Asst. Director of Income-tax (Exemptions)-I, Hyderabad V. Youth for Action, Secunderabad

ITA 218/HYD/2012

• Counselvise Citation: [2013] 120 COUNSELVISE.COM (IT) 2791 (ITAT-HYDERABAD)
• Duration Of Justice: 1 year(s) 2 month(s) 15 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 25-04-2013
• Appeal Filed By: Department
• Bench Allotted: A
• Assessment Year: 2004-2005
• Appeal Filed On: 10-02-2012
• Court: TRIBUNAL
• Keywords: Charitable institution; Onus to prove; Reassessment proceedings
• Section: 143(3); 147; 148; 6; 10; 2; 11

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD BENCH A', HYDERABAD BEFORE SHRI CHANDRA POOJARI, ACCOUNTANT MEMBER AND SHRI SAKTIJIT DEY, JUDICIAL MEMBER ITA NO.218/HYD/12 ASST. YEAR 2004-05 ADIT (E) - I, HYDERABAD. V/S. YOUTH FOR ACTION SECUNDERABAD. PAN AAATY0146K (APPELLANT) (RESPONDENT) APPELLANT BY : SRI K.J. RAO RESPONDENT BY : SRI V. NAGARAJAN DATE OF HEARING 22 - 02 -- 2013 DATE OF PRONOUNCEMENT 19 - 04 - 2013. O R D E R PER SAKTIJIT DEY, JUDICIAL MEMBER: THIS APPEAL FILED BY THE REVENUE IS DIRECTED AGAI NST THE ORDER DATED 30-11-2011 OF CIT (A)-IV, HYDERABAD P ASSED IN APPEAL NO.191/ADIT(E)-I/CIT(A)-IV/10-11 PERTAINING TO THE ASSESSMENT YEAR 2004-05. 2. GROUND NO. I AND VII ARE GENERAL IN NATURE, HENC E, NEED NO ADJUDICATION. ITA NO. 218 OF 2012 YOUTH FOR ACTION, SECUNDERA BAD. 2 3. IN GROUND NO. II TO V, THE GRIEVANCE OF THE DEPA RTMENT IS WITH REGARD TO THE DIRECTION GIVEN BY THE CIT (A) T O GRANT EXEMPTION U/S 11 OF THE ACT TO THE ASSESSEE. 4. BRIEFLY THE FACTS ARE, THE ASSESSEE IS A SOCIETY REGISTERED UNDER ANDHRA PRADESH ( TELANGANA AREAS) PUBLIC SOCI ETIES REGISTRATION ACT , 1350 FASLI (ACT 1 OF 1350F). TH E ASSESSEE FILED ITS RETURN OF INCOME FOR THE IMPUGNED ASSESSM ENT YEAR ON 1-7-2004 DECLARING NIL INCOME AFTER CLAIMING EXE MPTION U/S 11 OF THE ACT. AN ASSESSMENT ORDER WAS PASSED U/S 143(3) ON 19-9-2006 ACCEPTING THE RETURN OF THE ASSESSEE. SU BSEQUENTLY, ACTION U/S 147 WAS INITIATED BY ISSUANCE OF NOTIC E U/S 148 OF THE ACT. DURING THE REASSESSMENT PROCEEDINGS, THE ASSESSING OFFICER NOTING THE FACT THAT AN AMOUNT OF RS.1,68, 000 WAS PAID AS SALARY AND RS.6,20,000 AS HONORARIUM TO SRI VENK AT RAMNAYYA WHO IS THE SECRETARY AND EXECUTIVE DIRECTO R OF THIS SOCIETY. SRI VENKAT RAMNAYYA WAS ALSO A CHIEF FUNC TIONARY AS WELL AS THE FOUNDER/MEMBER OF THE INSTITUTION. TH E ASSESSING OFFICER WAS OF THE OPINION THAT THE ENTIRE INCOME O F THE SOCIETY IS LIABLE TO TAX IF PART OR WHOLE OF ITS INCOME OR PROPERTY IS DIRECTLY OR INDIRECTLY APPLIED OR USED FOR THE BENE FIT OF CERTAIN