ACIT, CHENNAI V. Meenakshi Ammal Trust, CHENNAI

ITA 1008/CHNY/2013

• Counselvise Citation: [2017] 130 COUNSELVISE.COM (IT) 7444 (ITAT-CHENNAI)
• Duration Of Justice: 3 year(s) 10 month(s) 8 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 23-03-2017
• Appeal Filed By: Department
• Order Result: Allowed
• Bench Allotted: B
• Next Hearing Date: 21-02-2017
• Assessment Year: 2008-2009
• Appeal Filed On: 15-05-2013
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Keywords: Set aside
• Section: 32; 147; 131; 68; 246; 69; 145; 27; 148; 54; 37; 6; 56; 263; 63; 132; 12; 28; 144; 10; 90; 154; 2; 11; 15; 271(1)(b); 139; 92; 12AA; 10(23C)

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL B BENCH, CHENNAI . . . , !.. # $%, ' () BEFORE SHRI N.R.S. GANESAN, JUDICIAL MEMBER AND SHRI D.S. SUNDER SINGH, ACCOUNTANT MEMBER ./ ITA NO.1008/MDS/2013 + ,+ / ASSESSMENT YEAR : 2008-09 THE ASSISTANT COMMISSIONER OF INCOME TAX, CENTRAL CIRCLE II(1), CHENNAI - 600 034. V. M/S MEENAKSHI AMMAL TRUST, NEW NO.61, NO.641, RAMASAMY SALAI, K.K. NAGAR, CHENNAI - 600 078. PAN : AAATM 4676 Q (.// APPELLANT) (01.// RESPONDENT) ./ 2 3 / APPELLANT BY : SHRI B. KOTESWARA RAO, CIT 01./ 2 3 / RESPONDENT BY : SHRI S. SRIDHAR, ADVOCATE # 2 4' / DATE OF HEARING : 23.02.2017 56, 2 4' / DATE OF PRONOUNCEMENT : 23.03.2017 / O R D E R PER N.R.S. GANESAN, JUDICIAL MEMBER: THIS APPEAL OF THE REVENUE IS DIRECTED AGAINST T HE ORDER OF THE COMMISSIONER OF INCOME TAX (APPEALS) II, CHEN NAI, DATED 11.02.2013 AND PERTAINS TO ASSESSMENT YEAR 2008-09. 2 I.T.A. NO.1008/MDS/13 2. SHRI B. KOTESWARA RAO, THE LD. DEPARTMENTAL REPRESENTATIVE, SUBMITTED THAT DURING THE YEAR UNDE R CONSIDERATION, THE ASSESSEE COLLECTED ` 9,95,70,000/- FROM THE STUDENTS AT THE TIME OF ADMISSION OVER AND ABOVE THE FEES FIXED FOR TUIT ION AND OTHER FACILITIES OFFERED BY THE INSTITUTION. DURING THE COURSE OF SEARCH OPERATION, THE REVENUE AUTHORITIES FOUND THAT THE A SSESSEE RECEIVED CAPITATION FEE FOR ADMISSION IN THE EDUCAT IONAL INSTITUTION FROM THE RESPECTIVE STUDENTS. REFERRING TO ORDER O F THE ASSESSING OFFICER, THE LD. D.R. POINTED OUT THAT SHRI K.R. MA NOHAR, THE MANAGER OF THE ASSESSEE-TRUST WAS EXAMINED DURING T HE COURSE OF SEARCH OPERATION. HE CATEGORICALLY ADMITTED THAT T HEY WERE COLLECTING CAPITAL FEE BY CASH AND SAME WAS HANDED OVER TO THE MANAGING TRUSTEES AND OTHER TRUSTEES. ACCORDING TO THE LD. D.R., THE ASSESSING OFFICER, IN FACT, REPRODUCED QUESTION AND ANSWER AT PAGE 6 OF HIS ORDER. 