ITO, CHENNAI V. MAC (Educational) Foundation, CHENNAI

ITA 2886/CHNY/2014

• Counselvise Citation: [2017] 128 COUNSELVISE.COM (IT) 4994 (ITAT-CHENNAI)
• Duration Of Justice: 2 year(s) 4 month(s) 18 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 12-04-2017
• Appeal Filed By: Department
• Bench Allotted: C
• Next Hearing Date: 16-01-2017
• Assessment Year: 2011-2012
• Appeal Filed On: 24-11-2014
• Court: TRIBUNAL
• Department Lawyers: M N MAURYA
• Keywords: Charitable institution; Source of fund
• Section: 143(3); 11

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL , C B ENCH, CHENNAI . , ! . , % !& BEFORE SHRI A.MOHAN ALANKAMONY, ACCOUNTANT MEMBER, AND SHRI G. PAVAN KUMAR, JUDICIAL MEMBER ./ ITA NO.2890/MDS/2014 / ASSESSMENT YEAR : 2011-12 THE INCOME TAX OFFICER, (EXEMPTIONS)-IV CHENNAI V. M/S. UNITED EDUCATIONAL FOUNDATION, MAC/ICH BUILDING, VHS CAMPUS, CHENNAI 600 113. PAN: AAATU3411D ( /APPELLANT) ( /RESPONDENT) & ./ ITA NO.2885/MDS/2014 / ASSESSMENT YEAR : 2011-12 THE INCOME TAX OFFICER, (EXEMPTIONS)-IV CHENNAI V. M/S. MAC PUBLIC CHARITABLE TRUST, MAC/ICH BLOCK 2, VHS CAMPUS, ADYAR, TTTI POST, TARAMANI, CHENNAI 600 113. PAN: AAATM0484C ( /APPELLANT) ( /RESPONDENT) & ./ ITA NO.2887/MDS/2014 / ASSESSMENT YEAR : 2011-12 THE INCOME TAX OFFICER, (EXEMPTIONS)-IV CHENNAI V. M/S. MAC CHARITIES, MAC/ICH BLOCK 2, VHS CAMPUS, ADYAR, TTTI POST, TARAMANI, CHENNAI 600 113. PAN: AAATM0483F ( /APPELLANT) ( /RESPONDENT) & 2 I.T.A. NOS.2885 2887,2889 & 2890/MDS/2014 ./ ITA NO.2886/MDS/2014 / ASSESSMENT YEAR : 2011-12 THE INCOME TAX OFFICER, (EXEMPTIONS)-IV CHENNAI V. M/S. MAC (EDUCATIONAL) FOUNDATION, MAC/ICH BLOCK 2, VHS CAMPUS, ADYAR, CHENNAI 600 113. PAN: AAATM0523A ( /APPELLANT) ( /RESPONDENT) & ./ ITA NO.2889/MDS/2014 / ASSESSMENT YEAR : 2011-12 THE INCOME TAX OFFICER, (EXEMPTIONS)-IV CHENNAI V. M/S. SRI VENKATESWARA EDUCATIONAL & HEALTH TRUST, NO.1/3A, RIVER VIEW ROAD, KOTTURPURAM, CHENNAI - 600085 PAN: AAATS2327L ( /APPELLANT) ( /RESPONDENT) /APPELLANT BY : SHRI M.N. MAURYA, CIT /RESPONDENTS BY : SHRI SAROJ KUMAR PARIDA, ADVOCATE /DATE OF HEARING : 16.01.2017 /DATE OF PRONOUNCEMENT : 12.04.2017 / O R D E R PER A. MOHAN ALANKAMONY, ACCOUNTANT MEMBER: THESE APPEALS ARE FILED BY THE REVENUE AGGRIEVED B Y THE ORDERS OF THE LD. COMMISSIONER OF INCOME TAX (A PPEALS) IN 3 I.T.A. NOS.2885 2887,2889 & 2890/MDS/2014 ITA NOS. 161/14-15, 192/14-15, 191/14-15, 193/14-15 , 164/14-15 DATED 01.08.2014 PASSED U/S. 250(6) R.W.S. 143(3) OF THE ACT. SINCE THE ISSUES IN ALL THESE APPEALS ARE INTER CON NECTED AND IDENTICAL THEY ARE HEARD AND DISPOSE OFF TOGETHER F OR THE SAKE OF CONVENIENCE. 2. ALL THE ASSESSEES HAVE RAISED SEVERAL GROUND S IN THEIR RESPECTIVE APPEALS HOWEVER THEY ARE BRIEFLY STATED HEREIN BELOW FOR ADJUDICATION. 2.1 M/S. UNITED EDUCATIONAL FOUNDATION IN ITA NO. 2890/MDS/2014 FOR THE ASSESSMENT YEAR 2011-12:- THE REVENUE HAS RAISED SEVERAL GROUNDS IN ITS APP EAL, HOWEVER THE CRUX OF THE ISSUE IS THAT, THE REVENUE IS AGGRIEVED BY THE ORDER OF THE LD. CIT(A), WHO HAS HELD THAT THE SUBSTANTIVE ADDITION MADE BY THE LD. AO FOR RS.22,03,77,500/- BY WITHDR AWING THE BENEFIT OF SECTION 11 OF THE ACT DUE TO RECEIPT OF NON-VOLUNTARY CONTRIBUTION / CAPITATION FEES, IS NOT TENABLE AND THE ASSESSEE WOULD BE ENTITLED FOR THE BENEFIT OF THE SECTION 11 OF THE ACT. 4 I.T.A. NOS.2885 2887,2889 & 2890/MDS/2014 2.2 M/S . MAC PUBLIC CHARITABLE TRUST IN ITA NO. 2885/MDS/2014 FOR THE ASSESSMENT YEAR 2011-12: THE REVENUE HAS RAISED SEVERAL GROUNDS IN ITS APPEAL, HOWEVER THE CRUX OF THE ISSUE IS THAT THE REVENUE IS AGGRIEVED BY THE ORDER OF THE LD. CIT(A) WHO HAD DELETED THE ADDITION MADE BY THE LD. AO PROTECTIVELY FOR RS.3,60,00,000/- ON ACCOUNT OF NON-VOLUNTARY CONTRIBUTION / CAPITATION FEES BY HOLDING THAT THER E IS NO VIOLATION OF THE ACT. 2.3. M/S. MAC CHARITIES IN ITA NO.2887/MDS/2014 FOR THE ASSESSMENT YEAR 2011-12:- THE REVENUE HAS RAISED SEVERAL GROUNDS IN ITS APP EAL, HOWEVER THE CRUX OF THE ISSUE IS THAT THE REVENUE IS AGGRIEVED BY THE ORDER OF THE LD. CIT(A) WHO HAD DELETED THE ADD ITION MADE BY THE LD. AO PROTECTIVELY FOR RS.10,65,00,000/- ON ACCOUNT OF NON- VOLUNTARY CONTRIBUTION / CAPITATION FEES BY HOLDING THAT THERE IS NO VIOLATION OF THE ACT. 5 I.T.A. NOS.2885 2887,2889 & 2890/MDS/2014 2.4 M/S. MAC (EDUCATIONAL) FOUNDATION IN ITA NO. 2886/MDS/2014 FOR THE ASSESSMENT YEAR 2011-12:- THE REVENUE HAS RAISED SEVERAL GROUNDS IN ITS APPEA L, HOWEVER THE CRUX OF THE ISSUE IS THAT THE REVENUE IS AGGRIEVED