M/s International School of Hyderabad, Hyderabad V. Dy.DIT(Exemptions)-II, Hyderabad, Hyderabad

ITA 1715/HYD/2014

• Counselvise Citation: [2015] 140 COUNSELVISE.COM (IT) 91632 (ITAT-HYDERABAD)
• Duration Of Justice: 5 month(s) 28 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 08-05-2015
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Next Hearing Date: 27-04-2015
• Assessment Year: 2011-2012
• Appeal Filed On: 10-11-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: RAMAKRISHNA BANDI
• Assessee Lawyers: S RAGHUNATHAN
• Keywords: Opportunity of being heard; Competent authority
• Section: 12A; 12AA; 2; 11

Judgement Text

ITA NO.1715 OF 2014 INTERNATIONAL SCHOOL OF HYDERAB AD PAGE 1 OF 14 IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD A BENCH, HYDERABAD BEFORE SHRI P.M. JAGTAP, ACCOUNTANT MEMBER & SHRI SAKTIJIT DEY, JUDICIAL MEMBER ITA NO.1715/HYD/2014 (ASSESSMENT YEAR: 2011-12) M/S INTERNATIONAL SCHOOL OF HYDERABAD, MEDAK DISTRICT PAN- AAABI 0034 J VS. DY. DIRECTOR OF INCOME TAX (EXEMPTIONS)-II HYDERABAD (APPELLANT) (RESPONDENT) FOR ASSESSEE : SHRI S. RAGHUNATHAN FOR REVENUE : SHRI RAMAKRISHNA BANDI, DR DATE OF HEARING : 27.04.2015 DATE OF PRON OUNCEMENT : 08 .0 5 .2015 O R D E R PER SAKTIJIT DEY, J.M. THIS IS AN APPEAL BY THE ASSESSEE AGAINST THE ORDE R DATED 27.08.2014 PASSED BY THE LD CIT (A)-IV HYDERABAD FO R THE A.Y 2011-12. 2. THOUGH, THE ASSESSEE HAS RAISED AS MANY AS EIGHT GROUNDS, AS PER THE REVISED GROUNDS OF APPEAL, THE CORE ISSUE IS WITH REGARD TO THE DENIAL OF EXEMPTION U/S 11 OF TH E I.T. ACT. 3. BRIEFLY, THE FACTS ARE THE ASSESSEE A SOCIETY IS SPONSORED AND MANAGED BY THE INTERNATIONAL CROPS RESEARCH INS TITUTE FOR THE SEMI-ARID TROPICS (ICRISAT). THE ASSESSEE CLA IMING ITSELF TO BE A NON PROFIT EDUCATIONAL INSTITUTION APPLIED FOR REGISTRATION ITA NO.1715 OF 2014 INTERNATIONAL SCHOOL OF HYDERAB AD PAGE 2 OF 14 U/S 12A OF THE ACT AND REGISTRATION WAS ALSO GRANTE D TO THE ASSESSEE U/S 12AA OF THE ACT W.E.F. 1.4.2004. FOR T HE A.Y UNDER CONSIDERATION THE ASSESSEE FILED ITS RETURN OF INCO ME ON 29.09.2011 DECLARING TOTAL INCOME AT NIL AFTER CLAI MING EXEMPTION U/S 11 OF THE ACT. IN THE COURSE OF THE A SSESSMENT PROCEEDINGS, THE AO WHILE VERIFYING ASSESSEES CLAI M OF EXEMPTION U/S 11 OF THE ACT, CALLED UPON THE ASSESS EE TO FURNISH VARIOUS INFORMATIONS INCLUDING THE BOOKS OF ACCOUNT S. IN RESPONSE TO QUERY RAISED BY THE AO, IT WAS SUBMITTE D BY THE ASSESSEE THAT THE DEPARTMENT OF AGRICULTURAL RESEAR CH & EDUCATION (DARE), MINISTRY OF AGRICULTURE, GOVT. OF INDIA VIDE ITS LETTER IN DO NO.12-35/80-IC-I DATED 13 FEBRUARY, 19 81 HAS APPROVED THE PROPOSAL OF ICRISAT FOR ESTABLISHING A N INTERNATIONAL SCHOOL TO CATER TO THE NEEDS OF THE