTEREST OF JUSTICE. 6. FOR THAT, THE LEANRED A.O SHOULD NOT HAVE TREATED THE DIFFERENTIA L SURPLUS BALANCE OF RS.32,87,340.00 AS INCOME OF THE APPELLANT AND ALSO SHOULD NOT HAVE LEVIED TAX ON IT AND THE LEARNED C.I.T(A) SHOULD NOT HAVE CONFIRMED THE ORDER OF ASSESSMENT WITHOUT CONSIDERING THE CLAIM OF EXEMPTION MADE BY THE APPELLANT. THE FIG URE OF RS.32,87,340/ - BE READ AS RS. 34,77,890/ - AND RS.59,75,182/ - FOR A.YS 2008 - 09 AND 2009 - 10 RESPECTIVELY. 4. BOTH THE PARTIES AGREED THAT SINCE THE ISSUE INVOLVED IN ALL THESE APPEALS ARE COMMON, THEREFORE, ALL THE APPEALS BE DECIDED ON THE BASIS OF THE FACTS FOR A.Y 2006 - 07. 5. THE BRIEF FACTS OF THE CASE FOR A.Y 2006 - 07 ARE THAT THE ASSESSEE SUBMITTED ITS RETURN ON 30.10.2006 SHOWING NIL INCOME. BEFORE THE AO, THE ASSESSEE CLAIMED THAT IT IS AN AOP REGISTERED UNDER SEC. 12AA . THE AO ON VERIFICATION NOTED THAT THE COMMUNICATION RELATES TO THE INDIAN RED CROSS SOCIETY, 1, RED CROSS ROAD, NEW DELHI. THE ASSESSEE HAS SUBMITTED STATEMENT OF INCOME BEFORE AO. ON THIS STATEMENT, THE AO DISALLOWED EXEMPTION U/S 11 3 ITA NOS. 14 TO 16/CTK/2013 (ASST. YEARS : 2006 - 07, 2008 - 09 & 2009 - 10) OF THE ACT AND I NCOME WAS ASSESSED U/S 143(3) ON A TOTAL INCOME OF RS.5,59,328/ - . ITAT, CUTTACK BENCH VIDE ORDER DT. 30.8.2010 RESTORED THE MATTER TO THE FILE OF THE AO FOR FRESH ADJUDICATION. AO ACCORDINGLY ISSUED NOTICE U/S 142(1) ON 1.2.2011 ASKING THE ASSESSEE TO AP PEAR BEFORE HIM AND PRODUCE THE BOOKS OF ACCOUNTS/DOCUMENTS IN SUPPORT OF ITS STAND. THE AO OBSERVED THAT THE ASSESSEE S INCOME IS NOT A PART EITHER OF THE INDIAN RED CROSS SOCIETY, NEW DELHI OR INDIAN R ED CROSS SOCIETY, BHUBANESWAR WHICH IS APPARENT FROM THE LETTER NO. G/25023/1/10 - FIN/516 DT. 13.1.2011 OF THE JT. SECRETARY , RED CROSS SOCIETY, NEW DELHI. THE AO, THEREFORE, TOOK THE VIEW THAT THE REGISTRATION CERTIFICATE SUBMITTED BY THE ASSESSEE U/S 12AA IN RESPECT OF INDIAN RED CROSS SOC IETY, NEW DELHI HAD NOTHING TO DO WITH THE INCOME AND EXPENDITURE OF THE ASSESSEE. THERE WAS EXCESS OF INCOME OVER EXPENDITURE OF RS.32,87,340/ - FOR THE IMPUGNED ASSESSMENT YEAR. THEREFORE, THE AO TREATED THE SAME TO BE THE INCOME OF THE ASSESSEE. THE A SSESSEE WENT IN APPEAL BEFORE THE CIT(A). CIT(A) AFTER HEARING THE SUBMISSION OF THE ASSESSEE, DISMI SSED THE APPEAL OF THE ASSESSEE BY OBSERVING AS UNDER : THE LEARNED A/R OF THE APPELLANT FILED DURING THE COURSE OF APPEAL HEARING A PHOTOCOPY OF THE LET TER NO.2637/RC DATED 31.12.2011 FROM HONORARY SECRETARY, INDIAN