BY THE ORDER OF THE LD. CIT(A) WHO HAD DELETED THE ADD ITION MADE BY THE LD. AO PROTECTIVELY FOR RS.10,00,000/- ON ACCOUNT OF NON- VOLUNTARY CONTRIBUTION / CAPITATION FEES BY HOLDING THAT THERE IS NO VIOLATION OF THE ACT. 2.5 M/S. SRI VENKATESWARA EDUCATIONAL & HEALTH TRUST IN ITA NO. 2889/MDS/2014 FOR THE ASSESSMENT YEAR 2011-12:- THE REVENUE HAS RAISED SEVERAL GROUNDS IN ITS APP EAL, HOWEVER THE CRUX OF THE ISSUE IS THAT THE REVENUE IS AGGRIEVED BY THE ORDER OF THE LD. CIT(A) WHO HAD DELETED THE SUBSTANTIVE ADDITION MADE BY THE LD. AO FOR RS.9,90,50,000/- ON ACCOUNT OF NON-VOLUNTARY CONTRIBUTION / CAPITATION FEES BY HOL DING THAT THERE IS NO VIOLATION OF THE ACT. 6 I.T.A. NOS.2885 2887,2889 & 2890/MDS/2014 3. THE BRIEF FACTS OF THE CASE ARE THAT ALL THESE A SSESSEE TRUST ARE EITHER ENGAGED IN THE ACTIVITY OF PROMOTING EDU CATION IN THE FORM OF CHARITY OR OTHER CHARITABLE ACTIVITIES, FIL ED THEIR RESPECTIVE RETURN OF INCOME ADMITTING NIL INCOME FOR THE RELEV ANT ASSESSMENT YEAR. SUBSEQUENTLY IN THE CASE OF ALL THE ASSESSEES THE ASSESSMENT WAS TAKEN UP FOR SCRUTINY AND THEREAFTER ASSESSMENT U/S. 143(3) OF THE ACT WAS COMPLETED ON 31.03.2014, WHEREIN THE LD. AO WITHDREW THE BENEFIT OF SECTION 11 OF THE AC T BY HOLDING THAT ALL THE ASSESSEE TRUSTS HAD RECEIVED NON-VOLUN TARY CONTRIBUTION / CAPITATION FEES. THUS ADDITION WAS MADE TOWARDS THE DONATIONS RECEIVED. 3.1 DURING THE COURSE OF ASSESSMENT PROCEEDINGS, IT WAS OBSERVED BY THE LD. AO IN THE CASE OF M/S. UNITED E DUCATION FOUNDATION THAT THE ASSESSEE HAD RECEIVED DONATION OF RS.22,03,77,500/- FROM 1206 PERSONS ON VARIOUS DATE S. OUT OF THE ABOVE MENTIONED SUM THE ASSESSEE HAD DONATED RS.18,74,67,000/- TO VARIOUS INSTITUTIONS. IT FURT HER CAME TO LIGHT FROM THE SWORN STATEMENTS OBTAINED FROM THE DONORS THAT THE DONATIONS WERE MADE IN ORDER TO SECURE ADMISSION FO R THEIR WARDS/RELATIVES IN SRI VENKATESWARA COLLEGE, SRIPER UMBUDUR, 7 I.T.A. NOS.2885 2887,2889 & 2890/MDS/2014 KANCHEEPURAM DISTRICT. FOR INSTANCE SHRI R. JEEVAR ATHINAM VIDE HIS SWORN STATEMENT DATED 17.02.2014 HAD REPLIED ST ATING THAT HE HAD DONATED A SUM OF RS.6 LAKHS TO THE ASSESSEE TRU ST TO SECURE ADMISSION OF HIS UNCLES SON MASTER M. KARTHIKEYAN IN SRI VENKATESWARA COLLEGE TO PURSUE BACHELOR OF ENGINEER ING (MECHANICAL) COURSE. HE FURTHER STATED THAT THE AM OUNT PAID AS DONATION BY HIM WAS RECEIVED FROM HIS UNCLE. SIMIL ARLY SHRI RAVI ANANTHA PADMANABAN VIDE HIS SWORN STATEMENT DATED 1 7.02.2014 HAD STATED THAT HE HAD DONATED RS.5,50,375/- TO THE ASSESSEE TRUST FOR SECURING THE ADMISSION OF HIS SISTERS SON MAST ER M. VISWESH IN SRI VENKATESWARA COLLEGE TO PURSUE BACHELOR OF ENGI NEERING (COMPUTER SCIENCE) COURSE. HE FURTHER STATED THAT THE AMOUNT PAID AS DONATION BY HIM WAS RECEIVED FROM HIS SISTE R. FURTHER SHI K. KRISHNAN IN HIS SWORN STATEMENT DATED 06.02.2014 HAD REPLIED STATING THAT HE HAD PAID RS.7 LAKHS TO THE ASSESSEE TRUST FOR SECURING THE ADMISSION OF HIS COUSINS SON MASTER S . DEIVANAYAGAM IN SRI VENKATESWARA COLLEGE TO PURSUE BACHELOR OF ENGINEERING (MECHANICAL) COURSE. HE FURTHER STATED THAT THE AMOUNT PAID AS DONATION BY HIM WAS RECEIVED FROM HI S COUSIN. 8 I.T.A. NOS.2885 2887,2889 & 2890/MDS/2014 3.2 DRAWING INFERENCE FROM THE ABOVE, THE LD. AO OP INED THAT PERSONS WHO DESIRE TO ADMIT THEIR WARDS IN SRI VENK ATESWARA ENGINEERING COLLEGE WERE FORCED TO PAY DONATION TO THE ASSESSEE TRUST WHICH AMOUNTS TO CAPITATION FEE. THE LD. AO FURTHER ANALYZED THE FUND FLOW OF ALL THE ASSESSEES TRUST IN THE FOL LOWING MANNER:- 3.3 THE ASSESSEE REBUTTED TO THE FINDINGS OF THE LD . AO VIDE ITS LETTER DATED 18.03.2014 AS UNDER:- .B. THE ASSESSEE TRUST HAS INDEED COLLECTED DONA TIONS FROM SEVERAL INDIVIDUALS. THE FACT THAT THE DONATIONS H AVE BEEN GIVEN TO THE ASSESSEE TRUST IS NOT DENIED BY THESE INDIVI DUALS. THE DONORS HAVE GIVEN LETTERS TO ASSESSEE TRUST THAT TH E DONATIONS ARE VOLUNTARY. THE ASSESSEE TRUST IS AN INDEPENDENT TR UST AND IS IN NO WAY CONNECTED TO THE SRI VENKATESWARA COLLEGE, WHIC H WE ARE 9 I.T.A. NOS.2885 2887,2889 & 2890/MDS/2014 GIVEN TO UNDERSTAND IS A TELUGU MINORITY INSTITUTIO N. THE ASSESSEE TRUST IS THEREFORE IN NO POSITION TO SECUR E ADMISSIONS FOR THE DONORS AS ALLEGED. MOREOVER, IT APPEAR FROM TH E STATEMENTS OF THE DONORS THAT THE ADMISSIONS HAVE BEEN OBTAINE D NOT FOR THEMSELVES BUT FOR SOME FRIENDS OR RELATIVES. THE DONATIONS ARE THEREFORE VOLUNTARY ONLY, AS THE TRUST HAS NOT REND ERED ANY SERVICE TO THE DONORS LEAVE ALONE SECURE SEATS