Commissioner Of Income Tax (E v. Anand Education Society

$~59 *IN THE HIGH COURT OF DELHI AT NEW DELHI +ITA 147/2017 & CM Nos.5878-79/2017 COMMISSIONER OF INCOME TAX (E)..... AppellantThrough:Mr. P. Roy Chaudhuri, Advocate.VersusANAND EDUCATION SOCIETY..... RespondentThrough:Mr. Pranjal Srivastava, Advocate. CORAM:HON'BLE MR. JUSTICE S. RAVINDRA BHATHON'BLE MR. JUSTICE NAJMI WAZIRIO R D E R%15.02.2017 CM No.5878/2017 (for exemption) 1.Allowed, subject to all just exceptions. 2.The application stands disposed off. ITA 147/2017 & CM No.5879/2017 3.The Revenue is aggrieved by the Tribunal’s order in its appeal filedunder Section 260A of the Income Tax Act, 1961 (hereinafter to be referredas ‘the Act’).It urges that the Income Tax Appellate Tribunal (for short‘Tribunal’) fell into error in appreciating the true nature and scope of Section13(3) of the Act. 4.The assessee is a Trust, which established and is managing “LancersConvent School” at Prashant Vihar, Rohini, Delhi.Based upon a surveyreport, the assessment for Assessment Year 2009-10 was reopened.TheAssessing Officer (AO) after taking a detailed analysis as to the expensesincurred by the assessee Trust was of the opinion that by virtue of SectionITA 147/2017Page 1 of 3 13(3) of the Act it could not claim the benefit of registration under Section12A of the Act.The assessee carried the matter in appeal to theCommissioner of Income Tax (Appeals) [CIT (A)], who confirmed the AO’sorder. The Tribunal in its detailed order, after independent examination ofthe materials, granted relief. It is urged on behalf of the Revenue that thetrue nature and purport of Section 13(3) of the Act has been lost. Counselhighlighted that several relatives of the Trustees were occupying importantdecision making positions and their recruitment to such posts was madeunder dubious circumstances. Besides, these relatives are getting unusuallyhigh salaries and perks. In these circumstances, the AO’s order was justifiedand ought not to have been interfered with. 5.This Court has considered the submissions.The ITAT – in ouropinion – rightly concluded that the AO’s decision, based by and large uponconjectures, is prejudiced. The extraordinary pay and privileges enjoyed bythe employees related to the Trustees etc., were no more and no less, wererecommended by the Pay Commission. No doubt, other employees were notbeneficiaries of such pay scales; at the same time, that they could have ajustifiable grievance did not mean that the payment made to those relatives tothe Management was so unusual as to attract Section 13(3) of the Act. TheCourt also notices that the AO and CIT (A) relied upon some decisions of theother Benches of the Tribunals as well as of the Allahabad High Court.Those were cases where the Trustees themselves drew money or theManager was given unsecured loans etc.In this case, the expenditure soanalyzed was by way of salaries and other perks including mobile phoneexpense etc.ITA 147/2017Page 2 of 3 6.In the Court’s opinion, the AO rather did the intrusive task of thecensor, which is utterly unwarranted in the circumstances of the case. TheTrustee concededly manages a private school and is, therefore, enjoys nomore no less autonomy than other private schools in regard to recruitment ofteachers (subject to such other provisions of law as may be done or legallytenable). It cannot be treated like a Government or a publically accountableinstitution having regard to the autonomy it enjoys. 7.In view of these facts, the Court is of the opinion that the impugnedorder does not call for any interference. No substantial question of law arisesin the appeal.The appeal alongwith pending application is, therefore,dismissed. S. RAVINDRA BHAT, J. FEBRUARY 15, 2017sb NAJMI WAZIRI, J.