IN THE INCOME TAX APPELLATE TRIBUNAL
DELHI BENCHES "C" : DELHI
BEFORE SHRI BHAVNESH SAINI, JUDICIAL MEMBER
AND
SHRI N.S. SAINI, ACCOUNTANT MEMBER
ITA.No.4304/Del./2016
Assessment Year 2011-2012
The Income Tax Officer, M/s. Innovative Welfare
Ward-1(2), Room
and Educational Society,
No.2417, 24th Floor, E-2
Block, Pratyaksh Kar vs Plot No.6, Knowledge Park-
Bhawan, Dr. Shyama
II, Greater Noida, Gautam
Prasad Mukherjee Civic
Centre, Jawahar Lal Budh Nagar, U.P.
Nehru Marg, New Delhi.
PIN 201301.
PIN 110 002.
PAN AAATI4207R
(Appellant (Respondent)
For Revenue : Shri Amit Katoch, Sr. D.R.
For Assessee : -None-
Date of Hearing : 06.05.2019
Date of Pronouncement : 08.05.2019
ORDER
PER BHAVNESH SAINI, J.M.
This appeal by Revenue has been directed against
the Order of Ld. CIT(A)-40, New Delhi, Dated 02.05.2016,
for the A.Y. 2011-2012 on the following grounds :
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ITA.No.4304/Del./2016 M/s. Innovative Welfare and
Educational Society, Greater Noida, Gautam Budh Nagar, U.P.
(i) "On the facts and in the circumstances of the case
and in law, the Ld. CIT(A) has erred in ignoring the
fact that the assessee failed to produce any
document regarding approval of the governing
body of the assessee society regarding the
appointment and remuneration of both the
specified persons Sh. Devashish Gaur, Director
cum Administrator (son of Chairman of the
assessee society) and Ms. Sharda Sharma,
Principal/Administrator (wife of Chairman of the
assessee society).
(ii) On the facts and in the circumstances of the case
and in law, the Ld. CIT(A) has erred in ignoring the
fact the salaries paid by assessee to these
specified persons were excessive in comparison to
the normal practice followed for other employees,
thereby committed violation within the meaning of
provisions of section 13(1)(c) of the Act by
providing benefits to the above specified persons."
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ITA.No.4304/Del./2016 M/s. Innovative Welfare and
Educational Society, Greater Noida, Gautam Budh Nagar, U.P.
2. Briefly the facts of the case are that assessee
society is registered under section 12A of the I.T. Act, 1961,
vide Registration Dated 16.02.2005 w.e.f. 11.02.2004. The
society is also registered under section 80G of the I.T. Act.
The society was established with the primary object to
educate and train Indian citizen under the cause of
"Education for All". The society has established three
educational institutions to train students in their fields. The
assessments for the A.Ys. 2009-2010 and 2010-2011 were
passed on the basis of the special audit. The assessee was
asked to compare the facts of this case with the facts of
preceding assessment year. The assessee in support
furnished affidavit of the Chairman of the Society stating
that there has been no purchase by the society from M/s.
Global Enterprises and M/s. Ruchi Construction in this
year. All the bills of additions to the fixed assets were
produced. The assessee society deducted TDS properly.
There is no loan process fees payable as was paid in earlier
year. No loan was taken in this year. The assessee was
asked to furnish the details of interested persons under
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ITA.No.4304/Del./2016 M/s. Innovative Welfare and
Educational Society, Greater Noida, Gautam Budh Nagar, U.P.
section 13(3) of the I.T. Act and their status in the society.
The assessee furnished details of interested persons. It
provides that Shri Devasish Gaur is Director cum
Administrator to whom salary of Rs.2,74,640/- has been
paid. Smt. Sharda Sharma, Principal/Administrator,
Innovative Institute of Law and have been paid salary of
Rs.5,23,680/-. Both are son and wife of the Chairman of the
society Shri K.R. Sharma. Both are specified persons. The
A.O. noted that in previous assessment years the assessee
could not produce any documents regarding approval of
Governing Body of the society regarding the appointment
and remuneration of both these persons. The salary paid to
these specified persons are excessive in comparison to the
normal practice followed for other employees, therefore,
exemption under section 11 was denied and the income was
computed in the status of AOP. The total income was
computed at Rs.1.37 crores.
