Vignana Jyothi, Secunderabad V. Asst.DIT(Exemptions)-III, Hyderabad, Hyderabad

ITA 1752/HYD/2014

• Counselvise Citation: [2017] 127 COUNSELVISE.COM (IT) 2612 (ITAT-HYDERABAD)
• Duration Of Justice: 2 year(s) 10 month(s) 5 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 22-09-2017
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Next Hearing Date: 11-09-2017
• Assessment Year: 2010-2011
• Appeal Filed On: 17-11-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: S MO HARANA
• Assessee Lawyers: V SIVA KUMAR
• Keywords: Depreciation; Cost of acquisition; Cancellation of registration; Capital expenditure
• Section: 143(3); 133(6); 12A; 12AA; 132

Judgement Text

ITA NOS 1803 1804 1752 AND 1753 OF 2014 VI GNANA JYOTHI SECUNDERABAD PAGE 1 OF 11 IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD A BENCH, HYDERABAD BEFORE SMT. P. MADHAVI DEVI, JUDICIAL MEMBER AND SHRI S.RIFAUR RAHMAN, ACCOUNTANT MEMBER ITA NOS.1803 & 1804/HYD/2014 (ASSESSMENT YEARS: 2010-11 & 2011-12) DY. COMMISSIONER OF INCOME TAX (E) HYDERABAD CIRCLE, HYDERABAD VS M/S. VIGNANA JYOTHI HYDERABAD PAN: AAATV 1122 C (APPELLANT) (RESPONDENT) ITA NOS.1752 & 1753/HYD/2014 (ASSESSMENT YEARS: 2010-11 & 2011-12) M/S. VIGNANA JYOTHI HYDERABAD PAN: AAATV 1122 C VS ASSTT. DIRECTOR OF INCOME TAX (EXEMPTIONS)- III HYDERABAD (APPELLANT) (RESPONDENT) FOR REVENUE: SHRI S. MOHARANA, CIT (DR) FOR ASSESSEE: SHRI V. SIVA KUMAR O R D E R PER SMT. P. MADHAVI DEVI, J.M. ALL THE ABOVE ARE CROSS APPEALS OF THE ASSESSEE AS WELL AS THE REVENUE FOR THE A.YS 2010-11 AND 2011-12 RES PECTIVELY AGAINST SEPARATE ORDERS OF THE CIT(A)-IV HYDERABAD DATED 12.09.2014. DATE OF HEARING : 11.09.2017 DATE OF PRONOUNCEMENT : 22.09.2017 ITA NOS 1803 1804 1752 AND 1753 OF 2014 VI GNANA JYOTHI SECUNDERABAD PAGE 2 OF 11 2. BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE IS A SOCIETY WHICH IS ENGAGED IN RUNNING OF EDUCATIONAL INSTITUT IONS. FOR THE A.YS 2010-11 AND 2011-12, THE ASSESSEE FILED ITS RET URN OF INCOME CLAIMING EXEMPTION U/S 11 OF THE I.T. ACT. 3. DURING THE ASSESSMENT PROCEEDINGS U/S 143(3) OF THE ACT, THE AO OBSERVED THAT THE ASSESSEE HAD COLLECTE D DONATIONS FROM VARIOUS PERSONS WHICH INCLUDED DONATIONS FROM THE PARENTS OF THE STUDENTS (AS DECLARED BY THE ASSESSEE ITSELF ) RANGING FROM RS.30,000 TO RS.12,00,000. IN ORDER TO VERIFY THE A SSESSEES CLAIM THAT THE DONATIONS RECEIVED FROM THE PARENTS OR REL ATIVES OF THE STUDENTS WERE VOLUNTARY, NOTICES U/S 133(6) WERE IS SUED RANDOMLY TO SOME OF THE PARENTS. RESPONSES WERE RECEIVED IN SOME CASES AND ON EXAMINATION OF THE SAID RESPONSES, THE AO OB SERVED