Asst. Director of Income Tax (E)-III, Hyderabad V. Caramel Educational Society, Adilabad

CO 29/HYD/2012

• Counselvise Citation: [2012] 122 COUNSELVISE.COM (IT) 7013 (ITAT-HYDERABAD)
• Duration Of Justice: 17 day(s)
• Appeal Type: Cross Objection
• Pronouncement Date: 21-03-2012
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: A
• Assessment Year: 2008-2009
• Appeal Filed On: 05-03-2012
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: V SRINIVAS; K VISWANATHAM
• Assessee Lawyers: SR THRESIAMMA P D
• Section: 12A; 11

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD BENCH A', HYDERABAD BEFORE SHRI CHANDRA POOJARI, ACCOUNTANT MEMBER AND SMT. ASHA VIJAYARAGHAVAN, JUDICIAL MEMBER ITA NO.2050/HYD/11 : A SSTT. YEAR 2008-09 ASSTT. DIRECTOR OF INCOME- TAX(EXEMPTION), HYDERABAD V/S. M/S. CARMEL EDUCATIONAL SOCIETY, ACC, MANCHERIAL, ADILABAD DIST. ( PAN - AAATC 4039 M) (APPELLANT) (RESPONDENT) C.O. NO.29/HYD./2012 (IN ITA NO.2050/HYD/11) : ASSTT. YEAR 2008-09 M/S. CARMEL EDUCATIONAL SOCIETY, ACC, MANCHERIAL, ADILABAD DIST. ( PAN - AAATC 4039 M) V/S. ASSTT. DIRECTOR OF INCOME- TAX(EXEMPTION), HYDERABAD ( CROSS - OBJECTOR) (RESPONDENT) REVENUE BY : SHRI V.SRINIVAS & SHRI K.VISWANATHAM ASSESSEE BY : SR. THRESIAMMA, P.D. DATE OF HEARING 19.3.2012 DATE OF PRONOUNCEMENT 19.3.2012 O R D E R PER CHANDRA POOJARI, ACCOUNTANT MEMBER: THIS APPEAL OF THE REVENUE AND CROSS-OBJECTION BY THE ASSESSEE FOR THE ASSESSMENT YEAR 2008-09 IS DIRECTED AGAINST THE ORD ERS OF THE CIT(A) IV, HYDERABAD DATED 30.9.2011 2. THE REVENUE RAISED THE FOLLOWING GROUNDS IN IT S APPEAL- 1. THE ORDER OF THE LEARNED. CIT(A) IS ERRONEOUS BOTH ON FACTS AND IN LAW. 2. THE LEARNED. CIT(A) ERRED TO HOLD THAT THE ASSESSEE IS ELIGIBLE FOR CLAIM UNDER SECTION 11 IN ABSENCE OF APPROVAL UNDER SUB-CLAUSE (VI) TO THE SECTION 10(23C). ITA NO.2050/HYD/11 & CO 29/ HYD/2012 CARMEL EDUCATIONAL SOCIETY , ACC, MANCHERIAL, . 2 3. THE LD. CIT(A) FAILED TO SEE THAT APPROVAL SUB-CLAU SE (VI) TO THE SECTIONS 10(23C) IS DISTINCT FROM REGISTRATION U/S. 12A OF THE ACT. 4. THE LD. CIT(A) FAILED TO SEE THAT SUB-CLAUSE (VI) T O THE SECTION 10(23C) AS INSERTED BY THE FINANCE ACT, 1998 W.E.F. 01.04.1999 STATES THAT THE UNIVERSITY OR OTHER EDUCATIONAL INSTITUTION EXISTING SOLELY FOR EDUCATIONAL PURPOSE MAY BE APPROVED BY THE PRESCRIBED AUTHORITY. THE ISSUE IS EXPLICITLY DEALT WITH BY TH E ACT ITSELF AND THE INTENTION OF THE LEGISLATURE IS QUITE CLEAR FORM IT. 5. THE LD. CIT(A) FAILED TO APPRECIATE THAT THE DECISI ON OF THE APEX COURT IN THE CASE OF CIT VS. BAR COUNSEL OF MAHARASHTRA WAS MADE IN THE YEAR 1981 PRIOR TO INTRODUCTION OF THE SUB-CLAUSE (VI) TO THE SECTION 10(23C) (INSERTE D BY THE FINANCE ACT, 1998 W.E.F. 01.04.1999) 6. THE