3. The assessee challenged the findings of the A.O.
before the Ld. CIT(A) and the same facts were reiterated. It
was further submitted that both these persons were
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ITA.No.4304/Del./2016 M/s. Innovative Welfare and
Educational Society, Greater Noida, Gautam Budh Nagar, U.P.
appointed through Resolution passed under the General
Body Meeting dated 04.06.2008 and are devoting full time
to the institution to the best of their knowledge, ability and
experience. The salary was paid to them reasonably. The
salary paid to them was less than the amount as prescribed
by Sixth Pay Commission introduced by the Government of
India, as per their education ability, experience and
devotion for the institution. It was, therefore, submitted that
A.O. was absolutely wrong in denying the exemption under
section 11 of the I.T. Act. The assessee also submitted that
issue is covered by the Order of the ITAT, Delhi Bench in the
case of ACIT vs. Idicula Trust Society [2014] 151 ITD 739
(Del.) in which similar disallowances were deleted. It was
also observed that in January, 2006, the Government of
India has notified Sixth Pay Commission which resulted into
handsome enhancement of salary of the employees
including Government teaching staff and salary have been
almost enhanced by 30%-40%, therefore, it is not excessive
salary paid to the above persons. The assessee also pleaded
that in the case of the assessee the matter have been
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ITA.No.4304/Del./2016 M/s. Innovative Welfare and
Educational Society, Greater Noida, Gautam Budh Nagar, U.P.
considered and decided by the Tribunal. The Ld. CIT(A)
following the same, allowed the appeal of assessee.
4. We have heard the Ld. D.R. who has relied upon
the Order of the A.O.
5. On the other hand, none appeared on behalf of
the assessee, despite notifying the date of hearing through
registered post.
6. After considering the submissions of the Ld. D.R,
we are of the view that no interference is called for in the
matter. The A.O. noted that salary have been paid to two
persons who were specified persons under section 13(3) of
the I.T. Act. A.O. also noted that in previous assessment
years, the assessee could not produce any documents
regarding approval of the governing body of the society
including the appointment and remuneration of both these
persons. The A.O. also found that salary paid to these
persons are excessive in comparison to the normal practice
followed for other employees. The assessee, however,
submitted before Ld. CIT(A) that both these persons were
7
ITA.No.4304/Del./2016 M/s. Innovative Welfare and
Educational Society, Greater Noida, Gautam Budh Nagar, U.P.
appointed through the resolution passed under the General
Body Meeting dated 04.06.2008. It was also submitted that
both these persons have devoted full time to the educational
institution to the best of their knowledge, ability and
experience. It, therefore, appears that A.O. followed the
orders for earlier years, in which the assessee did not
produce documents regarding approval of the Governing
Body. Further assessee explained that Governing Body
passed resolution in earlier year on 04.06.2008. The A.O.
did not bring any evidence on record as to how the salary
paid to these persons with reference to their qualification
was excessive or unreasonable. A.O. did not make any
comparison, but, appears to have followed order for earlier
years. In earlier year, the matter have been decided in
favour of the assessee as is noted by the Ld. CIT(A) in his
Order because the same salary have been considered in
earlier years. The Ld. CIT(A) also referred to decisions of the
Coordinate Bench of Delhi Tribunal in the case of ACIT vs.
Idicula Trust Society (supra), in which the Tribunal has
referred to the enhancement in pay/salary by Sixth Pay
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ITA.No.4304/Del./2016 M/s. Innovative Welfare and
Educational Society, Greater Noida, Gautam Budh Nagar, U.P.
Commission in January, 2006. In the case of the assessee,
assessee explained that salary paid to these persons was
even less than the salary prescribed by the Sixty Pay
Commission. Since the A.O. compared the facts of this year
for earlier years, in which, relief has already been granted to
the assessee as per findings of the Ld. CIT(A), therefore, Ld.
CIT(A) correctly following the earlier precedence, deleted the
addition. No interference is called for in the matter. Appeal
of Revenue dismissed.
7. In the result, appeal of Revenue dismissed.
Order pronounced in the open Court.
Sd/- Sd/-
(N.S. SAINI) (BHAVNESH SAINI)
ACCOUNTANT MEMBER JUDICIAL MEMBER
Delhi, Dated 08th May, 2019.
VBP/-
Copy to
1. The appellant
2. The respondent
3. CIT(A) concerned
4. CIT concerned
5. D.R. ITAT `C' Bench, Delhi
6. Guard File.
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ITA.No.4304/Del./2016 M/s. Innovative Welfare and
Educational Society, Greater Noida, Gautam Budh Nagar, U.P.
// BY Order //
Assistant Registrar : ITAT Delhi Benches :
Delhi.
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