ITO, Bhubaneswar V. M/s Silicon Institute of Technology, Bhubaneswar

ITA 316/CTK/2011

• Counselvise Citation: 31622114 RSA 2011
• Duration Of Justice: 3 month(s) 15 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 23-09-2011
• Appeal Filed By: Department
• Bench Allotted: DB
• Next Hearing Date: 19-09-2011
• Assessment Year: 2007-2008
• Appeal Filed On: 08-06-2011
• Court: TRIBUNAL
• Keywords: Capital asset; Depreciation; Charitable institution; Assessment record; Revenue expenditure; Capital expenditure
• Section: 11

Judgement Text

IN THE INC O ME TAX APPELLATE TRIBUNAL, CUTTACK BENCH, CUTTACK BEFORE : SHRI K.K.GUPTA, AM , AND SHRI K.S.S.PRASAD RAO, JM ITA NO. 316/CTK/2011 AND C.O.NO.18/CTK/2011 (FILED BY THE ASSESSE) (ASSESSMENT YEAR 2007 - 08) INCOME - TAX OFFICER, WARD 2(1),BHUBANE SWAR. VERSUS M/S.SILICON INSTITUTE OF TECHNOLOGY, SILICON HILLS, PATIA,BHUBANESWAR - 751 024. PAN: AACTS 4421 R (APPELLANT) (RESPONDENT) FOR THE APPELLANT: S MT. PARAMITA TRIPATHY, DR FOR THE RESPONDENT SHRI S.C.BHADRA, AR DATE OF HEARING : 19.09.2011 DATE OF PRONOUNCEMENT : 23.09.2011 ORDER SHRI K.S.S.PRASAD RAO, JM : THE REVENUE IS IN APPEAL WH EREAS THE CROSS OBJECTION IS FILED BY THE ASSESSEE ON THE ORDER DT.7.3.2011 OF THE COMMISSIONER OF INCOME - TAX (APPEA LS) FOR THE ASSESSMENT YE AR 200 7 - 08 IN THE CASE OF THE ASSESSEE. 2. THE DEPARTMENT HAS RAISED THE FOLLOWING ISSUES IN ITS GROUNDS OF APPEAL. 1. THAT, ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE LD. C1T(A) IS NOT JUSTIFIED IN ALLOWING EXEMPTION U/S.11 TO THE ASSESSEE. 2. THAT, ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE LD. CIT(A) HAS ERRED IN NOT APPRECIATING THE PROFIT MOTIVE OF THE ASSESSEE WHICH WAS BROUGHT OUT CLEARLY BY THE ASSESSING OFFICER IN HIS ORDER. 3. THAT, ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE LD. CIT(A) IS NOT JUSTIFIED IN APPLYING THE CASE OF AMERICAN HOTEL AND LODGING ASSOCIATION EDUCATIONAL INSTITUTION VS. CBDT AND THE CASE OF PINEGROVE INTERNATIONAL CHARITABLE TRUST VS. UOL AND OTHERS WHICH WERE DISTINGUISHABLE ON FACTS. 4 . THAT, ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE LD. CIT(A) IS NOT JUSTIFIED IN NOT CORRECTLY APPRECIATING THE PROFIT MOTIVE OF THE ASSESSEE AS ILLUSTRATED IN THE CASE OF SURAT ART SILK CLOTH MANUFACTURERS ASSOCIATION. ITA NO.316/CTK/2011 AND C.O.NO.18/CTK/ 2011 2 5. THAT, ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE LD. CIT(A) IS NOT JUSTIFIED IN TREATING THE ACTIVITY OF THE ASSESSEE - TRUST TO DERIVE INCOME OUT OF EDUCATIONAL ACTIVITY AS A CHARITABLE ACTIVITY. 6. THAT, ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE LD. CIT(A) IS NOT JUSTIFIED IN HOLDING THAT THE ISSUE OF CAPITATION FEES/PROFITEERING AS DEFINED BY THE APEX COURT IN THE CASE OF T.M.A PAI FOUNDATION AND OPEL ACT, 2007 WAS NOT APPLICABLE TO THE CASE OF THE ASSESSEE. THE FACT THAT THE ASSESSEE COLLECTED THE ENTIRE COURSE FEE IN ONE YEAR IS COVERED BY THE DEFINITION OF CAPITATION FEES AS PER THE OPEL ACT,2007. 7. THAT, ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE LD. CIT(A) IS NOT JUSTIFIED IN HOLDING THAT TO ARRIVE AT PROFIT OF THE ASSESSEE, CAPITA L EXPENDITURE IS ALSO TO BE DEDUCTED WHICH IS AGAINST THE NORMAL ACCOUNTING PRINCIPLES. 