C HILDREN OF THE INTERNATIONALLY RECRUITED STAFF OF THE INSTITUTE SU BJECT TO FULFILLING CERTAIN TERMS AND CONDITIONS. SUBSEQUENTLY, THE MIN ISTRY OF EXTERNAL AFFAIRS (MEA) VIDE LETTER NO.DII/451/80(16 /38) DATED 13.3.2003 HAS ALSO ACCORDED APPROVAL TO ICRISAT WHE REIN IT HAS AMENDED CERTAIN CONDITIONS SPECIFICALLY DECLARING T HAT THE STUDENTS ADMITTED BY THE SCHOOL SHOULD HAVE COME FR OM AN INTERNATIONAL/BRITISH SYSTEM OF EDUCATION AND HAS T O RETURN TO THE INTERNATIONAL/BRITISH SYSTEM OF EDUCATION. AO ON GOING THROUGH THE APPROVAL GRANTED BY THE DARE AND MEA NO TED THAT THE INITIAL ADMISSION TO THE ASSESSEES INTERNATION AL SCHOOL IS ITA NO.1715 OF 2014 INTERNATIONAL SCHOOL OF HYDERAB AD PAGE 3 OF 14 RESTRICTED TO THE CHILDREN OF NON INDIAN MEMBERS OF THE ICRISAT. IN OTHER WORDS, EVEN THE STAFF OF THE ICRISAT WHO A RE OF INDIAN NATIONALITY WERE NOT PERMITTED TO ADMIT THEIR CHILD REN IN THE ASSESSEES SCHOOL. HOWEVER, SUBSEQUENTLY ON THE REQ UEST OF ICRISAT, ON BEHALF OF THE ASSESSEES SCHOOL, CONDIT IONS WERE RELAXED BY THE GOVT. OF INDIA BY PERMITTING THE ASS ESSEE TO ENROLL THE CHILDREN OF EMPLOYEES OF INDIAN NATIONALITY WHO WILL STAY FOR A BRIEF PERIOD OF 2 TO 3 YEARS AND HAVE COME FROM A N INTERNATIONAL/BRITISH SYSTEM OF EDUCATION. FURTHER CONDITION WAS IMPOSED RESTRICTING THE NUMBER OF SUCH STUDENTS TO 5 STUDENTS PER CLASS PER ACADEMIC YEAR. ON VERIFYING THE DETAILS SUBMITTED BY THE ASSESSEE THE AO NOTED THAT THE ASS ESSEE HAS ADMITTED MORE THAN 5 STUDENTS OF INDIAN NATIONALITY IN EACH CLASS. EVEN, THE STUDENTS ARE NOT THE WARDS OF INTE RNATIONALLY RECRUITED STAFF OF INDIAN NATIONALITY OF THE ICRISA T. HE OBSERVED THAT EVEN THE OTHER FOREIGN STUDENTS WHO ARE ADMITT ED IN VARIOUS CLASSES OF ASSESSEES SCHOOL ARE NOT CHILDREN OF IN TERNATIONALY RECRUITED STAFF OF ICRISAT. THUS, THE AO WAS OF THE VIEW THAT THE PROCESS OF ADMISSION ADOPTED BY THE ASSESSEE IS IN CLEAR VIOLATION OF THE TERMS AND CONDITIONS STIPULATED BY THE MEA. THE AO FURTHER OBSERVED THAT THE ASSESSEE IN THE MATTER OF CONSTRUCTION OF SCHOOL BUILDING AND ACQUIRING OF PR OPERTY OF THE INSTITUTION HAS VIOLATED THE TERMS AND CONDITIONS O F APPROVAL. FURTHER ON VERIFICATION OF THE ACCOUNTS OF THE ASSE SSEE, AO NOTED ITA NO.1715 OF 2014 INTERNATIONAL SCHOOL OF HYDERAB AD PAGE 4 OF 14 THAT THE ASSESSEE HAS COLLECTED CAPITAL FEE OF RS.1 .75 LAKHS PER STUDENT AND THE TOTAL CAPITAL FEE COLLECTED DURING THE FINANCIAL YEAR 2010-11 AMOUNTED TO RS.1,56,87,500. FROM THE AFORESAID FACTS, THE AO OPINED THAT THE COLLECTION OF LARGE S UMS OF MONEY FOR ADMISSION OF STUDENTS IN THE SCHOOL PROVES THAT THE INSTITUTION DOES NOT EXIST SOLELY FOR EDUCATIONAL P URPOSES, BUT INSTEAD FOR THE PURPOSE OF PROFIT. ACCORDINGLY THE