Sree Educational Society, Hyderabad V. The commissioner of Income Tax (Central Circle), Hyderabad

ITA 564/HYD/2012

• Counselvise Citation: [2013] 120 COUNSELVISE.COM (IT) 2846 (ITAT-HYDERABAD)
• Duration Of Justice: 1 year(s) 3 month(s) 13 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 31-07-2013
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Assessment Year: 2011-2012
• Appeal Filed On: 17-04-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: M H NAIK
• Assessee Lawyers: AJAY GANDHI
• Keywords: Unexplained expenditure; Document seized; Charitable institution; Benefit of exemption; Cancellation of registration; Documents seized
• Section: 12A; 12AA; 11

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD BENCH A, HYDERABAD BEFORE SHRI CHANDRA POOJARI, ACCOUNTANT MEMBER AND SMT. ASHA VIJAYARAGHAVAN, JUDICIAL MEMBER ITA NO. 564/HYD/2012 ASSESSMENT YEAR: 2011-12 SREE EDUCATIONAL SOCIETY, APPELLANT HYDERABAD 500 029 (PAN AAATS7411B) VS. COMMISSIONER OF INCOME-TAX(CENTRAL), RES PONDENT HYDERABAD. APPELLANT BY : SHRI AJAY GANDHI RESPONDENT BY : SHRI M.H. NAIK DATE OF HEARING : 20/06/2013 DATE OF PRONOUNCEMENT : 31/07/ 2013 ORDER PER ASHA VIJAYARAGHAVAN, J.M.: THIS APPEAL PREFERRED BY THE ASSESSEE IS DIRECTED AGAINST THE ORDER OF CIT(CENTRAL), HYDERABAD DATED 29/03/2012 P ASSED U/S 12AA(3) OF THE ACT, FOR THE ASSESSMENT YEAR 2011-1 2. 2. BRIEFLY THE FACTS OF THE CASE ARE THAT THE ASSES SEE, M/S SREE EDUCATIONAL SOCIETY, WAS GRANTED REGISTRATION U/S 1 2A OF THE IT ACT EFFECTIVE FROM 30/12/1996. THE SOCIETY IS RUNN ING AN ENGINEERING COLLEGE BY THE NAME OF SREENIDHI INSTIT UTE OF SCIENCE & TECHNOLOGY. THE MAIN OBJECTIVES OF THE SOCIETY AR E TO PROVIDE EDUCATION, VOCATIONAL GUIDANCE, TRAINING & RESEARCH PROGRAMMES, TO PROMOTE PROFESSIONAL, TECHNICAL AND VOCATIONAL E DUCATION ETC. 2 ITA NO. 564/H/12 SREE EDUCATIONAL SOCIETY THE MAIN TRUSTEES OF THE SOCIETY ARE SRI K.T. MAHI AND SMT. SARITA MAHI. 3. DURING THE COURSE OF SEARCH, IN THE CASE OF THE ABOVE SOCIETY, THE DEPARTMENT COLLECTED EVIDENCE RELATING TO COLLECTION OF FEES FROM STUDENTS OVER AND ABOVE THE PRESCRIBED FEES IN THE FORM OF DONATION/CAPITATION FEES. THE EXCESS FEES WERE COLLECTED FOR GRANTING ADMISSION INTO THE ENGINEERING COURSES OFFERED BY THE INSTITUTION OF THE SOCIETY. THE FEES COLLECTED OVER AND ABOVE PRESCRIBED FEES WAS NOT ACCOUNTED IN THE REGULAR BO OKS OF ACCOUNT OF THE SOCIETY AND THE AO HELD THAT THE SAME HAS BE EN UTILIZED FOR THE BENEFIT OF THE INTERESTED PERSONS OF THE SOCIET Y. THE AO HAD ALSO REPORTED ABOUT UNEXPLAINED EXPENDITURE