8. THAT, ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE LD. CIT(A) IS NOT JUSTIFIED IN HOLDING THAT CAPITAL EXPENDITURE IS ALSO APPLICATION OF INCOME IN THIS C ASE AS STUDENTS START READING ONLY AFTER BASIC INFRASTRUCTURES ARE PUT IN PLACE AS PER AICTE NORMS. 3. THE ASSESSEE HAS RAISED THE FOLLOWING ISSUES IN THE CROSS OBJECTION SUPPORTING THE ORDER PASSED BY THE LEARNED CIT(A). 01. THAT THE AO FAILED TO APP LY THE PROVISIONS OF THE INCOME TAX ACT WHICH REQUIRE THAT THE ASSESSMENT OF A VALIDLY REGISTERED CHARITABLE ORGANISATION HAS TO BE DONE BY APPLYING THE PROVISIONS OF SECTION 11 TO 13. THE AO HAS NO POWER TO WITHDRAW THE EXEMPTION AVAILABLE U/S. 11 GOING B EYOND THE SCOPE OF SECTION 11 TO 13 DURING ASSESSMENT UNDER SECTION 143(3). 02. THAT THE AO HAS ERRED IN HOLDING THAT CAPITAL EXPENSES CANNOT BE TREATED AS APPLICATION FOR CHARITABLE PURPOSES WITHOUT QUESTIONING THE GENUINENESS OR RELEVANCE OF SUCH EXPEND ITURES. 03. THAT THE RATIO OF THE CASES AMERICAN HOSTEL AND LODGING ASSOCIATION EDUCATION INSTITUTION V CBDT AND PINEGROVE INTERNATIONAL CHARITABLE TRUST VS. UNION OF INDIA AND ADDL. CIT V. SURAT ART SILK CLOTH MANUFACTURERS ASSOCIATIONS REPORTED IN [(198 0) 121 ITR 1 IS RELEVANT AND HAS NOT BEEN DISTINGUISHED ON FACTS OR LAW. 04. THE RATIO OF THE CASE T.M.A. PAI FOUNDATION IS RELEVANT AND HAS NOT BEEN DISTINGUISHED ON FACTS OR LAW. THE OPEL ACT, 2007 ITA NO.316/CTK/2011 AND C.O.NO.18/CTK/ 2011 3 DOES NOT APPLY TO SELF FINANCING PRIVATE AUTONOMOUS INS TITUTIONS AND WAS NOT EFFECTIVE IN THE RELEVANT ASSESSMENT YEAR. 05. THAT ALL OTHER GROUNDS ARE BASELESS AND CONTINGENT UPON CROSS OBJECTION NO. 1 & 2 AS STATED ABOVE. 06. THAT THE RESPONDENT CRAVES LEAVE TO ADD TO, ALTER, AMEND, MODIFY, SUBSTITUTE, DELE TE AND! OR RESCIND ALL OR ANY OF THE GROUNDS OF CROSS OBJECTIONS ON OR BEFORE THE FINAL HEARING, IF NECESSITY SO ARISES. 4. BOTH THE PARTIES WERE HEARD REGARDING THE ISSUES RAISED BY THE DEPARTMENT AS WELL AS THE ASSESSEE IN THE APPEAL AND CROSS OBJECTI ON RESPECTIVELY, AND THEIR LEGAL IMPLICATIONS. 5. GOING THROUGH THE MATERIALS MADE AVAILABLE TO THE TRIBUNAL AN D ANALYZING THE SAME IN THE LIGHT OF THE SUBMISSIONS OF BOTH THE PARTIES, THE UNDISPUTED FACTS RELATING TO THE ISSUES ARE THAT THE ASSESSEE IS A PUBLIC CHARITABLE TRUST UNDER THE NAME AND STYLE M/S.SILICON INSTITUTE OF TE CHNOLOGY (SIT) AND ESTABLISHED ON 21.7.1999. IT WAS REGISTERED U/S.12A OF THE I.T.ACT ALSO. THE ASSESSEE RUNS AN EDUCATIONAL INSTITUTION AND THE SAME IS AFFILIATED TO UTKAL UNIVERS ITY(UU) AND AFFILIATED TO BIJU PATNAIK UNIVERSITY OF TECHNOLOGY (BPUT) WITH EFFECT FROM 2003. ALL THE COURSES ARE APPROVED BY ALL INDIA COUNCIL FOR TECHNICAL EDUCATION (AICTE), MINISTRY OF HUMAN RESOURCE DEVELOPMENT, GOVERNMENT OF INDIA, NEW DELHI. 6. DURI NG THE ASSESSMENT YEAR UNDER CONSIDERATION, THE ASSESSE HAS DERIVED INCOME OF 7,59,27,745 AND APPLIED THE INCOME WHOLLY FOR CHARITABLE PURPOSE. THE TRUST , DURING THE ASSESSMENT YEAR 2007 - 08 , APPLIED 7,10,06,099 FOR CHARITABLE PURPOSE. CONSIDERING THE 15% ACCUMUL ATION OF INCOME AMOUNTING TO 1 ,13.89, 62, THE TOTAL APPLICATION OF I NCOME WORKS OUT TO 8,23,95,261. THEREFORE THE TOTAL INCOME APPLIED FOR THE CHARITABLE PURPOSE IS MORE THAN THE INCOME DERI V ED BY 64,67.51 6 . ITA NO.316/CTK/2011 AND C.O.NO.18/CTK/ 2011 4 7. THE ASSESSE TRUST WAS ESTABLISHED ON 21.7.1999 WITH A PRIME OBJECT OF PROVIDING TECHNICAL EDUCATION AND THE O BJECT OF THE