M/s ilachal Educational Trust, Bhubaneswar V. ITO, Bhubaneswar

ITA 1/CTK/2013

• Counselvise Citation: 122114 RSA 2013
• Duration Of Justice: 2 year(s) 4 month(s) 19 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 21-05-2015
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: DB
• Next Hearing Date: 19-05-2015
• Assessment Year: 2009-2010
• Appeal Filed On: 01-01-2013
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: SHOVAN KRISHNA SAHU
• Assessee Lawyers: P R MOHANTY
• Keywords: Gift; Charitable institution; Capital receipt
• Section: 12A; 12AA; 11

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL CUTTACK B ENCH, CUTTACK , . . , BEFORE SHRI SUNIL KUMAR YADAV, JM & SHRI B.P.JAIN, AM ./ ITA NO.01 /CTK/2013 ( ! ! ! ! / ASSESSMENT YEAR :2009-2010) NILACHAL EDUCATION TRUST, PLOT NO.A-1/2/3, ASHOK NAGAR, BHUBANESWAR. VS. INCOME TAX OFFICER, WARD 1(2), BHUBANESWAR ' ./ # ./ PAN/GIR NO.AAATN 8238 R ( '$ / ASSESSEE) .. ( %&'$ / RESPONDENT) ( * * * * /ASSESSEE BY : SHRI P.R.MOHANTY * * * * /REVENUE BY : SHRI SHOVAN KRISHNA SAHU + ( / DATE OF HEARING : 19 TH MAY, 2015 -.! ( / DATE OF PRONOUNCEMENT 21 ST MAY,2015 / / / / / O R D E R PER B.P.JAIN, AM THIS APPEAL OF THE ASSESSEE ARISES FROM THE ORDER O F THE LD CIT(A)-1, BHUBANESWAR DATED 1.10.2012 FOR THE ASSESSMENT YE AR 2009-2010. 2. THE ASSESSEE HAS RAISED THE FOLLOWING GROUNDS: 1. FOR THAT THE ORDER OF THE LEARNED C.I.T (APPEAL S-I), BHUBANESWAR DATED 01.10.2012 CONFORMING THE ASSESSMENT ORDER DATED 30 .12.2011 PASSED BY THE I.T.O, WARD - 1(2), BHUBANESWAR (IN SHORT A. O) ON DIFFERENT PRETEXT IS NOT JUST AND CORRECT ON THE FACTS AND IN THE CIR CUMSTANCES OF THE CASE. 2. FOR THAT THE ORDER OF THE LEARNED C.I.T (A PPEALS-I), BHUBANESWAR DATED 01.10.2012 DISALLOWING THE ELIGIBILITY OF TH E BENEFIT OF SECTION-11 OF THE I.T .ACT 1961 ON THE GROUND THAT THE ASSESSEE HAS RECEIVED EXCESS FEES OVER & ABOVE THE PRESCRIBED FEES (WHICH IS NOT A FA CT & IS AGAINST THE MATERIALS AVAILABLE ON RECORD) AS CAPITATION FEES I S NOT JUST AND CORRECT ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE. ITA NO.01 /CTK/2013 ASSESSMENT YEAR :2009-2010 2 3. FOR THAT DETERMINATION OF INCOME AT RS. 91,22,79 0/- BY LEARNED A.O ( AS AGAINST THE RETURNED INCOME OF RS.NIL CLAIMED BY TH E ASSESSEE) & AS CONFIRMED BY THE (11 (A) ON THE FOLLOWING GROUNDS I S NOT JUST & LEGAL ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE: (A) TAKING THE EXCESS OF INCOME OVER EXPENDITURE O F RS.34,22,192/- AS TAXABLE INCOME AFTER REJECTING THE EXEMPTION U/S.11 (B) FURTHER ADDING THE CAPITAL RECEIPT OF RS.5 7,00,600/-(EARLIER TAXED AS ANONYMOUS DONATION U/S. 115BC BY A.O) AS E XCESS OF INCOME OVER EXPENDITURE. 