Parivar Seva Sanstha, New Delhi v. Addl. CIT (E), New Delhi

ITA 1066/DEL/2010 | 2006-2007
Pronouncement Date: 29-03-2012 | Result: Allowed

Appeal Details

RSA Number 106620114 RSA 2010
Assessee PAN AAATP0314J
Bench Delhi
Appeal Number ITA 1066/DEL/2010
Duration Of Justice 2 year(s) 19 day(s)
Appellant Parivar Seva Sanstha, New Delhi
Respondent Addl. CIT (E), New Delhi
Appeal Type Income Tax Appeal
Pronouncement Date 29-03-2012
Appeal Filed By Assessee
Order Result Allowed
Bench Allotted F
Tribunal Order Date 29-03-2012
Date Of Final Hearing 29-03-2012
Next Hearing Date 29-03-2012
Assessment Year 2006-2007
Appeal Filed On 11-03-2010
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL (DELHI BENCH `F : NEW DELHI) BEFORE SHRI U.B.S. BEDI JUDICIAL MEMBER AND SHRI K.D. RANJAN ACCOUNTANT MEMBER 1. ITA NO.1476/DEL./2003 (AY : 1998-99) 2. ITA NO.2873/DEL./2009 (AY : 1998-99) 3. ITA NO.2580/DEL./2008 (AY 1999-2000) 4. ITA NO.2581/DEL./2008 (AY 2000-01) 5. ITA NO.3336/DEL./2005 (AY 2001-02) 6. ITA NO.3586/DEL./2005 (AY 2002-03) 7. ITA NO.926/DEL./2008 (AY 2003-04) 8. ITA NO.927/DEL./2008 (AY 2004-05) 9. ITA NO.2874/DEL./2009 (AY 2005-06) & 10. ITA NO.1066/DEL./2010 (AY 2006-07) PARIVAR SEWA SANSTHA VS. DDIT(E) INV. CIRCLE I I C-374 DEFENCE COLONY NEW DELHI NEW DELHI. (PAN/GIR NO.AAATP0314J) I.T.A. NO.1173/DEL./2010 (ASSESSMENT YEAR : 2006-07) DDIT(E) INV. CIRCLE II VS. PARIVAR SEWA SANSTH A NEW DELHI. NEW DELHI. (APPELLANT) (RESPONDENT) ASSESSEE BY : S/SHRI S. GANESH & V.K. JAIN REVENUE BY : SHRI SUDESH GARG CIT(DR) ORDER PER BENCH THESE 11 MATTERS COMPRISE OF TEN APPEALS OF THE ASS ESSEE AND ONE THAT OF THE DEPARTMENT AGAINST DIFFERENT ORDERS OF THE CIT(A)-V II NEW DELHI FOR THE ASSESSMENT YEARS1998-99 (TWO APPEALS) 99-2000 2000-01 01-02 02-03 03-04 04-05 05-06 & 2006-07(CROSS APPEALS). THESE APPEALS INVOLVE IDE NTICAL FACTS AND ALMOST SIMILAR ISSUES THEREFORE BEING DISPOSED OF BY A SINGLE ORDER FOR THE SAKE OF CONVENIENCE. 2 2. THESE APPEALS WERE EARLIER DECIDED ON DIFFERENT DATES AND AGAINST THE TRIBUNAL DECISIONS ASSESSEE FILED APPEALS BEFORE THE HONBL E DELHI HIGH COURT IN 10 CASES AND IN ONE CASE DEPARTMENT FILED THE APPEAL. IN THESE AP PEALS THE HONBLE HIGH COURT HAS REMITTED THE ASPECT OF ASCERTAINING THE REASONABLEN ESS OF SALARY PAID FOR ALL THE YEARS UNDER APPEAL IN THE CASE OF MRS. SUDHA TIWARI FOR RE-CONSIDERATION REGARD BEING HAD TO CERTAIN FACTORS. 