M/s Indian Red Cross Society, Hyderabad V. Dy.Director of Income-Tax (Exemption)-II, Hyderabad, Hyderabad

ITA 35/HYD/2015

• Counselvise Citation: [2015] 121 COUNSELVISE.COM (IT) 0341 (ITAT-HYDERABAD)
• Duration Of Justice: 3 month(s) 11 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 17-04-2015
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Next Hearing Date: 04-03-2015
• Assessment Year: 2005-2006
• Appeal Filed On: 06-01-2015
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: RAMAKRISHNA BANDI
• Assessee Lawyers: S RAVI; A V RAGHURAM
• Keywords: Depreciation; Charitable institution; Bonafide belief
• Section: 143(3); 80G; 12AA; 10B; 12; 11

Judgement Text

ITA NO.35 OF 2012 INDIAN REDCROSS SOCIETY HYDERABAD PAGE 1 OF 15 IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD A BENCH, HYDERABAD BEFORE SHRI P.M. JAGTAP, ACCOUNTANT MEMBER & SMT.ASHA VIJAYARAGHAVAN, JUDICIAL MEMBER ITA NO. 35/HYD/2015 (ASSESSMENT YEAR: 2005-06) M/S. INDIAN RED CROSS SOCIETY D.NO.3-6-212 STREET NO.15, HIMAYATNAGAR, HYDERABAD PAN: AAATI 4575 L VS. DY. DIRECTOR OF INCOME TAX (EXEMPTIONS)-II 3 RD FLOOR, AAYAKAR BHAVAN BASHEERBAGH HYDERABAD 1. (APPELLANT) (RESPONDENT) FOR ASSESSEE : SHRI S.RAVI & SHRI A.V.RAGHU RAM FOR REVENUE : SHRI RAMAKRISHNA BANDI, DR DATE OF HEARING : 04/03/2015 DATE OF PRONOUNCEMENT : 17 /04 /2015 O R D E R PER SMT. ASHA VIJAYARAGHAVAN, J.M. THIS IS AN APPEAL FILED BY THE ASSESSEE, AGAINST TH E ORDER OF THE CIT (A)-IV, HYDERABAD, DATED 7.11.2014 PASSED F OR A.Y 2005- 06, U/S 143(3) R.W.S. 254(1) OF THE I.T. ACT, 1961. 2. BRIEFLY STATED, THE INDIAN RED CROSS SOCIETY (IR CS) WAS SET UP UNDER AN ACT OF PARLIAMENT IN 1922, WITH ITS NAT IONAL HEAD QUARTERS IN NEW DELHI. THE ASSESSEE IS A BRANCH OF IRCS SET UP ON 28.09.1969 AND IS BASED IN HYDERABAD. ASSESSEE H AD FILED ITS RETURN OF INCOME FOR THE FIRST TIME ON 18.02.2008 S HOWING NIL ITA NO.35 OF 2012 INDIAN REDCROSS SOCIETY HYDERABAD PAGE 2 OF 15 INCOME. ON VERIFICATION OF THE APPLICATION OF THE A SSESSEE U/S 35AC FILED ON 2.6.2008 SHOWED THAT THE REGISTRATION U/S 12AA WAS EFFECTIVE ONLY FROM A.Y 2008-09. SINCE THE ASSE SSEE HAD RECEIVED A SUM OF RS.2,94,08,733 FROM THE PUBLIC DU RING THE YEAR, THE AO ISSUED A NOTICE U/S 148. 3. IN THE COURSE OF ASSESSMENT PROCEEDINGS, ASSESSE E SUBMITTED THAT ASSESSEE HAD BEEN UNDER THE BONAFIDE BELIEF THAT THERE WAS NO REQUIREMENT FOR IT TO FILE A RETURN OF INCOME AND THAT THE NATIONAL HEAD QUARTER HAS BEEN GRANTED REG ISTRATION BY THE DIRECTOR OF INCOME TAX (EXEMPTION) NEW DELHI VI DE HIS ORDER U/S 12A, DATED 29.6.2000. AO NOTED THAT THE NATIONA L HEAD QUARTER HAS BEEN ADVISED ON 2.1.2003 BY THE AO IN N EW DELHI TO APPROACH THE JURISDICTIONAL AOS FOR ISSUE OF CERTIF ICATES U/S 194 SINCE THE ACCOUNTS OF THE BRANCHES WERE KEPT AND MA INTAINED INDEPENDENTLY OF THE NATIONAL HEAD QUARTER. 