ADIT, Hyderabad V. Hyderabad Archdiocese Educational Society, Secunderabad

ITA 1033/HYD/2009

• Counselvise Citation: [2011] 134 COUNSELVISE.COM (IT) 9791 (ITAT-HYDERABAD)
• Duration Of Justice: 1 year(s) 4 month(s) 30 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 04-03-2011
• Appeal Filed By: Department
• Order Result: Partly Allowed
• Bench Allotted: A
• Next Hearing Date: 17-02-2011
• Assessment Year: 2006-2007
• Appeal Filed On: 05-10-2009
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: K V N CHARYA
• Assessee Lawyers: BALAJI NAGARAJ
• Section: 11

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD BENCH A , HYDERABAD BEFORE SHRI G.C. GUPTA, VICE PRESIDENT AND SHRI CHANRA POOJARI, ACCOUNTANT MEMBER ITA NO.1033/HYD/2009 : ASSESSMENT YEAR 2006- 07 ASST. DIRECTOR OF INCOME TAX(EXEMPTION)-III, HYDERABAD V/S. HYDERABAD ARCHDIOCESE EDUCATIONAL SOCIETY, HYDERABAD. (PAN AAATH 0869 G) (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI K.V.N.CHARYA RESPONDENT BY : SHRI BALAJI NAGARAJ O R D E R PER G.C.GUPTA, VICE PRESIDENT: THIS APPEAL BY THE REVENUE FOR THE ASSESSMENT YEA R 2006-07 IS DIRECTED AGAINST THE ORDER OF THE COMMIS SIONER OF INCOME- TAX(APPEALS). 2. GROUNDS OF THE REVENUE IN THIS APPEAL READ AS U NDER- 1. THE LEARNED CIT(A)S ORDER IS ERRONEOUS IN LAW AND IN FACTS. 2. THE LD CIT(A) HAS FAILED TO APPRECIATE THAT OBTAINI NG APPROVAL OF THE PRESCRIBED AUTHORITY IS MANDATORY AS PER THE PLAIN MEANING OF THE PROVISIONS. 3. THE LEARNED CIT(A) HAS FAILED TO APPRECIATE THAT SE C.10(23C) AS SUCH IS NOT REPLACEMENT OF SEC.10(22) AND (22A) AS STATED IN THE APPELLATE ORDER BUT ONLY SUB-CLAUSE (IIIAD) AND (IIIAE) ARE REPLACEMENT OF THE ERSTWHILE SEC.10(22) AND SEC .(22A) RESPECTIVELY. ITA NO.1033/H/2009 HYDERABAD ARCHDIOCESE EDUCATIONAL SOCIETY, HYDER ABAD 2 4. THE LEARNED CIT(A) HAS FAILED TO APPRECIATE THAT SU B- CLAUSES(VI) AND (VIA) ARE ENTIRELY NEW PROVISIONS M EANT TO PROVIDE THE MUCH NEEDED MONITORING MECHANISM THAT W AS LACKING IN THE EARLIER PROVISIONS (AS STATED IN CIR CULAR NO.772) 5. THE LEARNED CIT(A) HAS WRONGLY HELD THAT PROVISIONS OF SEC.10(23C)(VIA) AND SEC.11 ARE AVAILABLE TO THE AS SESSEE ALTERNATIVELY. 