Income Tax Appellate Tribunal - Hyderabad
Centre For Rural Studies And ... vs Assessee on 16 January, 2014
IN THE INCOME TAX APPELLATE TRIBUNAL
HYDERABAD BENCH 'B', HYDERABAD
BEFORE SHRI CHANDRA POOJARI, ACCOUNTANT MEMBER
AND SMT. ASHA VIJAYARAGHAVAN, JUDICIAL MEMBER
ITA Nos. 1076, 1077 and 1078/Hyd/2010
Assessment Years: 2000-01, 2001-02 & 2002-03
Centre for Rural Studies vs. Asst. Commissioner of Income
and Development Tax, Central Circle -1,
Madakasira, Ananthapur. Ananthapur.
Appellant Respondent
Assessee by: Sri S. Rama Rao
Revenue by: Sri D. Sudhakar Rao
Date of hearing: 16/01/2014
Date of pronouncement: 16/01/2014
O RDE R
PER CHANDRA POOJARI, AM:
These appeals preferred by the assessee are directed against a common order of the CIT(A), Tirupathi dated 23/09/2005 for the assessment years 2000-01 to 2002-03. Since the facts and issues are common in these appeals, they were clubbed and heard together, therefore, a common order is passed for the sake of convenience.
2. The assessee has raised a common ground in these appeals, which is as follows:
"The learned CIT(A) erred in holding that the appellant is not eligible for exemption u/s 11 of the IT Act when the appellant was pursuing the application for registration u/s 12A and when ultimately the assessee was granted registration u/s 12AA of the Act."
3. Briefly the facts of the case are that the appellant is a Society registered with the Dist. Registrar, Anantapur under 2 I.T.A. Nos. 1076, 1077 & 1078/Hyd/2010 Centre for Rural Studies and Devleopment Madakasira the Societies Registration Act 1860. The Society came into existence by way of a Memorandum of Association entered into on 1.10.1991 and registered on 7.10.1991. The Society is meant for charitable purposes and the objects and aims of the Society mentioned in the Memorandum clearly indicate that all such objects are charitable in nature. The Society has no profit motive. The Society could not carry on the objects on its own due to non availability of funds. Therefore, the Society approached various donors with the proposal of carrying out the projects as per the objects. The donors like Social Education Development Trust (SEDT) Oxfam and UUAC have accepted to donate the funds for implementation of specific projects. According to the agreements entered into between the appellant Society and various donors, the grants were given for carrying out specific projects. For this purpose, specific amounts were sanctioned. The donors also prescribed time limit for completion of the project and according to the agreement the donors can collect back the amount so paid if the project is not completed. The details of subject projects undertaken, the amount received from each donor, the amount spent, date of completion of the projects are mentioned in the statement annexed. It can be seen from the details the appellant acted as an agent for various donor in implementing the projects on their behalf. The appellant did not undertake any project on it's own nor received any donation exclusively for the purpose of running the Society.
3.1 However, the appellant with an object of registering itself u/s 12AA of the I.T. Act filed an application for registration u/s 12A before the Commissioner of Income Tax, Guntur on 5.19.1992. In response thereto the CIT issued memorandum dated 23.11.1992 followed by a letter dated 22.12.1992 by the ACIT, Circle-1, Anantapur. The appellant society responded immediately thereafter and filed the information 3 I.T.A. Nos. 1076, 1077 & 1078/Hyd/2010 Centre for Rural Studies and Devleopment Madakasira required. Finally, till 6.11.2002, the CIT concerned did not pass any order either rejecting or allowing registration u/s 1.2A. On 6.11.2002, the CIT, Tirupati issued a letter requiring the assessee to file a fresh form 10A as the copy filed earlier cannot be acted upon. Accordingly, vide letter dated 23.11.2002, the appellant filed all the details. And copy of the application and the earlier correspondence. The appellant also annexed a copy of the application dated 5.10.1992. The CIT, Tirupati registered the Society u/s 12A with effect from 1.4.2002 reckoning the copy of the application as filed alongwith letter dated 23.11.2002.
