Asst. DIT(Exemp)-III, Hyderabad V. Telengana Franscillian Society, Secunderabad

ITA 1182/HYD/2012

• Counselvise Citation: [2012] 140 COUNSELVISE.COM (IT) 66442 (ITAT-HYDERABAD)
• Duration Of Justice: 3 month(s) 10 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 16-11-2012
• Appeal Filed By: Department
• Order Result: Partly Allowed
• Bench Allotted: B
• Assessment Year: 2009-2010
• Appeal Filed On: 06-08-2012
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: VIDISHA KALRA
• Assessee Lawyers: K CHENNUBOTLU
• Keywords: Charitable institution
• Section: 12A; 10; 11

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNALHYDERABAD BENCH HYDERABAD BENCH B, HYDERABAD BEFORE SHRI CHANDRA POOJARI, ACCOUNTANT MEMBER AND SMT. ASHA VIJAYARAGHAVAN, JUDICIAL MEMBER ITA NO. 1182/HYD/2012 ASSESSMENT YEAR : 2009-10 ASST. DIRECTOR OF INCOME-TAX (EXEMPTIONS)-III, APPELLANT HYDERABAD. VS. TELENGANA FRANSCILLIAN SOCIETY, RESPONDENT SECUNDERABAD. (PAN AAATT2752L) APPELLANT BY : SMT. VIDISHA KALRA RESPONDENT BY : SHRI K. CHENNU BOTLU DATE OF HEARING : 14/11/2012 DATE OF PRONOUNCEMENT : ORDER PER ASHA VIJAYARAGHAVAN, J.M.: THIS APPEAL PREFERRED BY THE REVENUE IS DIRECTED AGAINST THE ORDER OF CIT-IV, HYDERABAD, FOR THE ASSESSMENT YEAR S 2009-10. 2. BRIEFLY THE FACTS OF THE CASE ARE THAT THE AO DE NIED GRANTING OF EXEMPTION U/S 10(23C)(VI)/11 OF THE IT ACT. 3. ON APPEAL, BEFORE THE CIT(A) THE AR OF THE ASSES SEE SUBMITTED THAT SECTION 10 & 11 ARE NOT MUTUALLY EXCLUSIVE. H E REITERATED THAT AS LONG AS REGISTRATION U/S 12A IS AVAILABLE TO THE ASSESSEE THE CLAIM OF EXEMPTION U/S 11 COULD NOT HAVE BEEN REJECTED AN D THE AO COULD 2 ITA NO. 1182/HYD/2012 TELENGANA FRANSCILLIAN SOCIETY HAVE EXAMINED ONLY THE APPLICABILITY OF SEC. 11. HE REITERATED THE DECISIONS RELIED UPON BEFORE THE AO TO CONTEND THAT EXEMPTION U/S 11 OR 10(23C)(VI) CAN BE ALTERNATIVELY CLAIMED. 4. AFTER CONSIDERING THE SUBMISSIONS OF THE ASSESSE E, THE CIT(A) ELABORATELY DISCUSSED THE ISSUE AT PARAS 6.1 & 6.2 IN HIS ORDER AND HELD THAT MORE RECENTLY THE HONBLE PUNJAB & HARYAN A HIGH COURT IN THE CASE OF CIT VS. MAHASABHA GURUKUL VIDYAPEETH HA RYANA (326 ITR 25) HAVE ALSO OPINED THAT ONCE ALL THE REQUISIT E CONDITIONS FOR EXEMPTION U/S 11 ARE MET, EVEN IF THE CONDITIONS U/ S 10(23C)(VI) HAVE NOT BEEN COMPLIED WITH, THERE WILL BE NO BAR T O SEEK EXEMPTION U/S 1. IN VIEW OF THE ABOVE DISCUSSION AND RESPECTF ULLY FOLLOWING THE DECISION OF THE ITAT, HYDERABAD BENCH, THE CIT(A) H ELD THAT THE ASSESSEE WOULD BE ELIGIBLE FOR CLAIM OF EXEMPTION U /S 11 OF THE ACT, SUBJECT TO THE FULFILLMENT OF THE CONDITIONS OF SEC TION 11 TO 13 OF THE ACT. 5. AGGRIEVED, THE REVENUE IS IN APPEAL BEFORE US AN D HAS RAISED THE FOLLOWING GROUNDS OF APPEAL:- 1. THE ORDER OF THE LEARNED CIT(A) IS ERRONEOUS BOT H ON FACTS AND IN LAW. 2. THE LEARNED CIT(A) ERRED IN HOLDING THAT THE ASS ESSEE IS ELIGIBLE FOR CLAIM U/S 11 IN ABSENCE OF APPROVAL UN DER SUB- CLAUSE (VI) TO SECTION 10(23C) OF THE IT ACT, 1961. 