4. IN THE LIGHT OF THE ABOVE, THE ASSESSING OFFICER CONCLUDED THAT IT WAS INCUMBENT UPON THE APPELLANT TO FILE RETURNS OF INCOME WITH THE JURISDICTIONAL ASSESSING OFFICER AT LEAST FROM AY 2003-04 ONWARDS. THE ASSESSING OFFICE R NOTED ITA NO.35 OF 2012 INDIAN REDCROSS SOCIETY HYDERABAD PAGE 3 OF 15 THAT FOR AY 2005-06, THE ANNUAL REPORT HAD BEEN FINALIZED ON 12.6.2006, I.E. MUCH AFTER THE DUE DAT E AND' THE ASSESSEE HAD FAILED TO FILE THE AUDIT REPORT IN FOR M 10B . AS A LAST RESORT, THE ASSESSING OFFICER REQUIRED THE ASS ESSEE TO AT LEAST FILE A COPY OF THE RETURN OF INCOME FILED BY IRCS, NEW DELHI THOUGH THE ASSESSING OFFICER FELT THAT IN ANY CASE, EVEN THIS RETURN COULD NOT BE CONSIDERED AS THE RETURN FILED BY THE ASSESSEE. 5. DURING THE REASSESSMENT' PROCEEDINGS, THE ASSESS ING OFFICER NOTED THAT THE ASSESSEE APPEARED TO HAVE MAINTAINED VARIOUS ACCOUNTS LIKE GENERAL FUNDS, TRU ST FUND, RED CROSS CYCLONE RELIEF AND RECONSTRUCTION C ORPUS FUND AND NATIONAL CALAMITY FUND. THE GENERAL FUND S HOWED AN INCOME OF RS.1,39,80,896 AND EXP OF RS.67,01,698 ON ESTABLISHMENTS, RS.18,60,153 ON OTHER EXPENDITURE W ITH SURPLUS OF RS.41,63,196. THE ASSESSING OFFICER ALSO NOTED THAT THE ASSESSEE HAD RECEIVED A GRANT OF RS.45.00 LAKHS FROM ANDHRA PRADESH WHICH HAD BEEN REFLECTED IN THE BALANCE SHEET BUT NOT IN THE INCOME AND EXPENDITURE STATEMENT AND THAT UNLESS THIS RECEIPT WAS IN THE N ATURE OF ITA NO.35 OF 2012 INDIAN REDCROSS SOCIETY HYDERABAD PAGE 4 OF 15 A DONATION TO THE CORPUS; THIS SHOULD HAVE BEEN SHO WN AS AN INCOME. THE ASSESSING OFFICER ALSO NOTED THAT TH E TRUST FUND ACCOUNT SHOWED EXPENDITURE OF RS.17,434 WHILE THE CYCLONE RELIEF AND RECONSTRUCTION CORPUS FUND SHOWE D INCOME OF RS.9,497. 6. THE ASSESSING OFFICER NOTED THAT THE NATURAL CAL AMITIES RELIEF FUND, WHICH HE CONSIDERED THE MOST IMPORTANT OF ALL, SHOWED ZERO DONATIONS, INTEREST OF RS.10,68,232, ZE RO RELIEF EXPENDITURE, DEPRECIATION OF RS.53,167, SALARIES OF RS.96,993 AND SURPLUS OF RS.9,18,073. THE ASSESSING OFFICER ALSO NOTED THAT THE BALANCE SHEET REPORTED A SUM OF RS.2,94,08,733 AS AMOUNT RECEIVED FOR TSUNAMI VICTI MS. SINCE THE TSUNAMI HAD OCCURRED ON 26.12.2004, THE ASSESSING OFFICER WONDERED HOW THE AMOUNT HAD BEEN LEFT UNSPENT FOR THREE MONTHS TILL 31.3.2005 SHOWIN G ZERO RELIEF WORK. THE ASSESSING