3. LD.COUNSEL FOR THE ASSESSEE AT THE VERY OUTSET SUBMITTED THAT NO DOUBT ISSUE WITH REGARD TO ASCERTAINING THE REASONABLENESS OF THE SA LARY PAID TO MRS. SUDHA TIWARI IS KEPT OPEN AND WAS REMITTED BACK TO THE TRIBUNAL WHILE R EFERRING TO THE CONCLUSION AND DIRECTION AS CONTAINED IN PARAS.6-21 OF THE ORDER AND IN CONNECTION WITH OBSERVATION OF HONBLE DELHI HIGH COURT CERTAIN FRESH MATERIAL AND EVIDENCE HAS BEEN FILED WITH AN APPLICATION TO ADMIT ADDITIONAL EVIDENCE AND SUCH E VIDENCE IS VERY MATERIAL AND RELEVANT FOR DECIDING THE ISSUE REMITTED BACK BY THE HONBLE HIGH COURT. IT WAS FURTHER SUBMITTED THAT AFTER ADMITTING ADDITIONAL EVIDENCE ALSO THE MATTER SHALL HAVE TO GO BACK TO THE ASSESSING OFFICER FOR VERIFICATION OF SUCH EVIDENCE /MATERIAL. THEREFORE IT WAS PRAYED THAT THE ORDERS OF AUTHORITIES BELOW SHOULD BE SET ASIDE AND MATTER MAY BE REMITTED BACK TO THE ASSESSING OFFICER TO RE-CONSIDER THE ISSUE A FRESH. 4. IN THIS CASE DEPARTMENT HAS FILED ONE APPLICAT ION FOR ADJOURNMENT ON THE GROUND THAT INSTRUCTION ON FRESH DOCUMENTS/EVIDENCES HAVE BEEN SOUGHT FROM THE ASSESSING OFFICER AND SAME ARE AWAITED. SO IT WAS PLEADED F OR ADJOURNING THE MATTER BUT WHEN LD.DR. WAS APPRISED OF THE FACT THAT THE ADDITIONAL EVIDENCE IS BEING FILED IN ORDER TO ASCERTAIN THE CLAIM ABOUT REASONABLENESS OF THE SAL ARY PAID TO MRS. SUDHA TIWARI AND MATTER IN ANY CASE WOULD GO BACK TO THE ASSESSING O FFICER FOR VERIFICATION AND 3 ASCERTAINING THE CORRECTNESS OF ADDITIONAL EVIDENCE S BUT LD.DR. INSISTED THAT SINCE MATTER HAS BEEN REMITTED BACK TO THE TRIBUNAL FOR ASCERTAI NING THE REASONABLENESS OF THE REMUNERATION PAID TO SMT. SUDHA TIWARI SO TRIBUNA L SHOULD DECIDE IT ITSELF WITHOUT REMANDING IT BACK TO THE ASSESSING OFFICER AND THAT WAY ASSESSEES TIME WOULD ALSO BE SAVED AND MATTER WILL BE DECIDED ONCE FOR ALL. 5. LD.COUNSEL FOR THE ASSESSEE IN ORDER TO COUNTER THE SUBMISSION OF THE LD.DR HAS SUBMITTED THAT SINCE ALL DOCUMENTS AND EVIDENCE HAV E TO BE VERIFIED AND THEREFORE THE MATTER NEEDS TO GO BACK RATHER THAN DECIDING HERE B ECAUSE IF TRIBUNAL SEEKS REMAND REPORT FROM THE ASSESSING OFFICER IT WOULD ALSO TAKE LONG ER TIME. THEREFORE IN ALL FAIRNESS THE MATTER CAN GO BACK TO RE-DECIDE THE ISSUE AFRESH BY THE ASSESSING OFFICER IN TERMS OF HONBLE HIGH COURT DECISION. 6. WE HAVE HEARD BOTH THE SIDES CONSIDERED THE MAT ERIAL ON RECORD AS WELL AS DOCUMENTARY EVIDENCE FURNISHED AND FIND THAT HONBL E DELHI HIGH COURT HAS DISCUSSED AND CONCLUDED IN ITS JUDGMENT DATED 29.08.2010 IN 8 APPEALS AS PER PARAS.6-21 WHICH READ AS UNDER: 6. QUESTIONING THE CORRECTNESS OF THE ORDER IT I S SUBMITTED BY MR. S. GANESH LEARNED SENIOR COUNSEL FOR THE APPELLANT THAT THE T RIBUNAL HAS MISCONSTRUED THE PROVISION CONTAINED