3. THE LD. DEPARTMENTAL REPRESENTATIVE FURTHER SUBM ITTED THAT ON APPEAL BY THE ASSESSEE, THE CIT(APPEALS) FOUND T HAT WHAT WAS COLLECTED BY THE ASSESSEE IS ALSO A FEE FOR ACADEMI C COURSE AND OTHER AMOUNTS. THE CIT(APPEALS) FOUND THAT ` 4,85,00,000/- WAS TOWARDS FEES, ADVANCE AND DEPOSIT AND ` 2,62,00,000/- WAS 3 I.T.A. NO.1008/MDS/13 VOLUNTARY DONATIONS FROM WELL-WISHERS OF STUDENTS. SINCE THE ASSESSEE COULD NOT PRODUCE THE DETAILS OF THE PERSO NS WHO VOLUNTARILY DONATED TO THE EXTENT OF ` 2,62,00,000/-, THE CIT(APPEALS) RESTRICTED THE DISALLOWANCE AT ` 4,98,70,000/-. THE CIT(APPEALS) HAS ALSO FOUND THAT THE ASSESSEE COLLECTED A LUMP SUM F EE FOR THREE YEARS. SINCE THE STUDENTS DEMANDED THE REFUND, THE ASSESSEE RETURNED THE MONEY TO THE EXTENT OF ` 2,13,50,000/-. ACCORDINGLY, THE DISALLOWANCE WAS RESTRICTED TO ` 4,98,70,000/-. 4. THE LD. DEPARTMENTAL REPRESENTATIVE FURTHER SUBM ITTED THAT THE ASSESSEE COLLECTED FEES, ADVANCE AND OTHER MISC ELLANEOUS RECEIPTS FOR EDUCATIONAL ACTIVITIES SEPARATELY. WH AT WAS FOUND DURING THE COURSE OF SEARCH OPERATION TO THE EXTENT OF ` 9,95,70,000/- WAS CAPITATION FEE FOR ADMISSION OF STUDENTS IN THE EDUCATIONAL INSTITUTION OVER AND ABOVE THE FEES FIXED FOR ACADE MIC ACTIVITIES. HENCE, THE ENTIRE SUM OF ` 9,95,70,000/- HAS TO BE TREATED AS INCOME OF THE ASSESSEE. THE LD. D.R. FURTHER POINTED OUT THAT THE APPROVAL GRANTED UNDER SECTION 10(23C) OF THE INCOME-TAX ACT , 1961 (IN SHORT 'THE ACT') BY DIRECTOR GENERAL OF INCOME TAX WAS WI THDRAWN. 5. ON THE CONTRARY, SHRI S. SRIDHAR, THE LD.COUNSEL FOR THE ASSESSEE, SUBMITTED THAT THE ASSESSEE IS NOT CLAIMI NG ANY 4 I.T.A. NO.1008/MDS/13 EXEMPTION EITHER UNDER SECTION 11 OR SECTION 12 OF THE ACT. THE ASSESSEE IS ALSO NOT CLAIMING BENEFIT UNDER SECTION 10(23C) OF THE ACT. ACCORDING TO THE LD. COUNSEL, THE CIT(APPEALS ) FOUND THAT THE ASSESSEE RECEIVED ` 24,35,17,250/- TOWARDS DONATION FROM THE FINANCIAL YEAR 2002-03 TO 2008-09 INCLUDING THE AMO UNT OF ` 9,95,70,000/- FOR THE YEAR UNDER CONSIDERATION. AC CORDING TO THE LD. COUNSEL, THE ASSESSEE ITSELF DISCLOSED ` 2,36,70,000/- AND OFFERED THE SAME FOR TAXATION. THE REMAINING ` 7,47,00,000/- WAS NOT THE DONATION OR CAPITATION FEE COLLECTED. IT W AS A FEE COLLECTED FROM THE STUDENTS. IN FACT, ACCORDING TO THE LD. C OUNSEL, THE ASSESSEE COLLECTED TUITION FEE, LABORATORY, LIBRARY BOARDING AND OTHER FEES FOR THREE CONSECUTIVE YEARS. THE LD.COUNSEL F URTHER SUBMITTED THAT THE ASSESSEE-TRUST HAS TO CONSTRUCT BUILDING F OR THE PURPOSE OF ESTABLISHING A DENTAL COLLEGE AS REQUIRED BY DENTAL COUNCIL OF INDIA. THE FINANCIAL ASSISTANCE FROM BANKS WAS DELAYED, TH EREFORE, IN ORDER TO RAISE THE FUNDS, THE ASSESSEE-TRUST HAD DE CIDED TO COLLECT CONSOLIDATED FEES FOR THE ENTIRE COURSE FOR THREE A CADEMIC YEARS FROM THE RESPECTIVE STUDENTS. THE TOTAL FEE RECEIP T WAS ` 4,82,00,000/-. AFTER ADMISSION AND REOPENING OF CO LLEGE, THE PARENTS REPRESENTED THE MATTER TO THE MANAGEMENT AN D ACCORDINGLY, 5 I.T.A. NO.1008/MDS/13 THE TUITION FEE, LABORATORY, LIBRARY, BOARDING AND OTHER FEES FOR TWO YEARS TO THE EXTENT OF ` 1,05,50,000/- WAS RETURNED. 