OFFICER HELD THAT THE AS SESSEES CLAIMS OF HUMANITARIAN WORK HAD THEREBY BEEN PUT TO A SEVERE TEST SINCE TIME WAS OF THE ESSENCE IN SUCH SITUATIONS. ITA NO.35 OF 2012 INDIAN REDCROSS SOCIETY HYDERABAD PAGE 5 OF 15 7. THE ASSESSING OFFICER HELD THAT THERE BEING NO E XEMPTION FROM FILING OF RETURN OF INCOME FOR A SOCIETY REGIS TERED U/S 12AA, THE BENEFIT OF SEC.11 HAD TO BE DENIED TO A N ON-FILER AND ACCORDINGLY, THE EXCESS OF INCOME AS WELL AS TH E TSUNAMI DONATIONS AND THE GRANT RECEIVED FROM THE GOVERNMENT OF ANDHRA PRADESH WERE BROUGHT TO TAX. 8. ON APPEAL, THE CIT(A) VIDE HIS ORDER IN ITA NO.557/DDIT(E)- II/CIT(A)-IV/09-10, DATED 31.1.2011 HELD AS FOLLOWS: 6..... ACCORDINGLY, I AM OF THE VIEW THAT THE APPELLANT IS NOT ELIGIBLE TO GET THE BENEFIT OF THE PROVISIONS OF SECTION 10(23BBA) OF THE ACT. 6.6 ... TILL THE ASSESSMENT YEAR 2008-09, THE APPELLANT DID NOT HAVE ANY INDIVIDUAL STATUS AS A SEPARATE ENTITY AND ACCORDINGLY, ITS INCOME/LOSS WAS TO BE CONSIDERED WITH THE RESULTS OF NHQ ONLY. THEREFORE, IN VIEW OF THE FACT THAT THE APPELLANT BRANCH WAS NOT A SEPARATE ENTITY IN THE ASSESSMENT YEAR IN APPEAL, ALL THE PROVISIONS RELATING TO APPLICATION OF INCOME ETC. HAVE TO BE EXAMINED IN THE HANDS OF NHQ ONLY. THE ADDITIONS IN RESPECT OF CONTRIBUTIONS, GRANTS ETC. ARE THEREFORE, DELETED SUBJECT TO THE VERIFICATION OF THE CONTENTION THAT THE SAME HAVE BEEN CONSIDERED IN THE CONSOLIDATED RETURN OF THE IRCS.' 9. IN THE COURSE OF THE CONSEQUENTIAL ASSESSMENT ITA NO.35 OF 2012 INDIAN REDCROSS SOCIETY HYDERABAD PAGE 6 OF 15 PROCEEDINGS, AR SUBMITTED BEFORE THE ASSESSING OFFI CER THAT IRCS' HAD BEEN GRANTED REGISTRATION SINCE INCE PTION, THAT VIDE LETTER IN F.NO.176/23/94-II-AI DATED 21.7 .1994, THE CBDT STATED THAT NHQ WAS A 'SINGLE UNIT AND THA T THE BRANCHES HAVE NO SEPARATE CONSTITUTION AND THE CERT IFICATE ISSUED U/S 80G TO THE NHQ WILL APPLY TO ALL THE STA TE BRANCHES MUTATIS MUTANDIS', THAT AFTER CONSULTATION WITH THE MINISTRY OF LAW, THE CBDT LATER VIDE ITS LETTER DATED 19.5.2010 CLARIFIED THAT ALL BRANCHES OF THE IRCS M AY BE TREATED AS SEPARATE ENTITIES UNDER THE INCOME TAX A CT PROVIDED THEY OBTAINED REGISTRATION U/S 12A/80G FRO M THE RESPECTIVE JURISDICTIONAL OFFICERS, THAT THESE TWO LETTERS SHOWED THAT THE IRCS WAS A SINGLE UNIT, THAT AT THE END OF EACH FINANCIAL YEAR AND AFTER IT S APPROVAL BY THE AGM, THE FINANCIAL INFORMATION ALONG WITH TH E PRINTED BOOKLET WAS SENT TO NHQ FOR INFORMATION AND NECESSARY ACTION, THAT NO INFORMATION WAS AVAILABLE FROM NHQ ABOUT THE SUBSEQUENT ACTION TAKEN BY IT AND THA T THE APPELLANT WAS UNDER THE BONA FIDE BELIEF THAT IRCS WAS FILING THE RETURN OF INCOME AT DELHI SINCE A COMMON PAN WAS BEING USED BY ALL THE STATE UNITS ACROSS THE COUNTRY AND SINCE NHQ HAD FORWARDED THE CERTIFI CATE ITA NO.35 OF 2012 INDIAN REDCROSS SOCIETY HYDERABAD PAGE 7 OF 15 U/S 80G FOR USE BY ALL THE STATE UNITS. 