Soorya Educational Trust, Pondicherry V. ITO, Pondicherry

ITA 579/CHNY/2012

• Counselvise Citation: [2012] 140 COUNSELVISE.COM (IT) 61166 (ITAT-CHENNAI)
• Duration Of Justice: 2 month(s) 12 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 31-05-2012
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Next Hearing Date: 10-05-2012
• Assessment Year: 2008-2009
• Appeal Filed On: 19-03-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: JAY ANAGAYAN
• Assessee Lawyers: T BANUSEKAR
• Keywords: Charitable institution; Benefit of exemption
• Section: 12A; 12AA; 11

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL B BENCH, CHENNAI BEFORE SHRI ABRAHAM P. GEORGE, ACCOUNTANT MEMBER AND SHRI VIKAS AWASTHY, JUDICIAL MEMBER I.T.A. NO. 579/MDS/2012 (ASSESSMENT YEAR : 2008-09) M/S SOORYA EDUCATIONAL TRUST, NO.375, M.G. ROAD, PONDICHERRY 605 001. PAN : AADTS8694M (APPELLANT) V. THE INCOME TAX OFFICER, WARD I(2), PONDICHERRY. (RESPONDENT) APPELLANT BY : SHRI T. BANUSEKAR, CA RESPONDENT BY : SHRI JAYANAGAYAN, CIT-DR DATE OF HEARING : 10.05.2012 DATE OF PRONOUNCEMENT : 31.05.2012 O R D E R PER ABRAHAM P. GEORGE, ACCOUNTANT MEMBER : IN THIS APPEAL FILED BY THE ASSESSEE, ITS GRIEVAN CE IS THAT EXEMPTION UNDER SECTION 11 OF INCOME-TAX ACT, 1961 (IN SHORT 'THE ACT') WAS DENIED TO IT. AS PER THE ASSESSEE, IT WAS NOT ENGAGED IN ANY ACTIVITY OF A COMMERCIAL NATURE, BUT WAS ONLY IMPARTING EDUC ATION AND NEVER WORKED OR FUNCTIONED FOR MAKING PROFITS. THEREFORE , VIDE DEFINITION OF CHARITABLE PURPOSE GIVEN IN SECTION 2(15) OF THE ACT, IT WAS ELIGIBLE FOR EXEMPTION UNDER SECTION 11 OF THE ACT. 2 I.T.A. NO. 579/MDS/12 2. SHORT FACTS AS CULLED OUT FROM ASSESSMENT ORDER FOR IMPUGNED ASSESSMENT YEAR ARE THAT ASSESSEE HAD FILED ITS RET URN CLAIMING EXEMPTION UNDER SEC.11 OF THE ACT ON ITS INCOME. D URING THE COURSE OF ASSESSMENT PROCEEDINGS, ASSESSEE WAS REQUIRED TO EX PLAIN CHARITABLE ACTIVITIES CARRIED ON BY IT. AS PER THE ASSESSEE, IT WAS RUNNING A DISTANCE EDUCATION PROGRAMME FOR ANNAMALAI UNIVERSI TY, ON HOTEL MANAGEMENT AND CATERING TECHNOLOGY RESULTING IN GRA NT OF DIPLOMA AND GRADUATION, BASED ON A MEMORANDUM OF UNDERSTANDING (MOU) ENTERED WITH ANNAMALAI UNIVERSITY. ASSESSEE WAS TO CONDUCT THE CLASSES AS PER THE TERMS OF MOU, STUDENTS WERE TO PAY THE FEES TO THE UNIVERSITY AND IN TURN, THE UNIVERSITY WAS TO PAY A PART OF SUCH FEES TO THE ASSESSEE. THE COURSES CONDUCTED WERE TWO-YEAR DIPLOMA IN HOTEL MA NAGEMENT AND CATERING TECHNOLOGY, THREE-YEAR DEGREE IN HOTEL MAN AGEMENT AND TOURISM AND A ONE-YEAR CRAFT PROGRAMME. THE THEORY AND PRACTICAL CLASSES WERE TO BE CONDUCTED BY THE ASSESSEE. HOWE VER, CONDUCTING OF EXAMINATION, EVALUATION AND AWARDING OF DEGREE/DIPL OMA TO THE STUDENTS WERE TO BE DONE BY M/S ANNAMALAI UNIVERSITY. ASSES SING OFFICER (A.O.) WAS OF THE OPINION THAT ASSESSEE WAS PROVIDING ONLY CONTACT CENTRES AND CLASS ROOMS FOR CONDUCT OF THEORY AND PRACTICAL CLA SSES AS APPROVED BY ANNAMALAI UNIVERSITY AND THUS IT WAS ONLY A TECHNIC AL COLLABORATOR FOR THE DISTANCE EDUCATION COURSES CONDUCTED BY M/S ANNAMAL AI UNIVERSITY. AS PER THE A.O., ASSESSEE WAS NEITHER A SCHOOL NOR A COLLEGE WHERE 3 I.T.A. NO. 579/MDS/12 FORMAL SCHOOLING OR COLLEGIATE EDUCATION WAS IMPART ED TO STUDENTS WITH REGULAR ATTENDANCE AND REGULAR CLASSES CONDUCTED BY QUALIFIED STAFF. FURTHER, ASSESSEE WAS NOT AFFILIATED TO THE GOVERNM ENT NOR RECOGNIZED BY UGC OR ANY OTHER AUTHORITY FOR THE PURPOSE OF ED UCATION. ASSESSING OFFICER ALSO NOTED THAT ASSESSEE INDEED WAS GIVEN D EEMED REGISTRATION UNDER SECTION 12A OF THE ACT BY THE TRIBUNAL, BUT, HOWEVER, ACCORDING TO HIM, SUCH GRANT OF REGISTRATION UNDER SECTION 12A O F THE ACT WOULD NOT MEAN THAT ASSESSEE WAS A CHARITABLE TRUST. THE INC OME AND EXPENDITURE OF THE ASSESSEE, AS PER THE A.O., SHOWE D THAT IT WAS RECEIVING FEES FROM ANNAMALAI UNIVERSITY FOR STUDEN TS ENROLLED AND ALSO DERIVED INCOME ON BANK DEPOSITS AND HAD ALSO RECEIV ED DISCOUNTS. A.O. THUS CAME TO A CONCLUSION THAT ASSESSEE WAS NOT DOI NG ANY CHARITABLE ACTIVITY. HE ALSO RELIED ON THE TDS CERTIFICATE IS SUED BY THE ANNAMALAI UNIVERSITY WHICH MENTIONED THAT FEES WERE PAID BY T HE UNIVERSITY TO THE ASSESSEE FOR PROFESSIONAL AND TECHNICAL SERVICES. AS PER THE A.O., IF EDUCATION WAS TO BE CONSIDERED CHARITABLE, THERE SH OULD BE AN ELEMENT OF PUBLIC BENEFIT OR PHILANTHROPY. BUT, THE ASSESS EE WAS RUNNING ON COMMERCIAL LINES, HENCE, EXEMPTION COULD NOT BE GRA NTED. HE THUS DENIED THE CLAIM OF EXEMPTION UNDER SECTION 11 OF T HE ACT. RELIANCE WAS PLACED ON THE DECISION OF HONBLE APEX COURT IN THE CASE OF SOLE TRUSTEE, LOK SHIKSENA TRUST V. CIT (101 ITR 234) FO R RULING THAT UNLESS FORMAL SCHOOLING WAS INVOLVED, AN ACTIVITY COULD NO T BE CONSIDERED AS 4 I.T.A. NO. 579/MDS/12 EDUCATION. A.O. ALSO NOTED THAT JUST BECAUSE ` 65,000/- WAS PAID TO POOR STUDENTS, IT WOULD NOT MAKE ASSESSEE A CHARITA BLE ONE. 3. A.O. ALSO CAME TO A FINDING THAT ASSESSEE HAD CO NTRAVENED SECTION 11(5) AND SECTION 13(1) OF THE ACT. FOR CO MING TO THIS CONCLUSION, HE RELIED ON THE FOLLOWING ENTRIES IN T HE ACCOUNTS (I) ONE OF THE TRUSTEES, SHRI VICTOR VIJAYARAJ HAD WITH DRAWN ` 30 LAKHS ON 4.3.2008, WHICH WAS REPAID ONLY ON 6.3.2008. (II) DURING THE PERIOD 9.8.2007 TO 6.2.2008, THE SAME TRUSTEE HAD PERIODICALLY WITHDRAWN CASH TOTALLING TO ` 5,60,000/- FOR WHICH NO INTEREST WAS PAID. (III) ON 31.3.2008, SHRI VICTOR VIJAYARAJ HAD WITHDRAWN ` 1,80,000/- AS SALARY. (IV) A SUM OF ` 2,78,000/- WAS SEEN DEBITED AS PCP EXPENSES. (V) A SUM OF ` 2,50,000/- WAS WITHDRAWN ON 2.1.2008 BY DR. LOUIS PRAKASAM KANNAIAH, ANOTHER TRUSTEE. (VI) A SUM OF ` 7200/- WAS BEING DRAWN BY THE SAME TRUSTEE ON MONTHLY BASIS. (VII) AN ADVANCE OF ` 2,86,000/- WAS SHOWN IN THE BALANCE-SHEET. (VIII) A SUM OF ` 7,25,000/- WAS ADVANCED TO SRI RAMACHANDRA EDUCATIONAL TRUST. 