TaxTMI 
TaxTMI 
2012 (5) TMI 137
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....ice bearers of the society. 3. On the facts and circumstances of the case, the learned CIT(Appeals) erred both on facts and in law, in allowing relief to the assessee by overtaking the observation of the Hon'ble ITAT given while deciding appeal for A.Y. 2006-07 in assessee's own case "that the salary allowed to the office bearers and members was excessive which also approves that the assessee had violated the provisions of sec. 13(1)(c)(ii) read with sec. 13(2) of the Income-tax Act, 1961. 4. That the appellant craves for the permission to add, delete or amend the grounds of appeal before or at the time of hearing of appeal". 2. Though the revenue has taken four grounds of appeal but basically its grievance revolves around a single issue whereby it is canvassing that assessee had violated sec. 13(1)(c)(ii) read with sec.13(3) of the Income-tax Act, 1961 and thereby exposed itself to lose his status of a charitable institution and exemption under sec. 11 of the Income-tax Act, 1961. 3. The brief facts of the case are that assessee is a society came into existence on 6th day of July, 1971 in the name of Idisula Trust Society, 1-H/8, NIT Faridabad with ....
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....achers. (b) Admission policies and fees structure for the school. (c) Academic and study profile of the school. (d) Co-ordination with CB.S.E Board and other government bodies. (e) Recognition of school with CB.5.E Board and other government bodies. (f) Training and guidance to teaching staff for improvement of over all education of children (g) Over all administration of the running of school. (h) Co-ordination with State Government Educational and other authorities. Experience:- (a) 44 years experience of teaching line. (b) Started carrier with Cambridge School From 1962 to 1965. (c) Educationist and board member for an engineering college, Kerala. (d) Highly educated person who has devoted his full life in education field. Remuneration of Rs. 68,000/- (Sixty thousand only) per month, during the year under consideration is quite justifiable and reasonable for the services rendered to the school as full time employee. His contribution to the school is like a main pillar and has also worked with devotion for the u....
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....n SB/ FDR A/c. (C) Mr. Joseph John (Manager of St. John S School. Sec- 49, & Nehru round, Faridabad):- (a) Co-ordination with CB.5.GBP Board and their schedules. (b) Recognition of school with CB.S.GBP Board and other government bodies. (c) Management of construction and infrastructure facilities of the school, (d) Management of funds from bank for school constructions and other needs. Experience:- (a) 12 years experience of teaching line. (b) Started carrier with teaching Senior Secondary classes in St John School, Sector- ~ Faridabad (c) Young educated person (MA - English) who has devoted his life for the education field Remuneration of Rs. 55,000/- (Fifty five thousand only) per month, during the year under appeal is again justifiable and reasonable for the services rendered to the school as full time employee. His contribution to the school is like a main pillar and has also worked with devotion for the upliftment of education among students particularly in the low income groups of the society. Note:- Mr. Joseph John, who is an existing income tax assessee, hold....
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....allowance in assessment year 2006-07 but in the next assessment year i.e. 2007-08, Assessing Officer himself has allowed the salary to all these persons and the salary in this year are not higher to assessment year 2007-08. The same amount has been paid in this assessment year also. Learned First Appellate Authority has considered all these aspects made reference to the ITAT's order in assessment years 2003-04 to 2006-07 and also to the assessment order for assessment year 2007-08. Learned CIT(Appeals) thereafter deleted the disallowance. 8. Learned DR relied upon the assessment order and contended the salary paid to the persons specified under sec. 13(3) of the Act are on the higher side, therefore, deserves to be disallowed. On the other hand, learned counsel for the assessee pointed out that the issue in dispute is squarely covered by the order of the ITAT in assessment years 2003-04 to 2006-07. He further submitted that in assessment year 2006-07, a salary of Rs. 43,000 per month was paid to Mr. Joseph John, the ITAT has allowed the admissible salary to the extent of Rs. 30,000. In this assessment year, a salary of Rs. 55,000 per month was paid. Considering his experienc....
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.... sec. 11, 12 and 13 of the Income-tax Act, 1961. Clause "b" of section 40A(2) provides VI Categories of assessee along with list of persons who could be associated with the assessee. In this clause, no reference is being made to an assessee, who is a society or trust and whose income is to be assessed as per sections 11, 12 and 13 of the Income-tax Act, 1961. Because a similar mechanism has been provided therein section 13(1)(ii) and 13(3) of the Act. It appears that the Assessing Officer has made reference to this section unnecessarily. 10. The other provisions which are relevant for the controversy in hands are as under: "Section 11: Income from property held for charitable or religious purposes: (I) Subject to the provisions of sections 60 to 63, the following income shall not be included in the total income of the previous year of person in receipt of the income. (A) income derived from property held under trust wholly or charitable or religious purposes, to the extent to which such income is applied to such purposes in India........... ** ** ** Section 13: Section 11 not to apply in certain cases:- Section 13(1): Nothing contained in sectio....
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....clause (b) of section 40A(2) of the Act. Learned CIT (Appeals) has rightly observed that restriction is applicable to those amounts which have been applied directly or indirectly for the benefit of any person referred to in sub-section (3) of the Act. It will not lead to any conclusion that assessee would loose its charity status. In other words, if a small amount is to be disallowed that would not disqualify to enjoy the status of charity. Thus, we do not find any merit in ground Nos. 2 and 3 raised by the revenue. 12. Let us examine whether assessee has extended any undue benefit directly or indirectly to the persons referred to in sub-section (3). As far as the salary paid to two persons, namely, Mr. T.I. John and Mr. A. John of Rs. 8,16,000 and Rs. 7,20,000 is concerned, we find that a similar salary was paid in assessment years 2005-06 to 2007-08. In assessment years 2005-06 and 2006-07, Assessing Officer made the disallowance and the ITAT has upheld the deletion of disallowance. Thus, the issue is squarely covered by the order of the ITAT. As far as the salary paid to Mr. Joseph John is concerned, we find that the salary of Rs. 55,000 per month has been paid. Assessing Off....