6. THE LD.COUNSEL FOR THE ASSESSEE FURTHER SUBMITTE D THAT THE ASSESSEE ALSO APPROPRIATED A SUM OF ` 52,50,000/- TOWARDS EXPANSION. THE BALANCE AMOUNT OF ` 2,16,00,000/- WAS SHOWN IN THE BALANCE SHEET AS ADVANCE FEES RECEIVED. ALL TH ESE DETAILS WERE SUBMITTED BEFORE THE ASSESSING OFFICER AND THE CIT( APPEALS). THE CIT(APPEALS), AFTER CONSIDERING THE MATERIAL AVAILA BLE ON RECORD, FOUND THAT THE TOTAL FEES, ADVANCE AND DEPOSIT COLL ECTED WERE AT ` 4,85,00,000/-. IN ADDITION TO THIS, THE ASSESSEE H AS ALSO RECEIVED DONATION FROM WELL-WISHERS AND VOLUNTEERS OF RESPEC TIVE STUDENTS TO THE EXTENT OF ` 2,62,00,000/-. THE CIT(APPEALS) HAS ALSO FOUND THA T THE ASSESSEE HAS RETURNED ` 2,13,50,000/- TO THE RESPECTIVE STUDENTS DURING THE YEAR UNDER CONSIDERATION. THEREFORE, AC CORDING TO THE LD. COUNSEL, THE CIT(APPEALS) RESTRICTED THE ADDITI ON TO THE EXTENT OF ` 4,98,70,000/- INCLUDING THE DONATION OF ` 2,62,00,000/- AND THE BALANCE WAS DELETED BY THE CIT(APPEALS). 7. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS ON EITH ER SIDE AND PERUSED THE RELEVANT MATERIAL AVAILABLE ON RECORD. ADMITTEDLY, THE REVENUE AUTHORITIES FOUND THAT THE ASSESSEE HAS COL LECTED 6 I.T.A. NO.1008/MDS/13 CAPITATION FEE FOR ADMISSION OF STUDENTS IN THE EDU CATIONAL INSTITUTIONS OVER AND ABOVE THE FEES PRESCRIBED TOW ARDS TUITION FEES AND OTHER FEES. THE ASSESSEE HAS ALSO COLLECTED CO NSOLIDATED FEES FOR THREE CONSECUTIVE ACADEMIC YEARS. THE ASSESSEE S CLAIM BEFORE THIS TRIBUNAL IS THAT WELL-WISHERS OF THE STUDENTS HAVE PAID DONATIONS. HOWEVER, THE DETAILS WERE NOT AVAILABLE ON RECORD TO THE EXTENT OF ` 2,62,00,000/-. THEREFORE, THE ASSESSING OFFICER HA S RIGHTLY TREATED IT AS ANONYMOUS DONATION AND INCLUD ED IN THE TOTAL INCOME OF THE ASSESSEE FOR TAXATION. 8. THE REGISTRATION GRANTED UNDER SECTION 12AA OF T HE ACT AND APPROVAL GRANTED UNDER SECTION 10(23C) OF THE ACT W ERE WITHDRAWN BY THE RESPECTIVE AUTHORITIES. THEREFORE, THE ASSE SSEE IS NOT ELIGIBLE FOR EXEMPTION EITHER UNDER SECTION 11 OR 10(23C) OF THE ACT. THEREFORE, THE LD.COUNSEL FOR THE ASSESSEE VERY FAI RLY SUBMITTED BEFORE THIS TRIBUNAL THAT THE ASSESSEE IS NOT CLAIM ING ANY EXEMPTION EITHER UNDER SECTION 11 OR 10(23C) OF THE ACT. THE QUESTION ARISES FOR CONSIDERATION IS WHEN THE ASSESSEE IS NOT ELIGI BLE FOR EXEMPTION UNDER SECTION 10(23C) OR SECTION 11 OF THE ACT, WHE THER THE SURPLUS INCOME IS LIABLE FOR TAXATION UNDER THE INCOME-TAX ACT? THE CIT(APPEALS) HAS RIGHTLY FOUND THAT THE SURPLUS INC OME IS LIABLE FOR 7 I.T.A. NO.1008/MDS/13 TAXATION. THE ASSESSEES CLAIM BEFORE THE ASSESSIN G OFFICER AND THE CIT(APPEALS) THAT OUT OF CONSOLIDATED FEES FOR THREE ACADEMIC YEARS, THE FEES RELATING TO TWO YEARS WERE REFUNDED TO THE RESPECTIVE STUDENTS. HOWEVER, NO MATERIAL IS AVAILABLE ON REC ORD TO SUGGEST THAT THE ASSESSEE HAS REFUNDED THE FEES COLLECTED F ROM THE STUDENTS FOR THE TWO CONSECUTIVE YEARS. 