RED CROSS SOCIETY, ODISHA STATE BRANCH TO THE DIRECTOR, CENTRAL RED CROSS BLOOD BANK, CUTTACK STATING THEREIN THAT IT IS LEARNED FROM THE INCOME - TAX RECORD THAT THE CENTRAL RED CR O SS BLOOD BA NK HAS BEEN TREATED AS A SEPARATE ENTITY AND HAS BEEN ASSESSED ACCORDINGLY. BUT THE CENTRAL RED CROSS BLOOD BANK, CUTTACK IS NOT AN INDEPENDENT UNIT BUT AN INTEGRAL ESTABLISHMENT OF THE INDIAN RED CROSS SOCIETY, ODISHA STATE BRANCH. A PHOTOCOPY OF THE ABO VE LETTER WAS FILED BEFORE ME. IT WAS NOT CERTIFIED EITHER. SUCH PHOTOCOPY HAS VERY LITTLE EVIDENTIARY VALUE AS PER THE DECISION IN MOOSA S. MADHA V. CIT 89 ITR (SC) AND CHIRANJILAL STEEL ROLLING MILLS 84 ITR 222 (P&H). ALSO VIEWED AGAINST LETTER NO.G/2502 3/1/10 - FIN DATED 13.01.2011 OF THE JOINT SECRETARY, INDIAN RED CROSS SOCIETY ADDRESSED TO THE CIT, CUTTACK AND LETTER NO.434/RC DATED 19.3.2008 FROM THE HONORARY SECRETARY, INDIAN RED CROSS SOCIETY, ODISHA STATE BRANCH TO THE DIRECTOR, CENTRAL RED CROSS BL OOD BANK, CUTTACK, THE LETTER DATED 31.12.2011 FILED DURING THE APPEAL HEARING IN THE SHAPE OF A PHOTOCOPY SEEMS TO BE AN AFTERTHOUGHT. 4 ITA NOS. 14 TO 16/CTK/2013 (ASST. YEARS : 2006 - 07, 2008 - 09 & 2009 - 10) 6.2 APPLICATION FOR REGISTRATION U/S.12A HAS TO BE MADE IN FORM NO.10A PRESCRIBED BY RULE 17A OF THE I.T.RULES, 1962, B EFORE THE EXPIRY OF ONE YEAR FROM THE DATE OF THE TRUST OR THE ESTABLISHMENT OF THE INSTITUTION, WHICHEVER IS LATER. THE APPLICATION HAS TO BE MADE BY THE PERSON IN RECEIPT OF INCOME OF THE TRUST. A CONJOINT READING OF SECTION 11, 12 & 12A MAKES IT CLEAR T HAT REGISTRATION U/S.12A IS A CONDITION PRECEDENT FOR AVAILING OF BENEFIT U/S.11 & 12. UNLESS AND UNTIL AN INSTITUTION IS REGISTERED U/S.12A OF THE ACT, IT CANNOT CLAIM BENEFIT OF SECTION 11(1)(A) OF THE ACT. 6.3 REGISTRATION IS A PREREQUISITE FOR ELIGIBI LITY FOR EXEMPTION EVER SINCE SECTION 12A WAS INTRODUCED W.E.F. THE ASSESSMENT YEAR 1973 - 74. THE HONBLE SUPREME COURT IN U.P. FOREST CORPORATION V. DY.CIT (2008) 297 ITR HELD: FOR A TRUST OR AN INSTITUTION TO CLAIM BENEFIT U/S.11(1)(A) OF THE ACT, REGIS TRATION OF THE TRUST OR INSTITUTION U/S.12A IS A CONDITION PRECEDENT. THE HONBLE ALLAHABAD HIGH COURT IN FIFTH GENERATION EDUCATION SOCIETY V. CIT (1990) 185 ITR 634 HELD: A READING OF SECTION 12A OF THE ACT, SHOWS THAT REGISTRATION UNDER THE SECTION IS A PRECONDITION FOR AVAILING OF THE BENEFIT U/S.11 & 12. SECTION 11 PROVIDES FOR EXEMPTION OF INCOME WHICH IS APPLIED FOR CHARITABLE PURPOSES. SECTION 12 IS IN THE NATURE