3.2 The appellant in the meantime, was filing the returns of income for all the assessment years claiming exemption u/s 11 of the I.T. Act. For the assessment year 2001-2002, the appellant filed the return of income on 10.10.2001 admitting income at Rs. Nil. The return was processed u/s 143( 1). Later a notice u/s 148 was issued on 28.11.2003 in response to which the appellant filed the same return. The Assessing Officer completed the re-assessment u/s 143(3) on 30.3.2005 determining the total income at Rs. 10,80,020/-. While doing so, the Assessing Officer (a) rejected the claim for exemption u/s 11 of the I.T. Act, (b) treated the unspent grants from the donors as the income of the appellant, and (c) also treated the donations and the bank interest as the income of the appellant. The Assessing Officer also charged interest u/s 234A of Rs. 1,72,940/-, u/s 234B of Rs. 6,47,970/-. It is against the said order of assessment, the appellant carried the matter in appeal before the CIT(A).
4. The CIT(A) rejected the claim of the assessee.
5. Before us, the assessee filed these appeals on 10/08/2010, belatedly, with a delay of 1720 days. Further, we 4 I.T.A. Nos. 1076, 1077 & 1078/Hyd/2010 Centre for Rural Studies and Devleopment Madakasira have noticed that there was a short payment of appeal filing fees by Rs. 9,500/- in each appeal. In other words, the assessee paid appeal filing fee of Rs. 500/- per appeal instead of Rs. 10,000/- per appeal.
6. Before going into the other issues, first we deal with the payment of short fee. According to the learned AR the applicable filing fees to the assessee's case is only Rs. 500/- as the assessee's case falls u/s 253(6) of the IT Act. In this connection, he referred to CBDT Circular No. 779, dated 14/09/1999. According to him, the appeals filed by the assessee is not linked to the assessed income and, being so, filing fee should be considered at Rs. 500/- only. For this proposition, he relied on the decision of the ITAT Hyderabad Bench "A" in the case of AP State Electricity Board Vs. ITO, [1994] 49 ITD 522 wherein it was held as follows:
"Agricultural income is income which is not to be included while computing the total income of an assessee and that is provided in clause (1) of section
10. The inclusion of agricultural income for determining the tax payable by the assessee is under the Finance Act but that is only for the purpose of charging income- tax in respect of the total income and for no other purpose. The tax on the total income of the assessee other than agricultural income is determined by deeming the agricultural income as part of the total income and by this provision, it cannot be concluded that the agricultural income forms part of the total income as such. The provisions of section 2(2) of the Finance Act, 1993, make it clear and provide that where the assessee has in the previous year any net agricultural income exceeding Rs. 600 in addition to the total income and the total income exceeds a particular amount, then the net agricultural income shall be taken into account as if the net agricultural income was comprised in the total income after the prescribed limit of the total income but without being liable to tax and this is only for purposes of charging income-tax in respect of the total income. Here, the deeming agricultural income to be a part of the total income is only for a limited purpose and that deeming cannot be extended to mean that the 5 I.T.A. Nos. 1076, 1077 & 1078/Hyd/2010 Centre for Rural Studies and Devleopment Madakasira agricultural income also forms part of the total income of the assessee for other purposes as well. The total income of the assessee other than agricultural income being less than Rs. 1 lakh, the fee, in the instant case, therefore, would be Rs. 250/-."
7. On the other hand, the learned DR submitted that the filing payable by the assessee in this case is Rs. 10,000/- per appeal as it does not fall under clause (d) of section 253(6) of the IT Act and also the assessee is in appeal before the Tribunal on the income assessed and not with regard to granting of registration u/s 12A of the Act.
8. We have considered the rival submissions and perused the record as well as gone through the orders of the revenue authorities. In this case the assessee has filed 'NIL' returns for all the three assessment years under consideration. However, the income assessed by the Assessing Officer is as under:
Institutions 2000-01 2001-02 2002-03
SEDT 6959 218080 73346
OX FAM - 234091 -
Ford Foundation 1757921 - 700317
UUAC 725375 530902 492639
MGYS - - 11847
DWMA, Anantapur - - 400000
Other income 58524 93051 197650
(interest from bank)
contribution/donations 32605 3900 9667
Total 2581384 1080024 1504359
8.1 The Assessing Officer has computed income of the
society for assessment years 2000-01, 2001-02 and 2002-03 since registration u/s 12A was not granted for these three years, which was however granted from dated 01/04/2002 i.e. relevant to the assessment year 2003-04 onwards. Since the Commissioner has not granted registration u/s 12A, the Assessing Officer has computed income for these assessment years.