9. IT IS A WELL SETTLED PRINCIPLE OF LAW THAT THE A SSESSEE CAN COLLECT THE TUITION FEES ONLY FOR ONE ACADEMIC YEAR AND NOT FOR ANY OTHER YEARS. COLLECTION OF CAPITATION FEES OVER AN D ABOVE THE FEES FIXED BY THE EDUCATIONAL INSTITUTION IS PROHIBITED BY THE STATE LEGISLATION. MOREOVER, THE APEX COURT TIME AND AGA IN POINTING OUT THAT EDUCATIONAL INSTITUTION HAS NO RIGHT OR AUTHOR ITY TO COLLECT CAPITATION FEE OVER AND ABOVE THE FEES FIXED FOR AD MISSION OF STUDENTS. THEREFORE, THE FEE COLLECTED BY THE ASSE SSEE EITHER IN THE NAME OF BUILDING FUND, DONATION OR LIBRARY FUND, ET C, OVER AND ABOVE THE FEES FIXED FOR ADMISSION OF STUDENTS, HAS TO BE TREATED AS CAPITATION FEE. THEREFORE, THIS TRIBUNAL IS OF THE CONSIDERED OPINION THAT IT HAS TO BE BROUGHT ON RECORD THE FEE STRUCTU RES OF EDUCATIONAL INSTITUTIONS RUN BY THE ASSESSEE-TRUST. THE DETAIL S OF THE FEE STRUCTURES FOR ADMISSION OF STUDENTS IN THE EDUCATI ONS INSTITUTIONS 8 I.T.A. NO.1008/MDS/13 ARE NOT AVAILABLE ON RECORD. ACCORDINGLY, THE ORDE RS OF THE AUTHORITIES BELOW ARE SET ASIDE AND THE ENTIRE ISSU E IS REMITTED BACK TO THE FILE OF THE ASSESSING OFFICER. THE ASSESSIN G OFFICER SHALL RE- EXAMINE THE MATTER AND BRING ON RECORD THE FEE STRU CTURE OF EDUCATIONAL INSTITUTIONS AS PRESCRIBED BY THE COMMI TTEE CONSTITUTED BY THE STATE GOVERNMENT HEADED BY A RETIRED JUDGE O F HIGH COURT. 10. IT ALSO NEEDS TO BE BROUGHT ON RECORD THE EXCES S AMOUNT COLLECTED BY THE ASSESSEE OVER AND ABOVE THE FEES F IXED BY THE COMMITTEE NOMINATED BY THE STATE GOVERNMENT. THIS TRIBUNAL IS OF THE CONSIDERED OPINION THAT THE AMOUNT COLLECTED OV ER AND ABOVE THE FEES PRESCRIBED BY THE COMMITTEE NOMINATED BY T HE STATE GOVERNMENT IS LIABLE FOR TAXATION. SINCE DETAILS A RE NOT AVAILABLE ON RECORD, THE ORDERS OF THE AUTHORITIES BELOW ARE SET ASIDE AND THE ENTIRE ISSUE IS REMITTED BACK TO THE FILE OF THE AS SESSING OFFICER. THE ASSESSING OFFICER SHALL RE-EXAMINE THE MATTER AND T HEREAFTER DECIDE IN ACCORDANCE WITH LAW AS INDICATED ABOVE, AFTER GI VING A REASONABLE OPPORTUNITY TO THE ASSESSEE. 11. IN THE RESULT, THE APPEAL FILED BY THE REVENU E IS ALLOWED FOR STATISTICAL PURPOSES. 9 I.T.A. NO.1008/MDS/13 ORDER PRONOUNCED ON 23 RD MARCH, 2017 AT CHENNAI. SD/- SD/- ( ! . . # $% ) ( . . . ) (D.S. SUNDER SINGH) (N.R.S. 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