TRUST IS DESCRIBED IN THE TRUST DEED AND THE ASSESSEE WAS FORMED. TO ATTAIN ITS OBJECTS, THE ASSESSEE RUNS AN INSTITUTION IN THE NAME AND STYLE AS SILICON INSTITUTE OF TECHNOLOGY. THE INSTITUTE IS MAINLY PROVIDING THE TECHNICAL EDUCATION TO TH E STUDENTS IN THE STREAM OF B.TECH AND MCA. THE INSTITUTE S CURRICULUM IS APPROVED BY THE AICTE, MINISTRY OF HUMAN RESOURCE DEVELOPMENT, GOVERNMENT OF INDIA, NEW DELHI. THE INSTITUTE IS AFFILIATED TO UTKAL UNIVERSITY AND AFFILIATED TO BIJU PATNAIK UNIVERSI TY OF TECHNOLOGY AFTER ITS INCEPTION. THE INSTITUTE CONDUCTS COURSES OF COMPUTER SCIENCE AND ENGINEERING, ELECTRICAL & ELECTRONICS ENGINEERING, ELECTRONICS & TELECOMMUNICATION ENGINEERING, INFORMATION TECHNOLOGY, APPLIED ELECTRONICS & INSTRUMENTATION ENGIN EERING AND MASTER IN COMPUTER APPLICATIONS FOR ITS STUDENTS. APART FROM THAT THE ASSESSEE IS CONDUCTING REGULAR EXAMINATION AS DIRECTED BY THE AICTE, UU AND BPUT. IT IS ALSO INVOLVED IN VARIOUS ACTIVITIES FOR THE BETTERMENT OF THE STUDENTS, SUCH AS ARRANGI NG AND ASSISTING THE STUDENTS OF BOTH B.TECH & MCA PROGRAMMES FOR PLACEMENT IN VARIOUS ORGANIZATIONS/INDUSTRIES, ASSISTING THE STUDENTS FOR APPEARING CAREER COMPETITIVE EXAMINATIONS FOR CAREER ENHANCEMENT, PROVIDING STUDENT DEVELOPMENT PROGRAMME THROUGH LE CTURE/SEMINARS/WORKSHOP AND PRESENTATIONS FOR THE STUDENTS TO HAVE COMPETITIVE EDGE DURING PLACEMENT AND PROVIDING AND ARRANGING SUMMER PROJECTS & INDUSTRY VISITS WITHIN THE STATE AND OUTSIDE FOR INDUSTRIAL EXPOSURE, TO INVOLVE STUDENTS THROUGH RESPECTIVE FACULTY OF THE INSTITUTE IN INDUSTRY SPONSORED PROJECTS. 8. IN ORDER TO FULFILL THE OBJECTIVES OF THE TRUST AND TO RUN THE INSTITUTION, IT RECEIVES TUITION FEES FROM THE STUDENT S OFCOURSE AS PER THE GUIDELINES FRAMED BY THE AICTE. DURING THE FY 2006 - 07 RE LEVANT TO THE ASSESSMENT YEAR 2007 - ITA NO.316/CTK/2011 AND C.O.NO.18/CTK/ 2011 5 08 THE INSTITUTE RECEIVED TUITION FEE OF 51,800 FROM 1 ST YEAR BE STUDENTS, 38,500 FROM OTHER BE STUDENTS, 54,800 FROM 1 ST YEAR MCS STUDENTS AND 41,5080 FROM OTHER MCA STUDENTS. THE TUITION FEE IS CALCULATED BASED ON THE NUMBER OF STUDENTS AND THE TOTAL AMOUNT OF EXPENDITURE TO BE INCURRED AN D KEEPING IN VIEW THE MINIMUM REQUIRED SURPLUS FOR THE GROWTH OF THE INSTITUTION AS PRESCRIBED BY AICTE. THE NUMBER OF STUDENTS STUDYING IN THE INSTITUTE HAS INCREASED OVER THE YEAR THE INSTITUTE START WITH AN INTAKE OF 240 NUMBER OF STUDENTS IN THE ACADE MIC YEAR 2001 - 02 AND WHICH WAS GROWN TO A TOTAL STUDENT STRENGTH OF 1530 IN THE ACADEMIC YEAR 2006 - 07 WHICH INDICATE THAT THE GENERAL PUBLIC IS INTERESTED TO STUDY IN THE INSTITUTE. THIS INCREASE TREND INDICATES THAT THE DEMAND IS INCREASED EVERY YEAR IN T HE CUT OF RANK IN ORISSA JEE RANK IS REDUCED SUBSTANTIAL LY THEREBY INDICATING THE PREFERENCE FOR THE INSTITUTE. THE FEE INCOME IS DISCLOSED EVERY YEAR TO THE APPROVING AUTHORITY, AICTE THROUGH COMPLIANCE REPORT AND MANDATORY DISCLOSURE. THE TUITION FEE OF THE INSTITUTE WAS CALCULATED AND FIXED BY THE INSTITUTE TILL THE ACADEMIC YEAR 2006 - 07 AND FROM ACADEMIC YEAR 2007 - 08 THE TUITION FEE IS FIXED BY GOVT. OF ORISSA BY GAZETTE NOTIFICATION AS RECOMMENDED BY THE FEE STRUCTURE COMMITTEE. UP TO ACADEMIC YEAR 200 6 - 07 THE TUITION F EE WAS FIXED BASED ON THE VARIOUS GUIDELINE ISSUED BY AICTE AND THE DIRECTION OF THE HONORABLE SUPREME