ITO (E), New Delhi V. M/s. Innovative Welfare and Educational Society, Uttar Pradesh

ITA 4304/DEL/2016

• Counselvise Citation: [2019] 117 COUNSELVISE.COM (IT) 6384 (ITAT-DELHI)
• Duration Of Justice: 2 year(s) 9 month(s) 4 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 08-05-2019
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: C
• Assessment Year: 2011-2012
• Appeal Filed On: 04-08-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: TDS
• Section: 80G; 12A; 11

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCHES C : DELHI BEFORE SHRI BHAVNESH SAINI, JUDICIAL MEMBER AND SHRI N.S. SAINI, ACCOUNTANT MEMBER ITA.NO.4304/DEL./2016 ASSESSMENT YEAR 2011-2012 THE INCOME TAX OFFICER, WARD-1(2), ROOM NO.2417, 24 TH FLOOR, E-2 BLOCK, PRATYAKSH KAR BHAWAN, DR. SHYAMA PRASAD MUKHERJEE CIVIC CENTRE, JAWAHAR LAL NEHRU MARG, NEW DELHI. PIN 110 002. VS M/S. INNOVATIVE WELFARE AND EDUCATIONAL SOCIETY, PLOT NO.6, KNOWLEDGE PARK- II, GREATER NOIDA, GAUTAM BUDH NAGAR, U.P. PIN 201301. PAN AAATI4207R (APPELLANT (RESPONDENT) FOR REVENUE : SHRI AMIT KATOCH, SR. D.R. FOR ASSESSEE : -NONE- DATE OF HEARING : 06.05.2019 DATE OF PRONOUNCEMENT : 08.05.2019 ORDER PER BHAVNESH SAINI, J.M. THIS APPEAL BY REVENUE HAS BEEN DIRECTED AGAINST THE ORDER OF LD. CIT(A)-40, NEW DELHI, DATED 02.05.2016, FOR THE A.Y. 2011-2012 ON THE FOLLOWING GROUNDS : 2 ITA.NO.4304/DEL./2016 M/S. INNOVATIVE WELFARE AND EDUCATIONAL SOCIETY, GREATER NOIDA, GAUTAM BUDH NAGAR, U.P. (I) ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD. CIT(A) HAS ERRED IN IGNORING THE FACT THAT THE ASSESSEE FAILED TO PRODUCE ANY DOCUMENT REGARDING APPROVAL OF THE GOVERNING BODY OF THE ASSESSEE SOCIETY REGARDING THE APPOINTMENT AND REMUNERATION OF BOTH THE SPECIFIED PERSONS SH. DEVASHISH GAUR, DIRECTOR CUM ADMINISTRATOR (SON OF CHAIRMAN OF THE ASSESSEE SOCIETY) AND MS. SHARDA SHARMA, PRINCIPAL/ADMINISTRATOR (WIFE OF CHAIRMAN OF THE ASSESSEE SOCIETY). (II) ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD. CIT(A) HAS ERRED IN IGNORING THE FACT THE SALARIES PAID BY ASSESSEE TO THESE SPECIFIED PERSONS WERE EXCESSIVE IN COMPARISON TO THE NORMAL PRACTICE FOLLOWED FOR OTHER EMPLOYEES, THEREBY COMMITTED VIOLATION WITHIN THE MEANING OF PROVISIONS OF SECTION 13(1)(C) OF THE ACT BY PROVIDING BENEFITS TO THE ABOVE SPECIFIED PERSONS. 