CATEGORY OF PERSONS SUCH AS AUTHOR/FOUNDER, ANY TRU STEE, MANAGER OF SUBSTANTIAL CONTRIBUTOR ETC., OR ANY SPE CIFIED RELATIVES. HE THEREFORE ASKED THE ASSESSEE TO SHOW CAUSE AS TO WHY THE EXEMPTION GRANTED SHALL NOT BE WITHDRAWN I N VIEW OF THE PAYMENTS MADE TO THE SPECIFIED PERSONS IN VIOLA TION OF SECTION 13(3) OF THE ACT. THE ASSESSEE IN RESPONSE TO THE OBJECTIONS RAISED BY THE ASSESSING OFFICER SUBMITTE D THAT THE PAYMENT MADE TO THE EXECUTIVE DIRECTOR WAS ON THE B ASIS OF ITA NO. 218 OF 2012 YOUTH FOR ACTION, SECUNDERA BAD. 3 QUANTUM OF WORK INVOLVED WITH THE PROJECTS AND SUPP ORTED BY DONORS VIZ., ROCKEFELLER FOUNDATION, DESWOS, FES, AH, NORAD. THE BOARD OF THE ASSESSEE-SOCIETY ALSO REALIZING TH E NEED FOR PROFESSIONAL INPUTS SUPPORTED THE DECISION OF THE D ONOR. IT WAS SUBMITTED THAT SRI E. VENKAT RAMNAYYA IS HIGHLY QUA LIFIED BEING A POST GRADUATE FROM XLRI,XISS, RANCHI AND JAMSHEDP UR AND HAS RICH PROFESSIONAL EXPERIENCE IN THE FIELD OF SO CIAL SERVICE. THE SALARY RESERVED FOR HIM BY THE ASSESSEE-SOCIETY IS COMMENSURATE TO HIS EXPERIENCE AND QUALIFICATION. SINCE THE ORGANIZATION IS WORKING IN THE FIELD OF RURAL DEVEL OPMENT AND IT HAS TO EXECUTE PROJECTS FOR GROWTH, BENEFIT AND DEV ELOPMENT OF RURAL MASSES, THE PROJECTS ARE SUPPORTED/PARTNERED BY THE DONOR AGENCIES BOTH FOREIGN AND GOVERNMENTAL. IT WAS FURTHER SUBMITTED THAT SINCE ITS INCEPTION MR. E. VENKAT RA MNAYYA WAS IN FULL CHARGE OF THE AFFAIRS OF THE SOCIETY IN RES PECT OF ALL THE CONTRACTS TO BE EXECUTED, BESTOWED UPON BY FUNDING AGENCIES INCLUDING GOVERNMENT ORGANIZATION AND MANAGED A PRO FESSIONAL TEAM OF MORE THAN 40 QUALIFIED PERSONS ENGAGED IN T HE ACTIVITIES OF RURAL DEVELOPMENT AND WAS ALSO COND UCTING ALL THE FUNCTIONS AS STATED IN RULES AND REGULATIONS OF THE SOCIETY INCLUDING TRAINING, ACTION RESEARCH AND MOBILIZATIO N OF RESOURCES. IT WAS SUBMITTED THAT IN ORDER TO ACHI EVE THE QUALITY OF THE PROGRAMME OUTPUTS AND BENEFITS TO PO OR AND NEEDY, THE FUNDING AGENCIES EARMARK A REASONABLE AM OUNT TO BE PAID TO THE EXECUTIVE DIRECTOR AND OTHER PROFESS IONALS AS WELL AS THE STAFF OF THE SOCIETY. 5. IT WAS SUBMITTED THAT HONORARIUM WAS PAID TO THE PROFESSIONALS/STAFF FOR THEIR DEDICATED SERVICE TO ACHIEVE THE ITA NO. 218 OF 2012 YOUTH FOR ACTION, SECUNDERA BAD. 4 OBJECTS OF THE ORGANIZATION. IN THIS REGARD, THE ASSESSEE SUBMITTED COPIES OF THE AGREEMENT AND ALSO THE LIST OF PERSONS TO WHOM HONORARIUM WAS PAID WHICH INCLUDED HIGHLY EXPERIENCED PROFESSIONALS SUCH AS SRI S.D. MUKHERJE E, IFS FORMER PRINCIPAL CHIEF CONSERVATOR OF FORESTS FOR H IS EXCEPTIONAL