4. ALL THESE, AS PER THE A.O., RESULTED IN CONTRAVE NTION OF SECTION 13(1) AS WELL AS SECTION 11(5) OF THE ACT. RELYING ON INSTRUCTION NO.1112 OF CBDT, THE A.O. CAME TO AN OPINION THAT P ROFITS OF THE INSTITUTION WAS DIVERTED FOR PERSONAL USE AND THERE FORE, THE INCOME HAD 5 I.T.A. NO. 579/MDS/12 TO BE SUBJECTED TO TAX. IN THE RESULT, A.O. DENIED EXEMPTION OF TAX TO THE ASSESSEE. 5. AGGRIEVED, ASSESSEE MOVED IN APPEAL BEFORE CIT(A PPEALS). IT WAS CLAIMED THAT ASSESSEES ACTIVITY WAS NOTHING BUT E DUCATION, FALLING WITHIN THE MEANING OF SECTION 2(15) OF THE ACT AND ALSO UNDER SECTION 10(23C) OF THE ACT. RELIANCE WAS PLACED BY THE ASS ESSEE ON FOLLOWING DECISIONS, BEFORE THE CIT(APPEALS):- (A) CIT V. SECRETARY, REGIONAL COMMITTEE NATIONAL SPORT S CLUB OF ASSAM (1989) 180 ITR 648 (GAU) (B) ROYAL CHORAL SOCIETY V. IRC (1944) 12 ITR (SUPP) 12(CA) (ENGLISH CASE). (C) CIT V. BAR COUNCIL, MADRAS (1943) 11 ITR 1 (MAD) (D) ECUMENICAL CHRISTIAN CENTRE V. CIT (1983) 139 ITR 226 (KAR) (E) SOLE TRUSTEE, LOKA SHIKSHANA TRUST V. CIT (1975) 101 IT R 234 (SC) (F) GUJARAT STATE CO-OPERATIVE UNION V. CIT (1992) 103 CTR 1 95 IR 279 (GUJ) (G) CIT V. SRI THYAGA BRAHMA GANA SABHA (REGD) (1991) 188 I TR 160 (MAD) 6. HOWEVER, THE CIT(APPEALS) WAS NOT IMPRESSED. AC CORDING TO HIM, ASSESSEES ROLE WAS LIMITED TO CARRYING OUT THE INS TRUCTIONS OF ANNAMALAI UNIVERSITY AND IT COULD NOT DEVIATE FROM SUCH INSTR UCTIONS. IT COULD NOT ADMIT EVEN A SINGLE STUDENT AND COULD NOT REJECT AN Y STUDENTS ADMITTED BY THE SAID UNIVERSITY. ASSESSEE COULD NOT CONDUCT ANY EXAMINATION NOR COULD AWARD ANY CERTIFICATE OR DEGREES. ACTIVITIES OF THE ASSESSEE WERE NOTHING BUT PROVIDING INFRASTRUCTURE AND TECHNICAL MANPOWER. ASSESSEE, 6 I.T.A. NO. 579/MDS/12 ACCORDING TO CIT(APPEALS), WAS WORKING ON COMMERCIA L PRINCIPLES AND SOLELY AIMED AT EARNING PROFITS. THE MOU WITH ANNA MALAI UNIVERSITY CLEARLY SHOWED THAT ASSESSEE WAS BEING REMUNERATED FOR RENDERING PROFESSIONAL SERVICES AND PROVIDING INFRASTRUCTURE. THE SURPLUS GENERATED IN THE RELEVANT PREVIOUS YEAR CAME TO ` 1,13,55,617/- WHICH WAS QUITE SUBSTANTIAL AND THE CLAIM OF CHARITY WAS UNSUBSTANTIATED. RELYING ON THE DECISION OF HONBLE JURISDICTIONAL H IGH COURT IN THE CASE OF REGIONAL COMPUTER CENTRE V. CIT (311 ITR 182), HON BLE UTTARAKHAND HIGH COURT IN THE CASE OF CIT V. NATIONAL INSTITUTE OF AERONAUTICAL ENGG. EDUCATIONAL SOCIETY (315 ITR 428) AND OF THE CO-ORD INATE BENCH OF THIS TRIBUNAL IN THE CASE OF RAJAH SIR ANNAMALAI CHETTIA R FOUNDATION V. DIRECTOR OF INCOME-TAX (EXEMPTIONS) [10 ITR (TRIB) 424], THE CIT(APPEALS) CONFIRMED THE DENIAL OF EXEMPTION UNDE R SECTION 11 OF THE ACT. 7. INSOFAR AS THE ISSUE OF VIOLATION UNDER SECTION 13(1)(C) OF THE ACT WAS CONCERNED, SUBMISSION OF THE ASSESSEE BEFORE CI T(APPEALS) WAS THAT FUNDS OF ` 30 LAKHS WITHDRAWN ON 4.3.2008 WERE RE-TRANSFERRED TO ACCOUNTS OF THE TRUST ON 6.3.2008, AND IT WAS HELD BY THE TRUSTEE FOR A SHORT PERIOD OF TWO DAYS ONLY AND THAT TOO ONLY FOR THE PURPOSE OF MEETING THE CONSTRUCTION COST RELATING TO THE CONST RUCTION BEING CARRIED OUT BY THE TRUST. IN OTHER WORDS, AS PER THE ASSES SEE, AS SOON AS IT WAS FOUND THAT TRANSFER OF FUNDS TO THE TRUSTEE INAPPRO PRIATE, THE MONEY WAS 7 I.T.A. NO. 579/MDS/12 RETURNED. AS FOR THE OBSERVATION OF THE A.O. THAT SHRI VICTOR VIJAYARAJ, TRUSTEE WAS PAID ` 5,60,000/-, IT WAS SUBMITTED BEFORE CIT(APPEALS) T HAT ACTUAL WITHDRAWAL WAS ONLY ` 1,90,000/- OF WHICH ` 1,80,000/- WAS SALARY. ACCORDING TO ASSESSEE, THE SAID SHRI VICTOR VIJAYAR AJ WAS AN ENGINEERING GRADUATE WITH SEVEN YEARS EXPERIENCE A ND SALARY OF ` 1,80,000/- PER YEAR WAS NOT UNREASONABLE. AS FOR T HE SUM OF ` 2,78,000/- CHARGED TOWARDS PCP EXPENSES, ASSESSEE S UBMITTED THAT IT WAS SUMS DUE FROM THE ASSESSEE FOR WORK DONE AND NO T A PAYMENT IN THE NATURE OF ADVANCE OR A LOAN. AS FOR THE SUM OF ` 2,50,000/- WITHDRAWN BY DR. LOUIS PRAKASAM KANNAIAH, ANOTHER T RUSTEE, SUBMISSION OF THE ASSESSEE BEFORE CIT(APPEALS) WAS THAT IT WAS NOT AT ALL A PAYMENT MADE TO THE SAID PERSON, BUT WAS AN I TEM OF EXPENDITURE INCURRED FOR BUILDING. THE NARRATION ALONE WAS WRO NG BUT THE ACTUAL EXPENDITURE WAS CORRECTLY CHARGED TO THE BUILDING A CCOUNT. AS FOR SUM OF ` 7200/- DRAWN BY SAME TRUSTEE ON MONTHLY BASIS, SUB MISSION OF THE ASSESSEE WAS THAT THESE WERE RENT PAID FOR PROPERTY TAKEN ON LEASE FROM THE SAID TRUSTEE AND USED BY THE TRUST. AS PER THE ASSESSEE, SUCH RENTALS WERE JUSTIFIED CONSIDERING THE LOCATION OF THE SAID