10. THE ASSESSING OFFICER NOTED THAT THE ASSESSEE HAD B EEN REQUESTED TO FILE COPY OF RETURN FILED BY NHQ, THAT THE ASSESSEE SUBMITTED COPY OF ACKNOWLEDGEMENT DATED 21.7.2006 FOR THE RETURN OF INCOME, FILED BY NHQ AND THAT OTHER THAN THE ACKNOWLEDGMENT, NO O THER DETAILS LIKE COMPUTATION OF INCOME, CONSOLIDATED IN COME AND EXPENDITURE STATEMENT AND BALANCE SHEET HAD BEE N FILED TO SHOW THAT THE FINAL RESULTS OF THE ASSESSE E HAD BEEN INCORPORATED IN THE AUDITED RESULTS OF NHQ. THE ASS ESSING OFFICER NOTED THAT THE ASSESSEE HAD BEEN UNABLE TO FURNISH ANY EVIDENCE THAT ITS ACCOUNTS HAD BEEN CONSOLIDATE D AT THE NATIONAL LEVEL WITH THE FINANCIAL RESULTS OF NH Q AND THAT THE ASSESSEE HAD MERELY BEEN HARPING ON THE FA CT THAT THE ASSESSEE HAD SENT ITS FINAL RESULTS TO NEW DELH I. THE ASSESSING OFFICER CONCLUDED THAT THE ASSESSEE HAVIN G FAILED TO ESTABLISH THAT ITS TRANSACTIONS WERE INCLUDED IN THE AUDITED RESULTS OF NHQ IN ACCORDANCE WITH THE DIREC TIONS OF THE ITAT AND HAVING FAILED TO FILE A RETURN OF INCO ME INDEPENDENTLY, WAS NOT ELIGIBLE FOR EXEMPTION U/S 1 1 OF THE ACT. THE AO, THEREFORE, BROUGHT THE EXCESS OF INCOM E OF THE ITA NO.35 OF 2012 INDIAN REDCROSS SOCIETY HYDERABAD PAGE 8 OF 15 VARIOUS FUNDS AS WELL AS TSUNAMI DONATION AND THE G RANT FROM THE GOVT. OF ANDHRA PRADESH, AGGREGATING TO RS.3,89,82,064 TO TAX. 11. ON FURTHER APPEAL, T HE LD COUNSEL FOR THE ASSESSEE SUBMITTED BEFORE THE CIT (A) THAT: ' , IN SO FAR AS THE REGISTRATION OF THE TRUST IS CONCE RNED, IT WAS SUBMITTED THAT THE INDIAN RED CROSS SOCIETY (IR CS) WITH NATIONAL HEADQUARTERS AT DELHI IS A CREATION B Y AN ACT OF THE PARLIAMENT AND THE SAME HAS BEEN GRANTED EXEMPTION U/S 12 OF THE ACT BY THE INCOME-TAX DEPARTMENT AT NEW DELHI, FROM INCEPTION AND RENEWED FROM TIME TO TIME. THIS REGISTRATION IS EFFECTIVE F ROM 1.4.1989 ONWARDS. SIMILARLY, THE IRCS WAS ALSO GRAN TED REGISTRATION U/S. 80-G FROM TIME TO TIME AND THE LATEST RENEWAL IS VIDE ORDER DT. 14.10.2005 EFFECTIVE FROM 1-4- 2005 TO 31-3-2008. IT WAS SUBMITTED THAT ACT OF PARLIAMENT RELATING TO THE ESTABLISHMENT AND CONSTITUTION OF THE IRCS. CLAUSE 7 OF THE SAID ACT RELATES TO THE PURPOSES TO WHICH THE F UNDS OF THE, SOCIETY MAY' BE APPLIED AND MORE SPECIFICALLY THE OBJECTS ARE SET OUT IN THE FIRST