THAT SOME OF THE PERSONS SUBMITTED THAT THE DONATIONS WE RE GIVEN VOLUNTARILY WHEREAS IN FIVE CASES FOR THE A.Y 2011-1 2, THE PARTIES CATEGORICALLY STATED THAT THE DONATION AMOUNT WAS G IVEN AS A PRE- REQUISITE FOR SECURING ADMISSION OF THEIR WARDS IN THE ENGINEERING COLLEGES RUN BY THE ASSESSEE SOCIETY. SIMILAR STATE MENTS WERE GIVEN FOR THE A.Y 2010-11 AS WELL. TAKING THE SAME I NTO CONSIDERATION, THE AO OBSERVED THAT THE ASSESSEES CLAIM THAT THE DONATIONS ARE ENTIRELY VOLUNTARY IS NOT CORRECT. FUR THER, TAKING NOTE OF THE DECISION OF THE HON'BLE SUPREME COURT I N THE CASE OF TMA PAI FOUNDATION & OTHERS VS. STATE OF KARNATAKA & ORS REPORTED IN (2002) 8 SCC 481, THE AO HELD THAT THE CAPITATION FEE CHARGED OVER AND ABOVE THE PRESCRIBED FEE, TERMED A S A DONATION OR BUILDING FUND OR DEVELOPMENT FUND OR BY ANY OTHE R NAME, IS NOT PERMISSIBLE AND THAT THE ORGANIZATION IS NOT ELIGIB LE FOR EXEMPTION U/S 10(23C)(VI) OR SECTION 11 OF THE ACT. THUS OBSE RVING, THE AO ITA NOS 1803 1804 1752 AND 1753 OF 2014 VI GNANA JYOTHI SECUNDERABAD PAGE 3 OF 11 DENIED THE CLAIM OF EXEMPTION U/S 11 OF THE ACT TO THE ASSESSEE FOR BOTH THE A.YS IN RESPECT OF THE ENTIRE DONATIONS RECEIVED BY THE ASSESSEE. 4. THE AO ALSO OBSERVED THAT THE ASSESSEE HAS CLAIM ED CAPITAL EXPENDITURE BEING THE COST OF ACQUISITION O F FIXED ASSETS AS APPLICATION OF INCOME. HE ALSO OBSERVED FROM THE IN COME AND EXPENDITURE A/C, THAT THE ASSESSEE HAS DEBITED RS.3 ,77,21,183 AS DEPRECIATION. HE OBSERVED THAT CLAIMING BOTH THE CO ST OF FIXED ASSETS AS APPLICATION OF INCOME AND DEPRECIATION TH EREON AMOUNTS TO DOUBLE DEDUCTION WHICH IS NOT ALLOWABLE IN VIEW OF THE APEX COURT DECISION IN THE CASE OF ESCORTS LTD VS. (199 ITR 44) AND ALSO THE DECISION OF THE JURISDICTIONAL I.T.A.T IN THE C ASE OF VENKATASAI EDUCATIONAL SOCIETY & OTHERS (ITA NO.1440/HYD/2011, DATED 9.4.2012). HOWEVER, SINCE THE ASSESSEE IS BEING DEN IED EXEMPTION U/S 11, HE HELD THAT THE COST OF THE ASSETS CANNOT BE ALLOWED WHEREAS THE DEPRECIATION DURING THE PREVIOUS YEAR M AY BE ALLOWED AS PER COMMERCIAL PRINCIPLES. HE THEREFORE, WORKED OUT THE ALLOWABLE DEPRECIATION AT RS.13,74,670 AND THE BALA NCE OF THE CLAIM OF APPLICATION OF INCOME TOWARDS FIXED ASSETS OF RS.3,63,46,513 WAS DISALLOWED AND ADDED TO THE TOTA L INCOME OF THE ASSESSEE. 