3. THE LEARNED CIT(A) FAILED TO SEE THAT APPROVAL U NDER SUB- CLAUSE (VI) TO THE SECTION 10(23C) IS DISTINCT FROM REGISTRATION U/S 12A OF THE ACT. 4. THE LEARNED CIT(A) OUGHT TO HAVE APPRECIATED THA T SUB- CLAUSE (VI) TO THE SECTION 10(23C) AS INSERTED BY T HE FINANCE ACT, 1998 W.E.F. 01/04/1999 STATES THAT ANY UNIVERS ITY OR EDUCATIONAL INSTITUTION EXISTING SOLELY FOR EDUCATI ONAL PURPOSE AND WHICH MAY BE APPROVED BY THE PRESCRIBED AUTHORI TY. THUS, THE INTENTION OF THE LEGISLATURE IS QUITE CLEAR. 3 ITA NO. 1182/HYD/2012 TELENGANA FRANSCILLIAN SOCIETY 5. THE LEARNED CIT(A) OUGHT TO HAVE APPRECIATED THE FACT THAT OBTAINING APPROVAL OF THE PRESCRIBED AUTHORITY IS M ANDATORY AS PER THE PLAIN MEANING OF SECTION 10(23C)(VI) OF THE IT ACT, 1961 WHEREVER THE AGGREGATE GROSS RECEIPTS OF EDUCA TIONAL INSTITUTIONS ARE OVER AND ABOVE RS. 1 CRORE. 6. THE LEARNED CIT(A) FAILED TO APPRECIATE THAT THE DECISION OF THE APEX COURT IN THE CASE OF CIT VS. BAR COUNCIL O F MAHARASHTRA WAS MADE IN THE YEAR 1981 I.E. PRIOR TO INTRODUCTION OF THE SUB-CLAUSE (VI) TO THE SECTION 10(23C) (INSERTED BY THE FINANCE ACT, 1998 W.E.F. 01/04/199 9). 7. THE LEARNED CIT(A) BY OBSERVING THAT IT IS HELD THAT THE APPELLANT WOULD BE ELIGIBLE FOR CLAIM OF EXEMPTION U/S 11 OF THE ACT, SUBJECT TO THE FULFILLMENT OF THE CONDITIONS O F SECTION 11 TO 13 OF THE ACT, IN PRACTICAL, HAS SET ASIDE THE ASSE SSMENT, WHEREAS HE HAS NO SUCH POWER UNDER THE PRESENT PROV ISIONS OF THE ACT. 6. WE HAVE HEARD THE ARGUMENTS OF BOTH THE PARTIES AND PERUSED THE RECORD AS WELL AS GONE THROUGH THE ORDERS OF TH E AUTHORITIES BELOW. WE FIND THAT THAT THE ISSUE UNDER CONSIDERAT ION IS COVERED BY THE DECISION OF THE COORDINATE BENCH OF ITAT, HYDER ABAD IN THE CASE OF AL-HABEED CHARITABLE TRUST, HYDERABAD IN ITA NO. 2069/HYD/11 FOR AY 2004-05 VIDE ORDER DATED 30/03/2012, WHEREIN IT HAS BEEN HELD AS FOLLOWS: 4. WE HAVE HEARD BOTH THE PARTIES AND PERUSED THE MATERIAL ON RECORD. WE FIND THAT THE MAIN ISSUE INVOLVED IN TH E ABOVE GROUNDS IS COVERED BY THE ORDER OF THE HYDERABAD BENCH A OF THE TRIB UNAL 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 AN D ORDER DATED 17.4.2009 IN ITA NO.1206/HYD/2007 FOR THE ASSESSMEN T YEAR 2004-05, WHEREIN IT WAS HELD THAT IF DONATIONS ARE RECEIVED COMPULSORILY FOR THE ADMISSION OF STUDENTS, BY WHATEVER NAME IT MAY BE C ALLED, I.E. DONATION, BUILDING FUND, AUDITORIUM FUND, ETC. OVER AND ABOVE THE PRESCRIBED FEE, FROM THE STUDENTS, THE ASSESSEE WOULD NOT BE ENTITLED FO R EXEMPTION EITHER UNDER S.10(23C) OR UNDER S.11 OF THE ACT. FURTHER, WE