INCURRE D BY THE SOCIETY. THE AO HAD REFERRED TO THE STATEMENT RECOR DED FROM THE EMPLOYEE OF THE SOCIETY, WHO HAD STATED THAT FEES F OR THE CONVENOR AND THE MANAGEMENT QUOTA SEATS IS COLLECTE D THROUGH BANKERS CHEQUES AND THE CAPITATION FEES IS COLLECTE D IN CASH. THE AO GATHERED THAT FOR AYS 2005-06, 2006-07, 2009-10 & 2010-11, THE TOTAL UNACCOUNTED RECEIPTS AMOUNTED TO RS. 16,6 2,26,000/-. THE AO HAD ALSO REPORTED THAT CERTAIN INVESTMENTS W ERE MADE FROM OUT OF DONATION/CAPITATION FEES COLLECTED FROM THE STUDENTS AND WERE NOT RECORDED IN THE BOOKS OF THE SOCIETY. THE AO WAS OF THE VIEW THAT DUE TO THE VIOLATIONS OF THE PROVISIO NS OF SECTION 11 & 13 OF THE IT ACT, THE ASSESSEE SOCIETY WAS NOT EN TITLED FOR REGISTRATION U/S 12A/12AA OF THE IT ACT AND, THEREF ORE, A SHOW CAUSE NOTICE WAS ISSUED TO THE ASSESSEE-SOCIETY AS TO WHY THE REGISTRATION GRANTED EARLIER U/S 12A/12AA BY THE C IT-I, HYDERABAD SHALL NOT BE CANCELLED U/S 12AA(3) OF THE IT ACT. IN RESPONSE, IT WAS SUBMITTED BY THE AR THAT THE SOCIE TY IS REGISTERED WITH THE REGISTRAR OF THE SOCIETIES , HY DERABAD, UNDER THE AP (TELENGANA AREA)/SOCIETIES REGISTRATION ACT, 1350 FASLI 3 ITA NO. 564/H/12 SREE EDUCATIONAL SOCIETY AND THE SOCIETY IS FORMED WITH AN OBJECTIVE OF PROV IDING EDUCATION AND TO PROMOTE PROFESSIONAL, TECHNICAL AND VOCATION AL EDUCATION. FURTHER IT WAS SUBMITTED THAT THE SOCIETY IS FORMED WITH NO PROFIT MOTIVE AND NO COMMERCIAL ACTIVITY IS INVOLVED IN IT S WORKING AND THE SOCIETY IS FULLY COMPLYING TO THE REQUIREMENT O F SECTION 11,12 & 12A OF THE IT ACT AND ITS ACCOUNTS ARE BEING AUDI TED AND THE SURPLUS FUNDS BEING INVESTED/DEPOSITED IN THE PRESC RIBED MANNER. THE AR FURTHER SUBMITTED THAT ALL THE FEES COLLECTE D ARE DULY ACCOUNTED IN THE BOOKS OF ACCOUNT AND NONE OF THE S OCIETY MEMBERS ARE AWARE OF ANY COLLECTION OF SUM ABOVE TH E PRESCRIBED FEES FROM STUDENTS SEEKING ADMISSION UNDER THE MANA GEMENT QUOTA. 4. REFERRING TO THE SEIZED MATERIAL, IT WAS STATED THAT THE AMOUNTS MENTIONED IN THE SEIZED NOTE BOOKS WAS MAIN TAINED BY AN EMPLOYEE OF THE GROUP CONCERN. THOUGH THE NOTING S AND JOTTINGS IN THE SAID NOTE BOOK MENTION THE NAME OF THE STUDENTS, NO WHERE IT IS INDICATED THAT THE AMOUNTS WERE COLL ECTED BY OR ON BEHALF OF THE SOCIETY. IT WAS STATED THAT IF AT ALL THESE AMOUNTS WERE COLLECTED OVER AND ABOVE THE PRESCRIBED FEES, SUCH AMOUNTS WERE COLLECTED WITHOUT THE KNOWLEDGE AND WITHOUT AN Y CONNECTION WITH THE SOCIETY. IT WAS SUBMITTED THAT THE SOCIETY HAS NEVER COLLECTED ANY SUCH AMOUNT FROM ANY STUDENT DURING A NY YEAR SINCE ITS INCEPTION AND THE ALLEGATION OF COLLECTIO N OF EXCESS FEES BY THE SOCIETY IS BASELESS. THE AR FURTHER SUBMITTE D THAT THE UNEARTHED ESTIMATED INCOME OF RS. 16.50 LAKHS WAS O WNED AND ACCEPTED BY SRI K.T. MAHI. FURTHER, THE AMOUNT WAS COLLECTED IN THE PREMISES OF SHRI K.T. MAHI, WHICH ALSO HAPPENS TO BE THE OFFICE OF THE SOCIETY. 