5. AGGRIEVED, THE ASSESSEE PREFERRED AN APPEAL BEFO RE THE CIT (A) WHO GRANTED PARTIAL RELIEF TO THE ASSESSEE. THE CIT (A) OBSERVED THAT IN THE ASSESSEES OWN CASE FOR THE A. YS 2005-06 TO 2006-07 IN ITA NO.378/HYD/2009 & OTHERS DATED 19.10 .2012, HIS PREDECESSORS HAS TAKEN NOTE OF VARIOUS DECISION S ON THE ISSUE AND ALSO THE DECISION OF THE HON'BLE SUPREME COURT IN THE CASE OF ITA NOS 1803 1804 1752 AND 1753 OF 2014 VI GNANA JYOTHI SECUNDERABAD PAGE 4 OF 11 TMA PAI FOUNDATION (CITED SUPRA) AND HAS HELD THAT IF THE DONATIONS WERE RECEIVED COMPULSORILY FOR ADMISSION OF STUDENTS, THEN THE ASSESSEE IS NOT ENTITLED FOR EXEMPTION EIT HER U/S 10(23C) OR U/S 11 OF THE ACT. THE CIT (A) OBSERVED THAT IN THE CASE OF THE ASSESSEE, THE NEXUS BETWEEN THE DONATIONS AND THE A DMISSIONS HAS NOT BEEN ESTABLISHED AND THEREFORE, IT IS NOT P OSSIBLE TO HOLD THAT THE DONATIONS WERE RECEIVED COMPULSORILY FOR A DMISSION OF THE STUDENTS. SHE, THEREFORE, ALLOWED THE EXEMPTION U/S 11 OF THE ACT. 6. AS REGARDS THE ISSUE OF DISALLOWANCE OF DEPRECIA TION ON ASSETS WHICH HAVE BEEN ALLOWED AS APPLICATION OF IN COME IS CONCERNED, SHE OBSERVED THAT SINCE THE COST OF THE ASSETS ON WHICH THE DEPRECIATION HAS BEEN CLAIMED HAD ALREADY BEEN CLAIMED AS APPLICATION OF INCOME, THE DEPRECIATION ON SUCH ASSETS IS NOT ALLOWABLE. SHE THEREFORE, UPHELD THE DEPRECI ATION DISALLOWED BY THE AO. AGGRIEVED, THE ASSESSEE IS IN APPEAL AGA INST THE DISALLOWANCE OF THE DEPRECIATION WHEREAS THE REVENU E IS IN APPEAL AGAINST THE RELIEF GRANTED BY THE CIT (A) ALLOWING THE CLAIM OF EXEMPTION U/S 11 OF THE ACT. 7. THE LEARNED DR SUPPORTED THE ORDERS OF THE AO AN D SUBMITTED THAT THE ASSESSEE HAS COLLECTED DONATIONS FROM THE PARENTS AND RELATIVES OF THE STUDENTS AT THE TIME O F GIVING ADMISSIONS, AS IS EVIDENT FROM THE STATEMENTS OF TH E PARENTS AND THEREFORE, THE DONATIONS CANNOT BE TREATED TO BE VO LUNTARY AND IT IS IN CLEAR VIOLATION OF THE JUDGMENT OF THE HON'BL E SUPREME COURT IN THE CASE OF TMA PAI FOUNDATION. HE ALSO SUBMITTE D THAT ONLY FEW OF THE PARENTS HAVE SUBSEQUENTLY WITHDRAWN THEI R STATEMENTS ITA NOS 1803 1804 1752 AND 1753 OF 2014 VI GNANA JYOTHI SECUNDERABAD PAGE 5 OF 11 BUT THAT DOES NOT ABSOLVE THE ASSESSEE FROM ITS BUR DEN OF PROVING THAT THE DONATIONS ARE VOLUNTARY. THUS, ACCORDING T O THE LEARNED DR, THE ORDER OF THE CIT (A) GRANTING RELIEF TO THE ASSESSEE IS ERRONEOUS. 8. THE LEARNED COUNSEL FOR THE ASSESSEE, ON THE OTH ER HAND, SUBMITTED THAT THE DIT (EXEMPTIONS), VIDE ORD ERS DATED 1.4.2005, HAD WITHDRAWN THE REGISTRATION GRANTED TO THE ASSESSEE U/S 12AA OF THE ACT ON THE VERY SAME GROUND THAT TH E ASSESSEE HAS RECEIVED DONATIONS FROM THE PARENTS FOR ADMISSI ON OF THEIR WARDS TO EDUCATIONAL INSTITUTIONS OF THE ASSESSEE A ND THAT THE SAID ORDER WAS CHALLENGED BEFORE THE ITAT AND ITAT AFTER CONSIDERING VARIOUS DECISIONS INCLUDING THE DECISIO N OF THE HON'BLE SUPREME COURT IN THE CASE OF TMA PAI