AO CALLED UPON THE ASSESSEE TO EXPLAIN WHY THE AMOUNT OF CAPITAL F EE SHOULD NOT BE BROUGHT TO TAX BY DENYING EXEMPTION U/S 11 OF TH E I.T. ACT. THOUGH THE ASSESSEE SUBMITED A WRITTEN NOTE STRONGL Y OBJECTING TO THE PROPOSED DISALLOWANCE OF EXEMPTION U/S 11 OF THE I.T. ACT, BUT THE AO REFUSED TO ACCEPT THE CONTENTIONS OF THE ASSESSEE STATING THE FOLLOWING REASONS: A) THE ASSESSEE, INTERNATIONAL SCHOOL OF HYDERABAD HAS NOT BEEN GRANTED ANY IMMUNITY OR PRIVILEGES EXTENDED AS IN THE CASE OF ICRISAT. B) IT HAS TO ABIDE BY THE LAW OF THE LAND. C) IT IS CLEAR FROM THE G.OS ISSUED FROM TIME TO TIME BY THE MINISTRIES THAT GRANTING APPROVAL FOR ESTABLISHING SCHOOL FOR CATERING THE NEEDS OF INTERNATIONALLY RECRUITED STAFF IS SUBJECT TO CERTA IN TERMS AND CONDITIONS. D) THE ADMISSION TO THE SCHOOL WILL BE ONLY TO THE CHILDREN OF NON-INDIAN MEMBERS OF THE ICRISAT. THE SCHOOL SHALL NOT CARRY ON ITS ROLLS STUDENTS OF INDIAN NATIONALITY. HOWEVER, ON BEHALF OF INTERNATIONAL SCHOOL OF HYDERABAD THE ICRISAT APPEALED TO THE GOVT. OF INDIA TO ALLOW THE ADMISSION OF CHILDREN OF INDIAN NATIONALS OF THE ICRISAT TO THE SCHOOL. THE SAME IS ACCORDED SUBJECT TO FULFILLING OF CERTAIN CONDITIONS, WHICH WERE NOT ADHERED TO BY THE ASSESSEE. E) ON VERIFICATION OF THE DETAILS, IT IS SEEN THAT THE RE ARE 254 STUDENTS STUDYING IN THE SCHOOL, OUT OF ITA NO.1715 OF 2014 INTERNATIONAL SCHOOL OF HYDERAB AD PAGE 5 OF 14 WHICH ONLY 10 STUDENTS ARE WARDS OF EMPLOYEES OF ICRISAT. THESE 10 STUDENTS INCLUDE FOREIGN AND INDIAN NATIONALS. THE REST OF THE STUDENTS ARE NOT THE CHILDREN OF EMPLOYEES OF ICRISAT. THOUGH THEY ARE EITHER FOREIGN OR INDIAN NATIONALS, THE GOS ISSUED BY THE GOVT. OF INDIA FROM TIME TO TIME ARE PREVENTING THEM FROM ENROLLING AS STUDENTS IN THE SCHOOL. F) THE ASSESSEE SOCIETY HAS OBTAINED REGISTRATION U/S. 12AA OF THE I.T.ACT. G) GRANTING OF REGISTRATION U/S 12A DOES NOT GRANT THE SOCIETY A BLANKET EXEMPTION TO THE ASSESSEES. H) IT IS CLEAR FROM THE ACT AND ALSO FROM THE VARIOUS JUDICIAL DECISIONS THAT IT IS THE ASSESSING OFFICER WHO WILL EXAMINE THE AFFAIRS OF THE SOCIETY YEAR AFTER YEAR AND TO FIND OUT THAT WHETHER THE ASSESSEE HAS VIOLATED ANY PROVISIONS OF SECTION 11 TO 13 OF THE I.T.ACT OR NOT. I) FOLLOWING THE JUDGMENT OF SUPREME COURT IN THE CASE OF M/S. ISLAMIC ACADEMY OF EDUCATION & ANOTHER VS. STATE OF KARNATAKA AND ANOTHER AND IN THE CASE OF T.M.A.PAI FOUNDATION AND OTHERS VS. STATE OF KARN'ATAKA AND OTHERS, THE HON'BLE ITAT ALSO MADE IT CLEAR IN UMPTEEN NUMBER OF CASES THAT THE ASSESSEE IS NOT ENTITLED FOR EXEMPTION': U/S 11 IN CASE IT COLLECTED ANY MONEY BY WHATEVER NAME IT IS CALLED I.E., DONATION, BUILDING FUND, AUDITORIUM FUND ETC., OVER AND ABOVE THE PRESCRIBED FEE FOR ADMISSION OF STUDENTS. 