6 I.T.A. Nos. 1076, 1077 & 1078/Hyd/2010Centre for Rural Studies and Devleopment Madakasira 8.2 Before the Assessing Officer, the assessee claimed that amounts received from funding agencies, SEDT, OXFAM, Ford Foundation etc were received for specific projects and society never became owner of the funds and society was acting as an agent for implementation of the projects of the donors. The assessee before the Assessing Officer placed reliance on the observation of the ITAT, Hyderabad Bench in the case of Nirmal Agricultural Credit Society Vs. ITO wherein the Hon'ble ITAT observed that donations received for specific purposes do not belong to the assessee. The assessee further reported before the Assessing Officer that grants for specified purpose are not assessee's income or corpus since the assessee is acting as agent for funding agencies. The Assessing Officer while considering the replies given by the assessee has stated as under:
"The funding agencies in its letters states that the grants were sanctioned project-wise for specified period as per the proposals submitted by the assessee. The grants sanctioned were released in instalments; date/financial year-wise for utilisation on specified purpose without any specification of time limit. This implies that the assessee has to utilize the grants sanctioned within the financial year under which grants were sanctioned. There was no specific condition for returning of unspent grants. The assessee's contention that the grants received with specific purpose does not form the income of the assessee in case of unspent grants is not acceptable. The grants are received for specific purpose and utilisation for the year under consideration. The assessee fails to utilize the grants within the specified period, i.e. during the year. The unspent grants are considered as income. The other receipts under interest and local donations admitted by the assessee are not tied-up grants and the nature of these receipts attracts the provisions of section 12. Keeping in view the observations of the Hon'ble ITAT the unspent grants and other receipts are assessed as income of the assessee, for the year under consideration."
Accordingly, the assessee's claim that the surpluses in respect of grants from funding agencies are not its income 7 I.T.A. Nos. 1076, 1077 & 1078/Hyd/2010 Centre for Rural Studies and Devleopment Madakasira was declined by the Assessing Officer and assessed to tax.
8.3 In this case, primarily, defective notice was issued to the assessee by the Registry in filing these appeals, namely, i) short fees payment of filing fees and ii) delay in filing of these appeals by 1720 days.
8.4 Now the assessee's contention is that the dispute before the Tribunal is only pertaining to granting of exemption u/s 11 of the IT Act and does not relate to quantification of income. He pointed out that once exemption u/s 11 is granted, the case of the assessee falls under clause (d) of section 253(6) of the IT Act.
8.5 For the purpose of deciding the issue in dispute, it is appropriate to refer the provisions of section 253(6) of the IT Act.