PROPERTY. AS FOR SUM OF ` 2,86,000/- GIVEN AS ADVANCE REFLECTED IN ITS BALAN CE-SHEET, SUBMISSION OF THE ASSESSEE WAS THAT SUCH ADVANCE WA S NOT GIVEN TO ANY RELATED PARTY. AS FOR SUM OF ` 7,25,000/- ADVANCED TO SRI RAMACHANDRA EDUCATIONAL TRUST, SUBMISSION OF THE ASSESSEE WAS T HAT SUCH TRUST WAS 8 I.T.A. NO. 579/MDS/12 ALSO HAVING EDUCATIONAL OBJECTIVES AND IT WAS GIVEN AS AN INTEREST-FREE ADVANCE FOR EDUCATION PURPOSE ONLY. HOWEVER, NONE O F THESE SUBMISSIONS FOUND ANY POSITIVE RESPONSE FROM THE CI T(APPEALS). ACCORDING TO HIM, THESE WERE ALL CLEAR AND UNDISPUT ED VIOLATION OF THE NATURE MENTIONED IN SECTION 13(1)(C) OF THE ACT. R ELYING ON THE DECISION OF HONBLE JURISDICTIONAL HIGH COURT IN THE CASE OF RAMALINGAM CHARITIES V. CIT (56 DTR 328) AND THAT OF HONBLE DELHI HIGH COURT IN THE CASE OF P.T. KANAHYA LAL PUNJ CHARITABLE TRUST V. DIT(E) (2 97 ITR 66), CIT(APPEALS) OBSERVED THAT ADVANCING LOAN TO THE ME MBERS OF THE TRUST RESULTED IN VIOLATION OF THE NATURE MENTIONED IN SE CTION 13(1)(C) OF THE ACT. THUS, HE CONFIRMED THE ORDER OF A.O. DENYING THE ASSESSEE BENEFIT OF EXEMPTION UNDER SECTION 11 OF THE ACT, ON ACCOUN T OF THIS REASON ALSO. 8. NOW BEFORE US, LEARNED A.R., STRONGLY ASSAILING THE ORDERS OF AUTHORITIES BELOW, TOOK US THROUGH THE MEMORANDUM O F UNDERSTANDING (MOU) ENTERED BETWEEN THE ASSESSEE AND ANNAMALAI UN IVERSITY, PLACED AT PAPER-BOOK PAGES 10 TO 18. ACCORDING TO HIM, A SSESSEE WAS CONDUCTING PERSONAL CONTACT EDUCATIONAL PROGRAMMES IN A FULL-FLEDGED MANNER AND HAD TO TAKE CARE OF BOTH THEORY AND PRAC TICAL CLASSES FOR ALL THE PROGAMMES. AS PER THE MOU, THE DEGREES WERE AW ARDED BY ANNAMALAI UNIVERSITY AND THEREFORE, COURSES CONDUCT ED BY THE ASSESSEE COULD NOT BE CONSIDERED AS A PRIVATE COURSE OR ANY PRIVATE AWARDING OF DEGREE. LEARNED A.R. SUBMITTED THAT ACTIVITIES OF THE ASSESSEE WERE 9 I.T.A. NO. 579/MDS/12 PURELY IN THE NATURE OF EDUCATION AND COULD NOT BE COMPARED WITH A COACHING CENTRE, WHICH WAS PREPARING STUDENTS FOR C OMPETITIVE EXAMINATIONS. UNLESS AND UNTIL THE CLASSES CONDUCT ED BY THE ASSESSEE WERE ATTENDED BY THE STUDENTS, THEY WOULD NOT BE EL IGIBLE FOR WRITING THE EXAMINATION OF ANNAMALAI UNIVERSITY UNDER ITS DISTA NCE EDUCATION PROGRAMMES. THE FACULTY AND TEACHERS WERE EMPLOYED BY THE ASSESSEE AND IT WAS OBLIGED TO DO SO UNDER THE AGREEMENT WIT H ANNAMALAI UNIVERSITY. ASSESSEE WAS REQUIRED TO MAINTAIN STUD ENTS REGISTER, AND KEEP THE ATTENDANCE OF THE STUDENTS. IT HAD TO CON DUCT PERIODICAL PERFORMANCE ASSESSMENT AND REPORT TO DIRECTORATE OF DISTANCE EDUCATION OF ANNAMALAI UNIVERSITY. NO FEES WAS DIR ECTLY RECEIVED BY THE ASSESSEE, BUT THE FEES WERE PAID BY THE STUDENTS TO THE ANNAMALAI UNIVERSITY. ASSESSEE WAS TO PREPARE THE STUDY MATE RIALS FOR THE STUDENTS AND EDUCATE EACH OF THEM. IN OTHER WORDS, EXCEPT FOR CONDUCTING EXAMINATION AND AWARDING DEGREES, ALL TH E EDUCATION ACTIVITIES OF THE DISTANCE EDUCATION, WERE CARRIED ON BY THE ASSESSEE. ASSESSEE WAS ENTITLED ONLY FOR SHARE OF FEES COLLEC TED BY ANNAMALAI UNIVERSITY. IN THE FACE OF SUCH A SITUATION, TO SA Y THAT ASSESSEE WAS NOT ENGAGED IN AN ACTIVITY OF EDUCATION WOULD BE UNFAIR . RELYING ON THE TRUST DEED OF THE ASSESSEE, PLACED AT PAPER-BOOK PA GES 19 TO 32, LEARNED A.R. SUBMITTED THAT THE PRIMARY AIM OF THE TRUST WAS PROMOTION OF EDUCATION. NONE OF THE TRUSTEES COULD TAKE ANY PART OF THE SURPLUS 10 I.T.A. NO. 579/MDS/12 AND WHATEVER SURPLUS WAS THERE, WERE USED ONLY FOR THE DEVELOPMENT OF INFRASTRUCTURE. THEREFORE, ACCORDING TO HIM, CONCL USION OF THE LOWER AUTHORITIES THAT ASSESSEE WAS NOT IN THE FIELD OF E DUCATION WAS ENTIRELY WRONG. THERE WAS NO FINDING BY THE REVENUE THAT IT WAS COLLECTING ANY FEES MORE THAN WHAT WAS PAID BY THE UNIVERSITY TO I T. THE FEES WERE PAID BY THE STUDENTS DIRECTLY TO THE UNIVERSITY AND IT C OULD NOT BE STATED THAT ANNAMALAI UNIVERSITY WAS ENGAGED IN A BUSINESS OF M AKING MONEY BY SELLING EDUCATION. RELYING ON THE DECISION OF HON BLE DELHI HIGH COURT IN THE CASE OF INSTITUTE OF CHARTERED ACCOUNTANTS OF I NDIA V. THE DIRECTOR GENERAL OF INCOME TAX (EXEMPTIONS) IN WRIT PETITION (CIVIL) N.1927 OF 2010, PLACED AT PAPER-BOOK PAGES 65 TO 121, LEARNED A.R. SUBMITTED THAT CONDUCT OF COURSES IN WHICH DEGREES WERE AWARD ED BY A RECOGNIZED UNIVERSITY COULD NOT BE EQUATED OR CATEGORIZED WITH A COACHING CLASS CONDUCTED BY PRIVATE INSTITUTES, FOR PREPARING STUD ENTS TO APPEAR FOR ENTRANCE EXAMINATION OR FOR PRE-ADMISSION OR EXAMIN ATIONS OR FOR OTHER PROFESSIONAL EXAMINATIONS. THE COURSES CONDUCTED B Y THE ASSESSEE COULD NOT BE EQUATED WITH THAT OF A PRIVATE COACHIN G INSTITUTE. A.R. POINTED OUT THAT HONBLE DELHI HIGH COURT HAD CONSI DERED THE DECISION OF HONBLE APEX COURT IN THE CASE OF SOLE TRUSTEE, LOK A SHIKSHANA TRUST (SUPRA) RELIED ON BY THE A.O. FOR DENYING THE BENEF IT OF EXEMPTION UNDER SECTION 11 OF THE ACT TO THE ASSESSEE. ACCORDING T O HIM, WHAT EDUCATION CONNOTED WAS THE PROCESS OF TRAINING AND DEVELOPING KNOWLEDGE, SKILL, 11 I.T.A. NO. 579/MDS/12 MIND AND CHARACTER OF STUDENTS BY FORMAL SCHOOLING AND FORMAL EDUCATION AND THUS REQUIRED AN ORGANIZED AND SYSTEM ATIC TRAINING WHERE THE INSTITUTION