4. THUS ON THE BASIS OF THE AFORESAID REASONING THE AO CONCLUDED THAT IN VIEW OF THE RATIO LAID DOWN BY TH E HON'BLE SUPREME COURT IN THE CAE OF TMA PAI FOUNDATION & OT HERS VS. STATE OF KARNATAKA AND OTHERS, EXEMPTION U/S 10(23C ) AND U/S 11 IS AVAILABLE TO THOSE COLLEGES/INSTITUTIONS WHO ARE SOLELY RUN FOR EDUCATIONAL/PHILANTHROPIC PURPOSES AND NOT FOR THE PURPOSE OF PROFIT. HE CONCLUDED THAT AS THE ASSESSEE HAS CH ARGED CAPITATION FEE OF RS.1.75 LAKHS PER STUDENT, IT IS NOT ENTITLED FOR ITA NO.1715 OF 2014 INTERNATIONAL SCHOOL OF HYDERAB AD PAGE 6 OF 14 EXEMPTION U/S 11 OF THE ACT AND ACCORDINGLY TREATED THE INCOME OVER EXPENDITURE OF RS.1,22,98,693 AS PER THE INCOM E AND EXPENDITURE ACCOUNT AS INCOME OF THE ASSESSEE DURIN G THE RELEVANT YEAR. FURTHER AO ALSO DISALLOWED THE DEPRE CIATION CLAIMED OF RS.18,25,570. IN ADDITION TO THE ABOVE, THE AO ALSO TREATED THE ENTIRE CAPITAL FEE COLLECTED DURING THE YEAR AMOUNTING TO RS.1,56,87,500 AS INCOME OF THE ASSESS EE. THUS THE TOTAL INCOME WAS DETERMINED AT RS.4,52,87,684. 5. BEING AGGRIEVED BY THE ASSESSMENT ORDER SO PASSE D, ASSESSEE PREFERRED AN APPEAL BEFORE THE LD CIT (A). IN COURSE OF HEARING OF APPEAL BEFORE THE FIRST APPELLATE AUTHOR ITY ASSESSEE ADVANCED ELABORATE ARGUMENTS CONTESTING REASONINGS OF THE AO ON WHICH HE DENIED EXEMPTION TO THE ASSESSEE U/S 11 OF THE I.T. ACT. THE LD CIT (A) AFTER CONSIDERING THE SUBMISSIO NS OF THE ASSESSEE IN THE LIGHT OF THE MATERIAL AVAILABLE ON RECORD, DID NOT FIND ANY OF THE OBJECTIONS OF THE AO FOR DENIAL OF EXEMPTION U/S 11 OF THE ACT SUSTAINABLE, EXCEPT THE ALLEGATIONS O F THE AO THAT THE ASSESSEE HAS COLLECTED CAPITATION FEE OF RS.1. 75 LAKHS PER YEAR FROM EACH STUDENT. THE LD CIT (A) RELYING UPON SOME DECISIONS OF THE ITAT OBSERVED THAT IF DONATIONS AR E RECEIVED COMPULSORILY FROM STUDENTS BY WHATEVER NAME CALLED, VIZ., DONATIONS/ BUILDING FUND/AUDITORUM FUND ETC. OVER A ND ABOVE THE PRESCRIBED FEE FROM THE STUDENT, THE ASSESSEE W OULD NOT BE ITA NO.1715 OF 2014 INTERNATIONAL SCHOOL OF HYDERAB AD PAGE 7 OF 14 ENTITLED FOR EXEMPTION U/S 10(23C) OR U/S 11. ACCOR DINGLY, SHE SUSTAINED THE DISALLOWANCE OF EXEMPTION CLAIMED BY THE ASSESSEE U/S 11 OF THE ACT. 6. THE LD AR BEFORE THIS FORUM APART FROM MAKING OR AL SUBMISSIONS HAS ALSO FILED A DETAILED WRITTEN SUBMI SSION. THE SUM AND SUBSTANCE OF THE ARGUMENT OF THE LD AR IS T O THE EFFECT THAT THERE BEING NO FEE PRESCRIBED BY ANY COMPETENT AUTHORITY AS FAR AS THE ASSESSEE INSTITUTION IS CONCERNED, THE D EPARTMENTAL AUTHORITIES COULD NOT HAVE COME TO A CONCLUSION THA T THE ASSESSEE HAS COLLECTED CAPITATION FEE OVER AND ABOV E THE PRESCRIBED FEE. THE LD AR REFERRING TO THE ANDHRA P RADESH EDUCATIONAL INSTITUTION