ADIT, Hyderabad V. The Hyderabad Public School, Hyderabad

ITA 1474/HYD/2010

• Counselvise Citation: [2011] 140 COUNSELVISE.COM (IT) 53857 (ITAT-HYDERABAD)
• Duration Of Justice: 1 year(s) 1 month(s) 1 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 27-12-2011
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: B
• Assessment Year: 2007-2008
• Appeal Filed On: 26-11-2010
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: B V PRASAD REDDY
• Assessee Lawyers: B SATYANARAYANA MURTHY
• Section: 12A; 10; 11

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD B BENCH, HYDERABAD BEFORE SHRI CHANDRA POOJARI, A.M. & SMT. ASHA VIJAYARAGHAVAN, J.M. ITA NO.1474/HYD/2010 ASSESSMENT YEAR 2007-08 THE ADIT (E) - III, HYDERABAD VS THE HYDERABAD PUBLIC SCHOOL, HYDERABAD (PAN AAATT4938Q) APPELLANT RESPONDENT APPELLANT BY : SHRI B.V. PRASAD REDDY RESPONDENT BY : SHRI B. SATYANARAYANA MURTHY DATE OF HEARING : 12.12.2011 DATE OF PRONOUNCEMENT : 27.12.2011 ORDER PER ASHA VIJAYARAGHAVAN, JM: THIS APPEAL PREFERRED BY THE REVENUE IS DIRECTED AG AINST THE ORDER PASSED BY THE CIT(A) IV, HYDERABAD DATED 15. 9.2010 AND PERTAINS TO THE ASSESSMENT YEAR 2007-08. 2. BRIEF FACTS OF THE ISSUE ARE THAT THE ASSESSING OFFICER NOTICED THAT THE ASSESSEE EDUCATIONAL INSTITUTION HAD ANNUAL REC EIPTS EXCEEDING THE PRESCRIBED LIMIT OF RS.1 CRORE. HOWEVER, IT HA D NOT RECEIVED NECESSARY APPROVAL FROM PRESCRIBED AUTHORITY AS MAN DATED BY SUB CLAUSE (VI) OF SECTION 10(23C) OF THE ACT, 1961. I T WAS CONTENDED BEFORE HIM THAT THE SOCIETY WAS ALREADY REGISTERED U/S 12A AND THEREFORE EXEMPTION U/S 11 SHOULD BE CONSIDERED AS PER THE ACT PROVIDES AN OPTION BETWEEN SECTION 10 & 11. IT WAS ALSO CLAIMED THAT THE ASSESSEE SOCIETY WAS NOT EXISTING SOLELY FOR ED UCATIONAL PURPOSES AS IT HAD OTHER OBJECTS ALSO WHEREAS SECTION 10(23C ) IS APPLICABLE ONLY ITA NO.1474 O F 2010 HYDERABAD PUBLIC SCHOOL SOCIETY, HYD. 2 TO SOCIETIES HAVING EDUCATION AS A SOLE OBJECT. HO WEVER, THE ASSESSING OFFICER DENIED THE ALTERNATIVE CLAIM OF EXEMPTION U /S 11. 3. AGGRIEVED, THE ASSESSEE PREFERRED AN APPEAL BEF ORE THE CIT(A). 4. THE LEARNED COUNSEL FOR THE ASSESSEE SUBMITTED THAT AN IDENTICAL ISSUE HAS BEEN DECIDED BY THE TRIBUNAL IN THE ASSESSEES APPEAL FOR THE ASSESSMENT YEAR 2002-03 AND 2003-04 VIDE ORDER DATED 2.4.2009 IN IT A NO.1198/HYD/2005 AND 1228/HYD/2006 . IT WAS HELD THEREIN THAT THE ASSESSEE WOULD BE ENTITLED EX EMPTION U/S 11 SUBJECT TO FULFILMENT OF THE CONDITIONS MENTIONED I N SECTION 11 TO 13. THE TRIBUNAL ALSO HAS NOTED THAT SINCE THE ASSESSEE HAD OBTAINED APPROVAL U/S 10(23C) ALSO VIDE THE ORDER OF THE CC IT HYDERABAD DATED 13.3.2008 FROM THE ASSESSMENT YEAR 2003-04 ON WARDS, OTHERWISE ALSO THE ISSUE DOES NOT ARISE. 