SCHEDULE TO THE AC T. THE FIRST SCHEDULE IS AT. PAGE 26 IN THE SAID ACT. IT I S SEEN FROM THE SAID SCHEDULE THAT IT INVOLVES PROVISION OF REL IEF ,,' IN 'CASES OF DAMAGE CAUSED BY FLOODS AND OTHER DISASTE RS AND ALSO PROVIDE COMFORT TO PATIENTS IN THE HOSPITALS A ND HEALTH ITA NO.35 OF 2012 INDIAN REDCROSS SOCIETY HYDERABAD PAGE 9 OF 15 'INSTITUTIONS AND INCUR EXPENSES OF MANAGEMENT OF T HE SOCIETY AND ITS BRANCHES AND AFFILIATED SOCIETIES A MONGST OTHER OBJECTS MENTIONED THEREIN.(PARA 6,8,9,AND LL) . THUS IT IS SEEN THAT THE IRCS CARRIES OUT THE CHARITABLE ACTIVITIES WHICH ARE WELL RECOGNISED AND APPRECIATED IN THE PU BLIC DOMAIN. THE ASSESSEE SOCIETY WAS UNDER A BONAFIDE B ELIEF THAT THE IRCS WAS FILING ITS RETURN OF INCOME AT DE LHI, INCORPORATING THE FINANCIALS OF ALL THE STATE BRANC HES. IT WAS FURTHER SUBMITTED THAT AT THE END OF EACH FI NANCIAL YEAR AND AFTER ITS APPROVAL AT THE AGM, THE FINANCI AL INFORMATION ALONG WITH PRINTED BOOKLET IS SENT TO D ELHI FOR INFORMATION AND NECESSARY ACTION. NO FURTHER INFORM ATION THEREAFTER IS RECEIVED FROM THE NHQ AND ALSO ABOUT THE ACTION TAKEN THEREOF. THUS IT IS ONCE AGAIN, MOST H UMBLY SUBMITTED, THAT THE APPELLANT SOCIETY FILED ITS RET URN OF INCOMES FOR THREE YEARS ON A SINGLE DAY TO COMPLY W ITH THE PROVISIONS OF THE APPLICATION U/S 35 OF THE ACT. AT THIS JUNCTURE, IT WAS SUBMITTED TO KINDLY CONDON E THE DELAY IN FILING THE RETURN OF INCOME, IF ANY AND AL SOA CCEPT FORM 10 RELATING TO ACCUMULATION OF INCOME. THIS PR AYER IS MADE ON THE PREMISE THAT THE APPELLATE PROCEEDINGS ARE A CONTINUATION OF THE ASSESSMENT PROCEEDINGS AS LAID DOWN BY THE LAW. IT WAS POINTED OUT FROM THE LETTER ISSUED BY THE NA TIONAL HEAD QUARTERS IN JAN, 2003, THAT INSTRUCTIONS WERE GIVEN TO ALL STATE UNITS/U'T BRANCHES TO APPROACH THE LOC AL INCOME-TAX OFFICER AND OBTAIN SEPARATE TAN NO. FOR ISSUING THE TAX DEDUCTED AT SOURCE CERTIFICATES HAS PROVIDE D IN ITA NO.35 OF 2012 INDIAN REDCROSS SOCIETY HYDERABAD PAGE 10 OF 15 CHAPTER XVII - B OF THE ACT, AS EACH BRANCH HAS MAINTAINED THE ACCOUNTS SEPARATELY. IN SO FAR AS THE PROVISIONS OF THE A.P. CHARITABLE AND THE A.P. CHARITABLE & HINDU RELIGIOUS INSTITUTIONS AND ENDOWMENTS ACT, 1987, ASSESSEE SUBMITTED BELOW EXPLANATION SUB SECTION 3 OF THE SECTION 1 OF THE S AID ACT: EXPLANATION: IN THIS CLAUSE, THE EXPRESSION PUBLIC CHARITABLE INSTITUTIONS AND ENDOWMENTS SHALL INCLUDE EVERY CHARITABLE INSTITUTION OR ENDOWMENT THE ADMINISTRATION OF WHICH IS FOR THE TIME BEING VESTED IN ANY DEPARTMENT OF GOVT. OR CIVIL COURT, ZILLA PRAJA PARISHAD, MUNICIPALITY OR LOCAL