SERVICES IN THE AREA OF WATER SHED MANAGEMENT AND F ORESTRY. DR M.V.R PRASAD FORMERLY DIRECTOR DOR AND SENIOR ADVIS OR WORLD BANK AND GOVERNMENT OF PORTUGAL. DR ABDUL QUAYUM, PROF., EMERITUS, BIRSA AGRICULTURAL UNIVERSITY RANCHI, DR D. CHOWDHARY, DR M.H. RAO, FORMERLY DIRECTOR (I/C) ALL INDIA CO- ORDINATED PROJECT ON SORGHAM, DR B.V. RAMANA RAO, FORMERLY DIRECTOR (I/C), DR B.V. VENKATESWARLU, A RENOWNED SCIENTIST ASSOCIATED WITH CRIDA, AND MANY OTHER PROFESSIONALS . THE ASSESSEE SUBMITTED THAT HONORARIUM WAS PAID TO ALL THESE HIGHLY EXPERIENCED PROFESSIONALS WHO WORKED PART TIME BESI DES SRI.E. VENKAT RAMNAYYA WHO HAD WORKED FULL TIME. 6. THE ASSESSING OFFICER HOWEVER, OBSERVED THA T THOUGH HONORARIUM WAS PAID TO A NUMBER OF PROFESSIONALS, T HE AMOUNT PAID TO SRI RAMNAYYA, THE SECRETARY OF THE SOCIETY WAS EXCESSIVE. HE NOTED THAT SRI RAMNAYYA IN ADDITION T O HAVING BEEN PAID REMUNERATION OF RS.1,68,000/- FOR THE FUL L TIME JOB HAS ALSO RECEIVED HONORARIUM OF RS.6,20,000/-. THE ASSESSING OFFICER NOTICED THAT AS PER CERTIFICATES APPENDED T O THE MEMORANDUM OF ASSOCIATION, OFFICE BEARERS WERE NOT BEING PAID FROM THE FUNDS OF THE ASSOCIATION. HOWEVER, SRI R AMNAYYA BEING AN OFFICE BEARER HAD BEEN PAID FROM THE FUNDS OF THE SOCIETY. IT WAS FURTHER NOTED THAT THE SOCIETY HAS NOT ENTERED INTO ANY AGREEMENT FOR PAYMENT OF SALARY/HONORARIUM TO HIM. ITA NO. 218 OF 2012 YOUTH FOR ACTION, SECUNDERA BAD. 5 THE ASSESSING OFFICER WAS OF THE VIEW THAT THE CONT ENTION OF THE ASSESSEE THAT THE HONORARIUM WAS PRE-DETERMINED BY THE DONORS WERE ALSO NOT VALID AS ANY DONATION COULD NO T BE CONDITIONAL TO THE PAYMENT TO SPECIFIED PERSONS, M ORE SO TO THE OFFICE BEARER. HE THEREFORE FELT THAT SRI RAMNAYY A HAD BEEN PAID SALARY AND HONORARIUM APPARENTLY TO HIS ADVANT AGE AND SUCH PAYMENTS HAD BENEFITTED TO HIM. HE FURTHER OB SERVED THAT THE DONORS HAVE NOT SPECIFIED THE QUANTUM OF HONORA RIUM PAID TO THE INDIVIDUALS AND THE ASSESSEE HAD ALSO NOT EX PLAINED AS TO WHO HAD DECIDED THE SAME. THE ASSESSING OFFICER FU RTHER NOTED THAT A COMPARISON OF HONORARIUM PAID TO OTHER PROF ESSIONALS SHOWED THAT THE PAYMENT MADE TO SRI RAMNAYYA EXCESS IVE THEN WHAT COULD BE REASONABLY PAID FOR SUCH SERVICES. I T WAS FURTHER NOTED BY THE ASSESSING OFFICER THAT SINCE SRI RAMNA YYA HAD ALREADY PAID REMUNERATION OF RS.1,68,000/- THE FURT HER PAYMENT OF HONORARIUM OF RS.6,20,000 IS EXCESSIVE A ND UNREASONABLE. ACCORDINGLY, THE ASSESSING OFFICER H ELD THAT SUCH PAYMENT OF HONORARIUM IS IN VIOLATION OF THE PROVIS ION CONTAINED U/.S 13(3) OF THE ACT. ON THE BASIS OF THE AFORESA ID