FOUNDA TION, HAS HELD THAT THE DONATIONS COLLECTED BY THE ASSESSEE I S NOT IN VIOLATION OF THE PROVISIONS OF THE ANDHRA PRADESH E DUCATIONAL INSTITUTIONS (REGULATIONS OF ADMISSION AND PROHIBIT ION OF CAPITAL FEE ACT OF 1983) AND THAT THERE IS NO ALLEGATION TH AT THE FUNDS ARE BEING MISUSED OR DIVERTED OR THAT THE ASSESSEE IS N OT IMPARTING EDUCATION. HE, HOWEVER, DREW OUR ATTENTION TO THE O BSERVATIONS OF THE TRIBUNAL THAT IT IS OPEN TO THE AO TO DENY THE BENEFIT U/S 11 OF THE ACT, IF THE ASSESSEE DOES NOT SATISFY THE CONDI TIONS FOR SUCH EXEMPTION, BUT IT CANNOT BE A GROUND FOR CANCELLATI ON OF REGISTRATION. HE ALSO PLACED RELIANCE UPON THE FOLL OWING OTHER DECISIONS IN SUPPORT OF HIS CONTENTIONS THAT EXEMPT ION U/S 11 IS ALLOWABLE TO THE ASSESSEE: I) ACIT VS. BALAJI EDUCATIONAL & CHARITABLE PUBLIC TRUST, 15 TAXMANN.COM 63 (MAD.) ITA NOS 1803 1804 1752 AND 1753 OF 2014 VI GNANA JYOTHI SECUNDERABAD PAGE 6 OF 11 II) DCIT VS. VELLORE INSTITUTE OF TECHNOLOGY, 12 TAXMANN.COM 272 (CHENNAI). 9. THE LEARNED DR, ON THE OTHER HAND, PLACED RELIAN CE UPON THE DECISION OF THE COORDINATE BENCH OF THIS T RIBUNAL IN THE CASE OF VODITALA EDUCATIONAL SOCIETY VS. ADIT [20 S OT 353]. 10. HAVING REGARD TO THE RIVAL CONTENTIONS AND THE MATERIAL ON RECORD, WE FIND THAT THE ASSESSEE WAS INITIALLY GRANTED REGISTRATION U/S 12A OF THE ACT WHICH WAS CANCELLED BY THE DIT (EXEMPTION) ON THE GROUND THAT THE ASSESSEE IS COLL ECTING DONATIONS FROM THE PARENTS OR RELATIVES OF THE STUD ENTS FOR ADMISSION INTO ITS EDUCATIONAL INSTITUTIONS. WE FIN D THAT THE CANCELLATION OF REGISTRATION WAS CHALLENGED BEFORE THE ITAT AND THE ITAT IN ITA NO.1751/HYD/2014 VIDE ORDERS DATED 26.04.2017 HAS EXAMINED THE ISSUE AT LENGTH AND AT PARAS 11.15 TO 12 HAS OBSERVED AS UNDER: 11.15. WE HAVE ALREADY BROUGHT OUT ABOVE, THE OBSER VATIONS OF THE APEX COURT THAT IN VIEW OF THE MAJORITY JUDG MENT IN THE CASE OF TMA PAI, DIFFERENT INSTITUTIONS MAY NOT IFY DIFFERENT FEE FOR DIFFERENT COURSES AND THE SAME IN STITUTION IS ALSO ENTITLED TO FIX DIFFERENT FEE FOR DIFFERENT CO URSES. THEREFORE, IF THE INSTITUTION HAS FIXED DIFFERENT S UMS FOR DIFFERENT COURSES, THEY ARE PERFECTLY ENTITLED TO D O SO BUT THEY MUST NOTIFY THE SAME. TO OUR UNDERSTANDING, TH E REQUIREMENT OF NOTIFYING THE FEE IS TO ENSURE TRANS PARENCY AND ACCOUNTABILITY AND TO PREVENT MISUSE OF FUNDS. IN THE CASE BEFORE US, IT IS THE STAND OF THE ASSESSEE THA T THESE ARE VOLUNTARY CONTRIBUTIONS NOT CONNECTED TO THE ADMISS ION OF STUDENTS. HOWEVER, FROM THE STATEMENTS OF THE PAREN TS BEFORE THE AO WHEN ENQUIRED INITIALLY, THE CONTRIBU TIONS ARE STATED TO