Parivar Seva Sanstha, New Delhi V. Addll. DIT (E), New Delhi

MA 174/DEL/2010

• Counselvise Citation: [2010] 119 COUNSELVISE.COM (IT) 3755 (ITAT-DELHI)
• Duration Of Justice: 2 month(s) 20 day(s)
• Appeal Type: Miscellaneous Application
• Pronouncement Date: 09-07-2010
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: F
• Assessment Year: 2005-2006
• Appeal Filed On: 19-04-2010
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: BK GUPTA
• Assessee Lawyers: UTPAL KANT ADVS
• Section: 11

Judgement Text

INCOME TAX APPELLATE TRIBUNAL DELHI BENCH FRIDAY(D), NEW DELHI BEFORE SHRI I.P. BANSAL, JUDICIAL MEMBER & SHRI A.K. GARODIA, ACCOUNTANT MEMBER M.A NO. 174/D/2010 [ITA NO. 2874/D/09] ASSESSMENT YEAR: 2005-06 PARIVAR SEVA SANSTHA, VS. ADDL. DIT(E), C-374, DEFENCE COLONY, RANGE II, NEW DELHI 110024. NEW DELHI. AAATP0314J (APPLICANT) (RESPONDENT) APPLICANT BY: SH. KAMAL K. JETLEY, SH. PRAVEEN AGG ARWAL & SH. UTPAL KANT, ADVS. RESPONDENT BY: SH. B.K. GUPTA, SR. DR ORDER PER I.P. BANSAL, J.M. VIDE MISCELLANEOUS APPLICATION FILED AS ABOVE, IT IS THE CASE OF ASSESSEE THAT THERE IS A MISTAKE IN THE ORDER OF TR IBUNAL WHEN VIDE PARA 14 IN RESPECT OF A.Y. 2005-06, THE TRIBUNAL HAS HEL D THAT ASSESSEE IS NOT ENTITLED OR GRANT OF EXEMPTION U/S 11. IT IS THE C ASE OF ASSESSEE THAT FINDING HAS BEEN RECORDED ON THE BASIS OF EARLIER O RDERS OF THE TRIBUNAL WHICH IS CONTRARY TO THE FACT. IT IS THE CASE OF T HE ASSESSEE THAT FOR A.Y. 2004-05 THE SALARY PAID TO SMT. SUDHA TIWARI WAS HE LD TO BE REASONABLE AND IN THAT ORDER IT WAS HELD THAT 20% INCREASE IN SALARY FROM IMMEDIATE PRECEDING YEAR WAS REASONABLE. THE EXEMPTION U/S11 WAS DISALLOWED BY THE AO FOR THE REASON THAT EXCESSIVE SALARY WAS PAID TO SAID SMT. SUDHA TIWARI AND THUS, THERE WAS A VIOLATION OF SEC . 13(1)(C) & 13(2)(C). MA NO. 174/D/10 2 IT WAS SUBMITTED THAT THE EARLIER ORDER RENDERED BY THE TRIBUNAL IN THE CASE OF ASSESSEE FOR A.Y. 2004-05 IN THE EARLIER OR DER IT WAS HELD THAT SALARY PAID TO SMT. SUDHA TIWARI IS REASONABLE AND IT IS ALSO HELD THAT 20% INCREASE IN IMMEDIATE PRECEDING YEAR SHOULD BE HELD AS REASONABLE. IT IS THE CASE OF ASSESSEE THAT IF THE SAID PARAMETER IS APPLIED THEN THERE WILL BE NO EXCESS SALARY PAID TO SMT. SUDHA TIWARI AND THERE WILL BE NO VIOLATION OF SEC. 13(1)(C) & 1 3(2)(C). 2. IT WAS SUBMITTED BY LD. COUNSEL THAT DENIAL OF E XEMPTION U/S 11 STRAIGHTWAY IN PARA 14 IS CONTRADICTORY TO THE FIND INGS GIVEN IN PARA 15, WHEREIN IT HAS BEEN HELD THAT 20% INCREASE IN THE S ALARY OF SMT. SUDHA TIWARI FROM IMMEDIATE PRECEDING YEAR WILL BE CONSID ERED TO BE REASONABLE. IT WAS SUBMITTED THAT WHAT WAS ALLOWED BY THE TRIBUNAL BEING REASONABLE FOR A.Y. 2004-05 IS A SUM OF RS. 2 3,19,840/- IF 20% IS ADDED TO THE SAME THE RESULTANT SUM WILL BE 27,83,8 08/- AND AS AGAINST THAT THE SALARY PAID TO SMT. SUDHA TIWARI FOR THE Y EAR UNDER CONSIDERATION IS A SUM OF RS. 24,39,552/-. THUS, I T WAS SUBMITTED THAT THE SALARY PAID TO