4. FOR THAT THE ORDER PASSED BY THE LEARNED C.I.T ( A) IS BAD IN LAW AND LIABLE TO BE QUASHED ON THE ABOVE GROUNDS OR SUCH OTHER GR OUNDS IF ANY TO BE URGED AT THE TIME OF HEARING ON THE FACTS AND CIRCU MSTANCES OF THE CASE. 3. THE BRIEF FACTS OF THE CASE ARE THAT AS PER THE CIT, BHUBANESWAR ORDER DT.6.9.2007 U / S .12AA(2) OF THE ACT, THE ASSESSEE WAS GRANTED REGISTRATION W .E.F. 1.4.2006. HOWEVER, THE ASSESSING OFFICER HAS FOUND THE ASSESSEE INELIGIBLE FOR EXEMPTION OF INCOME U/S.11 DUE TO VARIOUS VIOLATIO NS. IT HAS BEEN OBSERVED BY THE AO THAT NO BOOKS OF ACCOUNT BILLS & VOUCHERS WE RE PRODUCED FOR EXAMINATION AND VERIFICATION. IT IS FURTHER OBSERVE D BY HIM THAT THE ASSESSEE IS EARNING INCOME IN RESPECT OF HOSTEL FOES, SALES OF BOOKS AND FROM FOODING FEES WHICH ARE SEPARATE BUSINESS BUT FOR WHICH NO SEPARA TE BOOKS OF ACCOUNT HAS BEEN MAINTAINED. ACCORDINGLY, THE AO HAS STATED THA T THE PROVISIONS OF SECTION 11(4A) HAVE BEEN VIOLATED SINCE THE ASSESSEE HAS N OT MAINTAINED SEPARATE BOOKS OF ACCOUNT IN RESPECT OF THOSE BUSINESS WHICH ARE INCIDENTAL TO THE OBJECTIVES OF THE TRUST. SINCE SEPARATE SET OF BOOK S OF ACCOUNT HAVE NOT BEEN MAINTAINED FOR SUCH INCIDENTAL BUSINESS ACTIVITIES AS STIPULATED U/S. 11, THE ASSESSEE IS NOT ELIGIBLE FOR EXEMPTION OF INCOME U/ S.11. THE AO HAS ALSO DISCUSSED ABOUT THE CAPITAL RECEIPT OF RS.57,00,600 /- SHOWN BY THE ASSESSEE. THE AMOUNT IS ALSO CALLED CAPITAL GRANT RECEIVED FR OM STUDENTS AT THE TIME OF ADMISSION FOR DEVELOPMENT OF THE ORGANIZATION. THE AO HAS FOUND OUT THAT THE ITA NO.01 /CTK/2013 ASSESSMENT YEAR :2009-2010 3 CAPITAL GRANT RECEIVED FROM THE STUDENTS/GUARDIANS ARE NOT VOLUNTARY OR NOT WITHOUT COMPULSION. THE STUDENTS HAVE NOT GIFTED/DO NATED THE CORPUS AMOUNT OR THE CAPITAL GRANT GRATUITOUSLY. NO WRITTEN DOCUM ENT OR SPECIFIC DIRECTION FROM THE DONOR HAS BEEN MADE TO TREAT THE AMOUNT PAID AS CORPUS FUND OR DONATION. AFTER DETAILED DISCUSSION, THE AO HAS CONCLUDED THA T THE CAPITAL GRANT RECEIVED FROM THE STUDENTS VIOLATES THE DECISION OF THE HON' BLE SUPREME COURT IN THE CASE OF TMA PAI FOUNDATION V. STATE OF KARNATAKA, AIR 2003 (SC) 355 AND THE ASSESSEE HAS ENGAGED IN PROFITEERING AND IN RECEIPT OF CAPITAL FEE. SINCE THE ASSESSEE COULD NOT PRODUCE CONFIRMATIONS FROM THE A LLEGED DONORS OF CAPITAL CONTRIBUTION, THE AO TREATED THE AMOUNT RECEIVED AS ANONYMOUS DONATIONS. 