ACIT, Mysore V. Sri. Adichunchanagiri Mahasamstana Math, Chunchanagiri

ITA 270/BANG/2011

• Counselvise Citation: 27021114 RSA 2011
• Duration Of Justice: 7 month(s) 4 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 18-10-2011
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Assessment Year: 2007-2008
• Appeal Filed On: 14-03-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: G V GOPALA RAO
• Assessee Lawyers: S RANGANATH
• Keywords: Charitable institution; Question of law; Capital receipt
• Section: 260A; 12A; 68; 12; 11

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL BANGALORE BENCH A BEFORE SHRI N.K.SAINI, ACCOUNTANT MEMBER AND SMT. P.MADHAVI DEVI, JUDICIAL MEMBER ITA NO.270(BANG)/2011 (ASSESSMENT YEAR:2007-08) ASST. COMMISSIONER OF INCOME-TAX, CIRCLE 1(1), MYSORE. VS. APPELLANT SRI ADICHUNCHANAGIRI MAHASAMSTANA MATH, NAGAMANGALA TQ. MANDYA DISTRICT. RESPONDENT PAN NO.AAATS3585N APPELLANT BY: SHRI G.V.GOPALA RAO. RESPONDENT BY : SHRI S.RANGANATH. DATE OF HEARING: 18-10-2011 DATE OF PRONOUNCEMENT: 18-10-2011 O R D E R PER N.K.SAINI, AM: THIS IS AN APPEAL BY THE DEPARTMENT AGAINST THE OR DER DATED 15-12-2010 OF THE CIT(A), MYSORE. THE FOLLOW ING GROUNDS HAVE BEEN RAISED IN THIS APPEAL: (1) THE LEARNED CIT(A) HAS ERRED IN LAW AND FACTS IN DELETING THE ADDITIONS BASED ON THE DECISION OF THE ITAT IN THE SAME CASE FOR THE AY 2005-06 VIDE ITA NO.1258 AND 1259/BNG/08, DATED 31- 12-08 WITHOUT NOTICING THE FACT THAT SUCH DECISION OF THE ITAT HAS NOT BEEN ACCEPTED BY THE DEPT. AND FURTHER APPEAL U/S 260A OF THE IT ACT WAS PREFERRED BEFORE THE HONBLE KARNATAKA HIGH COURT. ITA 270(BANG)/2011 PAGE 2 OF 5 (2) THE LEARNED CIT(A) HAS ERRED IN LAW AND IN FACTS IN RELYING UPON THE DECISION OF THE ITAT WITHOUT APPRECIATING THE FACT THAT SUCH DECISION IS NOT FINAL AS SUBSTANTIAL QUESTION OF LAW IS INVOLVED AND ITAT IS ONLY THE FINAL FACT FINDING AUTHORITY. (3) THE GROUNDS OF APPEAL PREFERRED BEFORE THE HONBLE KARNATAKA HIGH COURT IN RESPECT OF AY 2005-06 WHICH ARE APPLICABLE EVEN TO THE AY 2007-08 ARE REPRODUCED BELOW: (A) WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE AMOUNTS PAID BY THE STUDENTS/PARENTS TO THE ASSESSEE TRUST AT THE TIME OF SECURING ADMISSION TO ENGINEERING AND MEDICAL COLLEGES RUN BY THE ASSESSEE GROUP CAN BE CONSTRUED AS VOLUNTARY DONATIONS AND CORPUS FUND AS ENVISAGED U/S 11(1)(A) & 11(1)(D) R.W.S.12(1) OF THE IT ACT OR CAPITATION FEE WARRANTING ASSESSMENT OF SUCH AMOUNT UNDER THE HEAD OTHER SOURCES BE DENYING EXEMPTION UNDER SEC.11, 12 & 13 OF THE