5. THE CIT(A) HELD AS FOLLOWS: THE VIEW TAKEN EARLIER BY THE TRIBUNAL HAS BEEN RE ITERATED BY THEM IN RELATIVELY RECENT DECISION DATED 9.10.2009 IN THE CASE OF AP SOCIETY FOR KNOWLEDGE IN IT A NO.843/H/2009 ALSO . BESIDES, IT IS SEEN THAT HONBLE COCHIN BENCH OF THE TRIBUNA L IN THE CASE OF A1-FAROOK EDUCATIONAL CENTRE VS. ITO (123 ITD 523) (124 TTJ 286) HAVE ALSO ECHOED THE SAME VIEW, APPROVING OF T HE ELIGIBILITY OF AN ASSESSEE FOR ALTERNATIVE CLAIMS U/S 11 OR 10( 23C), EVEN THOUGH SECTION 10(23C) IS MORE APPROPRIATE FOR THE EDUCATIONAL INSTITUTIONS. IN VIEW OF THE DISCUSSIONS, RESPECTF ULLY FOLLOWING THE DECISION OF THE TRIBUNAL, HYDERABAD BENCH, IT IS HE LD THAT THE ASSESSEE WOULD BE ELIGIBLE FOR CLAIM OF EXEMPTION U /S 11 TP 13 OF THE ACT SUBJECT TO THE FULFILMENT OF THE CONDITIONS OF SECTION 11 TO 13 OF THE IT ACT. HOWEVER, SINCE THE ASSESSEE HAS ALREADY RECEIVED APPROVAL U/S 10(23C), IT IS CLEAR THAT THE CLAIM OF THE ITA NO.1474 O F 2010 HYDERABAD PUBLIC SCHOOL SOCIETY, HYD. 3 ASSESSEE WILL BE ALLOWABLE U/S 10(23C), SUBJECT TO THE FULFILMENT OF THE CONDITIONS ATTACHED TO SUCH APPROVAL. BESIDES IN THE CASE OF (I) VASAVI ACADEMY EDUCATION IN IT A NO.1749/H/2009 DATED 4.2.2010, THE TRIBUNAL HAVE FU RTHER OPTED THAT IN VIEW OF THE DECISION OF THE HONBLE A PEX COURT IN THE CASE OF (II) TMA PAI FOUNDATION AND OTHERS VS. STAT E OF KARNATAKA & OTHERS (2002) 8 SCC 481, HAVE HELD THAT INSTITUTI ONS COLLECTING CAPITATION FEES OVER AND ABOVE THE PRESCRIBED FEES FOR ADMISSION OF STUDENTS CANNOT BE CONSTRUED AS CHARITABLE EDUCA TIONAL INSTITUTIONS. THE HONBLE COURT HAS ALSO OPINED TH AT THE FEES COLLECTED OVER AND ABOVE THE PRESCRIBED FEE FOR THE ADMISSION OF STUDENT IS TO BE CONSTRUED AS CAPITATION FEE. THE HONBLE NOTED THAT A SIMILAR VIEW WAS TAKEN BY THE HONBLE APEX C OURT IN THE CASE OF ISLAMIC ACADEMY OF EDUCATION AND OTHER VS. STATE OF KARNATAKA AND OTHERS (2003) 6 SCC 697 ALSO. THEY N OTED THAT A SIMILAR VIEW WAS TAKEN IN THE CASE OF M/S JAMIA NIZ AMIA IN IT A NO.763/H/2007 IN ITA NO.494/H/2007 AND 518/H/2008 A ND SAI SUDHEER EDUCATIONAL SOCIETY, HYDERABAD IT A NO.999/H/2006. THEY HELD THAT IF DONATIONS ARE REC EIVED COMPULSORILY FOR THE ADMISSION OF STUDENTS BY WHATE VER THE NAME IT MAY BE CALLED I.E. DONATION, BUILDING FUND, AUDI TORIUM FUND ETC. OVER AND ABOVE THE PRESCRIBED FEE FROM THE STUDENTS FOR ADMISSION, THE ASSESSEE WOULD NOT BE ENTITLED FOR E XEMPTION U/S 10(23C) OR U/S 11 OF THE ACT. THOUGH IT IS NOTICED THAT IN THE ASSESSEES CASE NO FINDING WITH REGARD TO CHARGING OF DONATION ETC. HAS BEEN MADE B Y THE ASSESSING OFFICER, KEEPING IN VIEW THE OBSERVATIONS OF THE