WOULD BE ACCOUNTABLE TO SOME AUTHOR ITY. RELYING ON THE DECISION OF HONBLE GUJARAT HIGH COURT IN THE CASE OF GUJARAT STATE CO- OPERATIVE UNION V. CIT (195 ITR 279), LEARNED A.R. SUBMITTED THAT THOUGH IN THE CONTEXT OF THE PROVISION OF SECTION 1 0(22) THE CONCEPT OF EDUCATION COULD NOT BE GIVEN ANY WIDE OR EXTENDED M EANING AS HELD BY HONBLE APEX COURT, IT SURELY ENCOMPASSED SYSTEMATI C DISSEMINATION OF KNOWLEDGE AND TRAINING IN SPECIALIZED SUBJECTS. ST RONG RELIANCE WAS PLACED BY THE LEARNED A.R. ON THE DECISION OF HONB LE KERALA HIGH COURT IN THE CASE OF CIT V. ST. MARYS MALANKARA SEMINARY IN I.T. APPEAL NOS.183 AND 184 OF 2011 DATED 16 TH FEBRUARY, 2012, (COPY OF THE JUDGMENT PLACED AT PAPER-BOOK PAGES 63-64) FOR ARGU ING THAT EVEN AN EDUCATIONAL INSTITUTION IMPARTING RELIGIOUS TEACHIN G LIKE MAKING A PERSON FIT TO PERFORM THE DUTIES OF THE PRIEST, WAS ENTITL ED FOR EXEMPTION UNDER SECTION 10(23C) OF THE ACT. ACCORDING TO HIM, EDUC ATION PER SE WAS CHARITY AND RELYING ON THE DECISION OF HONBLE APEX COURT IN THE CASE OF DHARMADEEPTI V. CIT (114 ITR 454), SUBMITTED THAT NOT INVOLVING THE CARRYING ON OF ANY ACTIVITY FOR PROFIT GOVERNED ON LY OBJECTS OF GENERAL PUBLIC UTILITY AND NOT RELIEF TO THE POOR, EDUCATIO N AND MEDICAL RELIEF. 9. INSOFAR AS VIOLATION OF SECTION 13(1) AND SECTIO N 11(5) OF THE ACT WAS CONCERNED, A.R. SUBMITTED THAT NONE OF THESE VI OLATIONS WERE 12 I.T.A. NO. 579/MDS/12 MATERIAL ENOUGH TO DENY THE EXEMPTION SOUGHT UNDER SECTIONS 11 AND 12 OF THE ACT. ACCORDING TO HIM, INSOFAR AS THE SU M OF ` 30 LAKHS TRANSFERRED TO TRUST ACCOUNT WAS CONCERNED, IT WAS HELD BY THE CONCERNED TRUSTEE ONLY FOR TWO DAYS AND THERE WAS N O BENEFIT WHATSOEVER DERIVED BY HIM. THE AMOUNT WAS HELD BY THE TRUSTEE IN AN S.B. ACCOUNT AND NO INTEREST COULD BE EARNED FROM A N S.B. ACCOUNT FOR SUCH A SHORT PERIOD OF DEPOSIT. IT WAS ONLY AN ERR OR WHICH WAS CORRECTED WITHIN TWO DAYS. INSOFAR AS THE OTHER ITEMS, WHICH WERE CONSIDERED VIOLATION OF SECTION 13(1)(C) OF THE ACT WAS CONCER NED, A.R. SUBMITTED THAT SOME OF THESE WERE MISTAKEN FIGURES LIKE ` 5,60,000/- CONSIDERED BY THE A.O. INSTEAD OF ` 1,90,000/- AND SALARY BEING CONSIDERED AS A BENEFI T TAKEN BY THE TRUSTEE. SOME OF THE ITEMS WERE ADVAN CES GIVEN TO NON- RELATED PARTIES AND SOME OF THE EXPENSES WERE CONSI DERED TO BE THE DRAWINGS OF THE TRUSTEES. INSOFAR AS ADVANCE OF ` 7,25,000/- TO SRI RAMACHANDRA EDUCATIONAL TRUST WAS CONCERNED, A.R. S UBMITTED THAT THE SAID TRUST WAS AN INSTITUTION REGISTERED UNDER SECT ION 12A AND A COPY OF CERTIFICATE OF SUCH REGISTRATION WAS ALSO FILED. 10. PER CONTRA, LEARNED D.R. SUBMITTED THAT ASSESSE E WAS NOTHING BUT A COACHING INSTITUTE AND WAS ONLY RENDERING PROFESS IONAL SERVICES AS PER THE MOU WITH ANNAMALAI UNIVERSITY. THE SAID AGREEM ENT CLEARLY INDICATED THAT ASSESSEE WAS ENTITLED TO A PART OF T HE FEES REMITTED BY THE STUDENTS, AS PROFESSIONAL FEES FOR THE SERVICES REN DERED BY IT. EVEN 13 I.T.A. NO. 579/MDS/12 TDS CERTIFICATE ISSUED BY ANNAMALAI UNIVERSITY CLEA RLY SHOWED IT AS PROFESSIONAL FEES. CONDUCTING COACHING CLASS WILL NOT BE AN EDUCATION. DECISION OF HONBLE APEX COURT IN THE CASE OF SOLE TRUSTEE, LOKA SHIKSHANA TRUST (SUPRA) CLEARLY LAID DOWN THAT FORM AL SCHOOLING AND FORMAL EDUCATION ALONE COULD BE CONSIDERED AS EDUCA TION AND THE TERM EDUCATION COULD NOT BE GIVEN A WIDE MEANING SO AS TO ENCOMPASS ANY TYPE OF COACHING, SO AS TO BE ELIGIBLE FOR EXEMPTIO N PROVIDED UNDER THE ACT. INSOFAR AS VIOLATION UNDER SECTION 13(1)(C) O F THE ACT WAS CONCERNED, LEARNED D.R. SUBMITTED THAT IT WAS AN AD MITTED POSITION THAT ONE OF THE TRUSTEES HAD ENJOYED BENEFIT OF ` 30 LAKHS ATLEAST FOR TWO DAYS AND THIS WAS ENOUGH FOR BRINGING THE ASSESSEE WITHI N SECTION 13(1)(C) OF THE ACT. WHETHER THE ABERRATION WAS FOR A TEMPORAR Y PERIOD OR NOT, VIOLATION STOOD ESTABLISHED. THEREFORE, ACCORDING TO HIM, THE LOWER AUTHORITIES WERE JUSTIFIED IN TAKING A VIEW THAT AS SESSEE WAS ONLY A COACHING INSTITUTE WORKING FOR COMMERCIAL BENEFIT B Y WHICH IT HAD EARNED HUGE PROFITS. THE AMOUNT GIVEN TO POOR STUDENTS WA S MINISCULE AND TO CONSIDER ASSESSEE AS A CHARITABLE INSTITUTE ELIGIBL E FOR EXEMPTION WILL BE NOT IN ACCORDANCE WITH SPIRIT OF THE LAW GIVING EXE MPTION TO GENUINE EDUCATIONAL INSTITUTIONS DOING WORK OF CHARITY. 11. WE HAVE PERUSED THE ORDERS AND HEARD THE RIVAL SUBMISSIONS. WE HAVE TO RESOLVE TWO ISSUES. FIRST IS WHETHER ASSES SEE IS AN EDUCATION INSTITUTION ELIGIBLE FOR EXEMPTION UNDER SECTIONS 1 1 AND 12 OF THE ACT AND 14 I.T.A. NO. 579/MDS/12 SECOND IS WHETHER VARIOUS ITEMS OF PAYMENTS/INVESTM ENTS MENTIONED BY THE A.O. CONSTITUTED VIOLATION OF SECTION 13(1)(C) AND / OR SECTION 11(5) OF THE ACT. FOR RESOLVING THE FIRST ASPECT, IT IS ESSENTIAL TO REPRODUCE THE MEMORANDUM OF UNDERSTANDING ENTERED BY THE ASSESSEE WITH ANNAMALAI UNIVERSITY :- THE AGREEMENT MADE ON THIS DAY OF 11 TH FEBRUARY 2004 BETWEEN THE REGISTRAR, ANNAMALAI UNIVERSITY, INDIA (HEREINAFTER CALLED PARTY NO.1) AND SOORYA INSTITUTE OF MANAGEMENT STUDIES SIMS MANAG ED BY SOORYA EDUCATIONAL TRUST (REG. NO.1311/2003) 375, MAHATMA GANDHI ROAD, PONDICHERRY 605001. (HEREINAFTER CALLED PARTY