FOR THE DONORS IN SRI VENKATESWARA COLLEGE. C. AS REGARDS DONATIONS BY THE ASSESSEE TO MAC CHA RITIES ETC., THESE ARE TRUST WHICH ARE REGISTERED U/S.12A OF THE ACT AND APPLYING THEIR INCOME FOR CHARITABLE PURPOSE. THER EFORE THE DONATIONS ARE FOR THE PURPOSE OF THE OBJECTS OF THE ASSESSEE TRUST AND HAVE BEEN PROPERLY APPLIED FOR. IT IS SETTLED LAW THAT DONATIONS TO OTHER TRUST IS PROPER APPLICATION OF F UNDS. THEREFORE THERE IS NOTHING WRONG IN THE DONATIONS G IVEN TO MAC CHARITIES ETC., AND IS PART OF THE NORMAL ACTIVITIE S OF THE TRUST. AS A MATTER OF POLICY THE ASSESSEE TRUST REGULARLY DON ATES TO OTHER TRUST AFTER HAVING DONE A THOROUGH STUDY ON EXISTIN G/PROPOSED ACTIVITIES AND ANTECEDENTS OF THE DONEE TRUST 3.4 SIMILARLY WITH RESPECT TO THE SAME ALLEGATIONS THE ASSESSEES TRUST M/S. MAC PUBLIC CHARITABLE TRUST REPLIED TO T HE LD. AO AS FOLLOWS:- A) AS FAR AS THE ASSESSEE TRUST IS CONCERNED THE DONA TIONS ARE VOLUNTARY ONLY. THE TRUST HAS NOT IN ANY WAY SECUR ED ADMISSION IN SCVE COLLEGE FOR THE DONORS WHO HAPPEN TO BE TRU STS ONLY. B) THE ASSESSEE HAS ALSO SHOWN THESE DONATIONS AS INCO ME ONLY AND APPLIED THE SAME FOR CHARITABLE PURPOSES IN ACC ORDANCE WITH LAW. DONATIONS TO OTHER TRUSTS IS A PERMISSIB LE APPLICATION OF FUNDS. 10 I.T.A. NOS.2885 2887,2889 & 2890/MDS/2014 C) THERE IS NO INTENTION TO EVADE TAX AS THESE ARE GEN UINE TRANSACTIONS PROPERLY ACCOUNTED FOR AND DULY CONFIR MED BY ALL THE CONCERNED PARTIES. D) MERELY BECAUSE THERE ARE SOME ISSUES WITH REGARDS T O THE DONOR TRUST, THE DONATIONS RECEIVED BY THE ASSESSEE TRUST DOES NOT BECOME INVOLUNTARY. THE ASSESSEE TRUST HAS BEEN RE GULARLY RECEIVING DONATIONS AND HAS BEEN APPLYING THE SAME FOR CHARITABLE PURPOSE. 3.5 THE ASSESSEE SRI VENKATESWARA EDUCATIONAL & HEA LTH TRUST ALSO RESPONDED TO THE SHOW-CAUSE NOTICE OF THE LD.A O VIDE ITS LETTER DATED 19.03.2014 AS UNDER:- .A. THE ASSESSEE TRUST IS RUNNING THE SVCE COLLEG E WHICH IS ONE OF THE MOST REPUTED COLLEGES IN THE COUNTRY. B. THE COLLEGE COLLECTS FEES FROM THE STUDENT S IN ACCORDANCE WITH THE AICTE NORMS AS MAY BE APPLICABLE TO A MINO RITY INSTITUTION. C. APART FROM THE FEES COLLECTED FROM THE STUDE NTS ON ACCOUNT OF TUITION FEES, CAMPUS RECRUITMENT, COLLEGE TRANSP ORT ETC THE TRUST RECEIVES SOME DONATIONS FROM TRUSTS WITH SPEC IFIC DIRECTION THAT THESE DONATIONS SHALL FORM PART OF THE CORPUS. NO DONATIONS HAVE BEEN COLLECTED FROM ANY STUDENT DIRE CTLY OR INDIRECTLY BY THE ASSESSEE TRUST. AS STATED EARLIE R EVEN THE FEES COLLECTED FROM THE STUDENTS ARE AS PER STIPULATED N ORMS. D. AS REGARDS THE DONATIONS RECEIVED FROM THE MA C TRUST ETC THESE ARE VOLUNTARY ONLY, AS IS EVIDENCED BY THEIR LETTERS WHICH HAVE ALREADY BEEN PRODUCED TO YOUR GOODSELVES DURIN G ASSESSMENTS. THE DONOR TRUSTS HAVE NOT STATED THAT THESE ARE NOT VOLUNTARY DONATIONS. THE DONORS ARE SEPARATE TRUST S WITH NO 11 I.T.A. NOS.2885 2887,2889 & 2890/MDS/2014 COMMON TRUSTEES. THE ASSESSEE TRUSTS HAVE ISSUED V ALID RECEIPTS FOR THESE DONATIONS, PROPERLY ACCOUNTED FOR THE SAM E AND THE DONORS TRUSTS ARE IDENTIFIABLE AND SEPARATELY ASSES SED TO TAX. THEREFORE, IF THERE ARE SOME ISSUES REGARDING THE S OURCE OF FUNDS FOR THE DONOR TRUSTS THE SAME CANNOT BE A GRO UND FOR THE CORPUS DONATION RECEIPT TO BE CONSIDERED AS INCOME. SECTION 12(1) PROVIDES THAT ANY VOLUNTARY CONTRIBUTION RECE IVED BY A TRUST WITH A SPECIFIC DIRECTION THAT SHALL FORM PAR T OF THE CORPUS IS NOT DEEMED TO BE INCOME IN THE HANDS OF THE TRUS T. E. THE ALLEGATION THAT THE ASSESSEE TRUST IS SYS TEMATICALLY ADOPTING THIS ROUTE TO EVADE TAX IS DENIED. THE AS SESSEE TRUST HAS BEEN COMPLYING WITH ALL THE RELEVANT PROVISIONS OF THE INCOME TAX ACT IN THE TRUE SPIRIT ALL THESE YEARS. HOWEVER, WITHOUT PREJUDICE TO THE STAND THAT THE CORPUS DONA TIONS DO NOT FORM PART OF INCOME, THE TRUST WOULD STILL HAVE SPE NT MORE THAN 85% OF ITS GROSS RECEIPTS TOWARDS ITS OBJECTS EVEN IF THESE CORPUS DONATIONS WERE TO BE CONSIDERED AS INCOME. UNDER S UCH CIRCUMSTANCES, THERE IS NO REQUIREMENT FOR THE ASSE SSEE TRUST TO EVADE TAX. IT IS THEREFORE PRAYED THAT THE PROCEED INGS PURSUANT TO THE SCN ISSUED MAY BE DROPPED IN VIEW OF THE FAC T THAT: 1. THE TRUST IS CARRYING ON EDUCATIONAL ACTIVITI ES IN ACCORDANCE WITH LAW. 2. THE DONATION RECEIVED TOWARDS CORPUS ARE CONFIRMED BY THE DONORS WHO ARE INDEPENDENT TRUSTS WITH THEIR OWN SOURCES OF INCOME. THE DONORS HAVE NOT STATED THAT THE DONATIONS ARE NOT VOLUNTARY. 