INDUS EDUCATION SOCIETY,LAKHANPUR KANPUT V. DCIT, EXEMP., GHAZIABAD

ITA 671/DEL/2019

AI Insights

The case involves Indus Education Society, which appealed against the order of the Commissioner of Income Tax (Appeals)-I, Kanpur, concerning the assessment year 2014-15. The primary issue was the addition of Rs. 21,01,050 by the AO, which represented fees received over and above those fixed by the Fee Fixation Committee. The society argued that despite financial distress and charging higher fees, all income was applied towards its charitable objective of education, not profit. The Tribunal considered precedents and rulings from the Karnataka High Court, which clarified that such matters should be handled by the appropriate educational authority, not the AO of the Revenue Department.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 471997 (ITAT-DELHI)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 05-03-2025
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: C
• Assessment Year: 2014-2015
• Other Referred Cases: Kammavari Sangham vs. Hon'ble Karnataka High Court, Rashtreeya Sikshan Samiti Trust vs. Hon'ble Karnataka High Court, Gyan Ganga Vocational and Educational Society vs. Tribunal
• Laws Referred To: Income Tax Act
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: OM PARKASH
• Assessee Lawyers: TARUN ROHATGI
• Keywords: Set aside; Business income; Competent authority
• Section: 11; 12A

Judgement Text

"1 IN THE INCOME TAX APPELLATE TRIBUNAL, DELHI ‘C’ BENCH, NEW DELHI BEFORE SHRI ANUBHAV SHARMA, JUDICIAL MEMBER AND SHRI AMITABH SHUKLA, ACCOUNTANT MEMBER ITA No. 671/DEL/2019 [Assessment Year: 2014-15] Indus Education Society, Vs. DCIT, Exemption Range, 6, Awadhpuri, Lakhanpur, Ghaziabad (PAN:- AAAT16219B) [Appellant] [Respondent] Date of Hearing : 03.03.2025 Date of Pronouncement : 05.03.2025 Assessee by : Shri Tarun Rohatgi, CA Revenue by : Shri Om Parkash, Sr. D.R. ORDER PER AMITABH SHUKLA, ACCOUNTANT MEMBER, This appeal by the Assessee is preferred against the order of the Ld. Commissioner of Income Tax [Appeals]-I, Kanpur dated 30.11.2018 pertaining to assessment year 2014-15. 2. The only issue arising from the grounds of appeal raised by the assesse is regarding the addition of Rs. 21,01,050/- made by the AO as amounts of fees received by the assessee, over and above fees fixed by the Fee Fixation Committee, and its confirmation by the Ld. CIT(A). The ld. Counsel for the assesse submitted that the assessee trust is a society which runs Engineering College offering B.Tech. and MBA Courses located in a remote area of District Kanpur. The Ld. Counsel submitted that on account of adverse location the college could not attain sufficient students strength and hence, suffers from financial distress. In support of its arguments, the Ld. Counsel drew our attention to its income figures from AY 2009-10 to 2013- 14 evidencing continuous losses. The Ld. Counsel submitted that it is the case of the Revenue that fees charged over and above stipulated fees, assumes the character of capitation fees 2 falling into the mischief of business income as against charity. The Ld. Counsel submitted that entire income earned by it is applied towards its charitable object of education. It was submitted that the college was not selling education but barely managing to sustain itself. The ld. Counsel submitted that the judicial ratio laid down by Hon’ble Coordinate Bench of Bangalore Tribunal in the case of Kammavari Sangham has been overruled by the Hon’ble Karnataka High Court in its decision dated 6.9.2022 as at 146 Taxmann.com 367. The ld. DR placed reliance upon the order of lower authorities. 3. We have heard rival submissions in the light of the material available on records. We have noted that Hon’ble Karnataka High Court in its decision (supra) have held that fees collected by educational entities in excess of prescribed, constitutes a violation which can be investigated by the appropriate authority and not the AO of Revenue Department. Hon’ble High Court held that exemption under section 11 cannot be denied for failure to comply with some other statutory provisions. We have also noted that Hon’ble Karnataka High Court in its decision in Rashtreeya Sikshan Samiti Trust 152 taxmman.com 664 had considered an identical situation and held that exemptions u/s. 11 & 12A cannot be denied. Similarly, this Tribunal in its decision in the case of Gyan Ganga Vocational and Educational Society 35 taxman.com 17, held that jurisdiction and competence to examine an issue under other heads like Right to Education Act, lies with the authorities mentioned therein. We have also noted the arguments of the Ld. Counsel for the assesse that it had filed an appeal before the competent authority under Private Professional Educational Institutions (Regulation of Admission and Fixation of Fees) Act 2006 and that it was pending at the time of decision of the Ld. First Appellate Authority. We have also noted that the submissions of the assesse through its affidavit that till date no proceedings have been initiated by the Estate Authorities or are pending on the issue of charging of any excess fees. Accordingly, we are of the considered view that no case is made out for making the impugned addition of Rs. 21,01,050/-. 3 The order of lower authorities is therefore set aside and we direct the AO to delete the impugned addition. All the grounds of appeal raised by the assesse are therefore, allowed. In the result, the appeal of the assesse is allowed. Order pronounced on 05/03/2025. Sd/- Sd/- [ANUBHAV SHARMA] [AMITABH SHUKLA] JUDICIAL MEMBER ACCOUNTANT MEMBER SR BHATNAGAR Copy forwarded to: 1. Appellant 2. Respondent 3. CIT 4. CIT(A) 5. DR Asst. Registrar, ITAT, New Delhi "