4 ITA NO. 564/H/12 SREE EDUCATIONAL SOCIETY 5. THE CIT WAS OF THE VIEW THAT THE EVIDENCES RELAT ING TO COLLECTION OF DONATIONS/CAPITATION FEES WERE FOUND AND SEIZED AND DURING THE COURSE OF SEARCH PROCEEDINGS FROM THE OF FICE PREMISES OF THE SOCIETY. REFERRING TO THE PROVISIONS OF SECT ION 132(4A) OF THE ACT, THE CIT HELD THAT PRESUMPTION CAN BE DRAWN THAT THE DOCUMENTS FOUND FROM THE PREMISES OF THE SOCIETY AR E TRUE AND IT BELONGS TO THE SOCIETY AND THE SOCIETY HAS TO EXPLA IN IT AND MENTION AS TO WHO HAS PREPARED THE DOCUMENTS. HE F URTHER HELD THAT DURING THE COURSE OF SEARCH STATEMENT OF SRI M . RAMESH BABU, AN EMPLOYEE OF THE SOCIETY WAS RECORDED AND H E HAD STATED THAT FEES FOR CAPITATION FEES IS COLLECTED IN CASH AND FOR THE REST OF THE COURSE THE FEES IS COLLECTED IN THE FORM OF BAN KER CHEQUES/DDS. IT WAS ALSO RECORDED ON THE DATE OF SE ARCH THAT CASH DONATIONS RECEIVED FOR MANAGEMENT SEATS ARE US ED TO CLEAR THE EXPENSES IN CASH AND ALSO THE BALANCE AMOUNTS A RE DEPOSITED IN THE PERSONAL ACCOUNT OF SHRI K.T. MAHI IN ANDHRA BANK. FROM HERE THE CASH DEPOSITED WILL BE TRANSFERRED INTO VA RIOUS SCHOOLS ACCOUNTS AS PER REQUIREMENTS. THE CIT OBSERVED THA T SRI K.T. MAHI ADMITTED THE SUM OF RS. 16.5 LAKHS AS ADDITION AL INCOME IN HIS INDIVIDUAL HANDS. THE CIT WAS OF THE VIEW THAT THE COLLECTION OF MONEY BY THE TRUSTEE OR THE EMPLOYEES OF THE SOC IETY HAVE A DIRECT RELATIONSHIP WITH THE TRUST ITSELF AND THE M ISDEMEANOR BY THE TRUSTEE AND THE EMPLOYEES IS THE SAME AS THAT O F THE TRUST. THE CIT WAS ALSO OF THE VIEW THAT EXORBITANT AMOUNT S WERE COLLECTED FOR ADMISSION UNDER THE MANAGEMENT QUOTA, WHICH SHOWS THAT THE EDUCATIONAL INSTITUTIONS ARE NOT ADM INISTERING FOR CHARITABLE PURPOSE BUT FOR A PROFIT MOTIVE. HE OBSE RVED THAT THE SOCIETY HAS DIRECTLY OR INDIRECTLY COLLECTED SUBSTA NTIAL AMOUNTS WHICH HAVE NOT BEEN RECORDED IN THE BOOKS OF ACCOUN T. SIMILARLY, THE EXPENSES HAVE ALSO NOT BEEN ACCOUNTED FOR IN TH E BOOKS OF ACCOUNT, WHICH INDICATES THAT THERE IS NO TRANSPARE NCY IN THE 5 ITA NO. 564/H/12 SREE EDUCATIONAL SOCIETY FINANCIAL AFFAIRS OF THE SOCIETY AND, HENCE, THE AC TIVITIES OF THE SOCIETY ARE NOT GENUINE AND CANNOT BE SAID THAT THE ACTIVITIES ARE FOR CHARITABLE PURPOSE. THE CIT HELD