TaxTMI 
TaxTMI 
2014 (2) TMI 371
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....circumstances of the case, the Ld. CIT (A) has erred in holding that the activities of the assessee are charitable in nature and that the assessee is eligible to the claim of exemption u/s 11 of the IT Act, 1961 ignoring the fact that the decision in CITA vs. Employees Death & Superannuation Relief Fund 234 ITR 308 was squarely applicable in this case because the facts of this case are identical to the case CIT vs. Employees Death & Superannuation Relief Fund 234 ITR 308 and other cases cited by the Assessing Officer in his order. Consequently, the Ld. CIT (A) has grossly erred in deleting the addition made at Rs.12,81,70,700/- without appreciating the fact that the Assessee was not entitled to benefits of Section 11 of the Act because there were numerous violations of the provisions of section 13 of the IT Act, 1961." 3. Apropos Ground No.1, the grievance of the department is that the Ld. CIT (A) has erred in not taking into consideration the fact that the assessment order was correctly passed by the Assessing Officer u/s 144 of the IT Act, in view of the time constraints and non-submission of complete information by the assessee; and that the Ld. CIT (A) has erred in admitting....
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....144 of the Act. 6. It was in the above circumstances, that the assessee filed an application under Rule 46A of the IT Rules before the CIT (A), submitting the aforesaid letter dated 31.12.2007 along with all annexures, addressed to the Assessing Officer. The Ld. CIT (A) sent the application along with the additional evidence to the Assessing Officer for comments. The Assessing Officer submitted remand report dated 11.02.2009. The assessee submitted its rejoinders dated 21.04.2009 and 18.06.2009. 7. The Ld. CIT (A), it is seen, admitted the additional evidence filed by the assessee, finding that proper opportunity of hearing was not given to the assessee by the Assessing Officer. The relevant portion of the Ld. CIT (A)'s order in this regard is as follows:- "3.4 I have considered the facts of the case and material placed on record. It is evident from the chronology of events as aforementioned that proper opportunity of being heard was not given to the appellant and accordingly the case of the Appellant falls within the purview of rule 46A (1) of the Income Tax Rules. A perusal of the reply dated December 31, 2007 and the evidences enclosed therewith show that all these docu....
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....ve its services in the shape of result of research made by it in products of oil, petroleum, etc., that therefore, no charity was being done and the public at large was not benefitted thereby, rather it was a benefit to the members of the society itself and that certain members of the assessee society were paid amounts in respect of the research and for holding of meetings and conferences and the expenses so incurred were not justified. 11. The Ld. CIT (A), in the impugned order, observed, inter alia, that the assessee society was a society registered under the Societies Registration Act, which also stood registered under Section 12AA of the IT Act vide order dated 30.06.2003, w.e.f. 07.08.2002; that in earlier years, the assessee's claim of exemption u/s 11 had consistently been allowed; that the studies prepared by the assessee society contained research on different aspects of petroleum products, pricing, etc., and their effect on the economy of Indians living below the poverty line and benefits to the oil and gas sector; that thus, the objects of, as well as the activities carried on by the assessee society were for the benefit of the society at large and particularly for th....
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.... the Act for Assessment Years 2003-04, 2004-05, 2010-11 and 2011-12, showing that not only in the earlier years, but in the subsequent years too, the activities of the assessee Society have been held to be charitable by the Assessing Officer himself. The assessee society was formed after the dismantling of the Administered Price Mechanism in the petroleum sector and the closing down of the Oil Co- ordination Committee. The assessee society was created for co-ordination in the hydrocarbon sector, at the initiation of the Government of India, with the object of promoting the interest of the petroleum industry in line with the public/national policies, through a self regulatory environment, keeping in view consumer interest. It is also the object of the assessee society to work for global competitiveness of the petroleum industry and to promote measures of energy conservation, health and safety and environment among the members and consumers. During the year under consideration, the assessee society carried out a number of activities of public importance and utility in the area of use of oil, petroleum and natural gases, as under:- i) It has organized its first overseas delegation ....
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.... by the industry to the public, in order to achieve the target of economic growth. The studies contained research on the impact on the economy of Indians living below the poverty line and benefits to the oil and gas sector. The executive summary of these publications is available on the website of the assessee society free of cost to the public. 15. Thus, evidently, the objects of the assessee society, as well as its activities benefit not only the oil and gas industry, but the society at large. They are in the national interest of policy making on the energy sector. The papers prepared by the assessee society were used by the Government and the policy makers to formulate the policies for future needs of oil and gas in the Indian economy for sustainable growth which would help the public and the development of the nation. Therefore, the activities carried on by the assessee were in the nature of advancement of the object of general public utility and were not either for earning profit, or for converting benefit to any particular member of the assessee society. The assessee society advances an object of general public utility in the petroleum sector by acting as an interface betw....
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....d by PWC were specialized services and not merely regular accounting services. The Ld. CIT (A) held the payment made by the assessee to PWC to be reasonable on considering the above voluminous documentary evidence filed by the assessee. It was correctly observed that the work done by PWC for conducting the studies in relation to 'Fuelling India's Growth' and 'VAT on LPG' were large assignments involving time and professional expertise. It was also correctly observed that the Assessing Officer had not brought on record anything to show that the payment was unreasonable or in excess. These findings of the Ld. CIT (A) have not been shown to be erroneous. It would be apt to reproduce here the relevant findings of the Ld. CIT (A) in this regard:- "6.8 I have considered the submissions filed by the appellant along with the additional evidences adduced in relation to the above payments. I have also gone through the remand report sent by the A.O. and the rejoinder thereof filed by the appellant. In my considered view the payments made to the PwC are reasonable on the fact that the work done by the PwC for conducting the studies in relation to Fuelling India Growth and VAT on LPG were la....
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....cessary evidence of the payments. Further, the contention of the A.O. regarding the non compliance of the provisions of FCRA is not applicable, as a sum of Rs.9,410/- received by the appellant from World LPG does not come under the purview of FCRA." 18. Here again, before us, the department has not been able to refute the findings recorded by the Ld. CIT (A). As per the record, World LPG Association is a world renowned body. Almost all companies in the oil and gas sector are its members. The assessee had filed Minutes of the Meeting held on 04.07.2003, in which, this membership was approved. A copy of the invoice was also filed. The assessee society became a member of the World LPG Association to achieve its object of providing an update on the events and development in the field of oil and gas applicable to Government regulators and its members and to conduct studies of public utility. The World LPG Gas Association also became a member of the assessee society and as a result of such membership, it receives information, data, publications, etc., disseminated in the nature of education and utilized by it for drawing up strategies for Government and statutory bodies for enhancing ....
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....stry received education. This was crucial in the determination of the pricing of oil products. 21. Then, the assessee Society had paid rent of Rs. 50,05,974/- to Indian Oil Corporation for the premises hired by the assessee for office purpose. The Assessing Officer observed that the assessee had not furnished any evidence to justify this payment, since IOC was also a member of the assessee Society. The Ld. CIT (A) observed as above. 22. Here, the valuation of the rent was done by a Government approved valuer. This valuation was based on the prevailing market rent. The assessee had filed before the Ld. CIT (A) the supporting documents along with lease agreement and valuation report. A copy of the report of the registered valuer was also furnished. This report provided that the effective per square feet rate of rent paid by the assessee Society for office space at Yusuf Sarai for 6908 sq. ft., was Rs. 42 per sq. ft. per month. The Registered valuer also mentioned that the rent paid by ABN Amro Bank for a similar office space in Hauz Khas was Rs. 50 per sq. ft. per month. The comparison shows that the payment was reasonable. The assessee had also furnished a copy of lease agreem....