TRIBUNAL IN THE CASES CITED SUPRA THE ASSESSING OFF ICER IS DIRECTED TO VERIFY THIS ASPECT AGAIN WHILE GIVING EFFECT TO THIS ORDER. IN CASE IT IS FOUND THAT BESIDES FULFILLING THE CONDI TIONS ATTACHED TO ITA NO.1474 O F 2010 HYDERABAD PUBLIC SCHOOL SOCIETY, HYD. 4 THE APPROVAL U/S 10(23C) THE ASSESSEE HAS NOT CHARG ED ANY FEES FROM THE STUDENTS OVER AND ABOVE THE PRESCRIBED FEE S, THE ASSESSEE WOULD BE ENTITLED FOR EXEMPTION U/S 10(23C ). THE GROUNDS TAKEN IN THIS APPEAL ARE THEREFORE ALLOWED IN FAVOUR OF THE ASSESSEE, SUBJECT TO SUCH VERIFICATION. 6. AGGRIEVED, THE REVENUE PREFERRED AN APPEAL. 7. WE HEARD BOTH THE PARTIES. WE FIND THAT THE C IT(A) HAS MERELY HELD THAT IN THE CASE OF ASSESSEE SINCE NO FINDING WITH REGARD TO CHARGING OF DONATION HAS BEEN GIVEN BY THE ASSESSIN G OFFICER, THE ASSESSING OFFICER SHALL KEEPING IN VIEW THE OBSERVA TIONS OF THE TRIBUNAL IN THE CASES CITED SUPRA VIZ., (I) VASAVI ACADEMY EDUCATION IN IT A NO.1749/H/2009 DATED 4.2.2010, THE TRIBUNAL HAVE FURTHER OPTED THAT IN VIEW OF THE DECISION OF THE HONBLE A PEX COURT IN THE CASE OF (II) TMA PAI FOUNDATION AND OTHERS VS. STATE OF KARNATAKA & OTHERS (2002) 8 SCC 481, THE ASSESSING OFFICER IS DIRECTED TO VERIFY THIS ASPECT AGAIN WHILE GIVING EFFECT TO HIS ORDER. 8. FURTHER, THE CIT(A) HELD : IN CASE IT IS FOUND THAT BESIDES FULFILLING THE C ONDITIONS ATTACHED TO THE APPROVAL U/S 10(23C) THE ASSESSEE HAS NOT CH ARGED ANY FEES FROM THE STUDENTS OVER AND ABOVE THE PRESCRIBE D FEES, THE ASSESSEE WOULD BE ENTITLED FOR EXEMPTION U/S 10(23C ). THE GROUNDS TAKEN IN THIS APPEAL ARE THEREFORE ALLOWED IN FAVOUR OF THE ASSESSEE, SUBJECT TO SUCH VERIFICATION. 9. WE ARE OF THE OPINION THAT NO GRIEVANCE IS CAUSED TO THE DEPARTMENT, IN AS MUCH AS THE CIT(A) HAS MERELY DIR ECTED THE ASSESSING OFFICER TO VERIFY WHETHER OBSERVATIONS OF THE TRIBUNAL IN THE CASE OF VASAVI ACADEMY HAS BEEN FULFILLED BY THE AS SESSEE AND AFTER SUCH VERIFICATION TO DECIDE THE SAME IN ACCORDANCE WITH LAW. WE FIND ITA NO.1474 O F 2010 HYDERABAD PUBLIC SCHOOL SOCIETY, HYD. 5 NO INFIRMITY IN THE ORDER OF THE CIT(A) IN THIS BEH ALF. ACCORDINGLY THE ORDER OF THE CIT(A) IS CONFIRMED AND THE GROUNDS OF THE REVENUE IN THIS APPEAL ARE REJECTED. 8. IN THE RESULT, THE REVENUE APPEAL IS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT 27.12.2011 SD/- SD/- (CHANDRA POOJARI) ( (ASHA VIJAYA RAGHAVAN) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED THE 27 DECEMBER, 2011 COPY FORWARDED TO: 1. THE ASST. DIRECTOR OF INCOME TAX (E)-III, HYDERABAD 2. THE HYDERABAD PUBLIC SCHOOL SOCIETY, 1-11-87 TO 88 BEGUMPET, HYDERABAD 3. THE CIT(A) IV, HYDERABAD 4. THE CIT, HYDERABAD 5. THE DR, ITAT, HYDERABAD NP/