2. THE LEARNED DEPARTMENTAL REPRESENTATIVE HAS REL IED ON THE ORDER OF THE ASSESSING OFFICER. HE SUBMITTED T HAT THE ISSUE INVOLVED IN THE GROUNDS OF THIS APPEAL IS WITH THE DECISION OF THE HYDERABAD BENCH OF THE TRIBUNAL IN THE CASE OF ASST DIRECTOR OF INCOME TAX (EXEMPTION) V/S. VASAVI ACADEMY OF EDUC ATION, HYDERABAD (ITA NO.1120/HYD./2009 FOR ASSESSMENT YEA R 2005-06) DATED 29 TH JANUARY, 2010. THE LEARNED COUNSEL FOR THE ASSESS EE HAS RELIED ON THE ORDER OF THE CIT(A) AND HAS REFERRED TO THE RELEVANT PORTIONS OF THE APPELLATE ORDER OF THE CIT(A) IN SU PPORT OF HIS SUBMISSIONS. 3. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AND HA VE PERUSED THE ORDERS OF THE ASSTT. DIRECTOR OF INCOME TAX(EXEMPTION) AND THE CIT(A). WE FIND THAT THE RATIO OF THE DECIS ION OF THE HYDERABAD BENCH OF THE TRIBUNAL IN VASAVI ACADEMY O F EDUCATION, HYDERABAD, CITED SUPRA, IS APPLICABLE TO THE FACTS OF THE CASE OF THE ASSESSEE. WE FIND THAT THE CONSTITUTIONAL BENCH O F APEX COURT IN THE CASE OF T.M.A. PAI FOUNDATIONS AND OTHERS V/S. STA TE OF KARNATAKA & OTHERS (2002) 8 SCC 481 EXAMINED THE ISSUE OF COLL ECTION OF CAPITATION FEES FOR THE ADMISSION OF STUDENTS OVER AND ABOVE FEES PRESCRIBED BY THE PRIVATE INSTITUTION AND HELD THAT THE INSTITUTION WHICH ARE COLLECTING CAPITATION FEES FOR ADMISSION OF STUDENTS OVER ITA NO.1033/H/2009 HYDERABAD ARCHDIOCESE EDUCATIONAL SOCIETY, HYDER ABAD 3 AND ABOVE THE FEES PRESCRIBED CANNOT BE CONSTRUED A S CHARITABLE/EDUCATION INSTITUTION. APEX COURT FURTH ER OBSERVED THAT THE FEES COLLECTED OVER AND ABOVE THE PRESCRIBED FEE FO R ADMISSION OF THE STUDENT HAS TO BE CONSTRUCTED AS CAPITATION FEE. T HE APEX COURT, FURTHER OBSERVED THAT THE CONCERNED UNIVERSITY AND REGULATED BODY HAS TO TAKE ACTION FOR WITHDRAWAL OF THE RECOGNITIO N IN CASE IT IS FOUND THAT THE EDUCATIONAL INSTITUTION RECEIVED ANY MONEY OVER AND ABOVE THE FEES PRESCRIBED FOR THE COURSES. SAME VIEW WAS TAKEN BY APEX COURT IN THE CASE OF ISLAMIC ACADEMY OF EDUCATION A ND ANOTHER VS. STATE OF KARNATAKA & ANOTHER (2003) 6 SCC 697. IF THE DONATIONS WERE RECEIVED COMPULSORILY FOR ADMISSION OF STUDENT S, THE ASSESSEE IS NOT ENTITLED FOR EXEMPTION EITHER U/S 10(23C) OR U/ S 11 OF THE ACT. TAKING NOTE OF THIS LEGAL POSITION, THIS TRIBUNAL I N THE CASES OF M/S. VASAVI ACADEMY OF EDUCATION, HYDERABAD, NOTED ABOVE , OBSERVING THAT THE LOWER AUTHORITIES HAVE NOT EXAMINED THE IS SUE OF COLLECTION OF CAPITATION FEES IN THOSE CASES, HELD THE VIEW THAT THE MATTER REQUIRES TO BE EXAMINED BY THE ASSESSING OFFICER WHETHER 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 ALSO TAKEN BY THE HY DERABAD BENCH OF THE TRIBUNAL IN THE CASE OF ADIT V/S. NIRAJ EDUCATI ONAL SOCIETY HYDERABAD (ITA NO.1641/HYD/2008 