NO.2). WHEREAS THE ANNAMALAI UNIVERSITY, THE AUTHORITY RUN NING DISTANCE EDUCATION PROGRAMMES, HAS RESOLVED TO ADMIT STUDENT S TO ALL PROGRAMMES VIZ., ONE YEAR P.G. DIPLOMA IN HOTEL MANAGEMENT, TWO YEAR DIPLOMA IN HOTEL MANAGEMENT AND CATERING TECHNOLOGY (DHMCT) THREE YE AR B.SC. HOTEL MANAGEMENT AND TOURISM AND ONE YEAR CRAFT PROGRAMME S FOUR IN NUMBER OF THE PARTY NO.2 THROUGH DISTANCE EDUCATION IN A FULL-FLED GED MANNER IN INDIA. THE PARTY NO.1 ENTERS INTO THIS AGREEMENT WITH THE PART Y NO.2 SUBJECT TO THE UNDER MENTIONED TERMS AND CONDITIONS. PREAMBLE : WHEREAS THE ANNAMALAI UNIVERSITY, ANNAMALAINAGAR, THE UNITARY AND RESIDENTIAL IN CHARACTER WITH NINE FACULTIES EN COMPASSING ARTS, SCIENCE, EDUCATION, INDIAN LANGUAGES, ENGINEERING & TECHNOLO GY, FINE ARTS, AGRICULTURE, MEDICINE & DENTISTRY ALONG WITH WELL ESTABLISHED DI STANCE EDUCATION DIRECTORATE, BOTH IN INDIA AND OVERSEAS, IS DESIROU S TO COLLABORATE FOR IMPARTING SPECIALIZED EDUCATION IN HOTEL MANAGEMENT, TOURISM & CATERING TECHNOLOGY OFFERED BY THE PARTY NO.1 AND PARTY NO.2. THE ANNAMALAI UNIVERSITY WILL BE REPRESENTED BY THE REGISTRAR WHILE SOORYA EDUCATIONAL TRUST WILL BE REPRESENTED BY ITS MANAGI NG TRUSTEE. A) RESOLVED THAT THE PARTY NO.2 IS TO OFFER THE PROGRAM MES APPROVED BY PARTY NO.1 JOINTLY WITH THE PARTY NO.2 THROUGH DIST ANCE EDUCATION MODE OF ANNAMALAI UNIVERSITY 50% COST OF THE FIRST ADVERTI SEMENT WILL BE BORNE BY THE PARTY NO.1 (ANY ONE OF LEADING DAILIES ) AND SUBSEQUENT ADVERTISEMENT CHARGES WILL BE MET BY THE PARTY NO.2. THE PARTY NO.2 15 I.T.A. NO. 579/MDS/12 SHALL AT ITS OWN COST GIVE ADVERTISEMENT IN DAILIES AND OTHER MEDIA WITH DUE APPROVAL OF THE PARTY NO.1 B) THE DEVELOPMENT OF CURRICULA AND CONDUCT OF THE PRO GRAMMES WILL BE THE RESPONSIBILITY OF SOORYA EDUCATIONAL TRUST. THE SY LLABI, REGULATIONS AND SCHEME OF EXAMINATIONS WILL BE APPROVED BY THE ACADE MIC COUNCIL OF ANNAMALAI UNIVERSITY. C) ANNAMALAI UNIVERSITY IS RESPONSIBLE FOR CONFIRMING THE ADMISSION AND FOR THE CONDUCT OF EXAMINATION, EVALUATION AND AWARD OF DIPLOMA/DEGREE TO THE ENROLLED STUDENTS. D) THE CONDUCT OF PERSONAL CONTACT PROGRAMME FOR THE P ROGRAMME CONCERNED IN A FULL-FLEDGED MANNER WILL BE THE RESP ONSIBILITY OF THE PARTY NO.2. T.A. & D.A. FOR THE FACULTIES ENGAGED FROM TH E UNIVERSITY DURING PERSONAL CONTACT PROGRAMME WILL BE BORNE BY THE PAR TY NO.2. E) THE SOORYA EDUCATIONAL TRUST WILL TAKE CARE OF THE CONDUCT OF THEORY AND PRACTICAL CLASSES FOR ALL PROGRAMMES AS PER THE CAL ENDAR FINALIZED JOINTLY BY THE PARTY NO.1 AND THE PARTY NO.2. F) THE DIRECTORATE OF DISTANCE EDUCATION, THE CONTROLL ER OF EXAMINATIONS AND THE SOORYA EDUCATIONAL TRUST, PONDICHERRY WILL JOINTLY CHART OUT THE SCHEME OF EXAMINATIONS FOR THE PROGRAMMES FOR EACH Y EAR. THE UNIVERSITY WILL SEND SCHEME FOR CONDUCT OF EXAMINATI ONS AND APPLICATION FORMS FOR REGISTRATION TO THE EXAMINATIONS TO THE CE NTRES OF PARTY NO.1 AND THE PARTY NO.2. G) THE ACTIVITIES OF THE PARTY NO.2 SHOULD NOT CONTRAVE NE THE TERMS AND CONDITIONS OF THIS AGREEMENT. THE UNIVERSITY IS NO T RESPONSIBLE FOR THE MISCONDUCT OF SOORYA INSTITUTE OF MANAGEMENT STUDIE S TO ANY THIRD PARTY. H) THE PARTY NO.2 IS RESPONSIBLE AND ACCOUNTABLE TO THE PARTY NO.1 IN RESPECT OF THE COORDINATORSHIP. I) THE PARTY NO.2 WILL SEND TO THE DIRECTORATE OF DISTA NCE EDUCATION A PANEL OF RESOURCE PERSONS HANDLING THEORY & PRACTICAL CLA SSES WITH COMPLETE DETAILS INCLUDING, 1) NAME 2) AGE 3) QUALIFICATION 4) EXPERIENCE IN YEARS REGARDING HE/SHE HAS WORKED OR/I S WORKING WITH FULL ADDRESS. 16 I.T.A. NO. 579/MDS/12 THE PANEL NEEDS TO BE SUBMITTED IN ADVANCE, AS IT R EQUIRES PRIOR APPROVAL BY THE UNIVERSITY AUTHORITIES. J) THE SOORYA EDUCATIONAL TRUST ARE REQUIRED TO MAINTA IN STUDENTS ATTENDANCE REGISTER FOR BOTH THEORY AND PRACTICALS OF ALL PROGRAMMES AND FORWARD A STATEMENT OF ATTENDANCE TO THE DIRECTORAT E OF DISTANCE EDUCATION. K) PERIODICAL STUDENTS PERFORMANCE ASSESSMENT IN BOTH THEORY AND PRACTICALS, STUDYING AT SOORYA INSTITUTE OF MANAGEM ENT STUDIES MAY BE MADE BY THE PARTY NO.2 AND A REPORT BE FORWARDED TO THE DIRECTORATE OF DISTANCE EDUCATION. L) WITH REGARD TO ANY DISPUTE THAT MAY ARISE BETWEEN T HE PARTY NO.1 AND THE PARTY NO.2 IN RESPECT OF ANY OF THE MATTERS UNDE R THIS AGREEMENT, THE PLACE OF JURISDICTION FOR TAKING ANY LEGAL ACTI ON WILL BE ONLY CHIDAMBARAM, CUDDALORE DISTRICT, TAMILNADU, INDIA A ND NO OTHER PLACE. M) THE AGREEMENT WILL BE IN FORCE FROM THE ACADEMIC YE AR 2004-05 FOR THE DEGREE, P.G. DIPLOMA, DIPLOMA AND CRAFT PROGRAMMES FOR A PERIOD OF TEN YEARS AND IN CONTINUANCE THEREAFTER. IF THERE IS B REACH OF ANY TERMS AND CONDITIONS, THE AGREEMENT CAN BE TERMINATED BY GIVI NG THREE MONTHS NOTICE IN WRITING BY EITHER PARTY ENDING WITH THE E ND OF ANY ACADEMIC YEAR. THEREAFTER, THE PROGRAMME SHOULD BE CONDUCTE D FOR ANOTHER TWO YEARS TO ENABLE THE REGISTERED CANDIDATES TO COMPLE TE THE PROGRAMME AND ALSO THE EXAMINATION WILL BE CONDUCTED FOR ANOTH ER FIVE YEARS. N) BOTH THE PARTIES AGREE NOT TO HAVE TIE-UP FOR THE SA ID PROGRAMMES WITH ANY OTHER INSTITUTIONS. IN CASE THE SOORYA EDUCATI ONAL TRUST HAS GOT ALREADY TIE UP WITH ANY