OF AN EXPLANATION TO SECTION 11. BEFORE A PERSON CAN CLAIM THE BENEFIT OF SECTION 1 1 OR SECTION 12, AS THE CASE MAY BE, HE MUST OBTAIN REGISTRATION U/S.12A. IN ITO V. MRS. DWARIKA PRASAD TRUST (1989) 30 ITD 84 (DEL - TRIB.) IT WAS HELD: SECTION 12A DOES NOT MERELY PRESCRIBE A FORMALITY, NOR DOES THE PROCEDURE PRESCRIBED THEREIN IS SO INTENDED. REGISTRATION U/S.12A IS NOT A ROUTINE MATTER. IT IS GRANTED AFTER PROPER INVESTIGATION AND ENQUIRY AND ON SATISFACTION OF THE AUTHORITY THAT THE APPLYING TRUST IS, UNDER RELEVANT LAW, ENTITLED TO ITS GRANT. THE APPLICATION U/S.12A MAY BE REJECTED UNLESS THE NECESSARY CONDITIONS EXIST FOR ITS ACCEPTANCE. A SIMILAR ISSUE AROSE BEFORE THE HONBLE ITAT, CUTTACK BENCH, CUTTACK IN THE CASE OF ACIT, CIRCLE - 2(2), CUTTACK V. M/S. GRAM SWARAJ (ITA NO.322/CTK/2012 FOR THE AY 2008 - 09). IT HAS BEEN HELD THEREIN THAT TAXING THE NET INCOME INSTEAD OF THE GROSS RECEIPT IS THE RIGHT APPROACH. 6.4 IN VIEW OF THE REASONS DELINEATED AT PARA 6.1 TO 6.3 HERE - IN - ABOVE, THE ASSESSMENT MADE BY THE AO BY BR INGING TO TAX THE EXCESS OF INCOME OVER EXPENDITURE OF RS.32,87,340/ - IS CONFIRMED. 5 ITA NOS. 14 TO 16/CTK/2013 (ASST. YEARS : 2006 - 07, 2008 - 09 & 2009 - 10) 6. WE HAVE HEARD THE RIVAL SUBMISSIONS AND CAREFULLY CONSIDERED THE SAME. WE NOTED THAT THE ONLY ISSUE INVOLVED IN THIS APPEAL IS WHETHER THE ASSESSEE IS HAVING A SEPARA TE ENTITY FROM INDIAN RED CROSS SOCIETY, ODISHA STATE OR IS A BRANCH OF INDIAN RED CROSS SOCIETY, ODISHA STATE. THE AO TREATED THE ASSESSEE AS A SEPARATE UNIT ON THE BASIS OF THE LETTER OF INDIAN RED CROSS SOCIETY, ODISHA STATE BRANCH, RED CROSS BHAVAN, B HUBANESWAR DT. 19.3.2008 WHICH READS AS UNDER : DATE : 19/3/08 TO, THE DIRECTOR, CENTRAL RED CROSS BLOOD BANK, CUTTACK. SUB: INCOME TAX EXEMPTION ETC. SIR, IN CONNECTION WITH THE SUBJECT MENTIONED ABOVE I AM TO CLARIFY THAT THE CENTRAL RED CROSS BLOOD BANK. CUTTACK IS AN UNIT OF THE INDIAN RED CROSS SOCIETY, ORISSA STATE BRANCH WITH SEPARATE ADMINISTRATIVE SET UP AND ACCOUNTING SYSTEM. YOU ARE REQUESTED TO FI LE INCOME TAX RETURNS AND SEEK EXEMPTION AS A SEPARATE UNIT OF THE IRCS, ORISSA STATE BRANCH. IT IS NOT PRACTICALLY FEASIBLE TO INTEGRATE ACCOUNTS OF THE BLOOD BANK WITH THAT OF THE IRCS, ORISSA STATE BRANCH FOR THE AFORESAID PURPOSE. YOURS FAITHFULLY, SD/ - HONORARY SECRETARY INDIAN RED CROSS SOCIETY ORISSA STATE BRANCH THE CLAIM OF THE ASSESSEE IS THAT THE ASSESSEE IS A PART AND PARCEL OF THE INDIAN RED CROSS SOCIETY, ODISHA STATE