AS FOLLOWS: IT IS ALSO TO BE NOTE THAT A PROCEEDING WAS INITIA TED BY THE DGIT(INV.), HYDERABAD FOR RESCINDING THE APPROVAL A CCORDED EARLIER U/S 10(23C)(VI) OF THE IT ACT, WHICH ENTITL ES THE ASSESSEE SOCIETY TO CLAIM EXEMPTION ON THE INCOME O F THE EDUCATIONAL INSTITUTION. AFTER DETAILED DISCUSSION THE DGIT HAS PASSED A SPEAKING ORDER WITHDRAWING/RESCINDING THE APPROVAL GRANTED EARLIER U/S 10(23C)(VI) OF THE IT ACT. THE DGIT HAS ALSO OBSERVED IN THE SAID ORDER THAT THERE IS EVIDENCE OF COLLECTION OF DONATIONS/CAPITATION FEES WHICH HAS BEEN CREDITED TO THE ACCOUNT OF THE SECRETARY/TRUST EE. HE FURTHER OBSERVED THAT THERE IS NO EVIDENCE TO SUGGE ST THAT THE SUM COLLECTED BY THE SOCIETY HAS BEEN UTILIZED WHOLLY AND EXCLUSIVELY FOR THE PURPOSE OF THE SOCIETY AND EDUCATION. 6. AGGRIEVED, THE ASSESSEE IS IN APPEAL BEFORE US. 7. THE LEARNED COUNSEL FOR THE ASSESSEE SHRI AJAY G ANDHI PUT FORTH HIS FIRST ARGUMENT THAT AMENDMENT TO SECTION 12AA(3) WAS BROUGHT INTO EFFECT FROM 1 ST OCTOBER, 2004 AND THE SOCIETY HAS BEEN REGISTERED U/S 12A MUCH BEFORE 2004 AND, HENCE , THE CIT HAS NO JURISDICTION TO PASS THE ORDER U/S 12AA(3), WHERE THE CHARITABLE ORGANIZATION WAS REGISTERED BEFORE AMEND MENT TO SECTION 12AA(3). HE RELIED ON THE FOLLOWING CASE LA WS FOR THIS PROPOSITION: 1. OXFORD ACADEMY FOR CAREER DEVELOPMENT VS. CIT & ORS., [2009] 29 DTR 160 (ALL. HC). 2. AJIT EDUCATION TRUST VS. CIT, [2010] 46 DTR 482 (AHMD. TRIBUNAL). 3. KAPOOR EDUCATIONAL SOCIETY VS. CIT [2010] 44 DTR 97, (LUCKNOW TRIBUNAL) 8. THE SECOND ARGUMENT OF THE LEARNED COUNSEL FOR T HE ASSESSEE IS THAT THE AMOUNTS SAID TO HAVE BEEN COLL ECTED AND 6 ITA NO. 564/H/12 SREE EDUCATIONAL SOCIETY ADDED TO THE INCOME OF THE ASSESSEE WAS ACTUALLY OW NED UP SHRI K.T. MAHI, WHO HAPPENS TO BE THE SECRETARY OF THE S OCIETY AND THE SAID AMOUNT WAS ALSO ASSESSED IN HIS PERSONAL H ANDS. A SIMILAR ADDITION WAS ALSO MADE IN THE ASSESSMENT OF THE SOCIETY. IT IS SUBMITTED THAT THE AMOUNT SAID TO HAVE BEEN C OLLECTED WAS NEVER ITS OWN INCOME, IT NEVER REACHED THE SOCIETY AND IT HAD NOTHING TO DO WITH IT AND AS SUCH, THE SOCIETY HAS DONE NO VIOLATION OF ANY LAW INCLUDING ANY PROVISIONS OF TH E IT ACT. IT IS SUBMITTED THAT IF THERE WAS ANY IMPROPRIETY DONE, I T WAS DONE BY SHRI MAHI IN HIS INDIVIDUAL CAPACITY AND NOT BY THE SOCIETY. IT IS ALSO SUBMITTED THAT SINCE THE SAID AMOUNTS NEVER RE ACHED THE SOCIETY IN THE FIRST PLACE THERE WAS NO VIOLATION O F SECTION 13 OF THE ACT NOR WAS THERE ANY REASON TO CANCEL REGISTRA TION U/S 12AA OF THE ACT. 9. THE THIRD ARGUMENT OF THE LEARNED COUNSEL