REGULATION OF ADMISSION AND PROHIBITION OF CAPITATION FEE ACT, 1983 SUBMITTED THAT AS PER S ECTION 2(B) OF THE SAID ACT, CAPITATION FEE MEANS ANY AMOUNT COLEL CTED IN EXCESS OF THE FEE PRESCRIBED U/S 7. REFERRING TO SE CTION 7 OF THE SAID ACT, THE LD AR SUBMITTED THAT AS PER THE SAID PROVISIONS, THE GOVERNMENT BY WAY OF NOTIFICATION, REGULATED TH E TUTION FEE OR ANY OTHER FEE THAT MAY BE LEVIED AND COLLECTED F OR IN ANY OF THE EDUCATIONAL INSTITUTIONS IN RESPECT OF EACH CLA SS OF STUDENT. FURTHER AS PER THE SAID PROVISIONS, NO EDUCATIONAL INSTITUTION SHALL COLLECT ANY FEE IN EXCESS OF THE FEE NOTIFIED BY THE GOVT. IT WAS SUBMITTED BY THE ASSESSEE THAT THE CHARTER OF T HE INSTITUTION PRESCRIBES THAT IT IS NOT BOUND BY THE INDIAN EDUCA TION ITA NO.1715 OF 2014 INTERNATIONAL SCHOOL OF HYDERAB AD PAGE 8 OF 14 SYLLABUS. FURTHER, IT IT NOT GOVERNED BY ANY AUTHOR ITY OF INDIA SUCH AS THE CBSE, CISCE, STATE BOARD ETC. HENCE, AS SUCH, NO FEE HAS BEEN PRESCRIBED BY ANY SUCH AUTHORITY FOR U NAIDED SCHOOL. HE FURTHER SUBMITTED THAT THE MEA NOR THE D ARE HAS PRESCRIBED ANY FEES THAT THE ASSESSEE SHOULD CHARGE FROM ITS STUDENT. THE LD AR SUBMITTED, THE ASSESSEE IS AFFIL IATED TO THE FOREIGN ACCREDIATION BODIES SUCH AS INTERNATIONAL B ACCALAUREATE ORGANIZATIONA AND UNIVERSITY OF CAMBRIDGE AND NO FE E IS PRESCRIBED BY ANY OF THE RECOGNISED BODIES AS WELL. THUS, IT WAS SUBMITTED BY THE ASSESSEE, SINCE THERE IS NEITHER A NY REGULATORY AUTHORITY PRESCRIBING FEE FOR ASSESSEE INSTITUTION, NOR THERE BEING ANY PRESCRIBED FEE, DEPARTMENTAL AUTHORITIES WERE N OT CORRECT IN DENYING EXEMPTION U/S 11 TO THE ASSESSEE ON THE REA SONING THAT THE ASSESSEE HAS COLLECTED MONEY OVER AND ABOVE THE PRESCRIBED FEE. HE SUBMITTED,THE CAPITAL FEE OF RS.1.75 LAKHS COLLECTED FROM EACH STUDENT IS PART OF ASSESSEES FEE STRUCTURE. 7. THE LD AR SUBMITTED THAT AT NO STAGE EITHER DURI NG THE ASSESSMENT PROCEEDINGS OR BEFORE THE FIRST APPELLAT E AUTHORITY, ANY INQUIRY IS MADE TO ASCERTAIN THE FACTS WHETHER THERE IS ANY FEE PRESCRIBED FOR THE ASSESSEE SCHOOL TO COME TO A CONCLUSION THAT THE ASSESSEE HAS COLLECTED FEES OVER AND ABOVE THE PRESCRIBED FEE. HE SUBMITTED THAT EVEN THE ASSESSEE WAS NEVER CALLED UPON TO EXPLAIN THESE ASPECTS. ITA NO.1715 OF 2014 INTERNATIONAL SCHOOL OF HYDERAB AD PAGE 9 OF 14 8. THE LD AR REFERRING TO THE DECISION OF THE TMA P AI FOUNDATION (SUPRA) RELIED UPON BY THE AO SUBMITTED BEFORE US THAT EVEN IN THE SAID JUDGMENT THE HON'BLE SUPREME COURT OBSERVED THAT IN CASE OF PROFESSIONAL COLLEGES THE FEE CHARGEABLE SHOULD BE SUBJECT TO SUCH A CEILING AS MAY BE PRESC RIBED BY THE AUTHORITY OR BY A COMPETENT COURT. HOWEVER,THE LD A R DRAWING OUR ATTENTION TO THE OBSERVATIONS MADE BY THE HON'B