Asst. Director of Income Tax (Exemption)-I, Hyderabad V. Sri Chaitanya Educational Trust, Hyderabad

ITA 1303/HYD/2013

• Counselvise Citation: [2014] 120 COUNSELVISE.COM (IT) 6438 (ITAT-HYDERABAD)
• Duration Of Justice: 7 month(s) 19 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 16-05-2014
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Assessment Year: 2009-2010
• Appeal Filed On: 27-09-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: K HARITA
• Assessee Lawyers: P MURALIKRISHNA
• Section: 12A; 12AA; 11

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD BENCH A', HYDERABAD BEFORE SHRI B. RAMAKOTAIAH, ACCOUNTANT MEMBER AND SHRI SAKTIJIT DEY, JUDICIAL MEMBER I.T.A. NOS. 1303 & 1326/HYD/2013 A.YS. : 2009-10 & 2010-11 ASST. DIRECTOR OF INCOME- TAX (EXEMPTION) I, HYDERABAD. VS. SRI CHAITANYA EDUCATIONAL TRUST, HYDERABAD PAN AAHTS5123R APPELLANT RESPONDENT REVENUE BY: SMT. K. HARITA ASSESSEE BY: SHRI P. MURALI KRISHNA DATE OF HEARING: 12.05.2014 DATE OF PRONOUNCEMENT: 16.05.2014 O R D E R PER SAKTIJIT DEY, JM: THESE TWO APPEALS FILED BY THE DEPARTMENT ARE AGAI NST A COMMON ORDER OF THE CIT(A)-IV, HYDERABAD DATED 24/0 7/2013 FOR THE ASSESSMENT YEARS 2009-10 & 2010-11. SINCE COMMON IS SUES ARE INVOLVED IN THESE APPEALS, THE SAME WERE CLUBBED AN D HEARD TOGETHER AND THEREFORE A COMMON ORDER IS PASSED FOR THE SAKE OF CONVENIENCE. 2. THE DEPARTMENT IS AGGRIEVED BY THE ORDER OF THE CIT(A) IN HOLDING THAT EVEN IN ABSENCE OF APPROVAL U/S 10(23C ) THE ASSESSEE SOCIETY BEING REGISTERED U/S 12A OF THE ACT CAN CLA IM EXEMPTION U/S 11 OF THE ACT AND FURTHER DIRECTING THE ASSESSING OFFICER TO ALLOW EXEMPTION TO THE ASSESSEE U/S 11 IF THE ASSESSEE HA S NOT CHARGED ANY MONEY BY WHATEVER NAME IT IS CALLED I.E. DONATI ON, BUILDING FUND, AUDITORIUM FEE ETC., OVER AND ABOVE THE PRESCRIBED FEES FOR ADMISSION OF THE STUDENTS. 3. BRIEFLY THE FACTS ARE, THE ASSESSEE A SOCIETY IS REGISTERED U/S 12A OF THE ACT. FOR THE AYS UNDER DISPUTE, THE ASSE SSEE FILED ITS I.T.A. NOS. 1303 & 1326//HYD/2013 SRI CHAITANYA EDUCATIONAL TRUST, HYDERABAD. 2 RETURN OF INCOME FOR THE AFORESAID TWO ASSESSMENT YEARS DECLARING NIL INCOME AFTER CLAIMING EXEMPTION U/S 11 OF THE ACT. DURING THE ASSESSMENT PROCEEDINGS, THE ASSESSING OFFICER NOTIC ING THAT THE ASSESSEE HAS NOT OBTAINED APPROVAL U/S 10(23C) AND SINCE THE ASSESSEE IS RUNNING AN EDUCATIONAL INSTITUTION, NO EXEMPTION CAN BE GRANTED TO THE ASSESSEE. ACCORDINGLY, HE PROPOSED T O DISALLOW THE EXEMPTION CLAIMED BY THE ASSESSEE. IN RESPONSE TO T HE QUERY MADE BY THE ASSESSING OFFICER, THE ASSESSEE CONTENDED TH AT EVEN IN ABSENCE OF APPROVAL U/S 10(23C) OF THE ACT, THE ASS ESSEE WILL BE ENTITLED FOR EXEMPTION U/S 11 OF THE ACT, AS IT HAS FULFILLED ALL OTHER CONDITIONS PRESCRIBED THEREIN. THE ASSESSING OFFICE R THOUGH ACCEPTED THE FACT THAT THE ASSESSEE HAS BEEN REGISTERED U/S 12A OF THE ACT, BUT, SHE REFUSED EXEMPTION U/S 11 OF THE ACT TO THE ASSE SSEE ON THE GROUND THAT THE ASSESSEE BEING AN EDUCATIONAL INSTI TUTION CAN ONLY AVAIL EXCEPTION U/S 10(23C)(VI). AS THE ASSESSEE HA S NOT OBTAINED APPROVAL U/S 10(23C)(VI), IT IS NOT ELIGIBLE FOR EX EMPTION AND ACCORDINGLY COMPLETED THE ASSESSMENT. BEING AGGRIEV ED OF THE ASSESSMENT ORDER SO PASSED FOR THE AFORESAID ASSES SMENT YEARS, THE ASSESSEE PREFERRED APPEAL BEFORE THE CIT(A). 