BRANCH, BHUBANESWAR. FOR THIS, THE ASSESSEE RELIED ON THE LETTER OF T HE HON. SECRETARY DT. 31.12.2011. THIS LETTER READS AS UNDER : 6 ITA NOS. 14 TO 16/CTK/2013 (ASST. YEARS : 2006 - 07, 2008 - 09 & 2009 - 10) LETTER NO.2637/RC DATE.31.12.2011 THE DIRECTOR CENTRAL RED CROSS BLOOD BANK MANGALABAG, CUTTACK. SIR, IT IS LEARNED FROM THE INCOME TAX RECORD THAT THE CENTRAL RED CROSS BLOOD BANK HAS BEEN TREATED AS A SEPARATE ENTITY AND HAS BEEN ASSESSED ACCORDINGLY. BUT THE CENTRAL RED CROSS BLOOD BANK, CUTTACK IS NOT AN INDEPENDENT UNIT BUT AN INTEGRAL ESTABLISHMENT O F THE INDIAN RED CROSS SOCIETY, ODISHA STATE BRANCH. EVEN THE ACCOUNTS, ADMINISTRATION, SERVICE RULES ETC. ARE GOVERNED UNDER DIRECT SUPERVISION OF ODISHA STATE BRANCH. THE WORKING COMMITTEE AND THE EXECUTIVE COMMITTEES DECISIONS ARE FINAL AND BINDING AS PER INDIAN RED CROSS SOCIETY, ODISHA STATE BRANCH, RULES & SERVICE RULES, 2001. THEREFORE, I AM DIRECTED TO INFORM YOU THAT YOU ARE REQUESTED TO PRODUCE THE ANNUAL RECEIPT & EXPENDITURE STATEMENT BEFORE THE STATE BRANCH AUTHORITY AS QUICK AS POSSIBLE FOR COMPLIANCE IN INCOME TAX AND OTHER PURPOSES. YOUR POWER REGARDING WITHDRAWAL AND DEPOSIT IN THE BANK ACCOUNTS MAINTAINED IN THE SCB MEDICAL BRANCH ARE SUBJECT TO APPROVAL OF THE STATE BRANCH AUTHORITY. SINCE THIS UNIT IS NOT AN INDEPENDENT UNIT AND BEING A UNIT OF INDIAN RED CROSS SOCIETY, ODISHA STATE BRANCH, YOU NEED NOT REQUIRED TO PROCEED TO GET REGISTRATION UNDER SECTION 12A OF THE INCOME TAX ACT.1961 FOR EXEMPTION PURPOSE. YOU ARE FURTHER REQUESTED TO INTIMATE THE ABOVE FACT TO THE INCOME TAX AUTHORI TIES FOR TAXATION PURPOSE. THIS LETTER SUPERSEDES ANY EARLIER LETTER(S) ISSUED FROM THE INDIAN RED CROSS SOCIETY, ODISHA STATE BRANCH OFFICE. YOURS FAITHFULLY, SD/ - HONARARY SECRETARY IRCS - OSB FROM THE PERUSAL OF THE FIRST LETTER WE NOTED THAT IT IS NOT DENIED BY THE INDIAN RED CROSS SOCIETY, ODISHA STATE BRANCH THAT CENTRAL RED CROSS BLOOD BANK, CUTTACK I.E. THE ASSESSEE, IS A UNIT OF THE INDIAN RED CROSS SOCIETY, ODISHA STATE BRANCH BUT THEY DIRECTED TO THE DIRECTOR OF THE ASSESSEE TO FILE INCOM E TAX RETURN AND SEEK EXEMPTION AS A SEPARATE UNIT AS IT IS NOT PRACTICALLY POSSIBLE TO 7 ITA NOS. 14 TO 16/CTK/2013 (ASST. YEARS : 2006 - 07, 2008 - 09 & 2009 - 10) INTEGRATE THE ACCOUNTS OF THE BLOOD BANK WITH THAT OF IRCS. THIS LETTER IS SIGNED BY THE HON. SECRETARY OF INDIAN RED CROSS SOCIETY, ODISHA STATE BRANCH ON 19.3.2008. THE ASSESSEE FILED ITS RETURN SHOWING NIL INCOME ON 30.10.2006 ORIGINALLY CLAIMING