3. THERE IS NO EVIDENCE TO EVADE TAX BY THIS ROU TE AS THE ACTIVITIES OF THE TRUST FULLY QUALIFY FOR EXEMP TION UNDER SECTION 11-12. 4. THE VARIOUS TRUSTS REFERRED TO IN THE SCN ARE ALL PROPERLY REGISTERED U/S.12A AND HAVE BEEN REGULAR I N FILING RETURNS AND IN PROPER APPLICATION OF FUNDS. THE AS SESSEE TRUST IS 12 I.T.A. NOS.2885 2887,2889 & 2890/MDS/2014 A MINORITY INSTITUTION AND IS IN NO WAY CONNECTED T O THE VARIOUS TRUSTS REFERRED TO IN THE SCN TO ALLEGE A NEXUS. T HE TRUSTS HAVE BEEN REGULAR DONORS TO THE ASSESSEE TRUST FOR SEVER AL YEARS. 3.6 THE ASSESSEE M/S. MAC CHARITIES RESPONDED TO TH E SHOW CAUSE NOTICE ISSUED BY THE LD.AO ON 07.03.2014 AS F OLLOWS: THEREFORE YOUR PROPOSAL TO TREAT THE DONATION OF R S.10.65CR AS A NOT VOLUNTARY CONTRIBUTION MAY BE DROPPED IN V IEW OF THE FOLLOWING:- A) AS FAR AS THE ASSESSEE TRUST IS CONCERNED THE DONAT IONS ARE VOLUNTARY ONLY. THE TRUST HAS NOT IN ANY WAY S ECURED ADMISSION IN SVCE COLLEGE OF THE DONORS WHO HAPPEN TO BE TRUSTS ONLY. B) THE ASSESSEE HAS ALSO SHOWN THESE DONATIONS AS INCO ME ONLY AND APPLIED THE SAME FOR CHARITABLE PURPOSES I N ACCORDANCE WITH LAW. DONATIONS TO OTHER TRUSTS IS A PERMISSIBLE APPLICATION OF FUNDS. C) THERE IS NO INTENTION TO EVADE TAX AS THESE ARE GEN UINE TRANSACTIONS PROPERLY ACCOUNTED FOR AND DULY CONFIR MED BY ALL THE CONCERNED PARTIES. D) MERELY BECAUSE THERE ARE SOME ISSUES WITH REGARDS T O THE DONOR TRUST, THE DONATIONS RECEIVED BY THE ASSESSEE TRUST DOES NOT BECOME INVOLUNTARY. THE ASSESSEE TRUST HA S BEEN REGULARLY RECEIVING DONATIONS AND HAS BEEN APPLYING THE SAME FOR CHARITABLE PURPOSES. IN VIEW OF THE ABOVE, IT IS PRAYED THAT THE ISSUES RAISED IN THE SHOW CAUSE NOTICE MAY BE DROPPED. 13 I.T.A. NOS.2885 2887,2889 & 2890/MDS/2014 3.7 IN THE CASE OF M/S. MAC EDUCATION FOUNDATION, T HE LD.AR SUBMITTED BEFORE THE LD.CIT(A) VIDE WRITTEN S UBMISSION DATED 12.07.2014 AS FOLLOWS: 1. NO DONATIONS HAVE BEEN COLLECTED BY THE APPELLANT TRUST FROM ANY OF THE STUDENTS/PARENTS OF THE COLLEGE. 2. THE DONORS TO UNITED EDUCATION FOUNDATION ARE ALSO NOT STUDENTS/PARENTS OF SRI VENKATESWARA COLLEGE. 3. IF THE DONORS OF UNITED EDUCATION FOUNDATION HAD SUBMITTED THAT THE DONATIONS WERE FOR SECURING SEAT S THE LEARNED ASSESSING OFFICER OUGHT TO HAVE EXAMINED TH E RELEVANT STUDENT/PARENT BEFORE CONCLUDING THAT THE STATEMENTS OF THE DONORS WERE TRUE. 4. THE FACT THAT THE DONORS TO THE APPELLANT TRUST WER E NOT STUDENTS/PARENTS WERE NOT CONSIDERED BY THE AO. 5. THE DONOR TO THE APPELLANT TRUST HAS CONFIRMED THE DONATIONS. MERELY BECAUSE THERE WERE SOME ISSUES I N THE SOURCE OF SOME OF THE DONATIONS IF CANNOT BE CONCLU DED THAT THE DONATIONS ARE NOT VOLUNTARY. 3.8 HOWEVER THE LD. AO WAS OF THE OPINION THAT ALL THE TRANSACTIONS ARE INTERLINKED BECAUSE ALL THE ASSESS EE TRUSTS WERE MANAGED BY THE SAME GROUP OF FOUNDERS. SINCE FORCE D DONATIONS AND THE CAPITATION FEES ARE IN VIOLATION OF THE TAM IL NADU STATE LEGISLATIVE ACT WHICH PREVENTS THE EDUCATIONAL INST ITUTIONS FROM ACCEPTING CAPITATION FEES, THE LD. AO WITHDREW THE BENEFIT OF SECTION 11 OF THE ACT IN THE CASE OF ALL THE ABOVE MENTIONED ASSESSEE TRUSTS BY HOLDING THAT THEY HAD RECEIVED E ITHER FORCED 14 I.T.A. NOS.2885 2887,2889 & 2890/MDS/2014 DONATIONS OR CAPITATION FEES. ACCORDINGLY ADDITION S WERE MADE BY THE LD. AO IN THE CASE OF ALL THE ASSESSEE TRUSTS E ITHER SUBSTANTIALLY OR PROTECTIVELY. WHILE DOING SO, THE LD. AO ALSO RELIED IN THE CASE P.S. GOVINDASAMY NAIDU V. ACIT (2010) I N 324 ITR 44 (MAD) WHEREIN THE HONBLE JURISDICTIONAL HIGH COURT UPHELD THE ADDITION MADE ON ACCOUNT OF RECEIPT OF CAPITATION F EES THOUGH IT WAS TERMED AS CORPUS RECEIPT, AND IN THE CASE MISS MOHINI JAIN V. STATE OF KARNATAKA (1992) 2 SSC 666 (SC) WHEREIN TH E HONBLE SUPREME COURT CONFIRMED THE ADDITION BY STATING THA T THE CAPITATION FEES IS NOTHING BUT A PRICE FOR SELLING EDUCATION. 4. ALL THE ABOVE ASSESSEE TRUSTS CARRIED THE MATTER BEFORE THE LD. CIT(A). 5.1 IN THE CASE OF M/S. UNITED EDUCATIONAL FOUN DATION, THE LD. CIT(A) AFTER EXAMINING THE FACTS OBSERVED, THAT THE ASSESSEE TRUST HAD EXTENDED DONATION TO THE FOLLOWING TRUSTS FOR T HE RELEVANT ASSESSMENT YEAR :- MAC PUBLIC CHARITABLE TRUST RS. 3,60,00,000.00 MAC CHARITIES RS.10,65,00,000.00 MARUTI EDUCATIONAL TRUST RS. 75,00,000.00 MADHURITAI DESHMUKH SEWA PRATISHTHAN RS. 25,00 ,000.00 ARVINDBABU DESHMUKH PRATISHTHAN RS. 25,00,000. 00 15 I.T.A. NOS.2885 2887,2889 & 2890/MDS/2014 ROHIKHAND EDUCATIONAL & CHARITABLE TRUST RS. 75 ,00,000.00 MITRA PARISHAD RS. 50,00,000.00 GYAN SAGAR FOUNDATION RS. 25,00,000.00 TALKARA CHARITABLE TRUST RS. 75,00,000.00 AR L. FAMILY CHARITABLE TRUST RS. 5,00,000. 