IN SECTION 13(3) OF THE ACT. IT IS PUT FORTH BY HIM THAT THE PERCEPTION OF THE TRIBUNAL IS FUNDAMENTALLY ERRONEO US INASMUCH AS THE TRIBUNAL HAS NOT APPROPRIATELY APPRECIATED THE CONCEPT OF THE RE ASONABLENESS OF THE AMOUNT PAID TO MRS. SUDHA TIWARI BUT HAS GONE BY THE CONCE PT OF PERCENTAGE WITHOUT ANY RATIONAL BASIS. IT IS CONTENDED BY HIM THAT THE AMO UNT PAID IS COMMENSURATE WITH THE SERVICES RENDERED AND THEREFORE THE APPROACH OF THE AUTHORITIES THAT THE INCREASE IN SALARY WAS NOT BASED ON MATERIAL AND H ENCE THE AMOUNT RECEIVED BY THE INSTITUTION WAS AMENABLE TO TAX AS THE EXEMPTIO N GRANTED IN ITS FAVOUR IS OF NO ASSISTANCE TO IT. IT IS FURTHER SUBMITTED BY LEARNE D SENIOR COUNSEL THAT THE TRIBUNAL HAS FAILED TO APPRECIATE THAT THE SALARY PAYMENT WA S MADE FROM THE TRUST PERSPECTIVE AND HAS ADOPTED A DIFFERENT CRITERION T O APPRECIATE THAT THE AMOUNT PAID IS UNREASONABLE AND EXCESSIVE. 4 7. BE IT NOTED MR. S. GANESH LEARNED SENIOR COUN SEL RAISED MANY OTHER CONTENTIONS TO SUBSTANTIATE THE QUESTIONS THAT WERE FORMULATED AT THE TIME OF ADMISSION BUT IN COURSE OF HEARING THE GRAVAMEN OF CONTENTION RAISED WAS THE REASONABLENESS OF THE AMOUNT THAT HAS BEEN DETERMIN ED BY THE ASSESSEE AND THE APPROACH OF THE AUTHORITIES AND SPECIALLY THE TRIBU NAL WITH THE STANCE THAT OTHER ISSUES BE KEPT OPEN. 8. MRS. P.L. BANSAL LEARNED COUNSEL APPEARING FOR THE REVENUE PER CONTRA SUBMITTED THAT THE APPROACH OF THE APPELLATE AUTHOR ITIES CANNOT BE FOUND FAULT WITH AS THE HIKE IN THE SALARY WAS REALLY NOT JUSTIFIED AND HENCE THE BENEFIT OF EXEMPTION WAS CORRECTLY DENIED TO THE ASSESSEE. 9. TO APPRECIATE THE SUBMISSIONS RAISED AT THE BAR WE HAVE CAREFULLY PERUSED THE ORDERS PASSED BY THE AUTHORITIES AS WELL AS BY THE TRIBUNAL. IT IS NOT IN DISPUTE THAT PRIOR TO THE ASSESSMENT YEAR 1998-99 THE SALAR Y AND PERQUISITES WERE GRANTED TO MRS. SUDHA TIWARI AND THE SAME WAS ACCEPTED BY T HE ASSESSING AUTHORITY. FOR THE YEARS 1993-94 1994-95 1995-96 1996-97 1997- 98 AND 1998-99 THE AMOUNT PAID WAS RS.2.65 LACS RS.3.39 LACS RS.4.19 LACS RS.5.34 LACS RS.7.04 LACS AND RS.13.97 LACS RESPECTIVELY. ON A PERUSAL OF THE SAM E IT TRANSPIRES THAT THE SALARY AND PERQUISITES WERE INCREASED BY TIM BLACK THE CH IEF EXECUTIVE OF MARIE STOPES INTERNATIONAL ON THE BASIS OF RESOLUTION 9.3 .1993 WHEREBY HE WAS AUTHORIZED TO DETERMINE THE SAME. MRS. SUDHA TIWARI WAS THE OLDEST EMPLOYEE OF THE SOCIETY AND HAVING JOINED IN 1981 AND REGARD BE ING HAD TO HER EXPERIENCE AND THE MANAGERIAL SKILL THE SAME WAS DETERMINED. THE F INDING THAT HAS BEEN RECORDED BY THE