COURT OF INDIA. AS CAN BE SEEN FROM THE NORMS ISSUED BY THE ACITE FOR FIXING UP THE FEE IT IS EVIDENT THAT AN EDUCATIONAL INSTITUTION W ITH AICTE AFFILIATION CAN COLLECT FEES TO UPKEEP AND MAINTAIN THE CAPITAL COST OF THE INSTITUTION. THE SAID GUIDELINES ALSO CONTEMPLATES FOR CARRYING OUT RANDOM VISIT OF AICTE ROUND THE YEAR ANYTIME FOR VERIFYING THE STATUS OF THE INSTITUTIONS TO ENSURE MA INTENANCE OF NORMS AND STANDARDS PRESCRIBED BY IT. 9. DURING THE ASSESSMENT YEAR 2007 - 08 THE ASSESSEE HAS RECEIVED A TOTAL INCOME OF 7,59,27,744.50 AS INCOME COMPRISING OF TUITION FEES FROM ITA NO.316/CTK/2011 AND C.O.NO.18/CTK/ 2011 6 STUDENTS, HOSTEL FEE FROM STUDENTS, INTEREST INCOME AND OTHER MIS C. INCOME. THE ASSESSEE TRUST HAS APPLIED THE INCOME FOR THE PURPOSE OF THE OBJECT OF THE TRUST WORK OUT TO 7,10,06,099 WHICH INCLUDES THE SALARY AND ALLOWANCES OF TEACHING AND NON - TEACHING EMPLOYEES, EXPENDITURE ON ADMINISTRATIVE SERVICES, EXPENDITURE ON MAINTENANCE OF LABORATORIES INCLUDING CONSUMABLES, EXPENDITURE ON TRANSPORTATION OF STUDENTS, EMPLOYEES, EXPENDITURE ON BOOKS AND JOURNALS FOR LIBRARIES AND CONSTRUCTION , MAINTENANCE OF BUILDINGS AND OTHER ASSETS. THE CAPITAL EXPENDITURE ON CONSTRUCTION A ND MAINTENANCE OF BUILDINGS AND OTHER ASSETS DURING THE PERIOD UNDER CONSIDERATION IS 2,16,44,006.70. THERE IS A FRESH TERM LOAN DISBURSEMENT OF 39,00,000 RECEIVED BY THE ASSESSEE. THE TOTAL APPLICATION OF INCOME FOR THE ASSESSMENT YEAR UNDER CONSIDERATION IS 7,10,06,099 CONSISTING OF REVENUE EXPENDITURE AS PER INCOME& EXPENDITURE ACCOUN T, CONSTRUCTION MAINTENANCE OF BUILDINGS AND OTHER ASSETS. 10. THE ASSESSING OFFICER HAS TAKEN UP THE RETURN FILED BYTHE ASSESSEE FOR SCRUTINY ASSESSMENT AND AFTER COMPLYING ALL THE STATUTORY PROVISIONS AND AFTER HEARING THE ASSESSE AND CONSIDERING THE EXP LANATION AND THE MATERIAL PLACED ON RECORD PLACED BEFORE HIM, THE ASSESSING OFFICER PASSED THE ASSESSMENT ORDER DT .31.12.2009 U/S.143(3) DETERMINING THE SURPLUS AS PER INCOME AND EXPENDITURE AT 1,30,76,696, INCOME DIVERTED TO CAPITAL FUNDS AMOUNTING TO 28,25,204, CAPITAL EXPENSES AMOUNTING TO 51,24,483. THE DEPRECIATION CLAIMED AT 95,980,957 WAS ALSO DISALLOWED THEREBY THE ASSESSEE WAS TAXED ON A TOTAL INCOME OF 3,06,53,608. 11. AGGRIEVED BY THIS ASSESSMENT ORDER, THE ASSESSEE WENT IN APPEAL BEFORE THE CIT(A) AND THE LEARNED CIT(A) AFTER CONSIDERING THE MATERIAL AVAILABLE IN THE ASSESSMENT RECORD AND ANALYZING THE SAME IN THE LIGHT OF THE SUBMISSIONS OF THE LEARNED AR OF THE ASSESSEE AS WELL AS THE FINDINGS OF THE ITA NO.316/CTK/2011 AND C.O.NO.18/CTK/ 2011 7 ASSESSING OFFICER EXPRESSED IN THE ASSESSMENT ORDER AND ALSO THE VARIOUS JUDICIAL PRONOUNCEMENT RELIED ON BY BOTH THE PARTIES, HAS COME TO THE CONCLUSION THAT THE ASSESSEE IS ENTITLED TO CLAIM EXEMPTION U/S.11 AND THE ASSESSING OFFIC ER WAS FOUND NOT TO HAVE GIVEN ANY VALID REASON FOR DENYING THE EXEMPTION AND THE ASSESSEE WAS HAVING DEFICIT AFTER APPLICATION OF INCOME FOR CHARITABLE PURPOSES AND ACCORDINGLY DELETED THE ADDITION OF SURPLUS AS PER INCOME & EXPENDITURE ACCOUNT AND THREE OTHER ADDITIONS MADE BY THE ASSESSING OFFICER. 12. AGGRIEVED BY THIS ORDER OF THE LEARNED CIT(A), REVENUE HAS FILED THE PRESENT APPEAL WHEREAS THE ASSESSEE HAS FILED THE CROSS OBJECTION SUPPORTING THE ORDER OF THE LEARNED CIT(A). 