4. THE LD CIT(A) CONFIRMED THE ACTION OF THE ASSESS ING OFFICER. 5. AT THE TIME OF HEARING, THE LD COUNSEL FOR THE A SSESSEE ARGUED THAT IT IS THE APPLICATION OF THE RECEIPT, WHICH MATTERS IN TH E PRESENT CASE, ARE NOT THE SOURCE FROM WHICH THE MONEY HAS BEEN RECEIVED. HE RELIED UPON THE DECISIONS OF THE HONBLE KARNATAKA HIGH COURT IN THE CASES OF SANJEEVAMMA HANUMANTHE GOWDA CHARITABLE TRUST VS DIT (EXEMPTION ) (2006) 285 ITR 327 & CIT VS. KARNATAKA LINGAYAT EDUCATION SOCIETY (INC OME TAX APPEAL NO.5004/2012) ORDER DATED 15 TH OCTOBER, 2014. 6. ON THE OTHER HAND, THE LD D.R. RELIED ON THE ORD ER OF THE LD CIT(A). 7.. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE FACTS OF THE CASE. THE UNDISPUTED FACTS IN THE PRESENT CASE ARE THAT T HE ASSESSEE HAS BEEN FOUND BY THE ASSESSING OFFICER TO BE INELIGIBLE FOR EXEMP TION U/S.11 OF THE ACT DUE TO ITA NO.01 /CTK/2013 ASSESSMENT YEAR :2009-2010 4 VARIOUS VIOLATIONS AND IT WAS OBSERVED AS MENTIONED HEREINABOVE, NO BOOKS OF ACCOUNT, BILLS AND VOUCHERS WERE PRODUCED FOR EXAMI NATION AND VERIFICATION. AS REGARDS THE CAPITAL RECEIPTS OF RS.57,00,600/- DECL ARED BY THE ASSESSEE HAS BEEN CALLED AS CAPITAL GRANT RECEIVED FROM THE STU DENTS AT THE TIME OF ADMISSION FOR DEVELOPMENT OF THE ORGANISATION. IT WAS OBSERVED BY THE AO THAT SUCH CAPITAL GRANT RECEIVED FROM THE STUDENTS/GUARD IANS IS NOT VOLUNTARY OR NOT WITHOUT COMPULSION ONLY. THE SAID AMOUNT HAS NOT B EEN DEDUCTED AS CORPUS AMOUNT OR THE CAPITAL GRANT GRATUITOUSLY. NO WRITT EN DOCUMENT OR SPECIFIC DIRECTION FROM THE DONOR HAS BEEN MADE OR PLACED ON RECORD TO TREAT THE SAID AMOUNT PAID AS CORPUS FUND OR DONATION. WE CONCUR WITH THE VIEWS OF THE LD CIT(A) THAT ALL THE RECEIPTS ARE IN CASH AND LARGE NUMBER OF RECEIPTS AMOUNT TO RS.24,000/- EACH. THE ADMISSION FORM SHOWS THAT A STANDARD SEAL HAS BEEN PUT ON THE ADMISSION FORMS WITH DESCRIPTION OF RS.2 4,000/- MAY BE APPROPRIATED TOWARDS CORPUS DONATION OF THE COLLEGE BELOW WHICH THE GUARDIAN HAS PUT THE SIGNATURE. ACCORDINGLY, SUCH CORPUS DONATION IS NO T VOLUNTARY AS IT HAS BEEN COLLECTED FROM EACH OF THE STUDENTS SEEKING ADMISSI ON. THERE IS NO DOUBT THAT THE ASSESSEE TRUST HAS COLLECTED MONEY IN NATURE OF CAPITATION FEES FROM EACH