2014 (1) TMI 1078 - AT - Income Tax

Non-payment or payment of short fee for filing appeal before ITAT - whether 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 - Held 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 - 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, 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 - 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 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 - The assessee s case does not fall under the purview of section 253(6)(d) of the IT Act - Decided against assessee.

Summary

Issues Involved:

1. Eligibility for exemption under section 11 of the IT Act.
2. Treatment of unspent grants from donors.
3. Treatment of donations and bank interest as income.
4. Payment of short appeal filing fees.
5. Delay in filing appeals.

Issue-wise Detailed Analysis:

1. Eligibility for Exemption under Section 11 of the IT Act:

The assessee, a Society registered under the Societies Registration Act 1860, claimed exemption under section 11 of the IT Act for the assessment years 2000-01 to 2002-03. The Society argued that it was pursuing registration under section 12A and was eventually granted registration under section 12AA, thus qualifying for the exemption. However, the CIT(A) rejected this claim, and the Assessing Officer (AO) also denied the exemption, computing the society's income for these years since the registration was granted only from 01/04/2002, relevant to the assessment year 2003-04 onwards.

2. Treatment of Unspent Grants from Donors:

The Society received funds from donors like SEDT, Oxfam, and Ford Foundation for specific projects. The AO treated the unspent grants as the Society's income, arguing that the grants were received for utilization within the financial year without any specific condition for returning unspent amounts. The Society contended that it acted as an agent for the donors, and the grants for specific purposes did not form part of its income. The AO, however, rejected this argument, stating that the unspent grants should be considered as income since they were not utilized within the specified period.

3. Treatment of Donations and Bank Interest as Income:

The AO treated donations and bank interest as the Society's income. The Society argued that these amounts were not tied-up grants and should not be considered as its income. The AO disagreed, including these amounts in the total income assessed for the relevant years.

4. Payment of Short Appeal Filing Fees:

The appeals were filed with a delay of 1720 days and a short payment of appeal filing fees. The Society paid Rs. 500/- per appeal instead of the required Rs. 10,000/- per appeal. The Society argued that the applicable filing fee was Rs. 500/- as per section 253(6)(d) of the IT Act, relying on a CBDT Circular and a previous ITAT decision. The AO and the Tribunal, however, determined that the correct fee was Rs. 10,000/- per appeal, as the appeals related to the assessed income and not merely to the granting of registration under section 12A.

5. Delay in Filing Appeals:

The Tribunal noted the significant delay in filing the appeals but did not adjudicate on the merits of the delay due to the primary issue of short payment of filing fees. The appeals were dismissed on this ground, and the Tribunal declined to address other grounds raised by the assessee.

Conclusion:

The Tribunal dismissed all three appeals filed by the assessee due to the short payment of filing fees, which should have been Rs. 10,000/- per appeal instead of Rs. 500/- per appeal. Consequently, the Tribunal did not adjudicate on other grounds, including the merits of the exemption claim, treatment of unspent grants, donations, and bank interest, or the delay in filing the appeals. The decision emphasized the importance of complying with procedural requirements, such as the correct payment of filing fees, in the appellate process.