IS THA T EVEN IF THERE IS VIOLATION OF SECTION 13, IT CAN ONLY RESUL T IN THE ASSESSING OFFICE MAKING AN ADDITION IN THE YEAR OF VIOLATION BUT IT CANNOT RESULT IN CANCELLATION OF REGISTRATION U/S 12AA OF THE ACT. THE LEARNED COUNSEL RELIED ON THE FOLLOWING CASE LAWS: 1. CIT VS. KARIMIA TRUST, 302 ITR 57, JHARKHAND 2. DIT VS. GARDEN CITY EDUCATIONAL TRUST, 191 TAXMA NN 238, KARNATAKA. 10. LASTLY, IN HIS ARGUMENT, THE LEARNED COUNSEL SU BMITTED THAT THE SOCIETY HAD COLLECTED DONATIONS FROM STUDENTS F OR ADMISSION DOES NOT BY ITSELF RESULT IN ITS LOSING THE CHARACT ER AS A CHARITY AS PER ITS ORIGINAL MEMORANDUM OF ARTICLES OF ASSOCIAT ION. HE RELIED ON THE FOLLOWING CASE LAWS: 1. HYNDAVI EDUCATIONAL SOCIETY VS. ADIT, 86 DTR 196 (HYD TRIBUNAL) 7 ITA NO. 564/H/12 SREE EDUCATIONAL SOCIETY 2. MAHARASHTRA HOUSING & AREA DEVELOPMENT AUTHORITY VS. ADIT(E)-1(1), 33 TAXMANN.COM 604, (MUMBAI TRIB) 3. CIT VS. GITANJALI UNIVERSITY, 214 TAXMAN 11, RAJ ASTHAN 11. THE LEARNED DR, ON THE OTHER HAND, SUBMITTED TH AT IT WAS THE SOCIETY THAT WAS COLLECTING CAPITATION FEES AND IN THIS REGARD THE LEARNED DR REFERRED TO THE SEIZED DOCUMENTS. IT WAS SUBMITTED BY THE DR THAT IT WAS AN AFTERTHOUGHT ON THE PART OF THE SOCIETY TO DISOWN COLLECTION OF EXCESS FUND AND ATTRIBUTE THE SAME TO HAVE BEEN COLLECTED BY SHRI K.T. MAHI. THE LEARNED DR SUBMITTED THAT BENEFIT OF EXEMPTION U/S 11 OF THE A CT SHOULD BE DENIED TO THE ASSESSEE. HE ALSO ARGUED THAT ACTS DO NE BY THE SERVANT IN THE COURSE OF DOING HIS DUTIES ON BEHALF OF THE MASTER BIND THE MASTER AND THE LEARNED DR ARGUED THAT SHR I K.T. MAHI HAS COLLECTED THE CAPITATION FEES ON BEHALF OF THE SOCIETY, THEREFORE, THE CAPITATION FEES IS DEEMED TO HAVE BE EN COLLECTED BY THE SOCIETY. THE LEARNED DR RELIED ON THE FOLLOWING DECISIONS: 1. SAI VANI EDUCATIONAL SOCIETY, HYDERABAD IN ITA N O. 1369/HYD/2012. 2. M/S VASAVI ACADEMY OF EDUCATION, HYDERABAD IN IT A NO. 1120/HYD/2009. 3. VODITHALA EDUCATION SOCIETY, HYD. IN ITA NO. 113 8/H/06. 12. WE HAVE HEARD BOTH THE PARTIES, PERUSED THE REC ORD AND HAVE GONE THROUGH THE ORDERS OF THE AUTHORITIES BEL OW AS WELL AS DECISIONS CITED. IN THE CASE OF AJIT EDUCATION TRUS T VS. CIT, [2010]134 TTJ (AHD) 483, THE AHMEDABAD BENCH HELD T HAT AMENDMENT OF SUBSECTION (3) OF S. 12AA W.E.F. 1 ST JUNE, 2010 SHOULD NOT BE APPLICABLE RETROSPECTIVELY AND ITS OP ERATION HAS TO BE EFFECTIVE FROM THE DATE IT WAS INTRODUCED AND ON WARDS AND THEREFORE CIT WAS NOT JUSTIFIED IN CANCELLING THE R EGISTRATION GRANTED TO ASSESSEE U/S 12A, BY INVOKING PROVISIONS OF SECTION 12AA(3); FURTHER, THE TRUST BEING AN EDUCATIONAL IN STITUTION AND 8 ITA NO. 564/H/12 SREE EDUCATIONAL SOCIETY UNDISPUTEDLY IMPARTING EDUCATION, CANCELLATION OF R EGISTRATION WAS NOT IN ACCORDANCE WITH LAW. THE SAME RATIO HAS BEEN FOLLOWED BY THE LUCKNOW BENCH OF ITAT IN THE CASE OF KAPOOR EDU CATIONAL SOCIETY VS. CIT, [2010] 134 TTJ (LUCKNOW) 250. 