CONCLUSION, THE ASSESSING OFFICER CAME TO HOLD THAT THE ASSESSE E IS NOT ENTITLED TO AVAIL EXEMPTION U/S 11 OF THE ACT AND T HEREBY BROUGHT THE ENTIRE RECEIPT OF RS.2,47,78,536/- TO T AX. 7. THE ASSESSEE CHALLENGED THE ASSESSMENT ORDE R PASSED BY PREFERRING AN APPEAL BEFORE THE CIT(A). DURING THE HEARING OF APPEAL BEFORE THE CIT(A) THE ASSESSEE REITERATED TH E SUBMISSIONS MADE BEFORE THE ASSESSING OFFICER AND S UBMITTED THAT THE ASSESSING OFFICER HAD COMPLETELY IGNORED T HE PROVISIONS MADE IN THE BYE LAWS REGARDING THE PAYME NT TO THE ITA NO. 218 OF 2012 YOUTH FOR ACTION, SECUNDERA BAD. 6 OFFICE BEARERS WORKING FULLTIME FOR THE ACTIVITIES OF THE SOCIETY. IT WAS SUBMITTED THAT SALARY/HONORARIUM PAYABLE TO SRI RAMNAYYA WERE PART OF THE BUDGET PROVISION , APPROV ED BY THE DONOR AGENCY ROCKEFELLER FOUNDATION. IT WAS SUBMITT ED THAT THE DONOR AGENCY MAKES ITS OWN INDEPENDENT ASSESSMENT O F WHAT IS REASONABLE AND IN LINE WITH THE PREVAILING LEVELS O F STAFF COMPENSATION BY SIMILAR ORGANIZATIONS EXECUTING SUC H PROJECTS. IT WAS SUBMITTED THAT SINCE THE HONORARIUM WAS RELA TABLE TO THE EFFORTS PUT IN BY THE EXECUTIVE DIRECTOR/SECRETARY, THE SAME SHOULD NOT BE VIEWED AS AN EXTRAORDINARY PAYMENT ME ANT FOR THE BENEFIT OF THE RECIPIENT WITHOUT ANY SERVICE OR EXECUTIONAL ABILITIES. IT WAS FURTHER SUBMITTED THAT ALL SUCH P AYMENTS HAD BEEN SUBJECTED TO TDS ALSO. 8. THE ASSESSEE SUBMITTED A CHART BEFORE THE CIT(A) TO SHOW THAT THE REMUNERATION/ HONORARIUM PAID TO THE EXECU TIVE DIRECTOR SHRI RAMNAYYA CANNOT BE CONSIDERED TO BE E XCESSIVE OR UNREASONABLE COMPARED TO WHAT WAS PAID IN EARLIER Y EARS. IT WAS SUBMITTED, PAYMENT OF HONORARIUM DECLINED IN TH E SUBSEQUENT YEARS AS THE SCALE OF PROJECTS CHANGED. IT WAS FURTHER CONTENDED THAT ALL THE EXPENDITURE HAD BEEN INCURRED OUT OF CONTRACTUAL OBLIGATIONS IMPOSED BY THE GRANT COMMITMENTS OR OUT OF THE SERVICES PROVIDED BY THE SOCIETY. THE ASSESSEE SUBMITTED THAT THE CERTIFICATE APPENDE D TO THE MEMORANDUM OF ASSOCIATION OF THE SOCIETY PROVIDES F OR PAYMENT OF REMUNERATION TO A FULL TIME OFFICE BEARER. HE FU RTHER SUBMITTED THAT PAYMENTS MADE TO SRI RAMNAYYA CANNOT BE COMPARED WITH THE PAYMENTS TO OTHER HIRED PROFESSIO NALS WHO ONLY WORK PART TIME. IT WAS SUBMITTED THAT THE ASSE SSING OFFICER ITA NO. 218 OF 2012 YOUTH FOR ACTION, SECUNDERA BAD. 7 DID NOT PROPERLY EXAMINE THE REASONABLENESS OF THE PAYMENTS MADE IN THE LIGHT OF THE BENEFIT GAINED BY THE SOCI ETY FROM THE EXPERIENCE AND EXPERTISE OF SRI RAMNAYYA. IT WAS SU BMITTED THAT THE EXPERIENCE AND SKILLS OF SRI RAMNAYYA IS V ERY MUCH ESSENTIAL