LE SUPREME COURT IN THIS JUDGMENT, SUBSEQUENTLY IN PARAGRAPH 6 1 OF THE JUDGMENT SUBMITTED THAT HOWEVER, IN RESPECT OF PRIV ATE SCHOOL, MAXIMUM AUTONOMY HAS TO BE WITH THE MANAGEMENT WITH REGARD TO ADMINISTRATION INCLUDING THE RIGHT OF APP OINTMENT, DISCIPLINARY POWERS, ADMISSION OF STUDENTS AND THE FEES TO BE CHARGED. THUS, IT WAS SUBMITTED BY THE LD AR THAT W ITHOUT PROPERLY ANALYSING THE RATIO LAID DOWN BY THE HON'B LE SUPREME COURT THE DEPARTMENTAL AUTHORITIES WERE NOT CORRECT IN DENYING EXEMPTION U/S 11 OF THE I.T. ACT. IN FACT TO SUBSTA NTIATE ITS CLAIM THAT THERE IS NO PRESCRIBED FEE, IN CASE OF THE ASS ESSEE INSTITUTION, THE LD AR IN COURSE OF HEARING OF APPE AL SUBMITTED A SWORN AFFIDAVIT OF DR. OLI TOOHER HANCOCK, THE PRIN CIPAL OF INTERNATIONAL SCHOOL OF HYDERABAD. 9. THE LD AR FURTHER SUBMITTED, THE ASSESSEE INSTIT UTION HAS BEEN FUNCTIONING FOR THE LAST SO MANY YEARS AND UNT IL THE ITA NO.1715 OF 2014 INTERNATIONAL SCHOOL OF HYDERAB AD PAGE 10 OF 14 IMPUGNED A.Y, THE DEPARTMENT HAS NEVER DENIED EXEMP TION TO THE ASSESSEE FOR THE AFORESTATED REASONS, THOUGH TH E ASSESSEE IS FOLLOWING THE SAME METHOD OF CHARGING FEES. THUS T HERE IS A LEGITIMATE EXPECTATION ON THE PART OF ASSESSEE THAT IT IS ELIGIBLE FOR EXEMPTION U/S 11 OF THE ACT. IN THIS CONTEXT, H E RELIED ON THE DECISION OF THE HON'BLE DELHI HIGH COURT IN DDIT VS . SHANTI DEVI PROGRESSIVE EDUCATION SOCIETY (2012) (340 ITR 320). 10. THE LD DR ON THE OTHER HAND STRONGLY SUPPORTING THE REASONING OF THE AO AND THE CIT (A) SUBMITTED BEFOR E US THAT THE SO CALLED CAPITAL FEE OF RS.1.75 LAKHS COLLECTED FR OM EACH OF THE STUDENT CLEARLY DEMONSTRATE THE PROFIT MOTIVE OF TH E ASSESSEE, AS THE ASSESSEE HAS CHARGED MORE THAN THE PRESCRIBED F EE WHICH IS NOTHING BUT IN THE NATURE OF CAPITATION FEE, ASSESS EE IS NOT ELIGIBLE FOR EXEMPTION EITHER U/S 10(23C) OR SECTIO N 11 OF THE ACT. THE LD DR FURTHER SUBMITTED, BEFORE THE DEPART MENTAL AUTHORITIES, THE ASSESSEE NEVER TOOK THE PLEA THAT THERE IS NEITHER ANY REGULATORY AUTHORITY IN INDIA AS FAR AS THE ASSESSEE IS CONCERNED, NOR THERE IS ANY PRESCRIBED FEE FOR T HE ASSESSEE. AS THE SUBMISSIONS HAVE BEEN MADE BY THE ASSESSEE FOR THE FIRST TIME BEFORE THIS FORUM AND ALSO SINCE AN AFFIDAVIT HAS BEEN FILED ON THE AFORESAID BASIS, THE SAME MAY BE REMITTED BA CK TO THE FILE OF THE AO FOR EXAMINATION. ITA NO.1715 OF 2014 INTERNATIONAL SCHOOL OF HYDERAB AD PAGE 11 OF 14 11. WE HAVE CONSIDERED THE SUBMISSIONS OF THE PARTI ES AND PERUSED THE MATERIALS ON RECORD AS WELL AS THE ORDE RS OF THE REVENUE AUTHORITIES. WE HAVE ALSO CAREFULLY APPLIED OUR MIND TO THE DECISIONS PLACED BEFORE US. AS CAN BE SEEN, THO UGH, THE AO DENIED EXEMPTION U/S 11 TO THE ASSESSEE ON VARIOUS REASONS