3 ITA.NO.4304/DEL./2016 M/S. INNOVATIVE WELFARE AND EDUCATIONAL SOCIETY, GREATER NOIDA, GAUTAM BUDH NAGAR, U.P. 2. BRIEFLY THE FACTS OF THE CASE ARE THAT ASSESSEE SOCIETY IS REGISTERED UNDER SECTION 12A OF THE I.T. ACT, 1961, VIDE REGISTRATION DATED 16.02.2005 W.E.F. 11.02.2004. THE SOCIETY IS ALSO REGISTERED UNDER SECTION 80G OF THE I.T. ACT. THE SOCIETY WAS ESTABLISHED WITH THE PRIMARY OBJECT TO EDUCATE AND TRAIN INDIAN CITIZEN UNDER THE CAUSE OF EDUCATION FOR ALL. THE SOCIETY HAS ESTABLISHED THREE EDUCATIONAL INSTITUTIONS TO TRAIN STUDENTS IN THEIR FIELDS. THE ASSESSMENTS FOR THE A.YS. 2009-2010 AND 2010-2011 WERE PASSED ON THE BASIS OF THE SPECIAL AUDIT. THE ASSESSEE WAS ASKED TO COMPARE THE FACTS OF THIS CASE WITH THE FACTS OF PRECEDING ASSESSMENT YEAR. THE ASSESSEE IN SUPPORT FURNISHED AFFIDAVIT OF THE CHAIRMAN OF THE SOCIETY STATING THAT THERE HAS BEEN NO PURCHASE BY THE SOCIETY FROM M/S. GLOBAL ENTERPRISES AND M/S. RUCHI CONSTRUCTION IN THIS YEAR. ALL THE BILLS OF ADDITIONS TO THE FIXED ASSETS WERE PRODUCED. THE ASSESSEE SOCIETY DEDUCTED TDS PROPERLY. THERE IS NO LOAN PROCESS FEES PAYABLE AS WAS PAID IN EARLIER YEAR. NO LOAN WAS TAKEN IN THIS YEAR. THE ASSESSEE WAS ASKED TO FURNISH THE DETAILS OF INTERESTED PERSONS UNDER 4 ITA.NO.4304/DEL./2016 M/S. INNOVATIVE WELFARE AND EDUCATIONAL SOCIETY, GREATER NOIDA, GAUTAM BUDH NAGAR, U.P. SECTION 13(3) OF THE I.T. ACT AND THEIR STATUS IN THE SOCIETY. THE ASSESSEE FURNISHED DETAILS OF INTERESTED PERSONS. IT PROVIDES THAT SHRI DEVASISH GAUR IS DIRECTOR CUM ADMINISTRATOR TO WHOM SALARY OF RS.2,74,640/- HAS BEEN PAID. SMT. SHARDA SHARMA, PRINCIPAL/ADMINISTRATOR, INNOVATIVE INSTITUTE OF LAW AND HAVE BEEN PAID SALARY OF RS.5,23,680/-. BOTH ARE SON AND WIFE OF THE CHAIRMAN OF THE SOCIETY SHRI K.R. SHARMA. BOTH ARE SPECIFIED PERSONS. THE A.O. NOTED THAT IN PREVIOUS ASSESSMENT YEARS THE ASSESSEE COULD NOT PRODUCE ANY DOCUMENTS REGARDING APPROVAL OF GOVERNING BODY OF THE SOCIETY REGARDING THE APPOINTMENT AND REMUNERATION OF BOTH THESE PERSONS. THE SALARY PAID TO THESE SPECIFIED PERSONS ARE EXCESSIVE IN COMPARISON TO THE NORMAL PRACTICE FOLLOWED FOR OTHER EMPLOYEES, THEREFORE, EXEMPTION UNDER SECTION 11 WAS DENIED AND THE INCOME WAS COMPUTED IN THE STATUS OF AOP. THE TOTAL INCOME WAS COMPUTED AT RS.1.37 CRORES. 