BE LINKED TO THE ADMISSION OF STUDENTS, E VEN THOUGH THEY HAVE FILED AFFIDAVITS SUBSEQUENTLY DENYING THE SAME. WE ALSO FIND THAT THE INSTITUTION HAS RECEIVED THE FUND ITA NOS 1803 1804 1752 AND 1753 OF 2014 VI GNANA JYOTHI SECUNDERABAD PAGE 7 OF 11 THROUGH D.DS/ CHEQUES AND HAS ISSUED RECEIPTS FOR T HE SAME AND HAS ALSO ACCOUNTED FOR THE SAME. THEREFORE, THE RE IS TRANSPARENCY IN ACCOUNTING THE RECEIPTS. THE HON'BL E APEX COURT HAS FURTHER HELD THAT THE PRIVATE UNAIDED INS TITUTIONS ARE ENTITLED TO COLLECT FUNDS FOR THE MAINTENANCE A ND IMPROVEMENT OF THE INSTITUTION. HOWEVER, THE OBJECT IVE OF THE COLLECTION OF FUNDS MUST BE THE IMPARTING OF ST ANDARD EDUCATION TO THE PUBLIC AT LARGE. IN THE CASE BEFOR E US, THERE IS NO ALLEGATION THAT THE FUNDS COLLECTED BY THE AS SESSEE SOCIETY ARE FOR ANY OTHER PURPOSE OR THAT THE PROFI TS HAVE BEEN DISTRIBUTED TO ANY PERSON OR PERSONS. THEREFOR E THE COLLECTION OF THE DONATIONS BY THE ASSESSEE INSTITU TION CANNOT BE REGARDED AS CAPITATION FEE. 11.16. NOW ISSUE ARISES ABOUT PROFITEERING? PROFITE ERING REFERS TO TAKING ADVANTAGE OF UNUSUAL OR EXCEPTIONA L CIRCUMSTANCES TO MAKE EXCESSIVE PROFITS. IT IS THE GENERATION OF DISPROPORTIONATE OR UNFAIR PROFIT THROUGH MANIPU LATION OF PRICES, ABUSE OF DOMINANT POSITION, OR BY EXPLOI TING A BAD OR UNUSUAL SITUATION SUCH AS TEMPORARY SCARCITY. US UALLY, THERE IS NO GOVERNMENTAL CONTROL OVER PROFITEERING UNLESS IT INVOLVES ANY ILLEGAL MEANS. SALE OF SCARCE GOODS AT INFLATED PRICE DURING WAR IS AN EXAMPLE FOR PROFITEERING. BU T IN THE CASE BEFORE US, THERE IS NO CASE OF UNUSUAL OR EXCE PTIONAL CIRCUMSTANCES TO MAKE EXCESSIVE PROFITS. IT IS NOT THE CASE THAT ENGINEERING INSTITUTIONS IN THE STATE OF ANDHR A PRADESH ARE ONLY A FEW AND THEREFORE THERE WAS SCARCITY OF SEATS AND THE ASSESSEE HAS EXPLOITED SUCH A SITUATION TO MAKE EXCESSIVE PROFITS. IN THE STATE OF ANDHRA PRADESH, DURING THE RELEVANT PERIOD, THERE WERE A NUMBER OF ENGINEERING COLLEGES AND THERE WAS NO SCARCITY OF SEATS FOR THE ASPIRANT STU DENTS. IN FACT, THERE WERE NEWSPAPER REPORTS THAT MANY COLLEG ES COULD NOT GET THE PERMITTED NUMBER OF STUDENTS. THE REASONS FOR NOT GETTING THE STUDENTS MAY BE MANY SUCH LACK INFRASTRUCTURE, OR FACULTY OR STANDARD OF EDUCATION . THE ASSESSEE INSTITUTION MAY BE COMMANDING GOOD REPUTAT ION AND MAY ALSO BE A SOUGHT AFTER INSTITUTION DUE TO W HICH THE PARENTS AND THE STUDENTS MAY BE WILLING TO CONTRIBU TE TO THE DEVELOPMENT OF THE INSTITUTION BUT THAT WOULD NOT A MOUNT TO PROFITEERING BY THE INSTITUTION. 