ASSESSING OFFICER WAS THAT IF THE SALARY INC REASE WAS NOT PAID TO MRS. SUDHA TIWARI THE SAME COULD HAVE BEEN UTILIZED FOR CHARI TABLE ACTIVITIES. THE CIT(A) HAS TAKEN NOTE THAT THERE WAS AN INCREASE OF 59% IN THE SALARY PAID TO MRS. SUDHA TIWARI FOR THE ASSESSMENT YEAR 1998-99 THOUGH THE I NCOME OF THE SANSTHA (SOCIETY) HAD DECREASED. IT IS ALSO WORTH NOTING TH AT THE CIT(A) HAD REFERRED TO THE EARLIER ORDER OF THE TRIBUNAL WHEREBY THE TRIBUNAL HAD EXPRESSED THE VIEW THAT THE 25% ANNUAL INCREASE IN THE SALARY AND PERQUISITES C OULD BE CONSIDERED TO BE NORMAL INCREASE AND THEREFORE THE SAID INCREASE W AS UNREASONABLE. THE TRIBUNAL ADDRESSED ITSELF WITH REGARD TO THE SALARY PAID TO A PERSON WHO COMES UNDER THE CATEGORY OF PROHIBITED PERSON TO BE COMMENSURATE WI TH THE SERVICES RENDERED AND OBSERVED THAT THE AMOUNT THAT WAS PAID WAS UNREASON ABLE. 10. AS HAS BEEN INDICATED EARLIER WE ARE INCLINED TO KEEP THE OTHER ISSUES OPEN FOR THE TIME BEING AND ONLY THINK IT APT TO ADDRESS OURSELVES WHETHER THE FINDING RECORDED BY THE TRIBUNAL WITH REGARD TO THE UNREASO NABLE AND ITA 274/2005 WITH CONNECTED MATTERS UNJUSTIFIED INCREASE REQUIRES TO BE RECONSIDERED BY THE TRIBUNAL. MR. GANESH LEARNED SENIOR COUNSEL HAS INVITED OUR ATTENTION TO THE DECISION IN COMMISSIONER OF INCOME TAX WEST BENGAL V. EDWARD K EVENTER (PRIVATE) LTD. AIR 1978 SC 1586 WHEREIN THE APEX COURT WAS DEALIN G WITH AN ISSUE WHETHER THE TRIBUNAL WAS RIGHT IN HOLDING THAT THE DISALLOW ANCE OF CERTAIN AMOUNTS OUT OF THE REMUNERATION OR COMMISSION PAID TO THE FOUR DIR ECTORS OF THE COMPANY IN FOUR ASSESSMENT YEARS BY TAKING RESORT TO SECTION 10(4A) OF THE IT ACT 1992 WAS 5 JUSTIFIED. THEIR LORDSHIPS TOOK NOTE OF THE FACT TH AT THE TRIBUNAL HAD DISAGREED WITH THE VIEW OF THE TAXING AUTHORITIES AND CAME TO HOLD THAT THE REMUNERATION OR COMMISSION PAID TO THE DIRECTORS WAS NEITHER EXCESS IVE NOR UNREASONABLE AS THE LEGITIMATE BUSINESS NEEDS OF THE .ASSESSEE AND THE BENEFIT DERIVED BY OR ACCRUING TO THE ASSESSEE THEREFROM WERE TAKEN INTO CONSIDERA TION FROM THE POINT OF VIEW OF A BUSINESSMAN. IT IS WORTH NOTING THAT THE ORDER PA SSED BY THE TRIBUNAL WAS CONCURRED WITH BY THE HIGH COURT AND ON APPEAL BEIN G PREFERRED THEIR LORDSHIPS DECLINED TO INTERFERE WITH THE ORDER OF THE HIGH CO URT. IT IS SUBMITTED BY MR. GANESH LEARNED SENIOR COUNSEL THAT THOUGH THE SAID DECISION WAS RENDERED IN THE CONTEXT OF SECTION 10(4A) OF THE IT ACT 1992 BUT F IXING OF A REMUNERATION OR COMMISSION OR FOR THAT MATTER A SALARY OR PERQUISIT E HAS TO BE VIEWED FROM THE VARIOUS PERSPECTIVES AND NOT