OF THE STUDENTS IN CONNECTION WITH ADMISSION. THE E XEMPTION AVAILABLE U/S.11 IS SUBJECT TO THE CONDITIONS SPECIFIED IN SECTIONS 11, 12, 12A, 12AA AND 13 OF THE ACT. THEREFORE, THE EXEMPTION WILL NOT BE AVAILABLE IF THE CONDITIONS ARE NOT ADHERED TO IN VIEW OF DECISION IN THE CASE OF CIT V . HYDERABAD SECUNDERABAD FOOD GRAINS ASSOCIATION LTD. (1989) 175 ITR 574 (AP ). IT WAS HELD THEREIN THAT ONCE THE CIT REJECTS THE CLAIM OF PUBLIC CHARITABLE STATUS, THE SATISFACTION OF CONDITIONS SPECIFIED IN SECTION 12, 12A & 13 BECOME SUPERFLUOUS. BUT ONCE THE CLAIM OF PUBLIC CHARITABLE INSTITUTIONS IS ACCEPTED , THE CONDITIONS SPECIFIED IN SECTIONS 12, 12A & 13 ARE REQUIRED TO BE SATISFIED. ACCORDINGLY, THE AO IS ITA NO.01 /CTK/2013 ASSESSMENT YEAR :2009-2010 5 COMPETENT TO EXAMINE WHETHER THE PUBLIC CHARITABLE CHARACTER IS SATISFIED OR NOT IN VIEW OF CONDITIONS SPECIFIED IN SECTIONS 11, 12, 12A, 12AA & 13. THE HON'BLE ITAT, HYDERABAD, IN THE CASE OF M/S.MGR EDUCATIONAL SOCIETY, HYDERABAD, IN ITA NO.L577/HYD/2011 FOR ASS T. YEAR 2003-04 AND ITA NO. 1578/HYD/2011 FOR ASST. YEAR 2004-05, AND OTHER CASES IN THE ORDER DELIVERED ON 4-5-2012 HAS HELD THAT IF DONATIONS AR E RECEIVED COMPULSORILY FOR THE ADMISSION OF STUDENTS, BY WHATEVER NAME IT MAY BE CALLED, I.E. DONATION, BUILDING 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. THE HON,BLE ITA T HAS OBSERVED THAT: '5. WE HAVE HEARD BOTH THE PARTIES AND PERUSED TH E MATERIAL ON RECORD. THE ISSUE INVOLVED IN THIS APPEAL RELATES TO ASSESS EE'S CLAIM FOR EXEMPTION OF ITS INCOME UNDER S.11 OF THE ACT. WE F IND THAT THIS MAIN ISSUE INVOLVED IN THE ABOVE GROUNDS IS COVERED BY T HE 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 .1133/HYD/2006 FOR THE ASSESSMENT YEAR 2003-04 AND ORDER DA TED 17.4.2009 IN ITA NO.1206/HYD/2007 FOR THE ASSESSMENT YEAR 2004-05, WHEREIN IT WAS HELD THAT IF DONATIONS ARE RECEIVED COMPULSO RILY FOR THE ADMISSION OF STUDENTS, BY WHATEVER NAME IT MAY BE CALLED, I.E . DONATION, BUILDING FUND, AUDITORIUM FUND, ETC. OVER AND ABOVE THE PRES CRIBED FEE, FROM THE STUDENTS, THE ASSESSEE WOULD NOT BE ENTITLED FOR EX EMPTION EITHER UNDER S.10(23C) OR UNDER 5.11 OF THE ACT. FURTHER, WE FIN D THAT THE CONSTITUTIONAL BENCH OF APEX COURT IN THE CASE OF T.M.A. PAI FOUNDATIONS AND OTHERS VS. STATE OF KARNATAKA & OTH ERS (2002) 8 SCC 481 EXAMINED THE ISSUE OF COLLECTION OF CAPITAT ION FEES FOR THE ADMISSION OF STUDENTS OVER AND