3. THE ASSESSEE CHALLENGED THE FINDINGS OF THE A.O. BEFORE THE LD. CIT(A) AND THE SAME FACTS WERE REITERATED. IT WAS FURTHER SUBMITTED THAT BOTH THESE PERSONS WERE 5 ITA.NO.4304/DEL./2016 M/S. INNOVATIVE WELFARE AND EDUCATIONAL SOCIETY, GREATER NOIDA, GAUTAM BUDH NAGAR, U.P. APPOINTED THROUGH RESOLUTION PASSED UNDER THE GENERAL BODY MEETING DATED 04.06.2008 AND ARE DEVOTING FULL TIME TO THE INSTITUTION TO THE BEST OF THEIR KNOWLEDGE, ABILITY AND EXPERIENCE. THE SALARY WAS PAID TO THEM REASONABLY. THE SALARY PAID TO THEM WAS LESS THAN THE AMOUNT AS PRESCRIBED BY SIXTH PAY COMMISSION INTRODUCED BY THE GOVERNMENT OF INDIA, AS PER THEIR EDUCATION ABILITY, EXPERIENCE AND DEVOTION FOR THE INSTITUTION. IT WAS, THEREFORE, SUBMITTED THAT A.O. WAS ABSOLUTELY WRONG IN DENYING THE EXEMPTION UNDER SECTION 11 OF THE I.T. ACT. THE ASSESSEE ALSO SUBMITTED THAT ISSUE IS COVERED BY THE ORDER OF THE ITAT, DELHI BENCH IN THE CASE OF ACIT VS. IDICULA TRUST SOCIETY [2014] 151 ITD 739 (DEL.) IN WHICH SIMILAR DISALLOWANCES WERE DELETED. IT WAS ALSO OBSERVED THAT IN JANUARY, 2006, THE GOVERNMENT OF INDIA HAS NOTIFIED SIXTH PAY COMMISSION WHICH RESULTED INTO HANDSOME ENHANCEMENT OF SALARY OF THE EMPLOYEES INCLUDING GOVERNMENT TEACHING STAFF AND SALARY HAVE BEEN ALMOST ENHANCED BY 30%-40%, THEREFORE, IT IS NOT EXCESSIVE SALARY PAID TO THE ABOVE PERSONS. THE ASSESSEE ALSO PLEADED THAT IN THE CASE OF THE ASSESSEE THE MATTER HAVE BEEN 6 ITA.NO.4304/DEL./2016 M/S. INNOVATIVE WELFARE AND EDUCATIONAL SOCIETY, GREATER NOIDA, GAUTAM BUDH NAGAR, U.P. CONSIDERED AND DECIDED BY THE TRIBUNAL. THE LD. CIT(A) FOLLOWING THE SAME, ALLOWED THE APPEAL OF ASSESSEE. 4. WE HAVE HEARD THE LD. D.R. WHO HAS RELIED UPON THE ORDER OF THE A.O. 5. ON THE OTHER HAND, NONE APPEARED ON BEHALF OF THE ASSESSEE, DESPITE NOTIFYING THE DATE OF HEARING THROUGH REGISTERED POST. 6. AFTER CONSIDERING THE SUBMISSIONS OF THE LD. D.R, WE ARE OF THE VIEW THAT NO INTERFERENCE IS CALLED FOR IN THE MATTER. THE A.O. NOTED THAT SALARY HAVE BEEN PAID TO TWO PERSONS WHO WERE SPECIFIED PERSONS UNDER SECTION 13(3) OF THE I.T. ACT. A.O. ALSO NOTED THAT IN PREVIOUS ASSESSMENT YEARS, THE ASSESSEE COULD NOT PRODUCE ANY DOCUMENTS REGARDING APPROVAL OF THE GOVERNING BODY OF THE SOCIETY INCLUDING THE APPOINTMENT AND REMUNERATION OF BOTH THESE PERSONS. THE A.O. ALSO FOUND THAT SALARY PAID TO THESE PERSONS ARE EXCESSIVE IN COMPARISON TO THE NORMAL PRACTICE FOLLOWED FOR OTHER EMPLOYEES. THE ASSESSEE, HOWEVER, SUBMITTED BEFORE LD. CIT(A) THAT BOTH THESE PERSONS WERE 