13. FURTHER, WE ARE OF THE OPINION THAT SHRI K.T. M AHI SEEMS TO HAVE COLLECTED CAPITATION FEES ON HIS OWN WITHOUT A NY AUTHORITY OF THE SOCIETY, THEREFORE, THE SOCIETY IS NOT INVOLVED IN COLLECTION OF CAPITATION FEES IN CASH. THE ARGUMENT OF THE LEARNE D DR THAT THE ACTS OF THE SERVANT WILL BIND THE MASTER CANNOT BE APPLIED TO THE FACTS OF THE PRESENT CASE FOR THE REASON THAT SHRI K.T. MAHI WAS NEVER AUTHORIZED TO COLLECT THE EXCESS CAPITATION F EES. THE AUTHORITY TO COLLECT THE EXCESS FEES SHOULD HAVE BE EN GIVEN BY THE SOCIETY AND IT IS ONLY, THEN, IT CAN BE SAID THAT T HE ACTS OF THE EMPLOYEES WILL BIND THE PRINCIPAL. ANYTHING DONE B Y THE EMPLOYEE BEYOND THE SCOPE OF POWERS GIVEN TO HIM WILL NOT BI ND THE PRINCIPAL/SOCIETY. THE CASH DEPOSITED IN THE HEAD O FFICE BY ITSELF CANNOT BE TREATED AS FUND COLLECTED BY THE SOCIETY. THE SAID AMOUNT HAS BEEN ASSESSED IN THE PERSONAL HANDS OF T HE SHRI K.T. MAHI AS THE COLLECTED AMOUNTS HAVE NOT REACHED THE SOCIETY, THEREFORE, THE EXEMPTION U/S 11 CANNOT BE DENIED. I T CANNOT ALSO BE SAID THAT THE SEIZED DOCUMENTS, ON WHICH, THE AO HAD PLACED RELIANCE CONCLUSIVELY PROVED THAT IT WAS ONLY THE S OCIETY, WHICH IS RECEIVED THE EXCESS MONEY. THE CIRCUMSTANCES ONLY S HOW THAT IT WAS SHRI K.T. MAHI, WHO HAS COLLECTED EXCESS MONEY WITHOUT THE KNOWLEDGE OR THE AUTHORITY OF THE SOCIETY. IN OTHER WORDS, NONE OF THE MONIES WERE COLLECTED BY SHRI K.T. MAHI ON THE AUTHORITY OF THE SOCIETY. 14. IN THE CASE OF CIT VS. GEETHANJALI UNIVERSITY, 214 TAXMAN 11 (RAJ.) IT WAS HELD THAT WHAT IS REQUIRED FOR PUR POSE OF SEEKING 9 ITA NO. 564/H/12 SREE EDUCATIONAL SOCIETY APPROVAL U/S 10(23)(C) IS THAT UNIVERSITY OR EDUCAT ION TRUST SHALL EXIST SOLELY FOR EDUCATIONAL PURPOSES AND NOT FOR PURPOSE OF PROFIT. FURTHERMORE THOUGH THE ADMISSIONS WERE NOT IN ACCORDANCE WITH PRESCRIBED RULES STILL THE SAID VIO LATION COULD NOT BE TO ITS LOSING CHARACTER AS AN ENTITY EXISTING SO LELY FOR EDUCATIONAL PURPOSES. FOLLOWING THE RATIOS OF THE D ECISIONS AS MENTIONED ABOVE, IN THE PRESENT CASE THOUGH EXCESS FEES HAS BEEN COLLECTED BY SHRI K.T. MAHI, THE SOCIETY DOE S NOT LOOSE ITS CHARACTER AS THE INSTITUTION WHICH IS EXISTING FOR EDUCATIONAL PURPOSES. 