EXEMPTION U/S 11 BUT THE INCOME WAS ASSESSED AT RS.5,59,328/ - . THE ASSESSEE WENT IN APPEAL BEFORE CIT(A) AND ITAT. ITAT RESTORED THE MATTER BACK VIDE ITS ORDER DT. 30.8 .2010. SUBSEQUENTLY, THE ASSESSMENT ORDER WAS PASSED BY THE AO ON 24.11.2011 AND WHEN THE ASSESSEE WENT BEFORE CIT(A), WE NOTED, THE SECOND LETTER DT. 31.12.2011 WAS FILED BY THE ASSESSEE BEFORE CIT(A). THIS LETTER WAS NOT IN EXISTENCE WHEN THE SECOND ROU ND OF APPEAL HAS TAKEN PLACE BEFORE THE CIT(A). THIS LETTER, FOR THE FIRST TIME, WAS PLACED BEFORE CIT(A) AND WE ALSO NOTED THE ASSESSEE HAS ALSO FILED AN APPLICATION ON 23.7.2008 FOR REGISTRATION U/S 12AA BUT THE REGISTRATION APPLICATION OF THE ASSESSEE WAS REJECTED BY CIT ON THE GROUND THAT THE SAID INSTITUTION WAS ONLY A UNIT OF INDIAN RED CROSS SOCIETY, NEW DELHI WHICH HAS BEEN ENJOYING PRIVILEGE OF SEC. 10(23C) AS WELL AS 80G(5)(VI) AND THE CIT TREATED THE ASSESSEE AS A BRANCH OF INDIAN RED CROSS SOCI ETY AND, THEREFORE, REJECTED THE REGISTRATION. WHEN THE MATTER TRAVELLED TO THE TRIBUNAL, THE TRIBUNAL RESTORED THE MATTER TO THE CIT FOR RECONSIDERATION IN THE LIGHT OF THE GUIDELINES ISSUED BY CBDT AS PER LETTER DT. 19.5.2010 ADDRESSED TO THE PARENT IND IAN RED CROSS SOCIETY AFTER GIVING OPPORTUNITY TO THE ASSESSEE. CBDT ISSUED ANOTHER LETTER DT. 24.9.2010 THROUGH FILE NO. F NO. 176/042009 - ITA - I ADDRESSED TO THE DGIT (EXEMPTION) THAT CLARIFIED THE AMBIGUITY FOUND IN THE INTERPRETATION OF THE EARLIER LETTER DT. 19.5.2010. THIS LETTER DT. 24.9.2010 CLEARLY STATES THAT THE HEAD OFFICE AND THE BRANCHES ARE TO BE TREATED AS DISTINCT AND SEPARATE ENTITY FOR THE PURPOSE OF INCOME TAX ACT, 1961 AND IF ANY BRANCH DESIRES TO AVAIL EXEMPTION, IT HAS TO SEEK REGISTRATION U/S 12AA. CIT, THEREFORE, ALLOWED THE REGISTRATION TO THE ASSESSEE ON THE BASIS OF THE APPLICATION FILED BY THE ASSESSEE ON 23.7.2008. CIT VIDE ORDER DT. 31.1.2014 HAS CORRECTLY ALLOWED T HE REGISTRATION TO THE ASSESSEE U/S 12A. THEREFORE, ON THE BASIS OF THE REGISTRATION BEING GRANTED U/S 8 ITA NOS. 14 TO 16/CTK/2013 (ASST. YEARS : 2006 - 07, 2008 - 09 & 2009 - 10) 12A, THE ASSESSEE WILL BE ELIGIBLE FOR EXEMPTION IN RELATION TO ITS INCOME U/S 11 & 12 ONLY FROM A.Y. 2009 - 10 ONWARDS. THE LETTER ISSUED BY CBDT DT. 24 .9.2010 IS VERY CLEAR THAT THE HEAD OFFICE AND BRANCHES ARE TO BE TREATED AS DISTINCT AND SEPARATE ENTITY FOR THE PURPOSE OF INCOME TAX ACT, 1961. SIMILAR INTERPRETATION HAS BEEN TAKEN BY THE INDIAN RED CROSS SOCIETY, ODISHA STATE BRANCH VIDE LETTER DT. 1 