AUTHORITY, OR ANY COMPANY SOCIETY, ORGANIZATION INSTITUTION OR OTHER PERSON. AS IT WAS STATED THAT IT IS CLEARLY DISCERNIBLE THA T THE ASSESSEE SOCIETY DOES NOT FALL WITH THE DEFINITION OF THE A.P. CHARITABLE AND THE A.P. CHARITABLE & HINDU RELIGIOUS INSTITUTIONS AND ENDOWMENTS ACT, 1987. THIS IS BECA USE THE SOCIETY IS ESTABLISHED BY AN ACT OF PARLIAMENT AND IS OUTSIDE THE REALM OF THE ENTITIES MENTION IN THE SA ID EXPLANATION. THE REFERENCE TO THE WORD 'OTHER PERSO N' MUST BE ATTRIBUTABLE TO THE ENTITIES OF SIMILAR NAT URE PRESCRIBED IN THE SAID TERM. THIS IS BASED ON THE P RINCIPLE OF 'EJUSDEM GENERIC' WHICH LATIN MAXIM MEANS THAT T HE SAME MEANING MUST BE GIVEN TO THE WORDS PRECEDING I T. HOWEVER, THE ASSESSING OFFICER HAS MISUNDERSTOOD TH IS IMPORTANT PRINCIPLE AND THEREFORE ERRED IN APPLYING THE PROVISION IS OF THE SAID ACT. THERE: IS NO REQUIREM ENT TO GET THE INSTITUTION REGISTERED U/S. 43(1) OF THE ACT. I T IS HUMBLY SUBMITTED THAT THIS ACT APPLIES PRIMARILY TO THOSE ITA NO.35 OF 2012 INDIAN REDCROSS SOCIETY HYDERABAD PAGE 11 OF 15 INSTITUTIONS WHICH HAVE THE TRUSTEES IN THE FORM OF HEREDITY TRUSTEES AND THE LIKE FOR THE MANAGEMENT OF FINANCE S AND OTHER ORGANIZATIONAL AFFAIRS. IN THE INSTANT CASE, THE APPELLANT SOCIETY FUNCTIONS UNDER THE AEGIS OF HE T HE GOVERNOR OF ANDHRA PRADESH THROUGH AN EXECUTIVE. COMMITTEE AND MANAGEMENT COMMITTEE. THERE IS NO SEPARATE DEED FOR ITS, CONSTITUTION IN THIS REGARD. THE ASSESSEE BROUGHT TO NOTICE THE PROVISIONS OF 65 OF THE SAID ACT AND THAT THEY ARE ALSO INAPPLICABLE, AS TH ERE IS NO MANDATORY LIABILITY FOR ANNUAL CONTRIBUTION TO THE STATE GOVERNMENT. IT WAS SUBMITTED THAT THE REFERENCE TO THE APEX COURT JUDGEMENT IN THE CASE OF BIHARILAL JAISW AL VS. CIT REPORTED IN 217 ITR 146 IS ALSO HIGHLY IMPROPER AND THE ASSESSEE SOCIETY DID NOT VIOLATE OR INFRINGE AN Y PROVISION OF ANY LAW FOR THE TIME BEING IN FORCE MO RE SPECIFICALLY THE ENDOWMENT ACT REFERRED HEREIN ABOV E AND THIS DECISION IS NOT APPLICABLE TO THE FACTS OF THE CASE. 12. ASSESSEE ALSO RELIED ON THE FOLLOWING DECISIONS : COMMISSIONER OF INCOME-TAX V. VIDYA SAGAR EDUCATIONAL TRUST (AND VICE VERSA) 315 ITR 298 (KARNATAKA). COMMISSIONER OF INCOME-TAX V. HARDEODAS AGARWALLA TRUST 198 LTR 511 (CALCUTTA) CHAIRMAN, ANDHRA PRADESH WELFARE FUND V. COMMISSIONER OF INCOME-TAX 143 ITR 82 (ANDHRA PRADESH). COMMISSIONER OF INCOME-TAX V. TRUSTEES OF VISHA NIMA CHARITY TRUST, 138 ITR 564(BOMBAY) 13. THE CIT (A) HELD AS FOLLOWS: ITA NO.35 OF 2012 INDIAN REDCROSS SOCIETY HYDERABAD PAGE 12 OF 15 15. I HAVE CONSIDERED THE FACTS ON RECORD