00 CHILD HEALTH CONGRESS, DELHI RS. 25,00,000.00 TYAGI EDUCATION FOUNDATION RS. 36,00,000.00 TAMIL ISAI SANGAM RS. 23,67,000.00 MAC (EDUCATIONAL) FOUNDATION RS. 10,00,000.00 --------------------- RS.18,74,67,000.00 ---------------------- 5.2 THE LD. CIT(A) FURTHER OBSERVED AS FOLLOWS:- I. PERUSAL OF THE LETTERS FROM THE DONORS INDICATED THAT THE AMOUNT RECEIVED BY THE ASSESSEE TRUST WERE VOLUNTAR Y DONATIONS. II. ONLY IN SOME OF THE SWORN STATEMENTS THE DONORS HAD STATED THAT THE AMOUNT PAID WAS FOR SECURING ADMISSION OF THEIR WARDS/RELATIVES IN SRI VENKATESWARA COLLEGE OF ENGI NEERING. III. HOWEVER, THE SAME DONORS HAD RESPONDED EARLIER BY STATING THAT THEY HAD ADVANCED VOLUNTARY DONATIONS. IV. THUS THERE WERE CONFLICTING STATEMENTS. V. THE LD. AO DID NOT EXAMINE THE SOURCE OF THE HUG E DONATION PAID BY THE INDIVIDUAL DONORS WHICH SHOWS THAT THE REVENUE 16 I.T.A. NOS.2885 2887,2889 & 2890/MDS/2014 WAS LENIENT ON THE DONORS FOR DETECTING UNDISCLOSED INCOME IF ANY. VI. SOME OF THE DONORS WHO PAID HUGE DONATIONS WERE NOT ASSESSED TO TAX. VII. SOME DONORS ALSO STATED THAT THEY WERE MEAR NA ME LENDERS. VIII. THERE WERE STATEMENTS BY THE DONORS STATING THAT THE AMOUNT CONTRIBUTED BY THEM AS DONATIONS WHERE IN FA CT AMOUNT RECEIVED FROM THE PARENTS OF THE WARDS WHO H AD BEEN ADMITTED IN SRI VENKATESWARA COLLEGE OF ENGINE ERING. IX. IF THAT BEING THE CASE THE SOURCE OF SUCH DONAT IONS WERE NOT EXAMINED IN THE CASE OF THE PARENTS OF THE WARDS. X. THE MANNER IN WHICH COERCIVE INFLUENCE WERE ADMI NISTERED FOR OBTAINING DONATION WAS ALSO NOT ESTABLISHED. XI. DONATIONS WERE RECEIVED BY SRI VENKATESWARA ENG INEERING COLLEGE FROM DIFFERENT ENTITIES. XII. THE TRUSTEES OF ALL THE ASSESSEE TRUST WERE DI FFERENT AND THEREFORE THERE IS NO LINK BETWEEN THE INSTITUTIONS . XIII. THE DECISION IN THE CASE OF PSG CHARITIES V. ACIT REPORTED IN 324 ITR 44 IS NOT APPLICABLE TO THE FACTS OF TH E PRESENT CASE BECAUSE IN THAT CASE STUDENTS WERE ADMITTED IN THE 17 I.T.A. NOS.2885 2887,2889 & 2890/MDS/2014 COLLEGES RUN BY THE ASSESSEE TRUST ITSELF AND THE Q UID-PRO-QUO WAS ESTABLISHED BEYOND DOUBT. XIV. SRI VENKATESWARA EDUCATIONAL AND HEALTH TRUST IS A LINGUISTIC MINORITY INSTITUTION WHEREAS THE OTHER TRUSTS WERE NORMAL TRUSTS. XV. THERE IS NO VIOLATION OF SECTION 13(1)(C) R.W.S . 13(3) OF THE ACT, BECAUSE THE DONATIONS RECEIVED BY THE TRUST AR E SPENT ACCORDING TO THE OBJECTS OF THE TRUST. XVI. THE ASSESSEE TRUST NOT ONLY DONATED MONEY TO SRI VENKATASWARA EDUCATIONAL AND HEALTH TRUST BUT ALSO DONATED MONEY TO OTHER UNCONNECTED TRUSTS. XVII. THERE IS NO DIRECT NEXUS BETWEEN THE DONATION RECEIVED BY THE ASSESSEE TRUST AND THE ADMISSIONS SECURED IN AN EDUCATIONAL INSTITUTION RUN BY A DIFFERENT TRUST. XVIII. THE ENTIRE DONATIONS RECEIVED BY THE ASSESSE E TRUST WERE SPREAD OVER TO DIFFERENT CHARITABLE INSTITUTIONS WH O WERE NOT CONNECTED TO EACH OTHER. XIX. THERE IS NO PROHIBITION IN LAW FOR PARENTS OR RELATIVES OF THE STUDENTS ADMITTED IN SRI VENKATESWARA EDUCATIONAL A ND HEALTH TRUST TO CONTRIBUTE DONATION TO CONNECTED TR USTS. RELIANCE WAS PLACED IN THE CASE CIT V. VELLORE INST ITUTE OF 18 I.T.A. NOS.2885 2887,2889 & 2890/MDS/2014 TECHNOLOGY DECIDED BY THE CHENNAI BENCH OF THE TRIB UNAL, IN ITA NO.1332/MDS/2010 DATED 09.06.2011. XX. THE DONATIONS CONTRIBUTED TO THE ASSESSEE TRUST BY INDIVIDUALS ARE VOLUNTARY AND DIRECTED TO BE HELD A S CORPUS FUNDS BY SUCH INDIVIDUALS. HENCE IT CANNOT BE TRE ATED AS THE INCOME OF THE TRUST. MOREOVER THE ENTIRE DONATIONS WERE EXPENDED BY THE ASSESSEE TRUST FOR THE PURPOSE OF M EETING THE OBJECTIVES OF THE TRUST. RELIANCE WAS PLACED I N THE CASE ACIT V. BALAJI EDUCATIONAL AND CHARITABLE PUBLIC TR UST DECIDED BY THE CHENNAI BENCH OF THE TRIBUNAL REPORT ED IN 15 TAXMAN.COM 53. BASED ON THE ABOVE OBSERVATIONS, THE LD.C IT(A) HELD IN THE CASE OF THE M/S. UNITED EDUCATIONAL FOUNDATION THAT, THE DONATION EXTENDED BY THE DONORS CANNOT BE TREATED A S NON- VOLUNTARY CONTRIBUTION. FURTHER THE ASSESSEE TRUST HAD NOT VIOLATED ANY OF THE OBJECTS OF THE TRUST AND THE GENUINENESS OF THE TRUST IS ALSO ESTABLISHED. THEREFORE EXEMPTION U/S. 11 OF THE ACT CANNOT BE DENIED TO THE ASSESSEE TRUST. 