13. DURING THE COURSE OF HEARING THE LEARNED DR HAS VEHEMENTLY ARGUED SUPPORTING THE ORDER PASSED BY THE ASSESSING OFFICER AND ASSAILING THE ORDER PASSED BY THE LEARNED CIT(A) CONTENDING INTER ALIA THAT THE ASSESSEE IS CARRYING ON LITERALLY A BUSINESS IN EDUCATION IN THE GUISE OF TRUST AND EDUCATION INSTITUTION WHICH IS EVIDENT FROM THE HUGE AMOUNT OF COLLECTION MADE BY IT AS TUITION FEES FROM STUDENTS AND INVESTING HUGE AMOUNTS UNDER CONSTRUCTION OF BUILDINGS AND THEREBY THE STAND TAKEN BY THE ASSESSING OFFICER THAT THE ASSESSEE IS NOT A CHARITABLE INSTITUTION AND THEREBY NOT ENTITLED TO BENEFIT U/S.11 IS VERY MUCH CORRECT. THE ORDER OF THE LEARNED CIT(A) NOT AGREEING WITH THE ASSESSING OFFICERS ORDER IS NOT SUSTAINABLE FOR LEGAL SCRUTINY MORE SO IN THE LIGHT OF THE DECISION REND ERED IN THE CASE OF AMERICAN HOTEL & LODGING ASSOCIATION, EDUCATIONAL INSTITUTIONS [(2008) 301 ITR 86 (SC)] AND TMA PAI FOUNDATION V. STATE OF KARNATAKA [(2002) 8 SCC 481 (SC)] WHICH ARE RELIED ON BY THE LEARNED CIT(A) SUPPORTING HIS ORDER BUT IN FACT THEY ARE DISTINGUISHABLE ON FACTS. THE LEARNED CIT(A) HAS NOT CORRECTLY APPRECIATED THE PROFIT MOTIVE OF THE ASSESSEE AS WAS HELD IN THE CASE OF ADDI. CIT V. SURAT ART ITA NO.316/CTK/2011 AND C.O.NO.18/CTK/ 2011 8 SILK CLOTH MANUFACTURERS ASSOCIATION REPORTED IN [1980] 121 ITR 1 . THE LEARNED CIT(A) IS NOT JUSTIFIED IN TREATING THE ACTIVITIES OF THE ASSESSEE IN DERIVING INCOME OUT OF EDUCATIONAL ACTIVITIES AS CHARITABLE ACTIVITIES. THE VIEW OF THE LEARNED CIT(A) THAT THE ISSUE OF CAPITATION FEES AS DEFINED BY THE HONBLE APEX COURT IN THE CASE OF TMA PAI FO UNDATION V. STATE OF KARNATAKA (SUPRA) AND ORISSA PROFESSIONAL EDUCATIONAL INSTITUTIONS(REGULATION OF ADMISSION AND FIXATION OF FEES), 2007 IS NOT APPLICABLE TO THE CASE OF ASSESSEE IS NOT CORRECT. THE FACTS OF THE ASSESSEE COLLECTING THE ENTIRE GROSS FEE S IN ONE YEAR IS NOTHING BUT FALLING WITH IN THE PURVIEW OF THE DEFINITION OF CAPITATION FEES. THE VIEWS OF THE LEARNED CIT(A) IN HOLDING THAT THE PROFIT OF THE ASSESSEE IS AGAINST THE NORMAL ACCOUNTING PRINCIPLES IS NOT CORRECT. THE CIT(A)S VIEW THAT CAPITAL EXPENDITURE IS ALSO APPLICATION OF INCOME FOR CHARITABLE PURPOSE AS PER AICTE NORMS IS NOT CORRECT. HENCE, ACCORDINGLY, THE LEARNED DR SOUGHT FOR SETTING ASIDE THE ORDER OF THE LEARNED CIT(A) AND RESTORE THAT OF THE ASSESSING OFFICER BY ALLOWING T HE APPEAL OF THE DEPARTMENT. 14. CONTRARY TO THIS, THE LEARNED AR OF THE ASSESSEE HAS REITERATED ITS SUBMISSIONS MADE BEFORE THE LEARNED CIT(A) WHICH WAS DISCUSSED IN THE IMPUGNED ORDER AND AGREEING TO THE SAME. APART FROM THAT HE SUBMITTED THAT THE ASSESS ING OFFICER HAS TAKEN ALL THE STANDS WHICH ARE NOT APPLICABLE TO THE FACTS OF THE CASE AND THE AUTHORITIES RELIED ON BY THE ASSESSING OFFICER ARE FACTUALLY DISTINGUISHABLE. THEREFORE, THE IMPUGNED ORDER PASSED BY THE LEARNED CIT(A) HAVING BEEN PASSED AFTER THREAD BARE CONSIDERATION OF THE VARIOUS JUDICIAL PRONOUNCEMENT AND MAJORITY VIEWS OF THOSE JUDICIAL PRONOUNCEMENTS WHICH ARE IN FAVOUR OF THE FACTUAL ASPECTS OF THE ASSESSEE AND SIMILAR TO THE FACTS COVERED BY THOSE JUDICIAL PRONOUNCEMENT. THEREFORE, THE IMPUGNED ORDER PASSED BY THE LEARNED CIT(A) IS VERY MUCH RIGHT HAVING ITA NO.316/CTK/2011 AND C.O.NO.18/CTK/ 2011 9 BEEN IN ACCORDANCE WITH THE RATIOS LAID DOWN BY VARIOUS JUDICIAL PRONOUNCEMENT WHICH ARE RELIED