OTHER UNIVERSITY OR INSTITU TION WITH REFERENCE TO ANY DIPLOMA, DEGREE OR CRAFT PROGRAMME, THE TIE UP SHOULD BE TERMINATED WITH EFFECT FROM TODAY I.E. 11 TH FEBRUARY 2004. IN THIS MATTER, IF THERE BE ANY LEGAL DISPUTE IT SHOULD BE SETTLED BY THE SO ORYA EDUCATIONAL TRUST ONLY AND ANNAMALAI UNIVERSITY WILL NOT BE HAVING AN Y BINDING IN ANY WAY. O) THE PARTY NO.1 AND THE PARTY NO.2 AGREE FOR ALL THE ABOVE SAID TERMS AND CONDITIONS. P) IN THIS AGREEMENT THE TERM UNIVERSITY INCLUDES TH E DIRECTORATE OF DISTANCE EDUCATION. THE PARTY NO.1 AND THE PARTY NO.2 WILL ALSO ADHERE T HE FOLLOWING GUIDELINES : 1. THE PARTY NO.1 AUTHORIZES PARTY OF THE PARTY NO.2 CO NDUCT PROGRAMMES 17 I.T.A. NO. 579/MDS/12 B.SC. IN HOTEL MANAGEMENT AND TOURISM - 3 YEARS DIPLOMA IN HOTEL MANAGEMENT AND CATERING TECHNOLOGY DHMCT 2 YEARS PG DIPLOMA IN HOTEL MANAGEMENT 1 YEAR CRAFT PROGRAMMES FRONT OFFICE, HOUSE KEEPING, PRO DUCTION, SERVICE 1 YEAR OR ANY OTHER PROGRAMMES DECIDED BY THE DIRECTORATE OF DISTANCE EDUCATION ANNAMALAI UNIVERSITY FROM TIME TO TIME. 2. THE PARTY NO.1 AGREES TO RUN THE FOLLOWING HOTEL MA NAGEMENT AND CATERING TECHNOLOGY PROGRAMMS COURSES THROUGH THE P ARTY NO.2 B.SC. IN HOTEL MANAGEMENT AND TOURISM 3 YEARS DIPLOMA IN HOTEL MANAGEMENT AND CATERING TECHNOLOGY DHMCT 2 YEARS PG DIPLOMA IN HOTEL MANAGEMENT 1 YEAR CRAFT PROGRAMME FRONT OFFICE, HOUSE KEEPING, PROD UCTION, SERVICE 1 YEAR 3. THE PARTY NO.1 SHALL ADVERTISE ABOUT THE PROGRAMMES IN NATIONAL DAILIES, AND WILL BE RESPONSIBLE TO SELL THE APPLICATION FOR MS AND COLLECT THE FILLED- IN APPLICATION FORMS FROM ELIGIBLE CANDIDATES AND A DMIT STUDENTS THROUGH THE DIRECTORATE OF DISTANCE EDUCATION ANNAMALAI UNI VERSITY, ANNAMALAI NAGAR, CHIDAMBARAM, TAMIL NADU AS PER TERMS AND CON DITIONS OF THE FEES STRUCTURE PRESCRIBED IN THE PROSPECTUS SUPPLIED BY DIRECTORATE OF DISTANCE EDUCATION, ANNAMALAI UNIVERSITY, ANNAMALAI NAGAR, CHIDAMBARAM, TAMIL NADU. 4. THE PARTY NO.1 SHALL AGREE TO SHARE THE TOTAL FEES COLLECTED FROM THE STUDENTS IN THE FOLLOWING RATIO. 60% OF THE TUITION FEES AND 75% OF THE LABORATORY FEES TO THE PARTY NO.2 AND 40% OF THE TUITI ON FEES AND 25% OF THE LABORATORY FEES TO THE PARTY NO.1. THE SHAR E DUE TO PARTY NO.2 SHALL BE PAYABLE BY PARTY NO.1 IN THE MONTH OF AUGU ST, OCTOBER AND DECEMBER. ALL THE OTHER FEES EXCEPT TUITION AND LAB ORATORY FEES COLLECTED WILL BELONG TO THE PARTY NO.1 18 I.T.A. NO. 579/MDS/12 5. THE PARTY NO.2 SHALL ENROLL 10% STUDENTS WITH DIRECTO RATE OF DISTANCE EDUCATION, ANNAMALAI UNIVERSITY, IN ALL HOTEL MANAG EMENT PROGRAMMES WITH THE APPROVAL BY THE PARTY NO.1. 6. THE PARTY NO.1 SHALL PRINT AND ISSUE PART I AND P ART II STUDY MATERIALS OF B.SC. IN HOTEL MANAGEMENT & TOURISM. 7. THE PARTY NO.2 SHALL PRINT AND ISSUE PART III STUD Y MATERIALS OF B.SC. IN HOTEL MANAGEMENT AND TOURISM, DIPLOMA IN HOTEL MANA GEMENT AND CATERING TECHNOLOGY, P.G. DIPLOMA IN HOTEL MANAGEME NT AND CRAFT PROGRAMMES. 8. THE PARTY NO.1 SHALL DECIDE HOURS FOR THE PERSONAL CONTACT PROGRAMME AT SOORYA INSTITUTE OF MANAGEMENT STUDIES, PONDICHERRY AND ARRANGE EXAMINATION CENTRES, CONDUCT THE EXAMINATION AS PER T HE RULES AND REGULATIONS OF THE DIRECTORATE OF DISTANCE EDUCATIO N, ANNAMALAI UNIVERSITY, ANNAMALAI NAGAR, CHIDAMBARAM, TAMIL NAD U AND COORDINATE ALL AFFAIRS RELATED WITH THE EXAMINATIONS INCLUDING THE ISSUE OF MARKS LIST AT THE END OF THE YEAR DEGREE / DIPLOMA CERTIFICATE AT THE END OF THE PROGRAMME. 9. THE PARTY NO.2 SHALL PROVIDE A PREMISES TO ESTABLISH AN INSTITUTE WITH ALL INFRASTRUCTURE AND SHALL BEAR ALL THE EXPENDITURE IN THE ESTABLISHMENT OF CENTRES ANYWHERE IN INDIA. THE PARTY NO.2 SHALL APP OINT PRINCIPAL / DIRECTOR TO THE INSTITUTE WITH THE APPROVAL OF PART Y 1 TO MANAGE DAY TO DAY AFFAIRS OF THE INSTITUTE. ALSO SHALL MANAGE AL L THE EXPENSES INCLUDING SALARY TO THE STAFF, RENT FOR THE PREMISES, ELECTRI CITY BILL, WATER BILL, ETC. INCURRED IN THE DAY-TO-DAY AFFAIRS. 10. THE PARTY NO.2 SHALL COLLECT CHARGES FOR PROVIDING U NIFORMS & SHOES, ARRANGING PRACTICALS CLASSES, WITH CONSULTATIONS OF PARTY NO.1. THE PARTY NO.2 SHALL AGREE TO PREPARE STUDY MATERIALS FOR THE PROGRAMMES WITH THE GUIDANCE OF THE PARTY NO.1 11. THE PARTY NO.1 WILL PROVIDE THE PARTY NO.2 APPLICATI ON FORMS AND PROSPECTUS IN READINESS TO DISTRIBUTE AND THEIR SAL E PROCEEDS WILL BE 19 I.T.A. NO. 579/MDS/12 VESTED WITH THE PARTY NO.1. THE PARTY NO.2 SHOULD I SSUE THE APPLICATION FORMS TO THE CANDIDATES, COLLECTING THE PRESCRIBED APPLICATION FEE OF RS.100/- AND SENDING THE SAME TO THE PARTY NO.1. THE APPLICANTS SHOULD SUBMIT THE FILLED-IN APPLICATION FORMS ALONG WITH T HE RELEVANT DOCUMENTS TO THE DIRECTORATE OF DISTANCE EDUCATION, ANNAMALAI UNIVERSITY, ANNAMALAI NAGAR. 12. THE PRESCRIBED CENTRES OF THE PARTY NO.1 SHALL HAVE THE RIGHT PROVISIONALLY TO SPOT ADMIT THE ELIGIBLE STUDENTS; HOWEVER, ALL THE APPLICATIONS WITH XEROX COPIES OF ORIGINAL CERTIFICA TES WITH DUE ATTESTATION ALONG WITH FEES REMITTANCE SHOULD BE FO RWARDED TO THE DIRECTOR, DIRECTORATE OF DISTANCE EDUCATION, ANNAMA LAI NAGAR, FOR CONFIRMATION OF ADMISSION. THE DIRECTOR, DIRECTORA TE OF DISTANCE EDUCATION, ANNAMALAI UNIVERSITY IS RESPONSIBLE TO C ONFIRM THE ADMISSION ON SCRUTINIZING OF APPLICATIONS AND TO ISSUE IDENTI TY CARES TO THE RESPECTIVE CENTRES OF THE PARTY NO.1 / THE PARTY NO .2 FOR DISTRIBUTION TO THE STUDENTS. 