19 I.T.A. NOS.2885 2887,2889 & 2890/MDS/2014 6. IN THE CASE OF M/S. MAC PUBLIC CHARITABLE TRUST, THE LD. CIT(A) ARRIVED AT THE FOLLOWING CONCLUSION: A. THERE IS NO PROHIBITION IN LAW FOR A CHARITABLE INS TITUTION TO RECEIVE DONATION FROM ANOTHER CHARITABLE INSTITUTIO N. B. THERE IS ALSO NO PROHIBITION IN LAW FOR A CHARITABL E INSTITUTION TO GIVE DONATION TO ANOTHER CHARITABLE INSTITUTION. C. THE DONATION GIVEN BY THE ASSESSEE TRUST IS APPLICA TION OF INCOME AND HENCE EXEMPT U/S. 11 OF THE ACT. D. THE DONATION RECEIVED AND GIVEN BY THE ASSESSEE TRU ST ARE VOLUNTARY IN NATURE. E. THE ASSESSEE TRUST IS NOT CONNECTED WITH RECEIPT OF DONATION/CAPITATION FEE BY ANY TRUST FROM ANYONE. F. THE ASSESSEE TRUST IS NOT CONNECTED WITH THE ADMISS ION OF STUDENTS TO ANY ENGINEERING COLLEGE. WHILE DOING SO THE LD. CIT(A) MADE THE FOLLOWING OB SERVATIONS:- I. THOUGH DR. A.C. MUTHIAH WAS THE FOUNDER TRUSTEE OF SRI VENKATESWARA EDUCATIONAL AND HEALTH TRUST, HE IS NO T A TRUSTEE OF THE TRUST DURING THE RELEVANT ASSESSMENT YEAR. II. THE DONATION GIVEN BY M/S. UNITED EDUCATION FOU NDATION TO THE ASSESSEE TRUST IS WITHOUT ANY COERCION ON THE P ART OF THE ASSESSEE TRUST. 20 I.T.A. NOS.2885 2887,2889 & 2890/MDS/2014 III. THE LD. AO DID NOT BRING ANY EVIDENCE TO PROVE THAT THE DONATION GIVEN BY M/S. UNITED EDUCATION FOUNDATION TO THE ASSESSEE TRUST IS DUE TO UNDUE INFLUENCE OR INTIMID ATION. IV. THE ALLEGE COLLECTION OF CAPITATION FEES BY M/S . UNITED EDUCATION FOUNDATION TRUST FOR ADMISSION TO ENGINEE RING COLLEGE OWNED BY SRI VENKATESWARA EDUCATIONAL AND H EALTH TRUST IS NO WAY CONNECTED WITH THE ACTIVITY OF THE TRUST. V. NO EVIDENCE WAS BROUGHT ON RECORD BY THE LD. AO TO PROVE THAT THE ASSESSEE TRUST EXERTED INFLUENCE ON THEIR PARENTS, RELATIVE AND FRIENDS OF THE PARENTS OF THE STUDENTS TO PAY DONATION / CAPITATION FEES TO M/S. UNITED EDUCATION FOUNDATION TRUST IN ORDER TO GET EDUCATION IN THE E NGINEERING COLLEGE OWNED BY SRI VENKATESWARA EDUCATIONAL AND H EALTH TRUST. VI. THE ASSESSEE TRUST HAS RECEIVED DONATION FROM O THER TRUSTS AND ALSO PAID DONATION TO VARIOUS OTHER UNCONNECTED TRUSTS. VII. THE DEPOSITS OF RS.17,95,000/- WITH M/S. SPK M AC CHARITABLE TRUST IS NOTHING BUT A LOAN TRANSACTION AND ON SIMILAR OCCASION THE TRIBUNAL IN THE ASSESSEES OWN CASE HAD HELD THAT SUCH TRANSACTION IS NOT IN VIOLATION OF S ECTION 13 OF THE ACT. 21 I.T.A. NOS.2885 2887,2889 & 2890/MDS/2014 VIII. RELIANCE WAS PLACED IN THE DECISION OF THE HO NBLE DELHI HIGH COURT IN THE CASE CIT V. SRI RAM MEMORIAL FOUN DATION LIMITED 269 ITR 35 WHICH CONCURRED WITH THE DECISIO N OF THE HONBLE GUJARAT HIGH COURT IN THE CASE CIT V SARLAD EVI SARABHAI TRUST REPORTED IN 172 ITR 698 WHEREIN IT W AS HELD THAT WHEN THE DONOR CHARITABLE TRUST DONATES ITS IN COME TO ANOTHER CHARITABLE TRUST PROVISIONS OF SEC 11(1)(A) CAN BE SAID TO HAVE BEEN MET. IX. RELIANCE WAS ALSO PLACED IN THE DECISION OF THE HON BLE BOMBAY HIGH COURT IN THE CASE CIT V TRUSTEES OF THE JADI TRUST REPORTED IN 133 ITR 494 WHEREIN IT WAS HELD T HAT THE TRUST TO WHICH SEC.11 APPLIES CAN MAKE A VOLUNTARY CONTRIBUTION TO ANOTHER TRUST TO WHICH ALSO SEC.11 IS MADE APPLICAB LE SUBJECT, OF COURSE TO THE SATISFACTION OF THE CONDITIONS IN SEC .11. X. RELIANCE WAS ALSO PLACED IN THE DECISION OF HONBLE ALLAHABAD HIGH COURT IN THE CASE CIT V. JK CHARITAB LE TRUST REPORTED IN 196 ITR 31 WHEREIN IT WAS HELD AS FOLLO WS: A CHARITABLE PURPOSE MAY BE SERVED IN MORE THAN ONE W AY. ONE IS TO DIRECTLY CONTRIBUTE MONEY TO ANOTHER CHARITABLE ORG ANIZATION, WHICH ADVANCES THAT CAUSE. IN THE ABSENCE OF ALLEG ATIONS OF DEVICE AND/OR MALAFIDES, THE AMOUNT CONTRIBUTED TO OTHER C HARITABLE 22 I.T.A. NOS.2885 2887,2889 & 2890/MDS/2014 INSTITUTIONS OUT OF THE INCOME ACCUMULATED UNDER SU B-SECTION (2) IS OUTSIDE THE MISCHIEF OF SUB-SECTION(3) OF SECTION 1 1. IN OTHER WORDS SUCH CONTRIBUTION DOES NOT AMOUNT TO APPLICATION OF THE INCOME FOR PURPOSES OTHER THAN CHARITABLE OR RELIGIOUS. XI. SIMILAR DIRECTIONS WAS ALSO MADE IN THE INSTRUCTION S ISSUED BY THE LD. CBDT NO.1132 DATED 04.01.1978 CLAUSE XXIII/ 1/128. BASED ON THE ABOVE OBSERVATIONS AND THE CONCLUSIONS , THE LD. CIT(A) HELD THAT THE ALLEGATIONS OF THE LD. AO SUCH AS DONATION OF RS.3,60,00,000/- RECEIVED BY THE ASSESSEE TRUST IS NON- VOLUNTARY/CAPITATION FEES CONTRIBUTION BY THE DONOR S IS DEVOID OF MERITS AND NOT TENABLE IN THE EYE OF LAW. ACCORDIN GLY, THE LD. CIT(A) DIRECTED THE LD. AO TO DELETE THE ADDITION O F RS.3,60,00,000/- MADE IN THE HANDS OF THE ASSESSEE AS RECEIPT OF NON-VOLUNTARY DONATIONS. 7. IN THE CASE OF M/S. MAC CHARITIES AND M/S. MAC E DUCATIONAL FOUNDATION ALSO THE LD. CIT(A) ARRIVED AT THE SAME CONCLUSIONS AND MADE THE SAME OBSERVATIONS AS IN THE CASE OF M/ S. MAC PUBLIC CHARITABLE TRUST AND ACCORDINGLY DIRECTED TH E LD. AO TO ACCEPT THE INCOME RETURN BY THE ASSESSEE TRUSTS. 