FI ND THAT THE CONSTITUTIONAL BENCH OF APEX COURT IN THE CASE OF T.M.A. PAI FOUND ATIONS AND OTHERS VS. STATE OF KARNATAKA & OTHERS (2002) 8 SCC 481 EXAMIN ED THE ISSUE OF COLLECTION OF CAPITATION FEES FOR THE ADMISSION O F STUDENTS OVER AND ABOVE FEES PRESCRIBED BY THE PRIVATE INSTITUTION AND HELD THAT THE INSTITUTION WHICH ARE COLLECTING CAPITATION FEES FOR ADMISSION OF STU DENTS OVER AND ABOVE THE 4 ITA NO. 1182/HYD/2012 TELENGANA FRANSCILLIAN SOCIETY FEES PRESCRIBED CANNOT BE CONSTRUED AS CHARITABLE/E DUCATION INSTITUTION. APEX COURT FURTHER OBSERVED THAT THE FEES COLLECTED OVER AND ABOVE THE PRESCRIBED FEE FOR ADMISSION OF THE STUDENT HAS TO BE CONSTRUC TED AS CAPITATION FEE. THE APEX COURT, FURTHER OBSERVED THAT THE CONCERNED UNI VERSITY AND REGULATED BODY HAS TO TAKE ACTION FOR WITHDRAWAL OF THE RECOG NITION 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 AND ANOTHER VS. STA TE OF KARNATAKA & ANOTHER (2003) 6 SCC 697. IF THE DONATIONS WERE RE CEIVED COMPULSORILY 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 LOWER A UTHORITIES 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/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 O F ASSESSING OFFICER WITH A DIRECTION TO ASSESSING OFFICER THAT HE SHALL RECONS IDER 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 ANOT HER (SUPRA), AND IN THE CASED OF T.M.A. PAI FOUNDATION AND OTHERS VS. STATE OF KARNATAKA AND OTHERS (SUPRA), AND FIND OUT WHETHER THE ASSESSEE HAS RECE IVED ANY MONEY 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 NO T ENTITLED FOR EXEMPTION EITHER U/S 11 OR U/S 10(23C) IN CASE IT COLLECTED A NY MONEY BY WHATEVER NAME IT IS CALLED I.E., DONATION, BUILDING FUND, AU DITORIUM FUND ETC. ETC., OVER AND ABOVE THE PRESCRIBED FEE FOR ADMISSION OF STUDE NTS. 7. SINCE THE ISSUE UNDER CONSIDERATION IS MATERIALL Y IDENTICAL TO THAT OF THE CASE DECIDED BY THE COORDINATE BENCH I N THE CASE OF AL- HABEEB CHARITABLE TRUST (SUPRA), WE SET ASIDE THE O RDER OF THE CIT(A) AND REMIT THE ISSUE TO THE FILE OF THE AO TO DECIDE THE ISSUE AFRESH IN THE LIGHT OF THE SAID DECISION OF THE COO RDINATE BENCH. 5 ITA NO. 1182/HYD/2012 TELENGANA FRANSCILLIAN SOCIETY 8. IN THE RESULT, APPEAL OF THE REVENUE IS PARTLY A LLOWED FOR STATISTICAL PURPOSES. PRONOUNCED IN THE OPEN COURT ON 16/11/2012. SD/- SD/- (CHANDRA POOJARI) (ASHA VIJAY ARAGHAVAN) ACCOUNTANT MEMBER JUDICIAL MEMBER HYDERABAD, DATED: 16 TH NOVEMBER, 2012 KV COPY TO:- 1) ADIT (EXEMPTION)-III, ROOM NO. 307A, 3 RD FLOOR, AAYAKAR BHAVAN, BASHEERBAGH, HYDERABAD 500 004. 2) TELEGANA FRANSCILLIAN SOCIETY, 12-1-342/7/27, LOURD U NIVAS, SHANTI NAGAR, NORTH LALAGUDA, SECUNDERABAD. 3) THE CIT(A)-IV, HYDERABAD 4) DIT(EXEMPTIONS), HYDERABAD 5) THE DEPARTMENTAL REPRESENTATIVE, I.T.A.T., HYD ERABAD.