SMT. SUDHA TIWARI FALLS WITHIN T HE PARAMETERS LAID DOWN BY THE TRIBUNAL AND THUS, HAS BEEN HELD AS REA SONABLE SALARY. IF THE SALARY PAID TO SMT. SUDHA TIWARI IS HELD TO BE REASONABLE THEN THERE WILL BE NO VIOLATION AS SUCH OF THE PROVISIONS OF S EC. 13(1)(C) & 13(2)(C). THEREFORE, THE FINDINGS OF THE TRIBUNAL THAT EXEMPT ION U/S 11 IS NOT ALLOWABLE IS CONTRADICTORY TO THE FINDINGS GIVEN IN IMMEDIATE PROCEEDING PARA WHEREBY THE SALARY PAID TO SMT. SUDHA TIWARI I S HELD TO BE REASONABLE. IT WAS SUBMITTED THAT FOR A.Y. 2004-05 ALSO THE SALARY WAS MA NO. 174/D/10 3 CONSIDERED TO BE REASONABLE AND ASSESSEE IS ENTITLE D FOR EXEMPTION U/S 11 THOUGH IT HAS NOT BEEN SPECIFICALLY MENTIONED IN THE ORDER FOR A.Y. 2004-05. 3. ON THE OTHER HAND, IT WAS SUBMITTED BY LD. DR TH AT DISALLOWANCE OF EXEMPTION U/S 11 MAY NOT BE ONLY FOR THE REASON OF EXCESSIVE SALARY PAID TO SMT. SUDHA TIWARI AS NO SPECIFIC REFERENCE HAS B EEN MADE BY THE TRIBUNAL TO ITS EARLIER ORDER AND THUS, IT WAS SUBM ITTED THAT AN APPLICATION FILED BY THE ASSESSEE SHOULD BE DISMISSED. 4. WE HAVE HEARD BOTH THE PARTIES AND THEIR CONTENT IONS HAVE CAREFULLY BEEN CONSIDERED. TO APPRECIATE THE ISSUE RAISED BY THE ASSESSEE IN ITS APPLICATION, IT IS NECESSARY TO REP RODUCE THE RELEVANT PORTION OF THE ORDER OF THE TRIBUNAL FOR A.Y. 2004- 05 (IMMEDIATE PRECEDING YEAR), PARA NO. 14 & 15 OF THE ORDER FOR WHICH THE RECTIFICATION IS SOUGHT: - 11. GROUND NOS. 1 TO 10 ARE IN RELATION TO THE STA TUS OF SMT. SUDHA TIWARI AND THE FINDINGS OF THE LOWER AUT HORITIES THAT THE SALARY PAID TO HER WAS EXCESSIVE U/S 13 OF THE ACT. ON THE BASIS OF THE REASONABLE SALARY WORKED OUT FO R THE IMMEDIATELY PRECEDING YEAR AND BY GIVING AN INCREAS E OF 20% THEREOF, THE REASONABLE SALARY FOR THIS YEAR WO RKS OUT AT ABOUT RS. 25,23,288/-, SAY RS. 25,23,290/-. AGAINS T THIS, SHE WAS PAID SALARY OF RS. 23,19,840/-, WHICH IS RE ASONABLE HAVING REGARD TO THE SERVICES RENDERED BY HER. IT MAY BE MENTIONED THAT THERE WAS DECREASE OF 34.46% IN THE REVENUE AND 46.38% IN THE SURPLUS OVER LAST YEAR. HOWEVER, THAT DOES NOT COME IN THE WAY OF GIVING A FINDING T HAT LOOKING MA NO. 174/D/10 4 TO SERVICES RENDERED BY HER AND TAKING INTO ACCOUNT REASONABLE INCREASE OVER LAST YEAR, THE SALARY PAID IN THIS YEAR WAS REASONABLE. THEREFORE, WHILE IT IS HELD T HAT SHE IS A PROHIBITED PERSON U/S 13, IT IS ALSO HELD THAT THE SALARY PAID TO HER WAS REASONABLE ON THE FACTS AND IN THE CIRCUMST ANCES OF THE CASE FOR THIS YEAR. 14. GROUND NO. 1 RELATES TO EXEMPTION U/S 11. THE SAME IS HELD TO BE NOT ALLOWABLE AS PER EARLIER ORDERS O F THE TRIBUNAL. RESPECTFULLY FOLLOWING THE SAME, GROUND NO. 1 FOR A.Y. 2005-06 IS DISMISSED. 