INCLUDING THE CHARGING OF CAPITATION FEE, THE LD CI T (A) HAS NOT FOUND ANY OF THE REASONS SUSTAINABLE EXCEPT THE ONE RELATING TO COLLECTION OF CAPITATION FEE. AS THE DEPARTMENT IS NOT IN APPEAL, WE ARE NOT REQUIRED TO GO INTO OTHER REASONS MENTIONED BY THE AO FOR DENYING BENEFIT U/S 11. THUS, THE ONLY ISSUE WHICH REQUIRES CONSIDERATION IS WHETHER THE DENIAL OF EXEMPTION U/ S 11 OF THE ACT TO THE ASSESSEE ON THE ALLEGATION OF CHARGING CAPIT ATION FEE OVER AND ABOVE THE FEES PRESCRIBED UNDER THE ACT IS SUST AINABLE. SUBMISSIONS OF LD AR IN THIS REGARD BEFORE US, IN P ITH AND SUBSTANCE, IS AS FAR AS THE ASSESSEE INSTITUTION IS CONCERNED, IT IS NOT AFFILIATED TO ANY INDIAN CURRICULUM BODIES LIKE CBSE, CSICE OR STATE BOARDS. IT IS FURTHER SUBMISSION OF LD AR THA T THERE IS NO FEE PRESCRIBED TO THE ASSESSEE EITHER BY DARE/MEA OR AN Y OF THE BODIES TO WHICH IT IS AFFILIATED. IN THIS CONTEXT A SWORN AFFIDAVIT OF THE PRINCIPAL OF THE INSTITUTION HAS BEEN SUBMITTED BEFORE THIS FORUM CONTENTS OF WHICH ARE AS UNDER: I, THE ABOVE NAMED DEPONENET DO HEREBY SOLEMNLY AFFIRM AND STATE AS UNDER: 1. THAT THE APPELLENT IS A NON PROFIT EDUCATIONAL INSTITUTION SPONSORED AND MANAGED BY THE ITA NO.1715 OF 2014 INTERNATIONAL SCHOOL OF HYDERAB AD PAGE 12 OF 14 INTERNATIONAL CROPS RESEARCH INSTITUTE FOR THE SEMI- ARID TROPICS (IICRISAT). 2. THAT THE APPELLANT WAS ESTABLISHED BY THE APPROVAL GIVEN BY THE DEPARTMENT OF AGRICULTURAL RESEARCH AND EDUCATION (DARE) VIDE ITS LETTER IN D.O NO.12-35/80-IC-I DATED 13 FEBRUARY, 1981 ALONG WITH TERMS AND CONDITIONS FOR OPERATION. 3. THAT SUBSEQUENTLY, THE MINISTRY OF EXTERNAL AFFAIRS (MEA) VIDE ITS LETTER NO.DII/451/80(16/38) DATED 13-3-2003 HAS GIVEN APPROVAL TO ICRISAT WHEREIN IT HAS AMENDED CERTAIN CONDITIONS. 4. THAT THE DEPONENT IS THE PRINCIPAL OF THE ABOVE NAMED ASSESSEE SCHOOL AND HENCE IS FULLY CONVERSANT OF THE FACTS DEPOSED BELOW. 5. THAT THE CAPTIONED APPEAL WAS FILED ON 3 NOVEMBER 2014 BY THE APPELLENT. 6. THAT THE CAPTIONED APPEAL WAS FIXED FOR HEARING ON 19 MARCH 2015 AND FURTHER ADJOURNED TO 21 APRIL 2015. THE CASE WAS PARTLY HEARD ON THE SAID DATE AND IS PENDING FOR HEARING ON 27 APRIL 2015. 7. THE CRITICAL GROUNDS TAKEN BY THE APPELLANT IN THE MATTER RELATES TO DENIAL OF EXEMPTION U/S 11 FOR THE REASON THAT THE APPELLANT COLLECTS A CAPITAL FEE OVER AND ABOVE THE PRESCRIBED FEE. 8. THAT THE APPELLANT IS AFFILIATED ONLY TO INTERNATIONAL BODIES (VIZ., INTERNATIONAL BACCALAUREATE ORGANIZATION AND THE UNIVERSITY OF CAMBRIDGE AND IS NOT AFFILIATED TO ANY INDIAN CURRICULUM PRESCRIBING BODY LIKE CBSE, CISCE OR ANY OF THE STATE BOARDS. 