PURSUING THE ENHANCEME NT BY PERCENTAGE CONCEPT. THE LEARNED SENIOR COUNSEL FURTHER SUBMITTED THAT T HE TRIBUNAL APPRISED ITSELF WITH REGARD TO THE DUTIES OF MRS. SUDHA TIWARI OR INVOLV EMENT IN THE SOCIETY THE ACTIVITIES CARRIED OUT AND THE NUMBER OF HOURS SHE WORKED. HE ALSO SUBMITTED THAT HAD THE ROLE OF MR. TIM BLACK IN DETERMINING THE SA ME THE NATURE OF CARRYING OUT THE ACTIVITIES INASMUCH AS THERE WERE 56 CENTERS OF THE SOCIETY AND THAT MRS. SUDHA TIWARI WAS REQUIRED TO TRAVEL BEEN GIVEN ITS DUE C ONSIDERATION POSSIBLY THE TRIBUNAL WOULD HAVE TAKEN A DIFFERENT VIEW ALTOGETH ER. 11. PER CONTRA MRS. P .L. BANSAL WOULD SUBMIT THA T THE TRIBUNAL HAS CORRECTLY ADJUDGED THE ISSUE BY TAKING NOTE OF THE AMOUNT REC EIVED BY THE ASSESSEE AND THE AMOUNT PAID ON THAT BACKDROP FOUND THAT THE AMOUNT PAID TO MRS. SUDHA TIWARI WAS UNREASONABLE. 12. IT IS NOT IN DISPUTE THAT THE APPELLANT SOCIET Y IS ENGAGED IN A CHARITABLE PURPOSE AND THAT TOO IN FAMILY PLANNING AND MATERNA L AND CHILD HEALTH CARE. ON A SCRUTINY OF THE ORDER PASSED BY THE TRIBUNAL WE FI ND THAT IT HAS REALLY ADDRESSED ITSELF ONLY ON TWO FACETS NAMELY THE AMOUNT RECEI VED BY THE TRUST AND THE ENHANCEMENT MADE IN THE SALARY. 13. IN OUR CONSIDERED VIEW THE DUTIES CARRIED OUT BY MRS. SUDHA TIWARI IN JUXTA-POSITION WITH THE PURPOSIVE OF THE SOCIETY TO BE MADE EFFECTIVE AND ITS ACTIVITIES APART FROM THE OTHER FACETS INCLUSIVE OF HER QUALIFICATIONS HER DISPENSABILITY THE NUMBER OF CENTERS AND THE TRAVE L ASPECTS SHOULD HAVE BEEN ADDRESSED TO BY THE FINAL FACT FINDING AUTHORITY. T HE SAME HAVING NOT BEEN DONE THE FINDING THAT THE SALARY PAID BEING UNREASONABLE IS NOT CORRECT AS A TRIBUNAL IS REQUIRED TO RETURN A FINDING BY TAKING ALL THE COMP ONENTS AND THAT ITA 274/2005 WITH CONNECTED MATTERS TOO FROM THE PERSPECTIVE OF THE SOCIETY AND ALSO ITS ACTIVITIES AND NOT FROM A SINGULAR PERSPECTIVE OF A MOUNT RECEIVED BY THE TRUST. 14. ITA NO. 340/2010 PERTAINS TO THE ASSESSMENT YEA R 1999-2000. THE TRIBUNAL HAS HELD THAT THE SALARY PAID TO MRS. SUDHA TIWARI WAS EXCESSIVE AND NOT REASONABLE. 6 15. ITA NO. 341/2010 PERTAINS TO THE ASSESSMENT YEA R 2000-2001. THE TRIBUNAL HAS HELD THAT THE SALARY PAID TO MRS. SUDHA TIWARI WAS EXCESSIVE AND NOT REASONABLE. 16. ITA NO. 339/2010 PERTAINS TO THE ASSESSMENT YEA R 2001-2002. THE TRIBUNAL HAS HELD THAT THE SALARY PAID TO MRS. SUDHA TIWARI WAS EXCESSIVE AND NOT REASONABLE. 17. ITA NO. 342/2010 PERTAINS TO THE ASSESSMENT YEA R 2002-2003. THE TRIBUNAL HAS HELD THAT THE SALARY PAID TO MRS. SUDHA TIWARI WAS EXCESSIVE AND NOT REASONABLE. 