12. THAT LEADS US TO THE QUESTION WHETHER THE ASSES SEE HAS VIOLATED THE RULES AND REGULATIONS OF THE GOVERNMEN T OF ANDHRA PRADESH FRAMED FOR THE PURPOSE OF PROHIBITIN G THE COLLECTION OF CAPITATION FEES? ONE OF THE GROUNDS O N WHICH THE REVENUE HAS RELIED IS THAT THE ASSESSEE HAS VIO LATED THE ITA NOS 1803 1804 1752 AND 1753 OF 2014 VI GNANA JYOTHI SECUNDERABAD PAGE 8 OF 11 PROVISIONS OF THE ANDHRA PRADESH EDUCATIONAL INSTIT UTIONS (REGULATION OF ADMISSION AND PROHIBITION OF CAPITAT ION FEE) ACT, 1983 WHICH PROHIBITED COLLECTION OF ANY FEE OT HER THAN THE FEE FIXED BY THE GOVT. THE LD DR HAS PLACED BEF ORE US THE COPY OF THE G.O.MS.33, DT.11-06-2003 ISSUED BY THE GOVERNMENT OF ANDHRA PRADESH TO IMPLEMENT THE JUDGM ENT OF THE APEX COURT IN THE CASE OF T.M.A. PAI FOUNDAT ION (SUPRA) BY FRAMING THE RULES AND REGULATIONS FOR AD MISSION OF STUDENTS INTO PROFESSIONAL COLLEGES. AS PER THES E RULES, THE FEE PRESCRIBED PER STUDENT ADMITTED TO AN ENGINEERI NG COLLEGE UNDER THE MANAGEMENT QUOTA WAS UP TO A SUM OF RS.75,000/ PER ANNUM. THERE IS NO ALLEGATION THAT A SSESSEE HAS COLLECTED ANY FEE IN EXCESS OF SUCH PRESCRIBED AMOUNT. IN ADDITION TO THE ABOVE FEE NOTIFIED, THE ASSESSEE HA S ALSO COLLECTED THE DONATIONS NOT ONLY FROM SOME PARENTS/ RELATIVES BIT ALSO FROM MEMBERS OF SOCIETY. WHETHER SUCH COLLECTION OF DONATION IS PROHIBITED BY THE ANDHRA PRADESH EDUCATIONAL INSTITUTIONS (REGULATION OF ADMISSION A ND PROHIBITION OF CAPITATION FEE) ACT, 1983 IS TO BE E XAMINED. THE RELIANCE OF THE REVENUE HAS BEEN ONLY ON THE RU LES FRAMED VIDE G.O.MS.33 (SUPRA) IN WHICH THERE IS NO MENTION OF DONATIONS AND CONTRIBUTIONS TO THE EDUCATIONAL INSTITUTIONS. THE RULES HAVE PRESCRIBED ONLY THE FE E TO BE COLLECTED FROM THE STUDENTS AND HAVE PROHIBITED THE COLLECTION OF THE FEE OF ANY KIND OTHER THAN THOSE MENTIONED IN THE RULES. BUT SEC.6 OF THE ANDHRA PRADESH EDUCA TIONAL INSTITUTIONS (REGULATION OF ADMISSION AND PROHIBITI ON OF CAPITATION FEE) ACT, 1983 PERMITS THE RECEIPT OF VO LUNTARY DONATIONS. FOR THE SAKE OF EASY REFERENCE THE RELEV ANT PROVISION IS REPRODUCED HEREUNDER: SEC.6. (1) ANY DONATION OF MONEY TO ANY EDUCATIONAL INSTITUTION, SHALL BE MADE ONLY IN SUCH MANNER AS MAY BE PRESCRI BED AND NOT OTHERWISE. (2) ALL MONEYS RECEIVED BY ANY EDUCATIONAL INSTITUT ION BY WAY OF VOLUNTARY DONATIONS SHALL BE DEPOSITED IN THE ACCOU NT OF THE INSTITUTION, IN ANY SCHEDULED BANK AND SHALL BE APP LIED AND EXPENDED FOR THE IMPROVEMENT OF THE INSTITUTION AND THE DEVELOPMENT OF THE EDUCATIONAL FACILITIES AND FOR S UCH OTHER RELATED PURPOSES AS MAY BE PRESCRIBED. THUS, IT CAN BE SEEN THAT THE ANDHRA PRADESH EDUCAT IONAL INSTITUTIONS (REGULATION OF ADMISSION AND PROHIBITI