9. THAT THERE IS NO FEE PRESCRIBED TO THE APPELLANT EITHER BY DARE/MEA OR BY ANY OF THE BODIES TO WHICH IT IS AFFILIATED TO. 10. THAT THE ONE-TIME ADMISSION/CAPITAL FEE OF INR 1,75,000 CHARGED BY THE APPELLANT FOR THE FINANCIAL YEAR 2010-11 (CORRESPONDING TO A.Y 2011-12) IS PART OF THE FEE STRUCTURE APPROVED BY THE SCHOOL MANAGEMENT. THE FEE STRUCTURE FOR THE FINANCIAL YEAR UNDER CONSIDERATION I.E. 2010-11 IS ATTACHED AS ANNEXURE 1. ITA NO.1715 OF 2014 INTERNATIONAL SCHOOL OF HYDERAB AD PAGE 13 OF 14 12. THUS, AS CAN BE SEEN FROM THE CONTENT OF THE SW ORN AFFIDAVIT, IT IS THE CONTENTION OF THE ASSESSEE THA T NEITHER THERE IS A REGULATING AUTHORITY/PRESCRIBED BODY IN INDIA, AS FAR AS THE ASSESSEE IS CONCERNED, NOR THERE IS ANY FEE PRESCRI BED FOR THE ASSESSEE EITHER BY DARE/MEA OR BY ANY OF THE BODIES TO WHICH IT IS AFFILIATED TO. IT IS FURTHER SUBMISSION OF TH E ASSESSEE THAT THE ONE TIME ADMISSION/CAPITAL FEE OF RS.1.75 LAKHS FRO M EACH OF THE STUDENT IS PART OF THE FEE STRUCTURE APPROVED BY TH E SCHOOL MANAGEMENT, HENCE IT CANNOT BE SAID THAT THE ASSESS EE HAS CHARGED ANY FEES OVER AND ABOVE THE PRESCRIBED FEE FOR APPLYING THE RATIO OF THE DECISION OF THE ITAT FOR DENYING E XEMPTION U/S 11 OF THE I.T. ACT TO THE ASSESSEE. 13. HAVING CONSIDERED THE SPECIFIC CONTENTION OF T HE LD AR AND ASSERTIONS MADE IN THE AFFIDAVIT, WE ARE OF THE VIE W THAT THE AFORESAID ISSUE REQUIRES EXAMINATION BY THE AO. ON A PERUSAL OF THE ASSESSMENT ORDER AS WELL AS ORDER OF THE FIRST APPELLATE AUTHORITY, IT IS NOT CLEAR WHETHER THEY HAVE EXAMIN ED THIS ASPECT WHILE COMING TO THE CONCLUSION THAT THE ASSESSEE HA S CHARGED FEES OVER AND ABOVE THE PRESCRIBED FEE. AS THE DEPA RTMENTAL AUTHORITIES HAVE NOT MADE ANY INQUIRY FOR ASCERTAIN ING THE FACT, WHETHER THERE IS ANY FEES PRESCRIBED FOR THE ASSESS EE, WE ARE INCLINED TO REMIT THE MATTER BACK TO THE FILE OF TH E AO FOR EXAMINING AFRESH. THE AO MUST CONSIDER THE ASSERTIO N MADE IN ITA NO.1715 OF 2014 INTERNATIONAL SCHOOL OF HYDERAB AD PAGE 14 OF 14 THE AFFIDAVIT AS WELL AS OTHER MATERIALS ON RECORD AND DECIDE THE ISSUE ACCORDINGLY AND IN ACCORDANCE WITH LAW AFTER DUE OPPORTUNITY OF BEING HEARD TO THE ASSESSEE. AO MUST ALSO KEEP IN VIEW THE PRINCIPLE OF LAW AS LAID DOWN BY THE JU DICIAL AUTHORITIES ON THE ISSUE WHILE DECIDING THE MATTER. 14. IN THE RESULT, APPEAL FILED BY THE ASSESSEE IS ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON 8 TH MAY, 2015. S D/ - S D/ - (P.M. JAGTAP) (SAKTIJIT DEY) ACCOUNTANT MEMBER JUDICIAL MEMBER HYDERABAD, DATED 8 TH MAY, 2015. VNODAN/SPS COPY TO: 1. M/S. INTERNATIONAL SCHOOL OF HYDERABAD, ICRISAT, PATANCHERU, MEDAK DISTT. TELANGANA 2. DY. DIRECTOR OF INCOME TAX (EXEMPTIONS)-II HYDERABA D 3. CIT(A) - IV HYDERABAD 4. DIRECTOR OF INCOME TAX (EXEMPTIONS) HYDERABAD 5. THE DR, ITAT, HYDERABAD 6. GUARD FILE BY ORDER