13. THE PRESCRIBED TUITION FEES TO BE PAID FOR THE PROG RAMME SHOULD BE PAID BY WAY OF DEMAND DRAFT DRAWN IN FAVOUR OF THE DIREC TOR, DIRECTORATE OF DISTANCE EDUCATION, ANNAMALAI UNIVERSITY BY REMITTI NG INTO THE ACCOUNT OF THE PARTY NO.1 14. PREPARATION OF QUALITY ASSURED STUDY MATERIALS WILL BE THE RESPONSIBILITY OF THE PARTY NO.2 AND SUPPLIED TO VARIOUS CENTRES FO R DISTRIBUTION TO STUDENTS IN TIME. THE PRINTING OF PUBLICITY MATERI ALS WILL BE THE SOLE RESPONSIBILITY OF THE PARTY NO.2 AND THE PARTY NO.1 WILL HAVE NO SHARE. 15. THE ENTIRE EXAMINATION PROCESS FROM THE STAGE OF FIXI NG THE EXAMINERS, PREPARATION OF QUESTION PAPERS, CONDUCT OF EXAMINATI ONS, VALUATION, PUBLICATION OF RESULTS AND ISSUANCE OF DIPLOMA / DE GREES WILL BE THE RESPONSIBILITY OF THE PARTY NO.1 AND THE EXAMINATION FEES COLLECTED THEREOF WILL BE THE SOLE SHARE OF THE PARTY NO.1. THE EXAMINATION APPLICATION FORM DULY FILLED IN AND ACCOMPANIED WIT H THE REQUISITE FEES BY WAY OF DEMAND DRAFT IN FAVOUR OF THE CONTROLLER OF EXAMINATIONS, ANNAMALAI UNIVERSITY, PAYABLE AT CHENNAI WILL BE SE NT BY THE STUDENTS TO THE PARTY NO.1. THE THEORY AND PRACTICAL EXAMINATIO NS SHALL BE CONDUCTED 20 I.T.A. NO. 579/MDS/12 BY THE ANNAMALAI UNIVERSITY IN THE SELECTED EXAMINAT ION CENTRES. THE PARTY NO.2 WILL BE PAID RS.20/- PER CANDIDATE FOR EVER Y PRACTICAL EXAMINATION WHEREVER THEY HOLD. 16. THE UNIVERSITY WILL HAVE THE RIGHT TO INSPECT THE S OORYA EDUCATIONAL TRUST CENTRES AND THE ONGOING PROGRAMMES. WHAT WE CAN DISCERN FROM THE ABOVE AGREEMENT IS THA T THE DEGREES AND DIPLOMAS WERE AWARDED BY ANNAMALAI UNIVERSITY. THE CURRICULA AND CONDUCT OF PROGRAMMES WERE THE RESPONSIBILITY OF TH E ASSESSEE. THE CURRICULA HAD TO BE IN ACCORDANCE WITH THE SYLLABUS PRESCRIBED BY ACADEMIC COUNCIL OF ANNAMALAI UNIVERSITY. ASSESSEE WAS TO CONDUCT THEORY AND PRACTICAL CLASSES. THE PROGRAMMES WERE TO BE CONDUCTED IN A FULL-FLEDGED MANNER. SCHEME OF THE EXAMINATIONS WERE TO BE SORTED OUT JOINTLY. RESOURCE PERSONS WERE TO BE RECRUITED BY THE ASSESSEE AND PANEL OF SUCH RESOURCE PERSONS HAD TO BE APPROVED B Y ANNAMALAI UNIVERSITY. ATTENDANCE REGISTER WAS REQUIRED TO BE MAINTAINED BY THE ASSESSEE FOR BOTH THEORY AND PRACTICALS AND STATEME NT OF ATTENDANCE WAS TO BE GIVEN TO THE ANNAMALAI UNIVERSITY. PERFO RMANCE ASSESSMENT OF STUDENTS WERE TO BE CONDUCTED BY THE ASSESSEE AN D RECORDS HAD TO BE SUBMITTED TO THE UNIVERSITY. ASSESSEE WAS ALSO PREVENTED FROM HAVING ANY OTHER TIE-UP WITH ANY OTHER UNIVERSITY O R INSTITUTION. ASSESSEE WAS ENTITLED FOR A SHARE OF FEES COLLECTED FROM THE STUDENTS IN THE NATURE OF TUITION FEES AND LABORATORY FEES. ALL OTHER FEE S COLLECTED BELONGED TO UNIVERSITY. THIS IS CLEAR FROM CLAUSE NO.4. ANY O THER CHARGES, IF 21 I.T.A. NO. 579/MDS/12 COLLECTED FROM STUDENTS COULD BE DONE ONLY ON CONSU LTATION WITH ANNAMALAI UNIVERSITY, AS PER CLAUSE NO.10. THE TUI TION FEE WAS TO BE PAID DIRECTLY BY THE STUDENTS TO ANNAMALAI UNIVERSI TY AND NOT TO THE ASSESSEE. ALL THESE WOULD CLEARLY SHOW THAT ASSESS EE WAS IMPARTING A TYPE OF ORAL EDUCATION AND STUDENTS STUDYING IN ASS ESSEES INSTITUTION WERE BEING AWARDED FORMAL DIPLOMA/DEGREE. THERE IS NO CASE FOR THE REVENUE THAT ANNAMALAI UNIVERSITY WAS EXISTING FOR ANY COMMERCIAL PURPOSES. ASSESSEE WAS ONLY GETTING A PART OF THE FEES FROM ANNAMALAI UNIVERSITY AND NOTHING MORE. WHEN ASSESSEE WAS EMP LOYING TEACHERS AND TEACHING THE STUDENTS FOR GETTING A FORMAL DEGR EE OR DIPLOMA OF A RECOGNIZED UNIVERSITY AND WHEN ATTENDANCE TO SUCH C LASSES WAS COMPULSORY FOR BEING ELIGIBLE TO WRITE THE EXAMINAT IONS, WE CANNOT PLACE THE ASSESSEE AT PAR WITH A COACHING CENTRE. COACHI NG CENTRE ONLY TRAINS THE STUDENTS TO FACE COMPETITIVE, PROFESSIONAL, ENT RANCE EXAMINATIONS OR SIMILAR EXAMINATIONS. HERE, THE TRAINING GIVEN BY THE ASSESSEE WAS FOR AWARD OF FORMAL DEGREES OR DIPLOMA COURSES AND SCHE ME OF THE EXAMINATION WAS JOINTLY DECIDED BY ASSESSEE AND ANN AMALAI UNIVERSITY. ASSESSEE HAD A SAY IN CHARTING OUT THE SCHEME OF EX AMINATION AND ASSESSEE WAS SOLELY RESPONSIBLE FOR CONDUCTING CLAS SES. AS ALREADY MENTIONED, ASSESSEE WAS ONLY GETTING A SHARE OF THE FEES FROM ANNAMALAI UNIVERSITY. IN OUR OPINION, AS LONG AS A NNAMALAI UNIVERSITY WAS NOT CONSIDERED A COMMERCIAL INSTITUTION, ASSESS EE ALSO COULD NOT BE 22 I.T.A. NO. 579/MDS/12 CONSIDERED A COMMERCIAL INSTITUTION. IF ANNAMALAI UNIVERSITY WAS AN EDUCATIONAL INSTITUTION, THEN ASSESSEE, WHICH WAS C ONDUCTING CLASSES FOR THE SAID UNIVERSITY UNDER ITS AUTHORITY, WAS ALSO A N EDUCATIONAL INSTITUTION. IF WE HAVE A LOOK AT THE OBJECTS OF T HE ASSESSEE-TRUST, IT RUNS AS UNDER:- 1. TO FOUND, TO MANAGE, TO RUN AND TO ADMINISTER EDUCA TIONAL INSTITUTIONS, WITH A PURPOSE TO IMPART EDUCATION, T RAINING, RESEARCH AND DEVELOPMENT. 