LD. CIT(A) FAILED TO SEE THAT IN THE CITED CASE OF AMERICAN HOTEL AND LODGING ASSN. EDUCATIONAL INSTITUTE VS. CBDT (2008) ( 170 TAXMAN 306)(SC), THE HONBLE SUPREME COURT SET ASIDE THE ORDER OF THE CBDT DECLINING APP ROVAL UNDER SECTION 10(23C)(VI) AND RESTORED THE APPLICATION OF THE ASSESSEE FOR FR ESH DISPOSAL AND DID NOT DISPENSE WITH THE REQUIREMENT OF APPROVAL UNDER SECTION 10(2 3C)(VI). IN THE CONTRARY, THE DECISION OF THE APEX COURT STR ENGTHENED THE VIEW THAT THE APPROVAL UNDER SECTION 10(23C)(VI), BY THE PRESCRIB ED AUTHORITY, IS A PREREQUISITE FOR ENJOYING EXEMPTION BY ANY UNIVERSITY OR OTHER EDUCA TIONAL INSTITUTION. IN ITS CROSS-OBJECTIONS, THE ASSESSEE RAISED ELABOR ATE GROUNDS MERELY SUPPORTING THE ORDER OF THE CIT(A) IN THE LIGHT OF THE ORDER OF THE CIT(A) IN ITS FAVOUR. 3. WE HAVE HEARD BOTH THE PARTIES AND PERUSED THE MATERIAL ON RECORD. THE LEARNED AUTHORIZED REPRESENTATIVE FOR THE ASSESSEE SUBMITTED THAT THE MAIN ISSUE INVOLVED IN THE ABOVE GROUNDS I S COVERED BY THE ORDER OF THE HYDERABAD BENCH A OF THE TRIBUNAL DATED 15 .4.2009 IN THE CASES OF VASAVI ACADEMY OF EDUCATION, HYDERABAD IN ITA NO.11 33/HYD/2006 FOR THE ASSESSMENT YEAR 2003-04 AND ORDER DATED 17.4.20 09 IN ITA NO.1206/HYD/2007 FOR THE ASSESSMENT YEAR 2004-05, W HEREIN IT WAS HELD THAT IF DONATIONS ARE RECEIVED COMPULSORILY FOR THE ADMISSION OF STUDENTS, BY WHATEVER NAME IT MAY BE CALLED, I.E. DONATION, B UILDING FUND, AUDITORIUM FUND, ETC. OVER AND ABOVE THE PRESCRIBED FEE, FROM THE STUDENTS, THE ASSESSEE WOULD NOT BE ENTITLED FOR EX EMPTION EITHER UNDER S.10(23C) OR UNDER S.11 OF THE ACT. WE FURTHER FI ND THAT THE CONSTITUTIONAL BENCH OF APEX COURT IN THE CASE OF T .M.A. PAI FOUNDATIONS AND OTHERS VS. STATE OF KARNATAKA & OTHERS (2002) 8 SCC 481 EXAMINED THE ISSUE OF COLLECTION OF CAPITATION FEES FOR THE ADMISSION OF STUDENTS OVER AND ABOVE FEES PRESCRIBED BY THE PRIVATE INSTI TUTION AND HELD THAT THE ITA NO.2050/HYD/11 & CO 29/ HYD/2012 CARMEL EDUCATIONAL SOCIETY , ACC, MANCHERIAL, . 3 INSTITUTION WHICH ARE COLLECTING CAPITATION FEES FO R ADMISSION OF STUDENTS OVER AND ABOVE THE FEES PRESCRIBED CANNOT BE CONSTR UED AS CHARITABLE/EDUCATION INSTITUTION. APEX COURT FURTHE R OBSERVED THAT THE FEES COLLECTED OVER AND ABOVE THE PRESCRIBED FEE FOR ADM ISSION OF THE STUDENT HAS TO BE CONSTRUCTED AS CAPITATION FEE. THE APEX COURT, FURTHER OBSERVED THAT THE CONCERNED UNIVERSITY AND REGULATED BODY HA S TO TAKE ACTION FOR WITHDRAWAL OF THE RECOGNITION IN CASE IT IS FOUND T HAT THE EDUCATIONAL INSTITUTION RECEIVED ANY MONEY OVER AND ABOVE THE F EES PRESCRIBED FOR THE COURSES. SAME VIEW WAS TAKEN BY APEX COURT IN THE C ASE OF ISLAMIC ACADEMY OF EDUCATION AND ANOTHER VS. STATE OF KARNA TAKA & ANOTHER (2003) 6 SCC 697. IF THE DONATIONS WERE RECEIVED C OMPULSORILY FOR ADMISSION OF STUDENTS, THE ASSESSEE IS NOT ENTITLED FOR EXEMPTION EITHER U/S 10(23C) OR U/S 11 OF THE IT ACT. SINCE THE LOW ER AUTHORITIES HAVE NOT EXAMINED THE COLLECTION OF CAPITATION FEES IN THIS CASE, IN OUR OPINION, THE MATTER REQUIRES TO BE EXAMINED BY THE ASSESSING OFF ICER WHETHER THE ASSESSEE IS COLLECTING THE CAPITATION FEES FROM STU DENTS OR NOT AND IT IS NECESSARY FOR BRINGING THE ACTUAL FACTS ON RECORD F OR DECIDING THE ISSUE EFFECTIVELY. SIMILAR VIEW WAS TAKEN BY US IN THE C ASE OF M/S. JAMIA NIZAMIA IN ITA NO.763/HYD/2007 DATED 30.6.2008, IN THE CASE OF INTERNATIONAL EDUCATIONAL ACADEMY, HYDERABAD IN ITA NO.494/HYD/2007 AND 518/HYD/2008 FOR THE ASSESSMENT YEARS 2002- 200 3 AND 2004-05 AND SRI SAI SUDHIR EDUCATIONAL SOCIETY, HYDERABAD IN IT A NO.999/HYD/20-06 FOR THE ASSESSMENT YEAR 2003-04. THEREFORE, WE S ET ASIDE THE ORDERS OF THE LOWER AUTHORITIES AND REMIT BACK THE MATTER TO THE FILE OF ASSESSING OFFICER WITH A DIRECTION TO ASSESSING OFFICER THAT HE SHALL RECONSIDER THE ENTIRE ISSUE IN THE LIGHT OF JUDGMENT OF SUPREME CO URT IN THE CASE OF M/S ISLAMIC ACADEMY OF EDUCATION & ANOTHER VS. STATE OF KARNATAKA AND ANOTHER (SUPRA), AND IN THE CASED OF T.M.A. PAI FOU NDATION AND OTHERS VS. STATE OF KARNATAKA AND OTHERS (SUPRA), AND FIND OUT WHETHER THE ASSESSEE HAS RECEIVED ANY MONEY OVER AND ABOVE THE FEES PRES CRIBED AND THEREAFTER DECIDE THE ISSUE AFRESH IN ACCORDANCE WITH LAW AFTE R GIVING REASONABLE OPPORTUNITY OF HEARING TO THE ASSESSEE. WE MAKE IT CLEAR THAT THE ITA NO.2050/HYD/11 & CO 29/ HYD/2012 CARMEL EDUCATIONAL SOCIETY , ACC, MANCHERIAL, . 4 ASSESSEE IS NOT ENTITLED FOR EXEMPTION EITHER U/S 1 1 OR U/S 10(23C) IN CASE IT COLLECTED ANY MONEY BY WHATEVER NAME IT IS CALLE D I.E., DONATION, BUILDING FUND, AUDITORIUM FUND ETC. ETC., OVER AND ABOVE THE PRESCRIBED FEE FOR ADMISSION OF STUDENTS. 4. SINCE THE GROUNDS OF THE ASSESSEE IN ITS CROSS -OBJECTIONS MERELY SUPPORT THE ORDER OF THE CIT(A), THE SAME DO NOT CALL FOR ANY INDEPENDENT ADJUDICATION, AND AS SUCH IT IS INFRUCU TOUS. AS SUCH, IT IS DISMISSED, BEING INFRUCTUOUS. 5. IN THE RESULT, REVENUES APPEAL IS ALLOWED FOR STATISTICAL PURPOSE, AND THE ASSESSEES C.O., BEING INFRUCTUOUS , IS DISMISSED.. ORDER PRONOUNCED IN THE COURT ON 19.3.2012 SD/- SD/- (ASHA VIJAYARAGHAVAN) (CHANDRA POOJARI) JUDICIAL MEMBER ACCOUNTANT M EMBER DT/- 19TH MARCH, 2012 COPY FORWARDED TO: 1. M/S. CARMEL EDUCATIONAL SOCIETY, CHRISTU JYOTHI PRO VINCIAL, ACC, MANCHERIAL, ADILABAD DIST. 5. ASST., DIRECTOR OF INCOME-TAX(EXEMPTION)-III, H YDERABAD 6. CIT(A) IV, HYDERABAD 7. COMMISS IONER OF INCOME - TAX III HYDERABAD 8. DEPARTMENTAL REPRESENTATIVE, ITAT, HYDERABAD. B.V.S