Income Tax Appellate Tribunal - Hyderabad
Kmr Educational Society,, Hyderabad vs Assessee on 26 November, 2014
IN THE INCOME TAX APPELLATE TRIBUNAL
HYDERABAD BENCH "A", HYDERABAD
BEFORE SHRI P.M. JAGTAP, ACCOUNTANT MEMBER
AND SMT. ASHA VIJAYARAGHAVAN, JUDICIAL MEMBER
ITA No. 1300/Hyd/2014
Assessment year 2008-09
M/s. KMR Educational Society vs The Asst. CIT
Hyderabad Central Circle-1
PAN: AABTK3012F Hyderabad
Applicant Respondent
Appellant by: Sri S. Rama Rao
Respondent by: Sri Ramakrishna Bandi
Date of hearing: 12.11.2014
Date of pronouncement: 26.11.2014
ORDER
PER ASHA VIJAYARAGHAVAN, JM:
This appeal by the assessee is directed against the order of the CIT(A)-I, Hyderabad dated 28.4.2014 for A.Y. 2008-09.
2. The assessee is a society registered under the Andhra Pradesh Societies Registration Act 2001. For the assessment year 2008-09, the Assessing Officer completed the assessment u/s 143(3) r.w.s. 153A on 30.12.2010 determining the income at Rs. 83.71.683. The Assessing Officer worked out the tax payable according to the rates applicable for any other Association of Persons. The Assessing Officer, thereafter issued a notice u/s 154 and rectified the assessment by passing an order u/s 154 of the IT Act on 2.8.2011. According to the Assessing Officer, the rate applicable to AOP and individuals is not applicable to the assessee and the maximum marginal rate is applicable in view of the provisions of s. 167B of the Act. Aggrieved the assessee preferred appeal before the CIT(A) and submitted that sec. 167B has no application to the Society registered under the Societies Act or any other society formed in accordance with the similar laws. The 2 ITA No. 1300/Hyd/2014 M/s. KMR Educational Society ======================= assessee submitted that the order of the Assessing Officer passed u/s 154 is wrong.
3. During the course of appeal proceedings, the AR of the assessee has submitted that in the order u/s. 154, the Assessing Officer taxed the assessee at the maximum marginal rate in view of s. 167B of the Act. It was further submitted that the said section clearly mentions that it does not apply to a society registered under the Societies Registration Act. Copies of Certificate of Registration and Memorandum of the Society were also filed. He further submitted that these documents indicate that it is a society registered under the Societies Registration Act, 2001, therefore, the provisions of s. 167B of the Act have no application.
4. The CIT(A) held that the provisions of s. 167B are applicable to a society if the individual shares of the members are indeterminate or unknown on the date of formation or at any time thereafter and in the instant case, even though the assessee society claimed that the society is registered and filed Memorandum of the Society, it does not spell out the individual shares of the members of the Society. The CIT(A) observed that from the provisions of s. 167B, it is clear that if the individual shares of the members of the Society are indeterminate, Maximum Marginal Rates are applicable. Further, the CIT(A) noted that before passing order u/s. 154 on 2.8.2011, the Assessing Officer has issued a notice u/s. 154 on 13.7.2011, for which there was no reply from the assessee and therefore, the Assessing Officer was of the view that the assessee society has no objection for the proposed modification and passed order u/s. 154 applying Maximum Marginal Rates. The CIT(A) held that since the provisions of s. 167B are rightly applied by the Assessing Officer, He did not see any reason to interfere in the action of the Assessing Officer. Accordingly, the ground raised by the assessee in this regard was dismissed by him.
3 ITA No. 1300/Hyd/2014M/s. KMR Educational Society =======================
5. Before us, the learned AR submitted that the order of the Assessing Officer is erroneous both on facts and in law. The AO erred in holding that the provisions of s. 167B of the Act are applicable to the assessee. The Assessing Officer erred in arriving at the tax payable and the interest payable by the assessee by applying the provisions of s. 154 when no such order is to be passed by the Assessing Officer.
6. The learned DR relied on the orders of the Revenue authorities.
7. We have heard both the parties and perused material available on record. Section 167B of the Act reads as under:
"167B. (1) Where the individual shares of the members of an association of persons or body of individuals (other than a company or a co-operative society or a society registered under the Societies Registration Act, 1860 (21 of 1860) or under any law corresponding to that Act in force in any part of India) in the whole or any part of the income of such association or body are indeterminate or unknown, tax shall be charged on the total income of the association or body at the maximum marginal rate:"
8. The learned counsel submitted copies of the following bare Acts:
a) Societies Registration Act, 1860
b) Andhra Pradesh Societies Registration Act, 2001
9. The learned counsel submitted that from the preamble to the said Acts it can be seen that both the laws relate to the Registration of Societies promoting art, fine arts, charity, crafts, etc. The purpose of both the Acts is same. Section 32 of the Andhra Pradesh Societies Registration Act, 2001 repealed application of the provisions of the Societies Registration Act 1860 in the state of Andhra Pradesh.
10. Sub-section (2) of s. 32 mentions that if the society has done any act under the Societies Registration Act 1860 it would be deemed 4 ITA No. 1300/Hyd/2014 M/s. KMR Educational Society ======================= to have been taken under the Andhra Pradesh Societies Registration Act, 2001. In section 2 - Definitions - defines "Memorandum means the memorandum of association of a society as originally frames or an altered from time to time in pursuance of the provisions of this Act or the Societies Registration Act, 1860.
11. It was further submitted that from reading of the provisions of both the Acts, the Andhra Pradesh Societies Registration Act is similar to the Societies Registration Act of 1860. It was submitted that the Societies Registration Act 1860 was in existence in the entire British India and after formation of States, each State has enacted its own Act repealing the Societies Registration Act 1860. The respective State Act provided a saving clause and ratified the action taken by the societies under the Societies Registration Act, 1860.
12. We have gone through the Act both 1860 and 2001 and the submissions of the learned counsel. We find that the A.P. Societies Registration Act, 2001 is corresponding to the Societies Registration Act, 1860. The learned counsel has submitted copy of certificate of registration and Memorandum of the society which indicate that it is a society registered under the Societies Registration Act, 2001. Hence the provisions of s. 167B have no application to the society registered under the Societies Act or any other society formed in accordance on similar lines. Hence appeal of the assessee is allowed.
13. In the result, assessee's appeal is allowed.
Pronounced in the open court on 26th November, 2014 Sd/- Sd/-
(P.M. JAGTAP) (ASHA VIJAYARAGHAVAN)
ACCOUNTANT MEMBER JUDICIAL MEMBER
Hyderabad, dated the 26th November, 2014
tprao
5
ITA No. 1300/Hyd/2014
M/s. KMR Educational Society
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Copy to:
1. M/s. KMR Educational Society, c/o. Sri S. Rama Rao, Flat No. 102, Shriya's Elegance, H. No. 3-6-643, St. No. 9, Himayatnagar, Hyderabad-500 029.
2. The Asst. CIT, Central Circle-1, Aayakar Bhavan, Basheerbagh, Hyderabad.
3. The CIT(A)-I, Hyderabad.
4. The CIT (Central), Hyderabad.
5. The DR, A-Bench, ITAT, Hyderabad.