IT ACT. (B) WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE ITAT IS RIGHT IN LAW IN HOLDING THAT THE AMOUNTS RECEIVED FROM THE STUDENTS/PARENTS FOR SECURING ADMISSION TO ENGINEERING AND MEDICAL COLLEGES RUN BY THE ASSESSEE GROUP, WHEN TREATED AS INVOLUNTARY WILL DEFINITELY BE CAPITAL RECEIPTS NOT LIABLE TO TAX. (C) WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE ITAT IS RIGHT IN LAW IN TREATING THE AMOUNT RECEIVED BY THE ASSESSEE TRUST FROM THE STUDENTS/PARENTS AS QUID-PRO-QUO FOR GIVING ADMISSION TO ENGINEERING AND MEDICAL COLLEGES RUN BY THE ASSESSEE GROUP AS INCOME DERIVED FROM PROPERTY HELD UNDER TRUST AS ENVISAGED U/S 12(1) OF THE IT ACT. (D) WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE ITAT IS RIGHT IN LAW IN TREATING THE AMOUNT RECEIVED BY THE ASSESSEE TRUST FROM THE STUDENTS/PARENTS AS QUID-PRO-QUO FOR ITA 270(BANG)/2011 PAGE 3 OF 5 GIVING ADMISSION TO ENGINEERING AND MEDICAL COLLEGES RUN BY THE ASSESSEE GROUP AS CORPUS FUND DONATIONS IN TERMS OF SEC.11(1)(D) OF THE IT ACT. (E) WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE ITAT IS RIGHT IN LAW IN TREATING THE AMOUNT RECEIVED BY THE ASSESSEE TRUST FROM THE STUDENTS/PARENTS AS QUID-PRO-QUO FOR GIVING ADMISSION TO ENGINEERING AND MEDICAL COLLEGES RUN BY THE ASSESSEE GROUP AS VOLUNTARY DONATION IN TERMS OF SEC.11(1)(A) OF THE IT ACT. (F) WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE ITAT IS RIGHT IN LAW IN HOLDING THAT THE AMOUNT RECEIVED BY THE ASSESSEE TRUST FROM THE STUDENTS/PARENTS AS QUID-PRO-QUO FOR GIVING ADMISSION TO ENGINEERING AND MEDICAL COLLEGES RUN BY THE ASSESSEE GROUP, EVEN AFTER ASSESSED UNDER THE HEAD OTHER SOURCES IS ENTITLED TO EXEMPTION U/S 11 ON THE GROUND THAT THE TRUST WAS REGISTERED U/S 12A OF THE IT ACT. 2. FROM THE ABOVE GROUNDS, IT IS GATHERED THAT THE GRIEVANCE OF THE DEPARTMENT RELATES TO THE EXEMPTIO N GRANTED TO THE ASSESSEE U/S 11 OF THE IT ACT. IT IS ALSO N OTICED FROM THE GROUNDS RAISED BY THE DEPARTMENT THAT THE ISSUE IS COVERED IN FAVOUR OF THE ASSESSEE VIDE ORDER DATED 31-12-2008 IN ITA NOS.1258 & 1259/BANG/2008. 3. DURING THE COURSE OF HEARING ALSO, THE LEARNED C OUNSEL FOR THE ASSESSEE AT THE VERY OUTSET STATED THAT THE ISSUE RAISED BY THE DEPARTMENT IN ITS APPEAL IS SQUARELY COVERED IN FAVOUR OF THE ASSESSEE VIDE ORDER DATED 24-7-2009 IN ITA NO.442/BANG/200 FOR THE ASSESSMENT YEAR 2006-07 WHE REIN THE EARLIER ORDER DATED 31-12-08 IN ITA NOS.1258 & ITA 270(BANG)/2011 PAGE 4 OF 5 1259/BANG/2008 FOR THE ASSESSMENT YEAR 2005-06 HAD BEEN FOLLOWED. COPIES OF THE SAID ORDERS WERE FURNISHED . THE LEARNED DEPARTMENTAL REPRESENTATIVE, ALTHOUGH SUPPORTED THE ORDER OF THE AO, COULD NOT CONTROVERT THE AFORESAID CONTENTI ONS OF THE LEARNED COUNSEL FOR THE ASSESSEE. 