ABOVE FEES PRESCRIB ED BY THE PRIVATE INSTITUTION AND HELD THAT THE INSTITUTION WHICH A RE COLLECTING CAPITATION FEES FOR ADMISSION OF STUDENTS OVER AND ABOVE THE FEES PRESCRIBED CANNOT BE CON STRUED AS CHARITABLE/EDUCATION INSTITUTION. APE COURT FURTHER OBSERVED THAT THE FEES COLLECTED OVE R AN D ABOVE THE PRESCRIBED FEE FOR ADMISSION OF THE STUDENT HAS TO BE CONSTRUED AS CAPITATION FEE. THE APEX COURT FURTHER OBSERVED TH AT THE CONCERNED UNIVERSITY AND REGULATED BODY HAS TO TAKE ACTION FO R WITHDRAWAL OF THE RECOGNITION IN CASE IT IS FOUND THAT THE EDUCATIONA L INSTITUTION RECEIVED ANY MONEY OVER AND ABOVE THE FEES PRESCRIBED FOR TH E COURSES. SAME VIEW WAS TAKEN BY APEX COURT IN THE CASE OF ISLAMIC ACADEMY OF EDUCATION AND ANOTHER VS. STATE OF KARNATAKA & ANOT HER (2003) 6 SCC 697. IF THE DONATIONS WERE RECEIVED COMPULSORILY FO R ADMISSION OF STUDENTS, THE ASSESSEE IS NOT ENTITLED FOR EXEMPTIO N EITHER U/S 10(23C) OR U/S 11 OF THE IT ACT. SINCE THE LOWER AUTHORITIES H AVE NOT EXAMINED THE ITA NO.01 /CTK/2013 ASSESSMENT YEAR :2009-2010 6 COLLECTION OF CAPITATION FEES IN THIS CASE, IN OUR OPINION, THE MATTER REQUIRES TO BE EXAMINED BY THE ASSESSING OFFICER WH ETHER THE ASSESSEE IS COLLECTING THE CAPITATION FEES FROM STUDENTS OR NOT AND IT IS NECESSARY FOR BRINGING THE ACTUAL FACTS ON RECORD FOR DECIDIN G THE ISSUE EFFECTIVELY. SIMILAR VIEW WAS TAKEN BY US IN THE CASE OF M/S, LA MIA NIZAMIA IN ITA NO.763/HYD/2007 DATED 30.6.2008, IN THE CASE OF INTERNATIONAL EDUCATIONAL ACADEMY, HYDERABAD IN ITA NO.494/HYD/20 07 AND 518/HYD/2008 FOR THE ASSESSMENT YEARS 2002- 2003 AN D 2004-05 AND SRI SAI SUDHIR EDUCATIONAL SOCIETY, HYDERABAD IN ITA NO.999/HYD/20- 06 FOR THE ASSESSMENT YEAR 2003-04. THEREFORE, WE SET ASIDE THE ORDERS OF THE LOWER AUTHORITIES AND REMIT BACK THE MATTER TO THE FILE OF ASSESSING OFFICER WITH A DIRECTION TO ASSESSING OFF ICER THAT HE SHALL RECONSIDER THE ENTIRE ISSUE IN THE LIGHT OF JUDGMEN T OF SUPREME COURT IN THE CASE OF M/S ISLAMIC ACADEMY OF EDUCATION & ANOT HER VS. STATE OF KARNATAKA AND ANOTHER (SUPRA), AND IN THE CASED OF T.M.A. PAL FOUNDATION AND OTHERS VS. STATE OF KARNATAKA AND OT HERS (SUPRA), AND FIND OUT WHETHER THE ASSESSEE HAS RECEIVED ANY MONE Y OVER AND ABOVE THE FEES PRESCRIBED AND THEREAFTER DECIDE THE ISSUE AFRESH IN ACCORDANCE WITH LAW AFTER GIVING REASONABLE OPPORTU NITY OF HEARING TO THE ASSESSEE. WE MAKE IT CLEAR THAT THE ASSESSEE IS NOT