15. GROUND NOS. 2 TO 9 RELATE TO SALARY PAID TO SMT . SUDHA TIWARI. BY THE EARLIER ORDERS OF THE TRIBUNAL, IT IS HELD THAT 20% INCREASE IN THE SALARY IS HELD REASONABLE. THE AO WILL RECOMPUTED THE DISALLOWANCE ACCORDINGLY AND HE WILL COMPUTE 20% INCREASE IN THE SALARY WHICH IS HELD AL LOWABLE AS PER ORDER OF THE TRIBUNAL DATED 28 TH AUGUST, 2009 IN RESPECT OF A.Y. 04-05. IN OTHER WORDS, THE SALARY HELD ALLOWABLE FOR A.Y. 04-05 BY THE TRIBUNAL SHOULD BE INCREASED BY 20% FOR CONSIDERING THE REASONABILITY OF EXPENDI TURE OVER THE LAST YEARS SALARY PAID TO SMT. SUDHA TIWARI. THESE GROUNDS ARE, THEREFORE, PARTLY ALLOWED. 5. AS IT CAN BE SEEN FROM ABOVE MENTIONED PARA NO. 14 FOR A.Y. 2005-06 THE GROUND RELATING TO EXEMPTION U/S 11 HAS BEEN DISMISSED ON THE BASIS OF EARLIER ORDERS OF THE TRIBUNAL. IN PA RA 15, 20% INCREASE IN THE SALARY ON THE EARLIER ACCEPTED REASONABLE SALAR Y FOR THE PRECEDING YEAR IS CONSIDERED REASONABLE FOR THE YEAR UNDER CO NSIDERATION AND AO IS DIRECTED TO RE-COMPUTE THE DISALLOWANCE. AS PER CALCULATION SUBMITTED BY LD. AR THAT SALARY FOR THE YEAR UNDER CONSIDERAT ION IS REASONABLE. MA NO. 174/D/10 5 6. IN A.Y. 2004-05 FINDING HAS BEEN RECORDED THAT T HE SALARY PAID BY THE ASSESSEE TO SMT. SUDHA TIWARI AMOUNTING TO RS. 23,19,840/- IS REASONABLE IS FOUND TO BE REASONABLE. IF A FURTHER 20% SUM IS ADDED TO THE SAME IT WILL COME TO RS. 27,83,888/- AND AS AGA INST THAT THE SALARY IS PAID TO THE TUNE OF RS. 24,39,552/-. THUS, THE EXE MPTION U/S 11 COULD NOT BE HELD TO BE DISALLOWABLE FOR THE REASON THAT EXCESSIVE SALARY WAS PAID TO SMT. SUDHA TIWARI. 7. THEREFORE, THERE IS A MISTAKE IN THE ORDER OF TR IBUNAL WHILE RETURNING THE FINDING THAT ASSESSEE IS NOT ENTITLED TO GET EXEMPTION U/S 11 FOR THE REASON THAT EARLIER THIS ISSUE WAS DECIDED AGAINST ASSESSEE BY THE TRIBUNAL. HOWEVER, KEEPING IN VIEW THESE FACTU AL ASPECTS, WE ARE OF THE OPINION THAT THE ISSUE REGARDING GRANT OF EXEMP TION SHOULD HAVE BEEN RESTORED BACK TO THE FILE OF AO. ACCORDINGLY, WE MODIFY THE FINDINGS RETURNED IN PARA 14 OF OUR ORDER. THE SAID PARA IS OMITTED & REPRODUCED BY FOLLOWING PARA: 14. GROUND NO. 1 RELATES TO EXEMPTION U/S 11. IN PRECEDING PARAGRAPHS WE HAVE HELD THAT 20% INCREASE IN SALARY FROM THE SALARY CONSIDERED TO BE REASONABLE IN IMMEDIATE PRECEDING YEAR WILL BE REASONABLE. IF TH E SALARY PAID FOR THE YEAR UNDER CONSIDERATION IS FOUND TO F ALL WITHIN THAT PARAMETER THEN EXEMPTION U/S 11 CANNOT BE DENI ED TO THE ASSESSEE FOR THE ONLY REASON THAT SALARY PAID T O SMT. SUDHA TIWARI IS EXCESSIVE. THEREFORE, WE RESTORE T HIS ISSUE TO THE FILE OF AO TO DETERMINE THE ALLOWABILITY OR OTHERWISE OF EXEMPTION US/ 11 AFTER GIVING EFFECT TO THE ORDER O F THE TRIBUNAL WITH RESPECT TO SALARY PAID TO SMT. SUDHA TIWARI. IN MA NO. 174/D/10 6 OTHER WORDS HE CAN EXAMINE THIS ISSUE AS PER PROVIS IONS OF LAW TO DECIDE THE SAME ACCORDING TO PROVISIONS OF L AW. 8. IN THE RESULT, THE MISCELLANEOUS APPLICATION FIL ED BY THE ASSESSEE IS ALLOWED IN THE MANNER AFORESAID. ORDER WAS PRONOUNCED IN THE OPEN COURT ON 09.07.201 0 (A.K. GARODIA) (I.P. BANSAL) ACCOUNANT MEMBER JUDICIAL MEMBER DATED: 09.07.2010 KAVITA CHOPRA COPY TO: 1. APPLICANT 2. RESPONDENT 3. CIT 4. CIT(A) 5. DR TRUE COPY DEPUTY REGISTRAR