FOR THE FURTHERANCE AND ACHIEVEMENT OF TH E OBJECTIVES OF THE SOCIETY AND THEREFORE, MAKING REASONABLE PAY MENT COMMENSURATE WITH THE QUALIFICATION AND EXPERIENCE OF SRI RAMAYA WAS NEEDED FOR FUNCTIONING OF THE SOCIETY. T O ESTABLISH THE FACT THAT THE REMUNERATION PAID TO SRI E. RAMAN AYYA IS REASONABLE THE ASSESSEE ALSO SUBMITTED A STATEMENT SHOWING DETAILS OF SALARY AND ALLOWANCES PAID TO CEOS OF SI MILAR NGOS AS ALSO THEIR QUALIFICATION AND EXPERIENCE. IN SUPP ORT OF ITS CONTENTION THE ASSESSEE ALSO RELIED UPON CERTAIN JU DICIAL PRECEDENTS. THE CIT(A) AFTER CONSIDERING THE SUBMIS SIONS OF THE ASSESSEE AND OTHER MATERIALS ON RECORD, WAS OF THE VIEW THAT THE ASSESSING OFFICER HAS NOT DISPUTED THE FACT THA T SRI RAMNAYYA IS HAVING VAST EXPERIENCE AND NECESSARY QUALIFICATION. THE CIT(A) FURTHER OBSERVED THAT THE ASSESSING OFFICER HAS NOT BEEN ABLE TO BRING OUT THAT THE SER VICES CONTEMPLATED AS RECEIVABLE BY THE SOCIETY FROM HIM WAS NOT ACTUALLY RECEIVED OR THE SERVICES OF SRI RAMNAYYA A RE NOT OF THE LEVEL OF THE CEOS OF OTHER ORGANISATIONS WHO ARE GE TTING EVEN HIGHER REMUNERATION FOR SIMILAR KIND OF SERVICES. T HE CIT(A) OPINED THAT THE ASSESSING OFFICER HAS NOT BEEN ABLE TO DEMONSTRATE THAT PROVISIONS OF SEC. 13 (3) WERE VIO LATED BY EITHER SHOWING THAT SUCH SERVICES WERE NOT ACTUALLY RENDERED OR THE REMUNERATION PAID FOR SUCH SERVICES WAS IN ANY MANNER EXCESSIVE OR UNREASONABLE THEREBY, RESULTING IN MIS -UTILISATION OF THE FUNDS OF THE SOCIETY. THE CIT(A) RELYING UPO N THE ITA NO. 218 OF 2012 YOUTH FOR ACTION, SECUNDERA BAD. 8 DECISIONS OF HONBLE ALLAHABAD HIGH COURT IN THE CA SE OF CIT VS. KAMALA TOWN TRUST ( 279 ITR 89) AND OF HONBLE MADR AS HIGH COURT IN THE CASE OF CIT VS. 21 ST SOCIETY OF INACCURATE CONCEPTION (241 ITR 193) HELD THAT, AS THE ASSESSIN G OFFICER HAS NOT BEEN ABLE TO MAKE OUT AS TO HOW THE SALARY/ HONORARIUM PAID TO SRI RAMNAYYA WAS NOT COMMENSURATE WITH THE SERVICES ADMITTEDLY RENDERED BY HIM, THERE IS NO BASIS FOR C OMING TO THE CONCLUSION THAT SUCH SALARY/HONORARIUM WAS EXCESSIV E AND UNREASONABLE. THE CIT(A) ACCORDINGLY, DIRECTED THE ASSESSING OFFICER TO RECOMPUTED THE INCOME OF THE ASSESSEE AF TER GRANTING EXEMPTION U/S. 11 OF THE ACT. 9. WE HAVE HEARD CONTENTIONS OF THE PARTIES AND PER USED THE MATERIAL ON RECORD. WHILE THE LEARNED DR SUPPORTED THE VIEWS OF THE ASSESSING OFFICER, THE LEARNED AR MORE OR LE SS REITERATED THE SUBMISSIONS MADE BEFORE THE FIRST APPELLATE AUT HORITY. EXEMPTION U/S 11 OF THE ACT, IS SUBJECT TO THE CONDITIONS/RESTRICTIONS IMPOSED U/S 13 OF THE IT AC T. CLAUSE (C) OF SECTION 