ENTITLED FOR EXEMPTION U/S 11 IN CASE IT COLLECTED ANY MONEY BY WHATEVER NAME IT IS CALLED I.E., DONATION, BUILDING FUND, AUDITORIUM FUND ETC. ETC., OVER AND ABOVE THE PRESCRIBED FEE FOR ADMISSION OF STUDENTS.' THE HON'BLE ITAT, HYDERABAD, 'B' BENCH, IN THE CASE OF VODITHALA EDUCATION SOCIETY V. ADIT(EXEMPTIONS), [2008] 20 SOT 353 (HYD.), HELD TH AT THE ASSESEE SOCIETY IS NOT TO BE CONSIDERED AS A CH ARITABLE INSTITUTION IF CAPITATION FEE IS COLLECTED HENCE INELIGIBLE U/S 11 . IT WAS OBSERVED THEREIN THAT; '10. WE WOULD LIKE TO FURTHER ADD THAT COLLECTION O F MONEY OVER AND ABOVE THE FEES PRESCRIBED BY THE COMMITTEE APPOINTE D AS PER THE DIRECTIONS OF THE HON'BLE'APEX COURT IS INCREASING DAY-BY-DAY FOR ADMITTING STUDENTS UNDER MANAGEMENT QUOTA. THIS COL LECTION OF MONEY OVER AND ABOVE THE FEES PRESCRIBED BY THE COMMITTEE , SHALL BE CONSTRUED AS COLLECTION OF CAPITATION FEES' AS HELD BY THE AP EX COURT. COLLECTION OF CAPITATION FEE IS NOT A ISOLATED PROBLEM OF AN INDI VIDUAL STUDENT AND THE INSTITUTION. THIS IS A SOCIAL PROBLEM AND MAKES THE AVAILABILITY OF EDUCATION BEYOND THE REACH OF THE VAST MAJORITY OF THE POPULATION. MORE THAN 30 PER CENT OF THE POP ULATION IS LIVING BELOW POVERTY LINE AND BULK OF THE REMAINING POPULATION I S STRUGGLING FOR EXISTENCE UNDER POVERTY. IN THIS ECONOMIC SITUATION , IF WE ALLOW A FEW INDIVIDUALS WHO HAD AN OPPORTUNITY TO ESTABLISH AN EDUCATIONAL INSTITUTION TO COLLECT MONEY DIRECTLY OR INDIRECTLY FOR ADMISSI ON OF STUDENTS, IT WOULD BE A THREAT TO A VERY EXISTENCE OF DEMOCRACY AND SO VEREIGNTY OF THIS COUNTRY. THEREFORE, THE JUDICIAL AND QUASI-JUDICIAL AUTHORITIES CANNOT BE EXPECTED TO BE A SILENT SPECTATORS OF WHAT IS HAPP ENING IN THE EDUCATIONAL INSTITUTIONS. IN OUR OPINION, IT IS HIGH TIME FOR THE AUTHORITIES CONCERNED TO INITIATE ACTION IMMEDIATELY NOT ALREAD Y INITIATED, TO PUT AN END TO THIS KIND OF MALPRACTICE WITH IRON HAT. IN VIEW OF THE ABOVE IN OUR OPINION, THE ASSESSEE-SOCIETY CANNOT BE CONSIDERED TO BE A ITA NO.01 /CTK/2013 ASSESSMENT YEAR :2009-2010 7 CHARITABLE INSTITUTION AND THEREFORE, NOT ELIGIBLE TO CLAIM EXEMPTION UNDER SECTION 11.' THE HON,B!E SUPREME COURT IN THE CASE OF P.A. INAMD AR & ORS VS STATE OF MAHARASHTRA & ORS, AIR 2005 SC 3226/ [2005] SCC 537, HELD THAT NO CAPITATION CAN BE CHARGED IN ANY FORM. IT WAS OBSER VED AS UNDER; 'Q. 3 FEE, REGULATION OF TO SET UP A REASONABLE FEE STRUCTURE IS ALSO A COMP ONENT OF 'THE