ON OF CAPITATION FEE) ACT, 1983 DOES NOT PROHIBIT THE REC EIPT OF VOLUNTARY DONATIONS OR CONTRIBUTIONS, BUT THE LIMIT ATION PLACED IS ON THE MANNER OF PAYMENT OF SUCH DONATION AND ITA NOS 1803 1804 1752 AND 1753 OF 2014 VI GNANA JYOTHI SECUNDERABAD PAGE 9 OF 11 THE PURPOSE OF THE DONATION TO BE FOR THE IMPROVEME NT AND DEVELOPMENT OF THE INSTITUTION. IN THE CASE BEFORE US, THE ASSESSEE HAS RECEIVED THE DONATIONS BY WAY OF D.DS/ CHEQUES WHICH ARE DULY ACCOUNTED FOR IN ITS BOOKS O F ACCOUNT AND HAS ALSO BEEN APPLIED FOR THE PURPOSES OF THE E DUCATION ONLY. THEREFORE, IN OUR OPINION, THERE IS NO VIOLAT ION OF THE PROVISIONS OF ANDHRA PRADESH EDUCATIONAL INSTITUTIO NS (REGULATION OF ADMISSION AND PROHIBITION OF CAPITAT ION FEE) ACT, 1983. 11. THUS, THE TRIBUNAL HAS CLEARLY HELD THAT THERE IS NO VIOLATION OF THE PROVISIONS OF THE A.P. EDUCATIONAL INSTITUTIONS (REGULATION OF ADMISSION AND PROHIBITION OF CAPITAT ION FEES ACT OF 1983). IT IS ALSO MENTIONED THAT THE ASSESSEE HAS R ECEIVED THE DONATIONS BY WAY OF DDS/CHEQUES WHICH ARE DULY ACCO UNTED FOR IN ITS BOOKS OF ACCOUNT AND HAS ALSO BEEN APPLIED F OR THE PURPOSE OF EDUCATION ONLY. HAVING HELD THAT THE ACTIVITIES OF THE ASSESSEE TRUST ARE CHARITABLE IN NATURE AND THE DONATIONS AR E PERMITTED BY THE MEMORANDUM AND THERE IS NO COMPLAINT THAT THE A SSESSEE WAS COLLECTING ANY FEES MORE THAN WHAT WAS PRESCRIB ED, IT CANNOT BE SAID THAT THE ASSESSEE HAS VIOLATED ANY OF THE C ONDITIONS FOR CLAIMING EXEMPTION U/S 11 OF THE ACT. WE ALSO FIND THAT THE COORDINATE BENCH OF THIS TRIBUNAL IN THE CASE OF VO DITALA EDUCATIONAL SOCIETY VS. ADIT (CITED SUPRA) WAS CONS IDERING THE CASE OF AN ASSESSEE WHERE THERE IS A FINDING THAT T HE ASSESSEE THEREIN WAS COLLECTING MONEY OVER AND ABOVE THE PRE SCRIBED FEE FROM STUDENTS AND IN SUCH CIRCUMSTANCES, IT WAS HEL D THAT IT WAS TO BE CLASSIFIED AS CAPITATION FEE AND THEREFORE, N OT ELIGIBLE FOR EXEMPTION U/S 11 OF THE ACT. IN THE CASE BEFORE US, IT IS SEEN THAT THE ASSESSEE HAS RECEIVED DONATIONS FROM VARIOUS PE RSONS AND MORE THAN 50% OF THE DONATIONS ARE FROM PEOPLE WHO A RE NOT AT ALL CONCERNED WITH THE ADMISSION OF THE STUDENTS WHEREA S THE AO HAS DISALLOWED THE ENTIRE DONATIONS. IT IS ALSO SEEN TH AT ALL THE ITA NOS 1803 1804 1752 AND 1753 OF 2014 VI GNANA JYOTHI SECUNDERABAD PAGE 10 OF 11 DONATIONS ARE RECORDED IN THE BOOKS OF ACCOUNT OF T HE ASSESSEE AND MOST OF THE PARENTS AND RELATIVES OF THE STUDEN TS ALSO HAVE STATED THAT THE DONATIONS ARE VOLUNTARY. ONLY A FEW PARENTS OF THE STUDENTS HAVE STATED THAT THE DONATIONS ARE CONNECT ED WITH THE ADMISSIONS AND SOME OF THESE