4. THE CIT(A) AFTER CONSIDERING THE SUBMISSIONS OF THE ASSESSEE ACCEPTED THE CLAIM THAT EVEN IF THE ASSESSEE HAS NO T OBTAINED APPROVAL U/S 10(23C)(VI) OF THE ACT, BUT, STILL THE ASSESSEE BEING REGISTERED U/S 12A OF THE ACT, WILL BE ELIGIBLE FOR EXEMPTION U/S 11 OF THE ACT SUBJECT TO SATISFACTION OF THE CONDITIONS LAID DOWN U/S 11 TO 13 OF THE ACT. THE OBSERVATIONS MADE BY THE CIT(A) ARE EXTRACTED HEREUNDER: 3.0 THE APPELLANT IS ADMITTEDLY REGISTERED UNDER' S EC. 12AA BUT HAD NOT BEEN NOTIFIED U/S. 10(23C) OF THE ACT. THE ALLOWABILITY OF THE ALTERNATIVE CLAIM U/S 11 UNDER SIMILAR CIRCUMSTANCES IS SUPPORTED BY THE FOLLOWING JUDICIA L PRONOUNCEMENTS: 1. CIT VS BAR COUNCIL OF MAHARASTRA [1981] 130 ITR 28(SC) I.T.A. NOS. 1303 & 1326//HYD/2013 SRI CHAITANYA EDUCATIONAL TRUST, HYDERABAD. 3 2. AMERICAN HOTEL AND LODGING ASSOCIATION/ EDUCATIONAL INSTITUTE VS CBDT (2008) (170 TAXMAN 306) (SC) 3. RAJASTHANI SIKSHA SAMITHI (ITA NO 80 & 81/HYD/2008) 4. ST. THERESA'S CONVENT SOCIETY, .HYDERABAD (ITA NO. 844/HYD/08) 5. ADIT(EXEMPTIONS) VS LOUIS EDUCATIONAL SOCIETY, (ITA NO 1456/HYD/2008, DT 26.12.2008) 6. AP SOCIETY FOR KNOWLEDGE (ITA NO. 843/HYD/09, DT 09.10.2009. 4.0 IT WAS HELD IN THESE CASES THAT ONCE ALL THE RE QUISITE CONDITIONS FOR EXEMPTION UNDER SEC. 11 WERE MET, EVEN IF THE CONDITIONS UNDER SEC. 10(23C)(VI) HAD NOT BEEN COMPLIED WITH, THERE WOULD BE NO BAR TO SEEK EXEMPTION UNDER SEC. 11. 5.0 IT IS FURTHER SEEN THAT THE JURISDICTIONAL ITAT HAS HELD THAT IF DONATIONS ARE RECEIVED COMPULSORILY FOR THE ADMISSION OF STUDENTS, BY WHATEVER NAME CALLED, I.E . DONATION, BUILDING FUND, AUDITORIUM FUND, ETC, OVER AND ABOVE THE PRESCRIBED FEE, FROM THE STUDENTS, THE AS SESSEE WOULD NOT BE ENTITLED FOR EXEMPTION U'/S 10(23C) OR U/S 11. THIS VIEW HAS REPEATEDLY BEEN EXPRESSED BY THE ITAT AS IN THE FOLLOWING CASES: 1. VASAVI ACADEMY OF EDUCATION (ITA NO. 1133/HYD/2006, DATED 15.4.2009) 2. JAMIA NIZAMIA (ITA NO. 763/HYD/2007, DATED 30.6.2008) 3. INTERNATIONAL EDUCATIONAL ACADEMY (ITA NO. 494/HYD/2007) 4. SRI VENKATA SAI EDUCATIONAL SOCIETY (ITA NO. 1440/HYD/2011, DATED 9.4.2012) 3.5 FOLLOWING THE ABOVE DECISIONS OF THE JURISDICTI ONAL ITAT, IT IS HELD THAT IF THE ASSESSING OFFICER HAS FOUND THAT BESIDES FULFILLING OTHER PREREQUISITES FOR EXEMPTIO N U/S. 11, AS STIPULATED IN SECTIONS 11 TO 13 OF THE ACT THE A PPELLANT DID NOT CHARGE ANY MONEY, BY WHATEVER NAME IT IS CA LLED, I.T.A. NOS. 1303 & 1326//HYD/2013 SRI CHAITANYA EDUCATIONAL TRUST, HYDERABAD. 