9.3.2008 . THE ASSESSEE HAS ALSO ACCEPTED THIS POSITION OF LAW AND ACCORDINGLY, HAS APPLIED FOR REGISTRATION U/S 12A VIDE APPLICATION DT. 23.7.2008. VIDE LETTER DT. 31.12.2011 THE STATE UNIT OF THE INDIAN RED CROSS SOCIETY HAS CHANGED ITS CONTENTION AND I NFORMED THE ASSESSEE THAT THE ASSESSEE IS NOT REQUIRED TO PROCEED TO GET REGISTRATION U/S 12A . WHEN THE ASSESSEE HAS ALREADY GOT ITSELF REGISTERED U/S 12A , THE ASSESSEE CANNOT BE PERMITTED TO TAKE A CONTRARY VIEW IN OUR OPINION. THE LETTER DT. 31.12.2011 , IN ANY CASE, WAS NOT EVIDENCE WHICH WAS AVAILABLE BEFORE THE AO AND HAS BEEN WRITTEN ONLY AFTER THE COMPLETION OF THE ASSESSMENT. THE ASSESSEE CANNOT BE PERMITTED TO CHANGE ITS STAND AS AND WHEN IT SUITS IT. THE CBDT HAS EXAMINED THE MATTER AND VIDE LE TTER DT. 24.9.2010 HAS CLEARLY STATED THAT THE HEAD OFFICE AND BRANCHES ARE TO BE TREATED AS DISTINCT AND SEPARATE ENTITIES FOR THE PURPOSE OF INCOME TAX. AS PER THE INTERPRETATION TAKEN BY THE INDIAN RED CROSS SOCIETY, ODISHA STATE BRANCH VIDE LETTER DT. 19.3.2008 THE ASSESSEE HAS ALSO GOT ITSELF REGISTERED WITH THE CIT, CUTTACK U/S 12A VIDE REGISTRATION NO. 12A/ 376 - 64/2013 - 14 DT. 31.1.2014. WE HAVE ALSO SEEN THE RULES OF THE INDIAN RED CROSS SOCIETY, ODISHA STATE BRANCH, COPY OF WHICH HAS BEEN FILED BY THE ASSESSEE BEFORE US. NO DOUBT, RULE 4 EMPOWERS THE STATE BRANCH TO HAVE SUPERVISORY POWER OVER ALL ITS BRANCHES IN THE STATE OF ODISHA BUT THAT IS ONLY FOR THE PURPOSE OF OPENING THE BRANCHES IN EACH DISTRICT. THIS DOES NOT PROVE THAT THE BRANCH CANNO T BE AN INDEPENDENT ENTITY FOR THE PURPOSE OF INCOME TAX ACT. THIS FACT IS ALSO SUPPORTED BY RULE 21 UNDER THE HEADING AUDIT AS HAS BEEN ARGUED BY THE LD. AR. THIS CLAUSE CLEARLY STATES THAT EVERY YEAR THE ACCOUNTS OF THE DISTRICT BRANCH SHALL BE AUDIT ED BY THE AUDITOR APPOINTED BY THE EXECUTIVE COMMITTEE OR BY THE STATE 9 ITA NOS. 14 TO 16/CTK/2013 (ASST. YEARS : 2006 - 07, 2008 - 09 & 2009 - 10) BRANCH AS THE CASE MAY BE . A COPY OF THE AUDITED ACCOUNTS AND REPORT SHALL BE SUBMITTED TO THE STATE BRANCH FORTHWITH AFTER IT IS ADOPTED BY THE EXECUTIVE COMMITTEE . THIS CLAUSE NOWHE RE TALKS THAT THE ACCOUNTS OF THE BRANCH WILL GET MERGED IN THE INDIAN RED CROSS SOCIETY, ODISHA STATE BRANCH. RATHER THIS CLAUSE PROVES THAT THE DISTRICT BRANCH WILL HAVE INDEPENDENT ACCOUNTS AND THEY HAVE TO GET THEIR ACCOUNTS AUDITED. MERELY A BRANCH CANNOT BE ESTABLISHED WITHOUT PERMIT OF THE WORKING COMMITTEE OF THE STATE BRANCH DOES NOT MEAN THAT THE BRANCH DOES