RIGHT TO ESTABLISH AND ADMINISTER AN INSTITUTION' WITHIN THE MEANING OF ARTICLE 30(1) OF THE CONSTITUTION, AS PER THE LAW DECLARED IN PAL FOUNDATION. EVERY INSTITUTION IS FREE TO DEVISE ITS OWN FEE STR UCTURE SUBJECT TO THE LIMITATION THAT THERE CAN BE NO PROFITEERING AND NO CAPITATION FEE CAN BE CHARGED DIRECTLY OR INDIRECTLY, OR IN ANY FORM (PAR AS 56 TO 58 AND 161 [ANSWER TO Q.5(C)] OF PAL FOUNDATION ARE RELEVANT I N THIS REGARD). CAPITATION FEES CAPITATION FEE CANNOT BE PERMITTED TO BE CHARGE D AND NO SEAT CAN BE PERMITTED TO BE APPROPRIATED BY PAYMENT OF CAPITATI ON FEE. 'PROFESSION' HAS TO 'BE DISTINGUISHED FROM 'BUSINESS' OR A MERE 'OCC UPATION'. WHILE IN BUSINESS, AND TO A CERTAIN EXTENT IN OCCUPATION, T HERE IS A PROFIT MOTIVE, PROFESSION IS PRIMARILY A SERVICE TO SOCIETY WHEREI N EARNING IS SECONDARY OR INCIDENTAL. A STUDENT WHO GETS A PROFESSIONAL DEGRE E BY PAYMENT OF CAPITATION FEE, ONCE QUALIFIED AS A PROFESSIONAL, I S LIKELY TO AIM MORE AT EARNING RATHER THAN SERVING AND THAT BECOMES A BANE TO THE SOCIETY. THE CHARGING OF CAPITATION FEE BY UNAIDED MINORITY AND NON-MINORITY INSTITUTIONS FOR PROFESSIONAL COURSES IS JUST NOT PERMISSIBLE. S IMILARLY, PROFITEERING IS ALSO NOT PERMISSIBLE. DESPITE THE LEGAL POSITION, THIS COURT CANNOT SHUT ITS EYES TO THE HARD REALITIES OF COMMERCIALIZATIO N OF EDUCATION AND EVIL PRACTICES BEING ADOPTED BY MANY INSTITUTIONS TO EARN LARGE AMOUNTS FOR THEIR PRIVATE OR SELFISH ENDS. IF CAPITATION FEE AND PROFITEERING IS TO BE CHECKED, THE METHOD OF ADMISSION HAS TO BE REGULATE D SO THAT THE ADMISSIONS ARE BASED ON MERIT AND TRANSPARENCY AND THE STUDENTS ARE NOT EXPLOITED, IT IS PERMISSIBLE TO REGULATE ADMISSION AND FEE STRUCTURE FOR ACHIEVING THE PURPOSE JUST STATED. OUR ANSWER TO QUESTION-3 IS THAT EVERY INSTITUTION IS FREE TO DEVISE ITS OWN FEE STRUCTURE BUT' THE SAME CAN BE REGULATED IN THE INTEREST OF PREVENTING PROFITEERING. NO CAPITATION FEE CAN BE C HARGED.' THUS, THE OVERWHELMING JUDICIAL VIEW IS THAT ANY AM OUNT CHARGED TO A STUDENT IN EXCESS OF THE PRESCRIBED FEES AND IN CONNECTION WIT H THE ADMISSION IS IN THE NATURE OF CAPITATION FEES COLLECTED UNDER ANY HEAD OR GUISE. ONCE THE CAPITATION FEE IS RECEIVED, IT VIOLATES AGAINST THE CHARITABLE NATURE OF THE ITA NO.01 /CTK/2013 ASSESSMENT YEAR :2009-2010 8 INSTITUTION, ACCORDINGLY, THE INSTITUTION EXISTS FO R PROFITEERING AND COMMERCIALIZATION OF EDUCATION HAS TAKEN PLACE AN D NO