4 I.E. DONATION, BUILDING FUND, AUDITORIUM FEE ETC., OVER AND ABOVE THE PRESCRIBED FEE FOR THE ADMISSION OF THE, STUDEN T, THE APPELLANT WOULD BE ENTITLED FOR EXEMPTION U/S. 11, EVEN IF THE, NOTIFICATION U/S. 10(23C) OF THE ACT HAS NO T BEEN OBTAINED BY IT. THE APPEAL IS, THEREFORE, DECIDED IN FAVOUR OF THE APPELLANT ON THIS ISSUE, SUBJECT TO VERIFICATION OF FULFILMENT OF THE ABOVE CONDITIONS. 5. WE HAVE HEARD THE SUBMISSIONS OF THE PARTIES AND PERUSED THE MATERIALS ON RECORD. IT IS NOT DISPUTED THAT THE AS SESSEE IS REGISTERED U/S 12A OF THE ACT. THE REASON FOR WHICH THE ASSESS ING OFFICER HAS REFUSED EXEMPTION U/S 11 OF THE ACT IS, AS THE ASSE SSEE IS RUNNING AN EDUCATIONAL INSTITUTION IT HAS TO GET APPROVAL U/S 10(23C)(VI) OF THE ACT. HOWEVER, IN OUR VIEW, THE ASSESSING OFFICER IS NOT CORRECT IN DENYING EXEMPTION TO THE ASSESSEE ON THAT GROUND AL ONE. IT IS WELL SETTLED BY NUMBER OF DECISIONS OF THE ITAT, HYDERAB AD BENCHES THAT EVEN IN ABSENCE OF APPROVAL U/S 10(23C)(VI) OF THE ACT, THE ASSESSEE CAN MAKE AN ALTERNATIVE CLAIM OF EXEMPTION U/S 11 O F THE ACT IF, OTHERWISE, IT SATISFIES THE CONDITIONS LAID DOWN TH EREIN. THEREFORE, THE CIT(A)S ORDER BEING IN TUNE WITH THE CONSISTENT VI EW OF THIS TRIBUNAL, WE DO NOT FIND ANY INFIRMITY IN THE SAME. SO FAR AS THE OTHER DIRECTION OF THE CIT(A) TO THE ASSESSING OFFICER TO VERIFY AN D ALLOW EXEMPTION U/S 11 OF THE ACT, IF THE ASSESSEE HAS NOT COLLECT ED ANY MONEY BY WHATEVER NAME CALLED OVER AND ABOVE THE PRESCRIBED FEES FOR ADMISSION OF THE STUDENT, THE SAME IS ALSO IN TERMS WITH THE RATIO LAID DOWN BY THE ITAT, HYDERABAD BENCHES IN THE DECISION S REFERRED TO BY THE LEARNED CIT(A). MOREOVER, IT IS ALSO BROUGHT TO OUR NOTICE DURING THE HEARING OF THESE APPEALS BY THE LEARNED AR THAT FOR SUBSEQUENT ASSESSMENT YEAR 2011-12, THE AO HIMSELF HAS ALLOWED EXEMPTION U/S 11 OF THE ACT, TO THE ASSESSEE. A COPY OF THE SAID ASSESSMENT ORDER WAS ALSO SUBMITTED FOR OUR PERUSAL. THEREFORE, WHEN THE ASSESSING OFFICER HIMSELF HAS GRANTED EXEMPTION U/S 11 TO THE ASSESSEE IN AY 2011-12, WE DO NOT FIND ANY REASON TO INTERFERE WIT H THE ORDER PASSED BY THE LD. CIT(A), WHICH IN OUR VIEW IS JUST AND PR OPER. ACCORDINGLY, WE DISMISS THE GROUNDS RAISED BY THE DEPARTMENT. I.T.A. NOS. 1303 & 1326//HYD/2013 SRI CHAITANYA EDUCATIONAL TRUST, HYDERABAD. 5 7. IN THE RESULT, BOTH THE APPEALS FILED BY THE REV ENUE ARE DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 16/05/20 14. SD/ - (B. RAMAKOTAIAH) ACCOUNTANT MEMBER SD/ - (SAKTIJIT DEY) JUDICIAL MEMBER HYDERABAD, DATED 16 TH MAY, 2014 KV COPY FORWARDED TO: 1. ASST. DIRECTOR OF INCOME-TAX (E)-I, 3 RD FLOOR, AAYAKAR BHAVAN, BASHEERBAGH, HYDERABAD 500 004. 2. SRI CHAITANYA EDUCATIONAL TRUST, PLOT NO. 304, K ASETTY HEIGHTS, AYYAPPA SOCIETY, MADHAPUR, HYDERABAD. 3. THE CIT(A)-IV, HYDERABAD. 4. THE DIT(E), HYDERABAD 5. THE DR, ITAT, HYDERABAD