4. AFTER CONSIDERING THE SUBMISSIONS OF BOTH THE P ARTIES AND ALSO PERUSING THE MATERIAL ON RECORD, IT IS NOT ICED THAT AN IDENTICAL ISSUE HAVING THE SIMILAR FACTS WAS SUBJEC T MATTER OF ADJUDICATION FOR PRECEDING YEARS I.E. AYS 2005-06 A ND 2006-07 IN ASSESSEES OWN CASE WHICH HAD BEEN DECIDED IN AS SESSEES FAVOUR. WE THINK IT APPROPRIATE TO REPRODUCE THE F INDINGS GIVEN IN PARAS.13 & 14 OF THE ORDER DATED 31-12-2008 IN I TA NOS.1258 & 1259/B/08 FOR THE ASSESSMENT YEAR 2005-0 6, WHICH READ AS UNDER: 13. IN VIEW OF THE ABOVE AND ON OTHER SUBMISSIONS MADE EARLIER IT IS CLEAR THAT THE CONTRIBUTIONS WHE N TREATED AS INVOLUNTARY WILL DEFINITELY BE CAPITAL RECEIPTS NOT LIABLE TO TAX. IN THE ALTERNATIVE ON THE FACTS AND CIRCUMSTANCES OF THE CASE THE SAME ARE TO BE TREATED AS INCOME DERIVED FROM PROPERTY HELD UNDER TRUST. EVEN IF THE INCOME IS ASSESSED UNDER THE HEAD OTHER SOURCES, EVEN THEN A CHARITABLE TRUS T REGISTERED U/S 12A IS ENTITLED TO EXEMPTION U/S 11 FOR THE INCOME SO ASSESSED UNDER OTHER SOURCE. THEREFORE, IT IS INCORRECT TO TAX THE INCOME EVEN UNDER OTHER SOURCES WITHOUT CONSIDERING THE PROVISIONS OF SECTION 11, 12 AND 13 OF THE IT ACT, 1961. IN THIS CONNECTION, USEFUL REFERENCE CAN BE ITA 270(BANG)/2011 PAGE 5 OF 5 MADE TO THE DECISION OF BANGALORE BENCH OF ITAT IN THE CASE OF MBA NAHATA CHARITABLE TRUST (SUPRA) IN WHICH IT WAS HELD THAT EVEN WHEN ADDITIONS ARE MADE U/S 68 OF IT ACT, 1961 THE CHARITABLE TRUST IS ENTI TLED TO EXEMPTION U/S 11 OF THE IT ACT,1961. 14. TO CONCLUDE, WE HOLD THAT THE INCOME BROUGHT TO TAX BY THE ASSESSING OFFICER DENYING THE ASSESSEE EXEMPTION U/S 11 DO NOT HAVE ANY LEGS TO STAND AND ARE DIRECTED TO BE DELETED ON THE FACTS AND CIRCUMSTANCES OF THE RESPECTIVE ASSESSEES CASES. THE ORDER OF THE LEARNED CIT(A) IS REVERED ON THESE ISSUES. BY RESPECTFULLY FOLLOWING THE AFORESAID REFERRED TO EARLIER ORDER OF THE TRIBUNAL, WE DO NOT SEE ANY MERIT IN THIS AP PEAL OF THE DEPARTMENT. 5. IN THE RESULT, THE APPEAL IS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 18 TH OCTOBER,2011 SD/- SD/- (SMT. P. MADHAVI DEVI) JUDICIAL MEMBER (N.K. SAINI) ACCOUNTANT MEMBER BANGALORE: DATED : 18 TH OCTOBER, 2011 EKS COPY TO : 1. APPELLANT 2. RESPONDENT 3. CIT(A) CONCERNED 4. CIT 5. DR, ITAT, BANGALORE 6. GUARD FILE BY ORDER ASSISTANT REGISTRAR, ITAT, BANGALORE