LONGER THE INSTITUTION IS TO BE CONSIDERED AS CHARITABLE U/S.2(15) OF THE ACT . IN SUCH A CASE, THE INSTITUTION LOSES ITS CHARITABLE CHARACTER AND BECOMES INELIGIB LE FOR BENEFIT OF SECTION 11. IN THE PRESENT CASE, THE ASSESSEE SOCIETY HAS COLLECTE D EXCESS FEES OR DONATIONS IN THE NATURE OF CAPITATION FEES. SUCH COLLECTION I S DONE IN A SYSTEMATIC MANNER AS REVEALED BY THE DETAILS FILED. IN VIEW OF THE SA ME, THE ASSESSEE SOCIETY IS NOT ELIGIBLE FOR BENEFIT OF SECTION 11. SINCE THE DONA TIONS ARE IN THE NATURE OF CAPITATION FEES, IS REQUIRED TO BE DISCLOSED IN THE INCOME AND EXPENDITURE STATEMENT. ACCORDINGLY, THE SAME IS SUBJECT TO TAX BEING REVENUE RECEIPTS. HENCE, THE SURPLUS OF INCOME OVER EXPENDITURE AS AL READY DISCLOSED BY THE ASSESSEE IS TO BE INCREASED BY THE AMOUNT OF DONATI ON AND SUBJECT TO TAX AS PART OF INCOME OVER EXPENDITURE. IN THE CIRCUMSTANCES AND FACTS OF T HE CASE, WE FIND NO INFIRMITY IN THE ORDER OF THE LD CIT(A) WHO HAS RIGHTLY CONFIRMED THE ACTION OF THE ASSESSING OFFICER. 8. AS REGARDS THE DECISIONS RELIED UPON BY THE LD COUNSEL FOR THE ASSESSEE, MENTIONED HEREINABOVE, WE OBSERVE THAT SAME ARE REL ATED TO REGISTRATION U/S.12AA AND 10(23C)(VI) OF THE ACT. IT HAS BEEN M ENTIONED IN THE CASE OF KARNATAKA LINGYAT EDUCATION SOCIETY (SUPRA) THAT DO NATIONS WERE VOLUNTARY DONATIONS AND NOT COMPULSORY DONATIONS. THEREFORE, THE SAID DECISION OF THE HONBLE KARNATAKA HIGH COURT CANNOT BE MADE APPLICA BLE IN THE CIRCUMSTANCES AND FACTS OF THE CASE WHEREAS THE PRESENT CASE IS W ITH RESPECT TO THE EXEMPTION U/S.11 OF THE ACT AND, THEREFORE, THE CASES RELIED UPON BY THE LD COUNSEL FOR THE ASSESSEE CANNOT HAVE THE BENEFIT TO THE ASSESSEE. ITA NO.01 /CTK/2013 ASSESSMENT YEAR :2009-2010 9 9. IN THE RESULT, APPEAL FILED BY THE ASSESSEE IS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON THIS 21 / 05/2015. SD/- SD/- ( ) (SUNIL KUMAR YADAV) ( . . ) (B.P.JAIN) / JUDICIAL MEMBER / ACCOUNTANT MEMBER CUTTACK; DATED 21 /05/2015 B.K.PARIDA, SPS / / / / %( %( %( %( 2 2 2 2!( !(!( !( / COPY OF THE ORDER FORWARDED TO : / / / / / BY ORDER, 3 33 3 / 4 4 4 4 (ASSTT. REGISTRAR) , / ITAT, CUTTACK 1. '$ / THE ASSESSEE : NILACHAL EDUCATION TRUST, PLOT NO.A-1/2/3, ASHOK NAGAR, BBSR. 2. %&'$ / THE RESPONDENT.: INCOME TAX OFFICER, WARD 1(2), BHUBANESWAR 3. 5 ( ) / THE CIT(A), BHUBANESWAR 4. 5 / CIT , BHUBANESWAR 5. 6 %( , , / DR, ITAT, CUTTACK 6. 8 9+ / GUARD FILE. &( %( //TRUE COPY// :