23 I.T.A. NOS.2885 2887,2889 & 2890/MDS/2014 8. IN THE CASE OF M/S. VENKATESWARA EDUCATIONAL AND HEALTH TRUST, THE LD.CIT(A) ALSO ARRIVED AT THE SAME CONCL USION AS IN THE CASE OF THE OTHER TRUSTS AND FURTHER OBSERVED AS FO LLOWS: I. THE ASSESSEE TRUST HAD RECEIVED CORPUS DONATIONS FROM THE OTHER TRUSTS AMOUNTING TO RS.9,90,00,000/- WHICH IS NOT PROHIBITED UNDER ANY LAW. II. THE ASSESSEE TRUST IS A LINGUISTIC MINORITY CHA RITABLE INSTITUTION WHICH IS DISTINCT FROM ALL OTHER TRUSTS . III. THE ASSESSEE TRUST DID NOT RECEIVE CAPITATION FEE FROM ANY INDIVIDUALS. IV. NO EVIDENCE WAS BROUGHT ON RECORD BY THE LD. AO TO ESTABLISH THAT THE DONOR TRUST INFLUENCE THE PERSON S TO DONATE FOR SECURING SEATS IN THE ASSESSEE TRUST. V. MOREOVER THE REVENUE HAS TAXED THE SAME AMOUNT I N THE HANDS OF ALL THE THREE TRUSTS WHICH AMOUNTS TO TRIP LE TAXATION. VI. THE ASSESSEE IS A GENUINE MINORITY CHARITABLE I NSTITUTION ENGAGED IN THE ACTIVITY OF PROVIDING EDUCATION. ACCORDINGLY THE LD. CIT(A) DELETED THE ADDITION MAD E BY THE LD. AO TOWARDS NON-VOLUNTARY CONTRIBUTION IN THE CA SE OF ALL THE 24 I.T.A. NOS.2885 2887,2889 & 2890/MDS/2014 ASSESSEE TRUST BY HOLDING THAT THE EXEMPTION U/S. 1 1A OF THE ACT CANNOT BE DENIED. 9. BEFORE US THE LD.DR VEHEMENTLY ARGUED IN SUPPORT OF THE ORDERS OF THE LD.AO WHILE AS THE LD.AR RELIED O N THE ORDERS OF THE LD.CIT(A). 10. WE HAVE HEARD THE RIVAL SUBMISSIONS AND CAREFUL LY PERUSED THE MATERIALS AVAILABLE ON RECORD. FROM THE FACTS OF THE CASE, IT IS APPARENT THAT THE REVENUE HAD DENIED THE BENEFIT OF SECTION 11 OF THE ACT TO ALL THE ABOVE ASSESSEES WHO ARE REGISTER ED CHARITABLE TRUSTS U/S.12AA OF THE ACT PREDOMINANTLY DUE TO THE FOLLOWING REASONS:- 1) THE DONATION RECEIVED BY THE ASSESSEE TRUSTS WAS MOSTLY DIVERTED TO THEIR CONNECTED /RELATED CHARITABLE TRU ST VIZ., M/S. SRI VENKATESWARA EDUCATIONAL & HEALTH TRUST IN ORDE R TO SECURE ADMISSION FOR THE RELATIVES/WARDS OF THE DONORS IN THE EDUCATIONAL INSTITUTIONS RUN BY M/S. SRI VENKATESWA RA EDUCATIONAL & HEALTH TRUST. 25 I.T.A. NOS.2885 2887,2889 & 2890/MDS/2014 2) TO ARRIVE AT THE ABOVE CONCLUSION THE REVENUE HA D OBTAINED SWORN STATEMENTS FROM FEW DONORS. HOWEVER, THE FACTS ALSO REVEALS THAT INITIALLY ALL THE DONORS WHO HAD SUBMITTED SWORN STATEMENTS BEFORE THE LD.AO AGAINST THE ASSESSEE HAD EARLIER REPLIED TO THE LD.AO STATING T HAT THE DONATIONS WERE VOLUNTARILY MADE BY THEM TO THE CHAR ITABLE INSTITUTIONS. IN THIS SITUATION WE FAIL TO UNDERST AND THE REASON FOR THE CHANGE OF STAND BY THE DONORS BEFORE THE LD.AO ON THE SUBSEQUENT PROCEEDINGS. IN ALL THE INSTANCES THE DO NORS HAVE DONATED HUGE SUM OFTEN EXTENDING TO MORE THAN FIVE LAKHS TO THE CHARITABLE INSTITUTIONS. IT IS PERTINENT TO MENTION AT THIS JUNCTURE THAT THE LD.AO HAS NOT EXAMINED THE SOURCE OF INVESTMENT MADE BY THE DONORS. FURTHER ACCORDING TO THE FINDINGS OF THE L D.AO, IN MOST OF THE CASES THE RELATIVES/PARENTS OF THE STUDENTS STU DYING IN M/S. SRI VENKATESWARA EDUCATIONAL & HEALTH TRUST HAVE PAID D ONATIONS TO CONNECTED/RELATED CHARITABLE TRUSTS. FROM THESE FAC TS AND CIRCUMSTANCES OF THE CASE IT APPEARS THAT THE LD.AO MIGHT HAVE COERCED TO OBTAIN THE SWORN STATEMENTS FROM THE DON ORS IN THE MANNER CONVENIENT TO THE REVENUE SO AS TO DROP FURT HER PROCEEDINGS AGAINST THE DONORS FOR EXAMINING THEIR SOURCE OF 26 I.T.A. NOS.2885 2887,2889 & 2890/MDS/2014 INCOME WITH RESPECT TO THE AMOUNT OF DONATIONS MADE . FURTHER IT IS NOT ALWAYS POSSIBLE FOR THE RELATIONSHIP BETWEEN TH E PARENTS AND STUDENTS TO BE CORDIAL WITH THE MANAGEMENT OF THE E DUCATIONAL INSTITUTIONS. WE DO NOT FIND ANY OTHER REASON AS TO WHY THE DONORS HAVE CHANGED THEIR MIND WHILE GIVING THE SWORN STAT EMENTS WHEN THEY HAD ALREADY STATED OTHERWISE IN THE WRITTEN SU BMISSION SUBMITTED BEFORE THE LD.AO ON THE EARLIER OCCASION. THUS RELIANCE CANNOT BE PLACED ON THE SWORN STATEMENT GIVEN BY TH E DONORS WHICH IS SUBSEQUENT TO THEIR CONFIRMATION LETTER GI VEN ON THE EARLIER OCCASION THAT THEY HAD EXTENDED VOLUNTARY CONTRIBUT ION TO THE CHARITABLE INSTITUTIONS UNLESS SOME OTHER MATERIAL EVIDENCE PROVES OTHERWISE. IT IS ALSO PERTINENT TO MENTION THAT TH E DONORS OR THE PARENTS/STUDENTS STUDYING IN THE EDUCATIONAL INSTIT UTIONS HAD NOT COMPLAINED TO ANY AUTHORITIES REGARDING EXTORTION B Y WAY OF DONATIONS FOR SECURING ADMISSION IN THE EDUCATIONAL INSTITUTIONS MANAGED BY M/S. SRI