13(1) PROVIDES THAT IF ANY PART OF THE I NCOME OF THE TRUST OR ASSOCIATION IS APPLIED FOR THE BENEFIT OF ANY PERSON REFERRED TO IN SUB-SECTION (3) OF SECTION 13, THEN, NO EXEMPTION U/S 11 CAN BE AVAILED. SUB-SECTION 2 (C) OF SEC. 1 3 MAKES IT CLEAR THAT PAYMENT OF SALARY, ALLOWANCE ETC., TO A SPECIFIED PERSON U/S 13(3) TOWARDS SERVICES RENDERED BY HIM I F FOUND TO BE EXCESSIVE OR UNREASONABLE THEN NO EXEMPTION CAN BE GRANTED U/S. 11 OF THE ACT. IMPOSITION OF SUCH CONDITION/RESTRICTION IS TO RULE OUT THE POSSIBILIT Y OF DIVERSION OF THE FUNDS RECEIVED FOR CHARITABLE PURPOSE TOWARDS T HE BENEFIT OF ANY PERSON BEING THE AUTHOR OF THE TRUST, FOUNDER O F THE ITA NO. 218 OF 2012 YOUTH FOR ACTION, SECUNDERA BAD. 9 INSTITUTION OR A PERSON WHO HAS MADE A SUBSTANTIAL CONTRIBUTION TO THE TRUST OR INSTITUTION. THUS, ASSESSING OFFICE R IS GIVEN A DISCRETION TO DETERMINE WHAT SHOULD BE A REASONABLE PAYMENT TOWARDS THE SERVICES RENDERED. THERE CANNOT BE ANY STRAIGHT JACKET FORMULA TO FIND OUT WHAT CONSTITUTES A REASO NABLE PAYMENT. IT WOULD DEPEND UPON THE FACTS AND CIRCUMS TANCES OF EACH CASE. FOR THE YEAR UNDER DISPUTE, THE ASSESSE E HAD RECEIVED DONATIONS OF RS. 2,44,31,736/- WHEREAS THE ASSESSEE HAS PAID REMUNERATION OF RS. 1,68,000/- AND HONORAR IUM OF RS. 6,20,000/-TO THE EXECUTIVE DIRECTOR, WHICH IN OTHER WORDS MEANS THAT AN AMOUNT OF RS. 65,000/- PER MONTH WAS BEING PAID TO THE EXECUTIVE DIRECTOR TOWARDS THE SERVICES RENDERED BY HIM. ON PERUSAL OF THE ORDER OF THE CIT(A), IT IS S EEN THAT HE CAME TO HIS CONCLUSION BEING TOTALLY INFLUENCED BY THE FACT THAT THE EXECUTIVE DIRECTOR SHRI RAMNAYYA IS A MAN OF VA ST EXPERIENCE AND NECESSARY QUALIFICATION AND SIMILAR ORGANISATIONS ARE PAYING EVEN HIGHER REMUNERATION TO THEIR CEOS F OR RENDERING MORE OR LESS SIMILAR SERVICES. THESE REAS ONS, IN OUR VIEW, ARE NOT ENOUGH TO COME TO A CONCLUSION THAT T HE PAYMENT MADE WAS REASONABLE. IT HAS TO BE BORNE IN MIND THA T REASONABLENESS OF PAYMENT OF SALARY, REMUNERATION, ALLOWANCE, ETC., IN CASE OF A CHARITABLE INSTITUTION AVAILING EXEMPTION U/S 11 HAS TO BE WEIGHED IN A DIFFERENT SCALE COMPARED TO ANY OTHER ORGANISATION. FURTHER, THE CIT(A) HAS RELIED UPON T HE DECISION OF THE HONBLE ALLAHABAD HIGH COURT IN CASE OF CIT V/S. KAMALA TOWN TRUST (SUPRA) WHEREIN IT HAS BEEN OBSERVED THA T THE BURDEN TO PROVE THAT SECTION 13 IS VIOLATED IS UPON THE REVENUE. HOWEVER, THE FACTS IN THE CONTEXT OF WHICH THE HON BLE HIGH COURT HELD SUCH VIEW IS TOTALLY DIFFERENT FROM THE FACTS OF THE ITA NO. 218 OF 2012 YOUTH FOR ACTION, SECUNDERA BAD. 10 PRESENT APPEAL BEFORE