ON BY THE LEARNED CIT(A). HENCE, THE SAID ORDER OF THE LEARNED CIT(A) IS NOT INFIRM IN AN Y WAY REQUIRING ANY INTERFERENCE. APART FROM THAT IN THE CASE OF INCOME - TAX OFFICER V. M/S.HUMAN RESOURCE DEVELOPMENT & MANAGEMENT TRUST (ASBM TRUST) IN ITA NO .127/CTK/2011 AND C.O.NO .14/CTK/2011 VIDE ORDER DT.29.07.2011, ON FACTS AS WELL AS THE LEGAL ASPE CTS SIMILAR TO THE INSTANT CASE , THE ITAT, CUTTACK BENCH HAS AGREED TO THE VIEW OF THE LEARNED CIT(A) WHO HAS FOLLOWED THE SAME JUDICIAL PRONOUNCEMENT S THAT ARE FOLLOWED IN THE PRESENT APPEAL. THEREFORE, IN A WAY THE ISSUES IN THE PRESENT APPEAL ARE COVER ED BY THE SAID ORDER OF THE TRIBUNAL. ACCORDINGLY, HE SOUGHT FOR UPHOLDING THE IMPUGNED ORDER OF THE LEARNED CIT(A) BY DISMISSING THE APPEAL OF THE REVENUE AND ALLOW ING CROSS OBJECTION , FILED BY THE ASSESSEE IN SUPPORT OF THE IMPUGNED ORDER OF THE LEARNED CIT(A). 15. ON CAREFUL ANALYSIS OF THE ORDERS PASSED BY THE DEPARTMENTAL AUTHORITIES IN THE LIGHT OF RIVAL SUBMISSIONS AS WELL AS THE JUDICIAL PRONOUNCEMENTS RELIED ON BY BOTH THE PARTIES, WE FIND THAT THE ASSESSING OFFICER WHILE PASSING THE ASSESSMENT OR DER HAS COME TO THE CONCLUSION THAT IN VIEW OF THE DECISIONS RENDERED IN THE CASE OF ISLAMIC ACADEMY OF EDUCATION V. STATE OF KARNATAKA (14/08/2003) AND P.A. INAMDAR & ORS V. STATE OF MAHARASHTRA & ORS (12/08/2006) , WHEREIN HONBLE APEX COURT HAS CONSIDERE D THE FEES STRUCTURE AND APPLICATION THEREOF, THE CAPITAL EXPENDITURE IS TO BE MADE OUT OF THE SURPLUS AMOUNT OF THE TRUST AND THERE IS SCOPE FOR INVESTMENT ON CAPITAL ASSETS AT 15% OF THE GROSS RECEIPTS I.E., PERMITTED TO ACCUMULATED , THE EXPENDITURE ON C APITAL ASSETS WAS NOT TAKEN INTO ACCOUNT AS APPLICATION OF INCOME FOR CALCULATION OF TAXABLE INCOME IN THE HANDS OF THE ASSESSEE. FURTHER CONSIDERING THE RECORDS PRODUCED BY THE ITA NO.316/CTK/2011 AND C.O.NO.18/CTK/ 2011 10 ASSESSEE BEFORE HIM, THE ASSESSING OFFICER FOUND THAT THE ASSESSEE HAS BEEN MA KING SURPLUS EVERY YEAR AND IT VARIES TO 20% TO 40% OF THE GROSS RECEIPTS. AFTER CONSIDERATION THE DECISION OF HONBLE UTARAKHAND HIGH COURT IN THE CASE OF QUEENS EDUCATIONAL SOCIETY [( 2009 ) 319 ITR 160 (UTTARAKHAND)] AND THE DECISION OF HONBLE APEX COURT RENDERED IN THE CASE OF ADITANAR EDUCATIONAL INSTITUTION V. ADDL . CIT [1997] 224 ITR 310 , THE ASSESSING OFFICER HAS COME TO THE CONCLUSION THAT WHERE A SOCIETY OR BODY IS MAKING SYSTEMATIC PROFIT, EVEN THOUGH THE PROFIT IS UTILISED ONLY FOR CHARITABLE PUR POSE , YET IT CANNOT BE SAID THAT IT COULD CLAIM EXEMPTION . THEREAFTER THE ASSESSING OFFICER HAS REJECTED THE CLAIM OF THE ASSESSEE TO CARRY FORWARD THE LOSS AND DEPRECIATION HOLD ING THAT THE LOSS OR EXPENSES BEYOND THE VOLUNTARY CONTRIBUTION AND DONATION I S NOTHING BUT A RISK IN THE FORM OF ADVENTURE TO EARN PROFIT IN SUBSEQUENT YEARS. THE ACTIVITIES OF SET OFF OF BROUGHT FORWARD LOSS OF EARLIER YEARS OUT OF FEES COLLECTED FROM THE STUDENTS ARE ALSO NOT CHARITABLE PURPOSE AND SAME IS ALSO DOES NOT FOUND PL ACE IN THE TRUST DEED AND AIMS AND OBJECTS OF THE ASSESSEE. THEREAFTER THE ASSESSING OFFICER CONSIDERED THE APPLICABILITY OF THE BENEFIT OF SECTION 11 AND SAME TO THE CONCLUSION THAT THE ASSESSEE WAS NOT ALLOWED TO RUN THE INSTITUTION AND INVEST THE SURPLU S TO EXPAND ITS ACTIVITY OUT OF THE FEES COLLECTED FROM THE STUDENTS IN THE TRUST DEED UNDER WHICH