AND THE SUBMISSIONS OF THE AR. THE PRESENT APPEAL HAS BEEN FILED AGAINST AN ORDER CONSEQUENTIAL TO THE ORDER OF THE ITAT. IT IS NOT AN APPEAL AGAIN ST THE ORIGINAL ASSESSMENT. THE THREE ISSUES LISTED BY THE AR, VIZ. I. APPLICABILITY OF THE AP CHARITABLE AND RELIGIOUS INSTITUTIONS' AND ENDOWMENTS ACT, 1987 (APCRA). II. CONTRIBUTIONS/DONATIONS RECEIVED TOWARDS TSUNAMI III. CORPUS GRANT FROM GOVERNMENT OF ANDHRA PRADESH, WERE SUBJECT MATTER OF APPEAL AT THE ORIGINAL STAGE , IN THE APPEAL AGAINST THE ASSESSMENT ORDER DATED 24.12.2009. THESE ISSUES WERE ADJUDICATED UPON BY THE CIT(A) IN HIS ORDER DATED 31.1.2011 AND LATER BY THE ITAT IN ITS ORDER DATED 19.1.2012, AND ARE, THEREFORE, NO' LONGER OPEN FOR ADJUDICATION. SIMILARLY, THE ISSUE OF WHETHER THE APPELLANT IS ELIGIBLE FOR EXEMPTION U/S 10(23BBA) WAS DECIDED BY THE CIT(A) IN HIS ORDER DATED 31.1.2011 AND UPHELD BY THE ITAT. 16. THE ISSUE TO BE EXAMINED IN THE PRESENT APPEAL MUST, THEREFORE, BE CONFINED TO EXAMINING WHETHER THE DIRECTIONS OF THE ITAT HAVE BEEN CORRECTLY FOLLOWED. 17. AS CAN BE SEEN FROM THE DIRECTIONS OF THE ITAT AS REPRODUCED ABOVE, THE ASSESSING OFFICER HAD BEEN TASKED WITH THE EXAMINATION OF WHETHER THE APPELLANT HAD AN INDEPENDENT STATUS AS AN INCOME TAX ASSESSEE OR WHETHER THE APPELLANT'S ACCOUNTS HAD BEEN CONSOLIDATED WITH THOSE OF THE NHQ. THE LIMITED ISSUE FOR CONSIDERATION IN THIS APPEAL IS, THEREFORE, THE NATURE OF EVIDENCE SUBMITTED BY THE APPELLANT IN SUPPORT OF THE CLAIM THAT ITS FINANCIAL RESULTS HAD BEEN INCLUDED IN THE CONSOLIDATED REPORT OF THE NHQ AND CONSEQUENTLY, WHETHER THE ASSESSING OFFICER ITA NO.35 OF 2012 INDIAN REDCROSS SOCIETY HYDERABAD PAGE 13 OF 15 HAD TAKEN THE CORRECT VIEW OF SUCH EVIDENCE. 18. THE ONLY EVIDENCE SUBMITTED BY THE AR BEFORE THE ASSESSING OFFICER CONSISTED OF THE LETTER OF TH E APPELLANT TO NHQ FORWARDING ITS AUDITED RESULTS FOR INFORMATION AND NECESSARY ACTION. WHETHER OR NOT ANY 'NECESSARY ACTION' WAS TAKEN BY NHQ ON THE APPROVED FINANCIAL RESULTS OF THE APPELLANT IS NOT SPECIFIED NOR SUPPORTED BY ANY EVIDENCE. THE APPELLANT HAS IN FACT PLEADED ITS HELPLESSNESS IN FURNISHING ANY FURTHER INFORMATION. 19. SIMILARLY, THE ACKNOWLEDGMENT OF THE RETURN OF INCOME FILED BY NHQ ALSO DOES NOT ESTABLISH THE APPELLANT'S CLAIM THAT ITS FINANCIAL RESULTS HAD BE EN INCORPORATED IN THE CONSOLIDATED FINANCIAL RESULTS OF NHQ SINCE THE ACCOMPANYING INCOME AND EXPENDITURE STATEMENTS, BALANCE SHEET, ETC HAVE NOT BEEN PRODUCED BEFORE THE ASSESSING OFFICER. 