VENKATESWARA EDUCATIONAL & HEAL TH TRUST. IT IS A WELL-KNOWN FACT THAT ACCEPTING DONATIONS FOR G RANTING ADMISSION IN THE EDUCATION INSTITUTIONS IS AGAINST THE LAW OF THE LAND VIZ., THE TAMIL NADU EDUCATIONAL INSTITUTIONS (PROHIBITION OF COLLECTION OF CAPITATION FEE) ACT, 1992 AND IN VIOL ATION OF THE SAME LEADS FOR PENAL ACTION WHICH INCLUDES IMPRISONMENT. IN THE CASE OF 27 I.T.A. NOS.2885 2887,2889 & 2890/MDS/2014 THE ASSESSEE TRUST, NOTHING IS BROUGHT BEFORE US TO POINT OUT THAT THE LAW ENFORCING AUTHORITIES OF THE STATE GOVT., O R THE CENTRAL GOVT., HAVE INITIATED ANY COERCIVE ACTION AGAINST A NY OF THESE ASSESSEES FOR VIOLATING ANY PROVISIONS OF THE RELEV ANT ACT. FURTHER NOTHING IS BROUGHT BEFORE US TO ESTABLISH THAT THE ASSESSEE TRUSTS ARE BARRED FROM ACCEPTING DONATIONS FROM THE RELATI VES / PARENTS OF THE STUDENTS STUDYING IN THE EDUCATIONAL INSTITUTIO NS CONNECTED TO THOSE CHARITABLE TRUSTS. IN THE CASE OF MAC EDUCATI ONAL FOUNDATION, THE ASSESSEE TRUST HAD RECEIVED RS.10 L AKHS FROM M/S. UNITED EDUCATION FOUNDATION. THOUGH THE LD.AO STAT E THAT THE ASSESSEE TRUST HAS RECEIVED THE DONATION FOR GRANTI NG ADMISSION TO STUDENTS IN M/S. SRI VENKATESWARA COLLEGE, SRIPE RUMBUDUR, HE HAS NOT BROUGHT OUT ANY EVIDENCE TO PROVE THE SAME. THEREFORE THERE IS NO MERIT IN THE CASE OF M/S. MAC EDUCATION AL FOUNDATION FOR TREATING THE AMOUNT OF RS.10 LAKHS AS NON-VOLUN TARY CONTRIBUTION. IN THE CASE OF M/S. SRI VENKATESWARA EDUCATIONAL AND HEALTH TRUST, THE LD. AO HAD SIMPLY STATED THAT THE ASSESSEE TRUST HAS RECEIVED CAPITATION FEES WITHOUT ANY EVID ENCE TO ESTABLISH THE SAME. IT IS ALSO NOT CLEAR WHETHER THIS AMOUNT IS RECEIVED FROM OTHER CONNECTED/RELATED TRUSTS OR DIRECTLY RECEIVED FROM THE DONORS. THE LD. AO INSTEAD OF CLARIFYING THESE ISSUES HAS M ADE 28 I.T.A. NOS.2885 2887,2889 & 2890/MDS/2014 SUBSTANTIVE ADDITION IN THE HANDS OF THE ASSESSEE, WHICH IS ERRONEOUS. FURTHER IT IS APPARENT THAT THE LD.AO WI THOUT EXAMINING THE CORRECT SOURCE OF ACTUAL DONATION HAD COME TO T HE CONCLUSION THAT THERE WERE QUID-PRO-QUO ARRANGEMENTS FOR THE P AYMENT OF DONATION ONLY BASED ON CERTAIN PRESUMPTIONS AND ASS UMPTIONS AND NOT BASED ON WELL ASCERTAINED FACTS. THOUGH IT MAY APPEAR FROM THE CIRCUMSTANCE OF THE CASE THAT THERE MAY BE QUIT -PRO-QUO ARRANGEMENT FOR RECEIPT OF DONATION, UNLESS IT IS E STABLISHED BY COGENT EVIDENCE DRASTIC DECISION CANNOT BE ARRIVED AT BY WITHDRAWING THE BENEFIT OF SECTION 11 OF THE ACT TO ALL THE CHARITABLE TRUSTS WHICH WILL JEOPARDIZE THE FUNCTIONING AND TH E VERY EXISTENCE OF THE CHARITABLE EDUCATIONAL INSTITUTIONS. MOREOVE R THERE IS NO FINDING WITH RESPECT TO ANY VIOLATION OF SECTION 13 OF THE ACT, BECAUSE THE DONATIONS RECEIVED BY THE RESPECTIVE CH ARITABLE TRUSTS ARE SPENT ACCORDING TO THE OBJECTS OF THE TRUSTS. IT IS ALSO APPARENT THAT THIS BENCH OF THE TRIBUNAL IN ITA NO.627/MDS/2 014 VIDE ORDER DATED 27.06.2014 FOR THE ASSESSMENT YEAR 2010-11 AN D ITA NO.1799/MDS/2012 VIDE ORDER DATED 29.08.2013 FOR TH E ASSESSMENT YEAR 2008-09 IN THE CASE OF M/S. MAC PUB LIC CHARITABLE TRUST HAD HELD THAT THE BENEFIT OF SECTI ON 11 & 12 OF THE ACT CANNOT BE DENIED TO THE ASSESSEE FOR EXTENDING LOAN TO ANOTHER 29 I.T.A. NOS.2885 2887,2889 & 2890/MDS/2014 CONNECTED/RELATED CHARITABLE EDUCATIONAL INSTITUTIO N. FURTHER THE ASSESSEE TRUSTS HAVE ISSUED VALID RECEIPTS FOR THE DONATIONS RECEIVED AND HAD MAINTAINED THE NAMES, ADDRESS OF T HE DONORS AS PER THE PROVISIONS OF THE ACT. THE LD.CIT(A) HAD A LSO MADE A CATEGORICAL FINDING THAT THE ASSESSEE TRUST HAD NOT ONLY EXTENDED DONATION TO M/S. SRI VENKATESWARA EDUCATIONAL AND H EALTH TRUST BUT TO VARIOUS OTHER CHARITABLE INSTITUTIONS FOR CA RRYING OUT CHARITABLE ACTIVITIES. CONSIDERING THESE FACTS AND CIRCUMSTANCE OF THE CASE, WE ARE OF THE CONSIDERED VIEW THAT NO INT ERFERENCE IS NECESSARY IN THE DECISION OF THE LD.CIT(A) WHO HAD EXTENSIVELY ANALYZED THE ISSUE AND DECIDED THE MATTER BY PLACIN G RELIANCE ON THE VARIOUS DECISIONS OF HIGHER JUDICIARY. THEREFO RE, WE HEREBY SUSTAIN THE ORDER OF THE LD.CIT(A) IN THE CASE OF A LL THE ASSESSEES TRUSTS MENTIONED HEREIN ABOVE. 11. IN THE RESULT APPEALS OF THE REVENUE ARE DISMIS SED. ORDER PRONOUNCED ON 12 TH APRIL, 2017 AT CHENNAI. SD/- SD/- ( . ) )) ) (G. PAVAN KUMAR) /JUDICIAL MEMBER ( . ) (A. MOHAN ALANKAMONY) / ACCOUNTANT MEMBER 30 I.T.A. NOS.2885 2887,2889 & 2890/MDS/2014 /CHENNAI, /DATED, THE 12 TH APRIL, 2017. JR. /COPY TO: 1. /APPELLANT 2. /RESPONDENT 3. ( ) /CIT(A) 4. /CIT, 5. /DR 6. /GF.