FOR ASSESSMENT YEAR 2004-05) VIDE ORDER DATED 29.1.2010, WHEREIN THE ISSUE WAS SET ASIDE TO THE FILE OF THE ASSESSING OFFICER WITH A DIRECTION TO R ECONSIDER THE ENTIRE ISSUE IN THE LIGHT OF JUDGMENT OF SUPREME COURT 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). CONSISTENT WITH ITA NO.1033/H/2009 HYDERABAD ARCHDIOCESE EDUCATIONAL SOCIETY, HYDER ABAD 4 THE VIEW TAKEN BY THE HYDERABAD BENCHES OF THIS TR IBUNAL IN SIMILAR MATTERS, WE SET ASIDE THE ORDERS OF THE LOWER AUT HORITIES IN THIS CASE ALSO AND RESTORE THE MATTER TO THE FILE OF THE ASSE SSING OFFICER WITH A DIRECTION TO RECONSIDER THE ISSUES INVOLVED IN THE GROUNDS OF APPEAL OF THE REVENUE IN THE LIGHT OF JUDGMENT OF SUPREME COU RT IN THE CASE OF M/S ISLAMIC ACADEMY OF EDUCATION & ANOTHER V/S. STA TE OF KARNATAKA AND ANOTHER (SUPRA), AND IN THE CASED OF T.M.A. PAI FOUNDATION AND OTHERS VS. STATE OF KARNATAKA AND OTHERS (SUPRA) AN D FIND OUT WHETHER THE ASSESSEE HAS RECEIVED ANY MONEY OVER AN D ABOVE THE FEES PRESCRIBED, AND TO DECIDE THE ISSUE AFRESH AFT ER ALLOWING REASONABLE OPPORTUNITY OF HEARING TO THE ASSESSEE. WE MAKE IT CLEAR THAT THE ASSESSEE SHALL BE ENTITLED TO EXEMPTION UN DER THE ACT, IN CASE IT HAS NOT COLLECTED ANY MONEY BY WHATEVER NAM E IT IS CALLED, I.E. DONATION, BUILDING FUND, ETC., OVER AND ABOVE THE PRESCRIBED FEE FOR ADMISSION OF STUDENTS. 5. IN THE RESULT, APPEAL OF THE REVENUE IS ALLOWE D FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE COURT ON ( CHANDRA POOJARI ) ( G.C. G UPTA) A CCOUNTANT MEMBER V ICE PRESIDENT DATED THE FEBRUARY, 2011 COPY FORWARDED TO: 1. HYDERABAD ARCHDIOCESE EDUCATIONAL SOCIETY, ARCH BISHOPS HOUSE, 9-1-17/1, HYDERABAD. 2. ASST. DIRECTOR OF INCOME TAX(EXEMPTION) II I, HYDERABAD ITA NO.1033/H/2009 HYDERABAD ARCHDIOCESE EDUCATIONAL SOCIETY, HYDER ABAD 5 3. CIT (A) - IV , HYDERABAD. 4. DIRECTOR OF INCOME TAX(EXEMPTION), HYDERABAD 5. THE D.R., ITAT, HYDERABAD. B.V.S 1 . DATE OF DICTATION 1 7 .2 .201 1 2. DATE ON WHICH THE TYPED DRAFT IS PLACED BEFORE THE DICTATING MEMBER 3. DATE ON WHICH THE APPROVED DRAFT COMES TO THE SENIOR P.S. 4. DATE ON WHICH THE FAIR ORDER IS PLACED BEFORE THE DICTATING MEMBER AND OTHER MEMBER 1 8 . 2 .201 1 5. DATE ON WHICH THE FAIR ORDER GOES TO THE SR. P.S. 6. DATE ON WHICH THE FILE GOES TO THE BENCH CLERK. 7. DATE ON WHICH THE FILE GOES TO THE HEAD CLERK 8. DATE ON WHICH THE FILE GOES TO THE ASSISTANT REGISTRAR 9. DATE OF THE DESPATCH OF THE TRIBUNAL ORDER