"253(6) An appeal to the Appellate Tribunal shall be in the prescribed form9 and shall be verified in the prescribed manner and shall, in the case of an appeal made, on or after the 1st day of October, 1998, irrespective of the date of initiation of the assessment proceedings relating thereto, be accompanied by a fee of,--
(a) where the total income of the assessee as computed by the Assessing Officer, in the case to which the appeal relates, is one hundred thousand rupees or less, five hundred rupees,
(b) where the total income of the assessee, computed as aforesaid, in the case to which the appeal relates is more than one hundred thousand rupees but not more than two hundred thousand rupees, one thousand five hundred rupees,
(c) where the total income of the assessee, computed as aforesaid, in the case to which the appeal relates is more than two hundred thousand rupees, one per cent of the assessed income, subject to a maximum of ten thousand rupees, 10 [(d) where the subject matter of an appeal relates to any matter, other than those specified in clauses (a), (b) and (c), five hundred rupees:"
8.6 On plain reading of the above section, we find that the assessee is required to pay the appeal fee not in terms of section 253(6)(d) of the IT Act, but, it should be paid the 8 I.T.A. Nos. 1076, 1077 & 1078/Hyd/2010 Centre for Rural Studies and Devleopment Madakasira appeal fees in terms of section 253(c) of the IT Act. According to the assessee, the case falls under clause (d) of the above section, once exemption u/s 11 is granted to the assessee. In the present case, what to be seen is that the figure that determines the quantum fees payable and it relates to the quantum of total income computed by the Assessing Officer to which the appeal relates. As seen from the above table of computation done by the Assessing Officer, the income of the assessee relates to income determined by the Assessing Officer, which is more than Rs. 2,00,000/-. Being so, the fees payable is 1% assessed income subject to a maximum of Rs. 10,000/-. The word 'in the case to which the appeal relates' in clause (a), (b) and (c) of section 253(6) should be understood so as to cover all appeals, which are filed in the case of the assessee where the appeal is filed against the order which is based on quantum of income assessed. In the present case, the appeals are untenably connected with the assessment order, more particularly, with the total income computed by the Assessing Officer. The assessee may be seeking exemption u/s 11, but, it does not form part of the assessed income as computed by the Assessing Officer and this is sufficient to establish the nexus between the amount of income assessed by the Assessing Officer and also established requisite filing fees. If the Legislature wanted to provide to pay the filing fees based on the quantum income assessed in the case of appeals filed against assessment orders, then, they could have easily used much simpler phraseology in clause (a) to (c) of section 253(6) of the Act as in section 246, which provides appeals to the CIT(A). However, since the expression 'in the case to which the appeal relates' have been coined in clauses (a) to (c), it indicates the clear intention on the part of the Legislature to inter-link with the amount of income assessed by the 9 I.T.A. Nos. 1076, 1077 & 1078/Hyd/2010 Centre for Rural Studies and Devleopment Madakasira Assessing Officer in case of all appeals, which have related to the amount of assessed income including appeals in penalty for concealment. Residuary clauses introduced as clause (d) with effect from 01/06/1999 takes care of all appeals including the appeals against certain penalties, which have no nexus with the amount of income assessed. If the expression 'case' used in subsequent used to be read as assessment order if the expression 'case', then, for the period prior to 01/06/1999 when clause (d) was inserted no filing fees would be leviable inspite of appeals filed by the assessee against the orders other than assessment orders. Therefore, the present interpretation made by the learned counsel for the assessee is devoid of merit and actually the assessee is in appeal before the Tribunal is with regard to the addition, which does not fall under the purview of clause (d) of section 253(6) of the IT Act. Further, we place reliance on the judgment of the Special Bench in the case of Bidyuth Kumar Sett Vs. ITO, 92 ITD 148 (Cal.). In view of the above discussion, we are inclined to hold that the assessee's case does not fall under the purview of section 253(6)(d) of the IT Act and the case relied upon by the assessee in the case of AP State Electricity Board (supra) does not applicable to the facts of the case of assessee and devoid of any merit. Accordingly, all the appeals under consideration are dismissed on account of deficiency in payment of filing fees, which should be at Rs. 10,000/- per appeal and not Rs. 500/- per appeal, as paid by the assessee.
8.7 As the appeals have been dismissed in view of the short payment of filing fee, we decline to adjudicate any other grounds raised by the assessee on merits or relating to condonation of delay.
10 I.T.A. Nos. 1076, 1077 & 1078/Hyd/2010Centre for Rural Studies and Devleopment Madakasira
9. In the result, all the three appeals filed by the assessee are dismissed.
Pronounced in the open court on 16/01/2014.
Sd/- Sd/-
(ASHA VIJAYARAGHAVAN) (CHANDRA POOJARI)
JUDICIAL MEMBER ACCOUNTANT MEMBER
Hyderabad, dated 16/01/2014
kv
Copy forwarded to:
1. Centre for Rural Studies and Development Madakasira, Ananthapur, c/o Sri S. Rama Rao, Advocate, Flat No. 102, Shriya's Residency, St. No. 9, Himayathnagar, Hyderabad.
2. ITO, Ward - 12 (3), Hyderabad
3. CIT(A)-II, Hyderabad
4. CIT-I, Hyderabad.
5. The DR, ITAT, Hyderabad