US. IN CASE OF KAMALA TOWN TR UST (SUPRA), THE FINDING OF FACT WAS TO THE EFFECT THAT THE DEPARTMENT HAS FAILED TO ESTABLISH THAT THE BENEFIC IARY IS A PERSON COMING WITHIN THE CATEGORY OF PROHIBITED PER SONS U/S 13(3) OF THE ACT. HOWEVER, IN THE APPEAL BEFORE US THERE IS NO DENYING THE FACT THAT THE BENEFICIARY IS A PERSON S PECIFIED U/S 13(3) OF THE ACT, WHICH ATTRACTS THE PROVISION OF S ECTION 13(1)(C) OF THE ACT. THEREFORE, THE ASSESSEE HAS TO ESTABLISH THE REASONABLENESS OF THE PAYMENT MADE TO SUCH PERS ON. SIMILARLY, THE DECISION OF THE HONBLE MADRAS HIGH COURT IN THE CASE OF CIT V/S. 21 ST SOCIETY OF INACCURATE CONCEPTION (SUPRA) IS NOT APPLICABLE TO THE FACTS OF THE PRESENT CASE AS IN THAT CASE THE PAYMENTS MADE TO THE NUNS WERE OUT OF THE SALAR Y RECEIVED BY THEM AS A TEACHER IN A SCHOOL FUNDED BY THE STAT E, WHICH WERE MADE OVER BY THE NUNS TO THE SOCIETY. ON CONSI DERATION OF THE FACTS AND MATERIALS AVAILABLE ON RECORD, WE ARE OF THE VIEW THAT ADEQUATE ENQUIRY IS REQUIRED TO BE CONDUCTED F OR ARRIVING AT A CONCLUSION WITH REGARD TO THE REASONABLENESS O R OTHERWISE OF THE PAYMENT OF SALARY AND HONORARIUM TO THE EXEC UTIVE DIRECTOR SHRI E. RAMNAYYA. SINCE NEITHER THE CIT(A) NOR THE ASSESSING OFFICER HAVE PROPERLY ENQUIRED INTO THE M ATTER BEFORE COMING TO THEIR RESPECTIVE CONCLUSIONS, WE ARE INCL INED TO REMIT THE MATTER TO THE FILE OF THE ASSESSING OFFICER FOR FRESH CONSIDERATION OF THE ISSUE. THE ASSESSING OFFICER S HALL CALL FOR ALL THE MATERIALS IN THIS REGARD FROM THE ASSESSEE AND MAY ALSO CONDUCT FURTHER ENQUIRY, IF FOUND NECESSARY, FOR CO MING TO A JUST AND PROPER CONCLUSION. THE ASSESSING OFFICER S HALL PASS THE ORDER AFTER AFFORDING ADEQUATE OPPORTUNITY OF BEIN G HEARD TO ITA NO. 218 OF 2012 YOUTH FOR ACTION, SECUNDERA BAD. 11 THE ASSESSEE IN THE MATTER AND AFTER CONSIDERING AL L THE EVIDENCES THAT THE ASSESSEE MAY SUBMIT IN SUPPORT O F HIS CLAIM. 10. SINCE WE HAVE REMITTED THE MATTER TO THE FILE O F THE ASSESSING OFFICER, GROUND NO. VI IS DISMISSED HAVIN G BECOME INFRUCTUOUS. 11. IN THE RESULT, THE APPEAL FILED BY THE DEPARTME NT IS PARTLY ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE COURT ON 19 TH APRIL, 2013. SD/- SD/- (CHANDRA POOJARI) (SAKTIJIT DEY) ACCOUNTANT MEMBER JUDICIAL MEMBER DT/- 19 TH APRIL, 2013. COPY FORWARDED TO: 1. A D IT (E) - 1 , 3 RD FLOOR, AAYAKAR BHAVAN, BASHEERBAGH, HYDERABAD 500 004. 2. 3. 4. YOUTH FOR ACTION, PLOT NO. 20 - 21, SREE NIVAS, BANJARA NAGAR, TIRUMULGIRI, SECUNDERABAD CIT (A)-IV, HYDERABAD THE DIT(E), HYDERABAD 5 DEPARTMENTAL REPRESENTATIVE, ITAT, HYDERABAD. JMR/KV