15. WE ALSO FORTIFIED BY THE DECISION OF BANGALORE B BENCH IN THE CASE OF SHRI M.J. BALACHANDER VS. DCIT IN ITA N OS. 90 TO 94/BANG/2012 AND OTHERS VIDE ORDER DATED 21/12/2012 WHEREIN SIMILAR ISSUE HAS BEEN CONSIDERED AND THE TRIBUNAL HAS HELD THAT M.J. BALACHANDER WAS COLLECTING (ETF) EXTRA TUTION FEES ON HIS OWN WITHOUT ANY AUTHORITY OR CONSENT OF THE SOCIETY AND THE CONCLUSION OF THE CIT WAS THAT ETF WAS COLLECTED BY M.J. BALAC HANDER ON HIS OWN AND THE SOCIETY HAS NOTHING TO DO WITH ETF COLL ECTION. THE ITAT CONFIRMED THE FINDINGS OF THE CIT. 16. IN THE PRESENT CASE NO MATERIAL HAS BEEN BROUGH T ON RECORD TO SHOW THAT THE ASSESSEE SOLELY EXISTS FOR PROFIT MOTIVE. THE DEPARTMENT HAS NOT BEEN ABLE TO DISCHARGE ITS ONUS OF SHOWING AS TO HOW THE CONDITIONS FOR GRANT OF REGISTRATION HAV E BEEN BREACHED BY THE ASSESSEE. THE REGISTRATION HAS BEEN GRANTED TO THE SOCIETY FOR MANY YEARS IN THE PAST UNDER THE SA ME FACTS AND THERE IS NO CHANGE IN THE FACTS OR IN THE ACTIVITIE S OF THE SOCIETY IN THE PRESENT YEAR. IT HAS ALSO NOT BEEN DEMONSTRATE D BY THE DEPARTMENT AS TO HOW THE OBJECT OF THE ASSESSEE HAS TURNED INTO A COMMERCIAL ONE. THE PREDOMINANT OBJECT OF THE ASS ESSEE IS AND 10 ITA NO. 564/H/12 SREE EDUCATIONAL SOCIETY REMAINS TO CARRY OUT CHARITABLE PURPOSE OF ADVANCEM ENT OF EDUCATION AND NOT TO EARN PROFIT. IN FACT NO PROFIT HAS BEEN ESTABLISHED TO HAVE BEEN EARNED BY THE ASSESSEE. TH E DIT HAS FAILED TO SPECIFY AS TO HOW PROFIT EARNING IS THE P REDOMINANT ACTIVITY OF THE ASSESSEE AND THE SOCIETY HAS BEEN P URSUING ITS OBJECT OF IMPARTING EDUCATION TO STUDENTS. THEREFOR E, THE ASSESSEE SOCIETY CANNOT BE DEPRIVED OFF OF THE BENE FIT OF REGISTRATION GRANTED BY THE DIT(E) U/S 11 OF THE AC T. BEING SO, IN OUR OPINION, REGISTRATION GRANTED U/S 12AA OF THE A CT CANNOT BE CANCELLED. HOWEVER, THE AFORESAID FINDINGS GIVEN BY US ARE NOTHING TO DO WITH THE ALLOWABILITY OF EXEMPTION U/ S 11 OF THE ACT. IN CASE ANY DISCREPANCY OR IRREGULARITY WITH REGARD TO THE ALLOWABILITY OF EXEMPTION U/S 11 IS NOTICED BY THE AO, HE CAN MAKE AN INDEPENDENT ENQUIRY/EXAMINATION AT THE TIME OF ASSESSMENT FOR EACH ASSESSMENT YEAR AND DECIDE IN A CCORDANCE WITH LAW. 17. IN THE RESULT, APPEAL OF THE ASSESSEE IS ALLOWE D. PRONOUNCED IN THE OPEN COURT ON 31/07/2013. (CHANDRA POOJARI) (ASHA VIJAYARAGHAV AN) ACCOUNTANT MEMBER JUDICIAL MEMBE R HYDERABAD, DATED: 31 ST JULY, 2013. KV COPY TO:- 1) SREE EDUCATIONAL SOCIETY, 1-2-288/23/1, DOMALGUDA, HYDERABAD 500 029. 2) CIT(CENTRAL), HYDERABAD. 3) ADDL.CIT, CENTRAL RANGE 1, HYDERABAD 4) THE DEPARTMENTAL REPRESENTATIVE, I.T.A. T., HYDERABAD.