20. THE CONCLUSION OF THE ASSESSING OFFICER THAT THERE WAS NO EVIDENCE THAT THE APPELLANT'S ACCOUNTS WERE CONSOLIDATED WITH THOSE OF NHQ OR THAT THE APPELLANT'S TRANSACTIONS WERE REFLECTED IN THE RETURN OF INCOME OF NHQ, IS, THEREFORE, JUSTIFIED. CONSEQUENTLY, THE ASSESSMENT MADE BY THE ASSESSING OFFICER IS UPHELD. 14. AGGRIEVED, ASSESSEE IS IN APPEAL BEFORE US. 15. THE LD COUNSEL FOR THE ASSESSEE REITERATED THE SUBMISSIONS MADE BEFORE THE CIT (A), WHEREAS THE LD DR POINTED OUT THAT THE ASSESSEE COULD NOT FURNISH ANY EVIDENCE TO CONFIRM THAT ITS ACCOUNTS ARE CONSOLIDATED AT NATIONAL LEVEL AND ALS O NOT IN A ITA NO.35 OF 2012 INDIAN REDCROSS SOCIETY HYDERABAD PAGE 14 OF 15 POSITION TO FURNISH THAT ITS FINAL RESULTS ARE CONS OLIDATED WITH THAT OF THE RESULTS OF NHQ. IT WAS ARGUED THAT MERE LY SENDING THE FINAL RESULTS OF THE ASSESSEE TO THE HQS IS NOT SUF FICIENT EVIDENCE TO PROVE THAT THE ASSESSEES TRANSACTIONS ARE REFLE CTED IN THE RETURN OF THE HQ. 16. WE HAVE HEARD BOTH PARTIES. IN THE FIRST ROUND OF APPEAL FILED BY THE AO, THE ITAT IN ITS ORDER DATED 19.1.2012 IN ITA NO.694/HYD/2011 HELD AS FOLLOWS: '10. ...ACCORDINGLY, THE (CIT(A)) DIRECTED THE ASSESSING OFFICER TO EXAMINE WHETHER THE ASSESSEE IS HAVING INDIVIDUAL STATUS OR ASSESSEE'S TRANSACTIONS ARE CONSOLIDATED AT HEAD OFFICE LEVEL AT DELHI AND DECIDE THE ISSUE ACCORDING TO LAW. 11. IN THIS DIRECTION OF THE CIT(A), WE DO NOT FIND ANY INFIRMITY. ACCORDINGLY, WE DIRECT THE ASSESSING OFFICER TO EXAMINE WHETHER THE ASSESSEE IS HAVING ANY INDIVIDUAL STATUS AS AN INCOME TAX ASSESSEE OR ASSESSEE'S ACCOUNTS ARE CONSOLIDATED AT NATIONAL LEVEL AND ASSESSEE'S TRANSACTIONS ARE REFLECTED IN THE RETURN OF INCOME OF HEAD OFFICE AND DECIDE ACCORDINGLY. 17. WE FIND THAT THE ITAT HAD GIVEN DIRECTIONS TO T HE AO BY ORDER DATED 19.1.2012 WHICH THE AO IN HIS CONSEQUEN TIAL ORDER HAS FAILED TO COMPLY WITH. HENCE WE SET ASIDE THE I SSUE TO THE FILE ITA NO.35 OF 2012 INDIAN REDCROSS SOCIETY HYDERABAD PAGE 15 OF 15 OF THE AO TO FOLLOW THE DIRECTIONS OF THE TRIBUNAL IN ITS ORDER DATED 19.1.2012 AND DECIDE ACCORDINGLY. 18. IN THE RESULT, ASSESSEES APPEAL IS ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON 17 TH APRIL, 2015. SD/ - SD/ - (P.M. JAGTAP) (ASHA VIJAYARAGHAVAN) ACCOUNTANT MEMBER JUDICIAL MEMBER HYDERABAD, DATED 17 TH APRIL, 2015. VNODAN/SPS COPY TO: 1. INDIAN RED CROSS SOCIETY C/O A.V.RAGHURAM, ADVOCATE , 610 BABUKHAN ESTATE, BASHEERBAGH, HYDERABAD 500001 2. DY. DIRECTOR OF INCOME TAX (EXEMPTIONS)-II , 3 RD FLOOR, AAYAKAR BHAVAN BASHEERBAGH HYDERABAD 1. 3. THE CIT(A)-IV HYDERABAD 1. THE CIT-III, HYDERABAD 2. THE DR, ITAT, HYDERABAD 3. GUARD FILE BY ORDER