IT WAS CREATED. THE ACTIVITIES OF THE ASSESSEE IN RUNNING OF CANTEEN FUND , BOOK BANK, GUEST HOUSE, PLACEMENT, EXAMINATION OVER AND ABOVE THE PRESCRIBED WHICH WERE TRANSFERRED TO THE BALANCE SHEET AS CAPITAL OF THE TRUST AND THE ASSESSEE IS NOT MAINTAINING ANY SEPARATE BOOKS OF ACCOUNT FOR ALL THESE THINGS. THEREFORE, THE ASSESSING OFFICER HAS TAKEN THIS AS A GROUND FOR DISALLOWING THE CLAIM OF EXEMPTION/S.11. HE HAS ALSO TAKEN THE ASPECT OF PURCHASING THE VEHICLES AMOUNT ING TO 7.2 LAKHS BY THE ASSESSEE FOR TRANSPORTATION , HAS COME TO THE ITA NO.316/CTK/2011 AND C.O.NO.18/CTK/ 2011 11 CONCLUSION THAT THE ASSESSEE HAS SPENT ALL THESE AMOUNTS AND THE ACTIVITIES ARE IN CONTRAVENTION OF SECTION 13 OF THE I.T.ACT. THUS OBSERVING THE ASSESSING OFFICER HAS FOUND THAT THE TAXABLE I NCOME IN THE HANDS OF THE ASSESSEE IS AT 3,06,53,368 CONSISTING INCOME OVER EXPENDITURE DISCLOSED IN THE INCOME & EXPENDITURE ACCOUNT AND INCOME DIVERTED TO CAPITAL FUNDS AND CAPITAL EXPENSES AND DEPRECIATION CLAIMED BY THE ASSESSEE. 16. WHILE PASSING THE IMPUGNED ORDER, THE LEARNED CIT(A) HAS THREAD BARE CONSIDERED EACH AND EVERY ASPECTS OF THE ASSESSMENT ORDER, WHEREIN THE ASSESSING OFFICER HAS NOTED VARIOUS ANGLES IN WHICH THE ASSESSEES CLAIM WERE NEGATIVE D BY HIM AND AFTER CONSIDERING MAJORITY OF THE JUDICIAL PRONOUNCEMENT AS MENTIONED IN THE IMPUGNED ORDER, HE FOUND THAT THE JUDICIAL PRONOUNCEMENT RELIED ON BY THE ASSESSING OFFICER ARE OF THE MINORITY VIEW ON THE ASPECT IN QUESTION AND HENCE, RELIANCE PLACED ON THOSE DECISIONS WAS NOT SUSTAINABLE FOR LEGAL SCRUTINY AND AFTER FOLLOWING THE MAJORITY VIEWS OF THE JUDICIAL PRONOUNCEMENT S , THE LEARNED CIT(A) HAS PASSED THE IMPUGNED ORDER ELABORATELY DISCUSSING EVERY ASPECTS OF THE CASE AND RELYING ON THE LATEST AND MAJORITY VIEWS OF THE JUDICIAL PRONOUNCEME NT EXPRESSED ON THE SIMILAR FACTS THAT ARE INVOLVED IN THE PRESENT CASE AT HAND AND ULTIMATELY CAME TO THE CONCLUSION THAT THE ASSESSING OFFICERS APPROACH IS NOT CORRECT HAVING BEEN FOUND NOT IN ACCORDANCE WITH LAW APPLICABLE THERETO AND ACCORDINGLY, HE SET ASIDE THE ASSESSMENT ORDER BY ALLOWING THE APPEAL OF THE ASSESSEE AND ACCEPTING THE CONTENTION OF THE ASSESSEE HAVING BEEN SUPPORTED BY MAJORITY VIEWS OF THE JUDICIAL PRONOUNCEMENT. 17. APART FROM THAT TAKING INTO CONSIDERATION THE ORDER OF ITAT, CUTTA CK BENCH IN THE CASE OF INCOME - TAX OFFICER V. M/S.HUMAN RESOURCE DEVELOPMENT & MANAGEMENT TRUST (ASBM TRUST) IN ITA NO .127/CTK/2011 AND C.O.NO .14/CTK/2011 VIDE ORDER DT.29.07.2011, IT IS FOUND THAT THE FACTS ITA NO.316/CTK/2011 AND C.O.NO.18/CTK/ 2011 12 AND CIRCUMSTANCES MENTIONED IN THE SAID ORDER AR E AKIN TO THE FACTS AND CIRCUMSTANCE PREVAILING IN THE PRESENT CASE IN HAND. THEREFORE, IN A WAY THE ISSUES IN THE PRESENT CASE ON HAND ARE COVERED BY THE ORDER OF THIS TRIBUNAL STATED SUPRA. 18. APART FROM THAT ON GOING THROUGH THE IMPUGNED ORDER, IT IS FOUND THAT THE LEARNED CIT(A) HAS THREAD BARE CONSIDERED THE ISSUE S IN QUESTION WITH REFERENCE TO THE ADMITTED FACTS THAT T HE ASSESSEE IS REGISTERED U/S.12A OF THE ACT AND RUNNING THE EDUCATIONAL INSTITUTION , IMPARTING EDUCATION IN THE FIELDS OF TECHNICAL ENGINEERING AND COMPUTER APPLICATIONS WITH THE PARAMETER LAID DOWN BY THE AICTE AND THE GUIDELINES GIVEN BY MINISTRY OF HUMAN RESOURCE DEVELOPMENT, GOVERNMENT OF INDIA, NEW DELHI