7 ITA.NO.4304/DEL./2016 M/S. INNOVATIVE WELFARE AND EDUCATIONAL SOCIETY, GREATER NOIDA, GAUTAM BUDH NAGAR, U.P. APPOINTED THROUGH THE RESOLUTION PASSED UNDER THE GENERAL BODY MEETING DATED 04.06.2008. IT WAS ALSO SUBMITTED THAT BOTH THESE PERSONS HAVE DEVOTED FULL TIME TO THE EDUCATIONAL INSTITUTION TO THE BEST OF THEIR KNOWLEDGE, ABILITY AND EXPERIENCE. IT, THEREFORE, APPEARS THAT A.O. FOLLOWED THE ORDERS FOR EARLIER YEARS, IN WHICH THE ASSESSEE DID NOT PRODUCE DOCUMENTS REGARDING APPROVAL OF THE GOVERNING BODY. FURTHER ASSESSEE EXPLAINED THAT GOVERNING BODY PASSED RESOLUTION IN EARLIER YEAR ON 04.06.2008. THE A.O. DID NOT BRING ANY EVIDENCE ON RECORD AS TO HOW THE SALARY PAID TO THESE PERSONS WITH REFERENCE TO THEIR QUALIFICATION WAS EXCESSIVE OR UNREASONABLE. A.O. DID NOT MAKE ANY COMPARISON, BUT, APPEARS TO HAVE FOLLOWED ORDER FOR EARLIER YEARS. IN EARLIER YEAR, THE MATTER HAVE BEEN DECIDED IN FAVOUR OF THE ASSESSEE AS IS NOTED BY THE LD. CIT(A) IN HIS ORDER BECAUSE THE SAME SALARY HAVE BEEN CONSIDERED IN EARLIER YEARS. THE LD. CIT(A) ALSO REFERRED TO DECISIONS OF THE COORDINATE BENCH OF DELHI TRIBUNAL IN THE CASE OF ACIT VS. IDICULA TRUST SOCIETY (SUPRA), IN WHICH THE TRIBUNAL HAS REFERRED TO THE ENHANCEMENT IN PAY/SALARY BY SIXTH PAY 8 ITA.NO.4304/DEL./2016 M/S. INNOVATIVE WELFARE AND EDUCATIONAL SOCIETY, GREATER NOIDA, GAUTAM BUDH NAGAR, U.P. COMMISSION IN JANUARY, 2006. IN THE CASE OF THE ASSESSEE, ASSESSEE EXPLAINED THAT SALARY PAID TO THESE PERSONS WAS EVEN LESS THAN THE SALARY PRESCRIBED BY THE SIXTY PAY COMMISSION. SINCE THE A.O. COMPARED THE FACTS OF THIS YEAR FOR EARLIER YEARS, IN WHICH, RELIEF HAS ALREADY BEEN GRANTED TO THE ASSESSEE AS PER FINDINGS OF THE LD. CIT(A), THEREFORE, LD. CIT(A) CORRECTLY FOLLOWING THE EARLIER PRECEDENCE, DELETED THE ADDITION. NO INTERFERENCE IS CALLED FOR IN THE MATTER. APPEAL OF REVENUE DISMISSED. 7. IN THE RESULT, APPEAL OF REVENUE DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT. SD/- SD/- (N.S. SAINI) (BHAVNESH SAINI) ACCOUNTANT MEMBER JUDICIAL MEMBER DELHI, DATED 08 TH MAY, 2019. VBP/- COPY TO 1. THE APPELLANT 2. THE RESPONDENT 3. CIT(A) CONCERNED 4. CIT CONCERNED 5. D.R. ITAT C BENCH, DELHI 6. GUARD FILE. 9 ITA.NO.4304/DEL./2016 M/S. INNOVATIVE WELFARE AND EDUCATIONAL SOCIETY, GREATER NOIDA, GAUTAM BUDH NAGAR, U.P. // BY ORDER // ASSISTANT REGISTRAR : ITAT DELHI BENCHES : DELHI.