STATEMENTS HAVE ALSO B EEN RETRACTED SUBSEQUENTLY. THERE IS ALSO NO FINDING TH AT THE ASSESSEE HAS MISUSED OR NOT USED THE DONATIONS FOR ANY OTHER PURPOSE THAN THE PURPOSE FOR WHICH THEY HAVE BEEN GIVEN I.E . FOR EDUCATIONAL PURPOSE. IN SUCH CIRCUMSTANCES, WE ARE OF THE OPINION THAT THE EXEMPTION U/S 11 OF THE ACT CANNOT BE DENIED IN TOTO TO THE ASSESSEE WITH REGARD TO THE VOLUNTARY D ONATIONS RECEIVED BY THE ASSESSEE. ONLY SUCH DONATIONS, WHIC H ARE ADMITTEDLY NOT VOLUNTARY CAN BE DISALLOWED. AO IS D IRECTED ACCORDINGLY. 12. IN THE RESULT, REVENUES APPEALS ARE PARTLY ALL OWED. 13. AS REGARDS THE ASSESSEES APPEALS ARE CONCERNED , WE FIND THAT THE CIT (A) HAS DISALLOWED THE DEPRECIATI ON ON THE GROUND THAT THE COST OF THE ASSETS HAVE ALREADY BEE N ALLOWED AS APPLICATION OF INCOME IN THE EARLIER YEARS. THIS IS SUE HAD COME UP FOR CONSIDERATION BEFORE THE COORDINATE BENCH OF TH IS TRIBUNAL IN THE CASE OF (I) A.P. OLYMPIC ASSOCIATION VS. ADIT ( E) 48 TAXMANN.COM 282 (HYD) AND (II) GURU NANAK MISSION T RUST VS. DDIT (E) 69 TAXMANN.COM 82 (HYD) IN WHICH, AFTER CO NSIDERING THE DECISION OF THE HON'BLE SUPREME COURT IN THE CA SE OF ESCORTS LTD VS. UNION OF INDIA (199 ITR 43) AND ALSO THE DE CISION OF THE HON'BLE DELHI HIGH COURT IN THE CASE OF VISHWA JAGR UTI MISSION (IT ITA NOS 1803 1804 1752 AND 1753 OF 2014 VI GNANA JYOTHI SECUNDERABAD PAGE 11 OF 11 APPEAL NO.140 OF 2012 DATED 29.3.2012) AS WELL AS T HE DECISION OF THE COORDINATE BENCH IN THE CASE OF VENKATA SAI EDU CATIONAL SOCIETY IN ITA NO.1440/HYD/2011 DATED 9.4.2012, IT HAS BEEN HELD THAT CHARITABLE OR RELIGIOUS TRUSTS REGISTERED U/S 12A OF THE ACT CAN CLAIM BENEFIT U/S 11 IN THE FORM OF APPLICA TION OF FUNDS AS WELL AS DEPRECIATION U/S 132 IN RESPECT OF PROPERTY HELD UNDER THE TRUST. RESPECTFULLY FOLLOWING THE DECISIONS OF THE COORDINATE BENCHES OF THIS TRIBUNAL, THE ASSESSEES APPEALS AR E ALSO ALLOWED. 14. IN THE RESULT, ASSESSEES APPEALS ARE ALLOWED. 15. TO SUM UP, REVENUES APPEALS ARE PARTLY ALLOWED AND ASSESSEES APPEALS ARE ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 22 ND SEPTEMBER, 2017. SD/- SD/- (S.RIFAUR RAHMAN) ACCOUNTANT MEMBER (P. MADHAVI DEVI) JUDICIAL MEMBER HYDERABAD, DATED 22 ND SEPTEMBER, 2017. VINODAN/SPS COPY TO: 1 DCIT (EXEMPTIONS) HYDERABAD CIRCLE, 3 RD FLOOR, AAYAKAR BHAVAN, BASHEERBAGH, HYDERABAD 500004 2 ASSTT. DIRECTOR OF INCOME TAX (EXEMPTIONS) III HY DERABAD 3 VIGNANA JYOTHI, XAVIER BHAVAN, PLOT NO.7 ROAD NO. 16, WEST MARREDPALLY, SECUNDERABAD 500026 4 CIT (A)-IV HYDERABAD 5 DIRECTOR OF INCOME TAX (EXEMPTIONS), HYDERABAD 6 THE DR, ITAT HYDERABAD 7 GUARD FILE BY ORDER