AND THE FEES COLLECTED BY THE ASSESSEE FROM THE STUDENTS FOR IMPARTING SUCH E DUCATION FOR HAVING BEEN APPROVED BY THE AICTE. THE ASSESSEE IS SPENDING THE AMOUNT RECEIVED BY IT BY WAY OF COLLECTION OF TUITION FEES OR COLLECTION OF HOSTEL FEES IS BEING SPENT FOR BUILDING NECESSARY INFRASTRUCTURE FOR IMPARTING THE EDUCATION IN VARIOUS FIELDS WHICH IS THE CHARITABLE PURPOSE FOR WHICH THE TRUST WAS ESTABLISHED. THE ASSESSEE HAS ALSO SPENT THE SAID AMOUNT FOR RAISING THE INFRASTRUCTURE NECESSARY FOR CARRYING OUT THE OBJECT OF IMPARTING EDUCATION AND THEREBY THE ASSESSEE WAS FOUND TO BE EN TITLED FOR EXEMPTION/S.11 OF THE I.T.ACT AND THE VIEW OF THE ASSESSING OFFICER THAT THERE IS CONTRAVENTION OF SECTION 13 OF THE I.T.ACT IS FOUND TO BE BASELESS BY THE CIT(A) AFTER THREAD BARE CONSIDERING ALL THE RELEVANT FACTS. ON THE OVERALL CONSIDERATIO N OF THE IMPUGNED ORDERS, WE FOUND THAT THE ORDER OF THE LEARNED CIT(A) IS IN ACCORDANCE OF THE MAJOR ITY VIEWS OF JUDICIAL PRONOUNCEMENT S THAT WERE RENDERED BY VARIOUS JUDICIAL FORUMS STATED IN THE IMPUGNED ORDER. HENCE, WE FIND NO INFIRMITY IN THE ORDER O F THE LEARNED CIT(A) REQUIRING NO INTERFERENCE. APART FROM THAT HONBLE APEX COURT WHILE CONSIDERING THE ACCEPTANCE OF THE CIT(A)S ORDER BY THE TRIBUNAL ITA NO.316/CTK/2011 AND C.O.NO.18/CTK/ 2011 13 IN THE CASE OF CIT V. K. Y. PILLIAH AND SONS (63 ITR 411), HAS HELD THAT THE INCOME TAX APPELLATE TRIB UNAL IS THE FINAL FACT FINDING AUTHORITY AND NORMALLY IT SHOULD RECORD ITS CONCLUSION ON EVERY DISPUTED QUESTION RAISED BEFORE IT, SETTING OUT ITS REASONS IN SUPPORT OF ITS CONCLUSION. BUT, IN FAILING TO RECORD REASONS, WHEN THE APPELLATE TRIBUNAL FULLY AG REES WITH THE VIEW EXPRESSED BY THE APPELLATE ASSISTANT COMMISSIONER AND HAS NO OTHER GROUND TO RECORD IN SUPPORT OF ITS CONCLUSION, IT DOES NOT ACT ILLEGALLY OR IRREGULARLY, MERELY BECAUSE IT DOES NOT REPEAT THE GROUNDS OF THE APPELLATE ASSISTANT COMMISSI ONER ON WHICH THE DECISION WAS GIVEN AGAINST THE ASSESSEES OR THE DEPARTMENT. THIS IMPLIES THAT THE TRIBUNAL MAY NOT GIVE ITS REASONS WHEN IT AGREES WITH THE REASONING GIVEN BY THE LEARNED CIT(A) IN THE IMPUGNED ORDER BEFORE US. THEREFORE, RESPECTFULLY FOL LOWING THE SAID DICTUM OF HONBLE SUPREME COURT STATED SUPRA AS IT IS A FULL BENCH OF HONBLE SUPREME COURT, AND ON THE FACTS AND CIRCUMSTANCES OF THE CASE, WE ARE OF THE CONSIDERED VIEW THAT THE DEPARTMENT APPEAL IS DEVOID OF MERITS AND HENCE, IT IS HEREB Y DISMISSED. 19. NOW COMING TO THE CROSS OBJECTION FILED BY THE ASSESSEE, IT IS FOUND THAT THE C.O. IS SUPPORTING THE ORDER PASSED BY THE LEARNED CIT(A) . AS THIS TRIBUNAL HAS UPHELD THE CIT(A)S ORDER, THE CROSS OBJECTION OF THE ASSESSEE IS ALLOWED. 20. I N THE RESULT, THE APPEAL OF THE DEPARTMENT IS DISMISSED AND THE CROSS OBJECTION OF THE ASSESSEE IS DISPOSED OF ACCORDINGLY. SD/ - SD/ - (K.K.GUPTA) ACCOUNTANT MEMBER ( K.S.S.PRASAD RAO) JUDICIAL MEMBER DATE: 23 RD SEPTEMBER, 2011 H.K.PADHEE, SENIOR PRIVATE SECRETARY. ITA NO.316/CTK/2011 AND C.O.NO.18/CTK/ 2011 14 CO PY OF THE ORDER FORWARDED TO : 1. THE APPELLANT: INCOME - TAX OFFICER, WARD 2(1),BHUBANESWAR. 2. THE RESPONDENT: M/S.SILICON INSTITUTE OF TECHNOLOGY, SILICONO HILLS, PATI A,BHUBANESWAR - 751 024. 3. THE CIT, 4. THE CIT(A), 5. THE DR, CUTTACK 6. GUARD FILE (IN DUPLICATE) TRUE COPY, BY ORDER, SENIOR PRIVATE SECRETARY.