18. ITA NO. 338/2010 PERTAINS TO THE ASSESSMENT YEA R 2003-2004. THE TRIBUNAL HAS HELD THAT THE SALARY PAID TO MRS. SUDHA TIWARI WAS EXCESSIVE AND NOT REASONABLE. 19. ITA NO. 337/2010 PERTAINS TO THE ASSESSMENT YEA R 2004-2005 WHEREIN THE TRIBUNAL HAS HELD THAT THE ENHANCEMENT OF SALARY BY 20% WAS REASONABLE BUT AS IT HAD PREVIOUSLY OPINED THAT THE CONTENTION REGARDING HER STATUS WAS REJECTED THE ASSESSING OFFICER WAS REQUIRED TO COMPUTE THE INCOM E AND LEVY INTEREST AND PROCEED WITH PENALTY. TO ELABORATE THE DIRECTIONS WERE ISSUED ON THE BASIC FOUNDATION THAT THE ASSESSEE WAS NOT ENTITLED TO EX EMPTION. 20. ITA NO. 707/2010 PERTAINS TO THE ASSESSMENT YE AR 2005-2006 WHEREIN THE TRIBUNAL HAS HELD THAT THE ENHANCEMENT OF SALARY BY 20% WAS REASONABLE BUT AS IT HAD PREVIOUSLY OPINED THAT THE CONTENTION REGARDING HER STATUS WAS REJECTED THE ASSESSING OFFICER WAS REQUIRED TO COMPUTE THE INCOM E AND LEVY INTEREST AND PROCEED WITH PENALTY. TO ELABORATE THE DIRECTIONS WERE ISSUED ON THE BASIC FOUNDATION THAT THE ASSESSEE WAS NOT ENTITLED TO EX EMPTION. 21. IN VIEW OF OUR AFORESAID ANALYSIS WHILE KEEPIN G ALL THE ISSUES OPEN WE SET ASIDE THE ORDER PASSED BY THE TRIBUNAL AND REMIT TH E MATTER BACK TO THE TRIBUNAL TO DEAL WITH THE ISSUE OF REASONABLENESS OF THE PAYMEN T MADE TO MRS. SUDHA TIWARI. 6.1 THIS DECISION HAS BEEN FOLLOWED IN OTHER APPEAL S BY THE HONBLE DELHI HIGH COURT. 7. AND IN ORDER TO SUBSTANTIATE ITS CLAIM IN VIEW O F HONBLE JURISDICTIONAL HIGH COURT DECISION THE DOCUMENTS FURNISHED BY THE ASSESSEE A RE RELEVANT AND IMPORTANT BUT THESE NEED FURTHER VERIFICATION AT THE LEVEL OF ASSESSING OFFICER. THEREFORE IN VIEW OF FACTS CIRCUMSTANCES AND MATERIAL ON RECORD AND SPECIFIC R EQUEST OF LD.COUNSEL FOR THE ASSESSEE 7 TO REMIT THE ISSUE BACK ON THE FILE OF THE ASSESSIN G OFFICER WE FIND IT JUST AND APPROPRIATE TO SET ASIDE THE ORDERS OF AUTHORITIES BELOW FOR AL L THE YEARS AND RESTORE THE MATTERS BACK ON THE FILE OF THE ASSESSING OFFICER WITH THE DIREC TION TO RE-DECIDE THE ISSUES AFRESH IN VIEW OF DIRECTION OF HONBLE DELHI HIGH COURT BY PA SSING A SPEAKING ORDER AFTER GIVING DUE OPPORTUNITY TO THE ASSESSEE. WE HOLD AND DIREC T ACCORDINGLY. 8. IN THE RESULT ALL THE APPEALS GET ACCEPTED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN OPEN COURT ON CONCLUSION OF H EARING. SD/- SD/- (K.D. RANJAN) ACCOUNTANT MEMBER (U.B.S. BEDI ) JUDICIAL MEMBER DATED : MARCH 29 2012 SKB COPY OF THE ORDER FORWARDED TO:- 1. APPELLANT 2. RESPONDENT 3. DDIT(E) INV. CIRCLE NEW DELHI. 4. CIT(A)-VII NEW DELHI. 5. CIT(ITAT) DEPUTY REGISTRAR ITAT