NOT HAVE AN INDEPENDENT IDENTITY. EXCEPT LETTER DT. 31.12.2011 , NO OTHER COGENT MATERIAL OR EVIDENCE WAS BROUGHT TO OUR KNOWLEDGE WHICH MA Y PROVE THAT FOR THE PURPOSE OF INCOME TAX, THE ASSESSEE CANNOT BE TREATED TO BE A SEPARATE ENTITY. SINCE THE ASSESSEE GOT REGISTERED U/S 12A, THEREFORE, IT WILL BE ENTITLED FOR EXEMPTION U/S 11 AND 12 FROM THE A.Y 2009 - 10 AND FOR THE A.YS 2006 - 07 AND 200 8 - 09, THE ASSESSEE WILL NOT BE ENTITLED FOR EXEMPTION. WE NOTED THAT FOR A.Y 2006 - 07 THE AO HAS ASSESSED THE ASSESSEE ON THE INCOME WHICH HAS BEEN DERIVED BY THE ASSESSEE AFTER DEDUCTING THE EXPENSES THEREOF. SIMILARLY, THE AO HAS DETERMINED THE INCOME O F THE ASSESSEE FOR A.Y 2008 - 09 AFTER DEDUCTING THE EXPENSES OUT OF THE GROSS INCOME. THEREFORE, WE DO NOT FIND ANY ILLEGALITY OR INFIRMITY EVEN IN THE COMPUTATION OF INCOME IN BOTH THESE A.YS. WE, ACCORDINGLY, DISMISS THE GROUND OF APPEAL TAKEN BY THE AS SESSEE FOR A.YS. 2006 - 07 AND 2008 - 09 AND CONFIRM THE ORDER OF CIT(A) DISMISSING THE APPEALS OF THE ASSESSEE. 6.1 SO FAR AS DETERMINATION OF THE INCOME FOR THE A.Y 2009 - 10 IS CONCERNED, WE NOTED THAT THE CIT HAS ALLOWED REGISTRATION U/S 12A TO THE ASSESSEE VIDE ITS ORDER DT. 31.1.2014 FROM A.Y 2009 - 10. SINCE THE APPEAL HAS BEEN DECIDED BY THE CIT(A) ON 22.11.2012 AND THE ASSESSMENT ORDER HAS BEEN PASSED BY THE AO ON 24.11.2011 I.E. PRIOR TO THE REGISTRATION BEING ALLOWED TO THE ASSESSEE U/S 12A AND SINCE REGISTRATION WAS NOT GRANTED TO THE ASSESSEE PRIOR TO THE FRAMING OF THE ASSESSMENT, WE, THEREFORE, SET ASIDE THE ASSESSMENT AND DIRECT THE AO TO 10 ITA NOS. 14 TO 16/CTK/2013 (ASST. YEARS : 2006 - 07, 2008 - 09 & 2009 - 10) RE - DETERMINE THE INCOME OF THE ASSESSEE AFTER GIVING EFFECT TO THE ORDER OF CIT PASSED U/S 12A DT. 31.1 .2014 AS, IN OUR OPINION, THE PROVISIONS OF SEC. 11 & 12 WILL BE APPLICABLE TO THE ASSESSEE IN THIS YEAR. THUS, APPEAL FOR A.Y 2009 - 10 IS ALLOWED FOR STATISTICAL PURPOSE. 7. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE FOR A.YS 2006 - 07 AND 2008 - 09 STAND DISMISSED WHILE THE APPEAL FILED FOR A.Y 2009 - 10 IS ALLOWED FOR STATISTICAL PURPOSE. 8. ORDER PRONOUNCED IN PURSUANCE OF RULE 34(4) OF ITAT RULES, 1963 BY PUTTING ON NOTICE BOARD OF THE BENCH AT CUTTACK ON 1 3 /06/ 201 4 . SD / - (D.T.GARASIA) JUDICIAL MEMBER S D / - (P.K. BANSAL) ACCOUNTANT MEMBER PLACE : PANAJI DATED : 1 3 / 06 /201 4 *SSL* COPY TO : (1) APPELLANT (2) RESPONDENT (3) CIT CONCERNED (4) CIT(A) CONCERNED (5) D.R (6) GUARD FILE TRUE COPY, BY ORDER