2. THE AREAS OF INTEREST SHALL BE, (A) ARTS (B) SCIENCE (C) MEDICAL (D) ENGINEERING (E) COMMERCE (F) HOTEL MANAGEMENT & CATERING TECHNOLOGY (G) FINANCE (H) PHYSICAL (I) COMPUTER SCIENCE (J) INFORMATION TECHNOLOGY (K) AGRICULTURE (L) MARINE SCIENCE (M) HORTICULTURE AND KINDERED DISCIPLINES NOW EXISTING OR TO BE INVENTED/DISCOVERED IN THE FUT URE. 4. TO PROVIDE A CONDUCIVE ATMOSPHERE, ADEQUATE FACIL ITY AND/OR PATRONAGE FOR RESEARCH WORK. 5. TO PROVIDE AND ARRANGE TO PUBLISH THE RESULT OF RESEARCH PERIODICALLY OR OTHERWISE. 6. TO PROVIDE ADEQUATE INFRASTRUCTURE SUCH AS HOSTEL S, LIBRARY, PLAYGROUND, GYMNASIUM, AUDITORIUM, LABORATORY, RESE ARCH CENTRE, HOSPITAL, TRANSPORT, MEANS OF COMMUNICATION S, PHYSIOTHERAPY AND SUCH EQUIPPED AND FURNISHED FACIL ITIES. 23 I.T.A. NO. 579/MDS/12 7. TO ARRANGE FOR EXCHANGE OF SCHOLARS AND STUDENTS A ND ALSO EMPLOYEES FOR THE FURTHERANCE AND ADVANCEMENT OF TH E AIMS OF THE TRUST. 8. TO INTERACT WITH OTHER TRUSTS OR SOCIETIES OR ORG ANISATIONS, PROFESSING SAME OR KINDRED VIEWS. EX-FACIE THE ABOVE OBJECTS ARE NOTHING BUT EDUCATIO NAL. 12. NOW WE HAVE TO SEE WHETHER THE SUBSTANTIAL SURP LUS GENERATED BY THE ASSESSEE FOR THE RELEVANT PREVIOUS YEAR WOULD M AKE IT A COMMERCIAL ENTITY. ASSESSEE WAS, NO DOUBT, RECEIVING A PART O F FEES FROM ANNAMALAI UNIVERSITY FOR IMPARTING EDUCATION. IF WE HAVE A L OOK AT DEFINITION OF CHARITABLE PURPOSE UNDER SECTION 2(15) OF THE ACT , IT RUNS AS UNDER:- CHARITABLE PURPOSE INCLUDES RELIEF OF THE POOR, ED UCATION, MEDICAL RELIEF, PRESERVATION OF ENVIRONMENT (INCLUD ING WATERSHEDS, FORESTS AND WILDLIFE) AND PRESERVATION OF MONUMENTS OR PLACES OR OBJECTS OF ARTISTIC OR HISTO RIC INTEREST, AND THE ADVANCEMENT OF ANY OTHER OBJECT O F GENERAL PUBLIC UTILITY. EDUCATION PER SE IS CHARITABLE AS CAN BE SEEN FROM THE ABOVE DEFINITION. THE SAME WILL BE CHARITABLE IRRESPECTIVE OF THE FAC T THAT WHILE IMPARTING EDUCATION, CERTAIN FEES HAS BEEN CHARGED. THERE IS NO CONDITION TO HOLD THAT FOR BECOMING CHARITABLE WHILE IMPARTING EDUCAT ION, IT SHOULD BE IMPARTED FREE OR WITHOUT CHARGING ANY FEES. LOWER AUTHORITIES GAVE MUCH WEIGHTAGE TO THE FACT THAT ASSESSEE GENERATED SUBSTANTIAL SURPLUS AND THE EDUCATION IMPARTED WAS NOT FREE OF COST. N O DOUBT, A TRUST WHICH IMPARTED EDUCATION WITHOUT CHARGING FEES WOUL D QUALIFY FOR 24 I.T.A. NO. 579/MDS/12 EXEMPTION UNDER SECTIONS 11 AND 12 OF THE ACT, BUT THIS DOES NOT MEAN THAT OTHER TRUSTS WHICH ARE CHARGING FEES FOR IMPAR TING EDUCATION, WOULD NOT BE CONSIDERED TO BE CHARITABLE IN NATURE. THE ACT CONTEMPLATES EXEMPTION TO BE GRANTED TO AN ELIGIBLE TRUST OR INS TITUTE IN RESPECT OF ITS INCOME. IT IS THEREFORE MANIFESTED IN SUCH PROVISI ONS THAT ONLY WHEN THERE IS INCOME, THERE COULD BE A CLAIM OF EXEMPTIO N. THUS STATUTE ENVISAGES THAT THERE ARE CHANCES OF A TRUST OR INST ITUTE EARNING INCOME BY WAY OF SURPLUS SO AS TO GRANT EXEMPTION UNDER SE CTIONS 11 AND 12 OF THE ACT, SUBJECT TO THE CONDITIONS PRESCRIBED UNDER SECTIONS 11(5) AND 13 OF THE ACT. IF THE TRUST IS NOT EXPECTED TO EAR N SURPLUS, THERE WOULD NOT BE A QUESTION OF ALLOWING ANY EXEMPTION FROM TA X LIABILITY. WHEN THE SCHEME OF THE ACT ALLOWED EXEMPTION FROM TAX LIABIL ITY, THE SAME COULD BE ONLY ENVISAGED WHERE THERE IS A LIKELIHOOD OF EA RNING SURPLUS. MERELY BECAUSE THE EDUCATION ACTIVITY HAD RESULTED IN A SU RPLUS, WOULD NOT BE A GROUND TO HOLD THAT ASSESSEE WAS NOT CARRYING ON CH ARITABLE ACTIVITY. THERE IS NO CASE FOR THE REVENUE THAT SURPLUS GENER ATED BY THE ASSESSEE ON ACCOUNT OF ITS ACTIVITIES WERE DIVIDED AMONG THE TRUSTEES OR TAKEN BY THE TRUSTEES BUT, FOR CERTAIN VIOLATION AL LEGEDLY FALLING UNDER SECTION 13(1)(C) OF THE ACT. A LOOK AT THE INCOME AND EXPENDITURE AND BALANCE-SHEET OF THE ASSESSEE PLACED AT PAPER-BOOK PAGE 8 CLEARLY SHOWS THAT EXCESS OF INCOME GENERATED ` 1,13,97,056.73 WAS UTILIZED IN MAKING INVESTMENT IN VARIOUS ASSETS OF THE TRUST. HONBLE GUJARAT HIGH 25 I.T.A. NO. 579/MDS/12 COURT IN THE CASE OF GUJARAT STATE CO-OPERATIVE UNI ON V. CIT (195 ITR 279), AFTER CONSIDERING THE JUDGMENT OF HONBLE APE X COURT IN THE CASE OF SOLE TRUSTEE, LOKA SHIKSHANA TRUST (SUPRA), HAD HELD AS UNDER:- THE SUPREME COURT, IN THE ABOVE OBSERVATIONS, BY RE FERRING TO THE SYSTEMATIC INSTRUCTION, SCHOOLING OR TRAINING GIVEN O THE YOUNG HAS ONLY CITED AN INSTANCE IN ORDER TO INDICATE AS TO W HAT THE WORD EDUCATION APPEARING IN SECTION 2(15) OF THE ACT WHI CH DEFINES CHARITABLE PURPOSES IS INTENDED TO MEAN. WE ARE CERTAIN THAT THESE OBSERVATIONS WERE NOT INTENDED TO KEEP OUT OF THE MEANING OF THE WORD EDUCATION, PERSONS OTHER THAN YOUNG. THE EXPRESSION SCHOOLING ALSO MEANS THAT SCHOOLS, INSTRUCTS OR EDUCATES (THE OXFORD ENGLISH DICTIONARY, VOL. IX, PAGE 217). THE SU PREME COURT HAS OBSERVED THAT THE WORD EDUCATION ALSO CONNOTE S THE WHOLE COURSE OF SCHOLASTIC INSTRUCTION WHICH A PERSON HAS RECEIVED. THIS CLEARLY INDICATES THAT THE OBSERVATIONS OF THE SUPREME COURT WERE NOT INTENDED TO GIVE A NARROW OR PEDANTIC SENS E TO THE WORD EDUCATION. BY GIVING FURTHER ILLUSTRATIONS OF A TRAVELER GAINI NG KNOWLEDGE, VICTIMS OF SWINDLERS AND THIEVES BECOMING WISER, TH E VISITORS TO NIGHT CLUBS ADDING TO THEIR KNOWLEDGE THE HIDDEN MYSTERIE S OF LIFE, THE SUPREME COURT HAS INDICATED THAT THE WORD EDUCATIO N IS NOT USED IN A LOOSE SENSE SO AS TO INCLUDE ACQUISITION OF EVEN SUCH KNOWLEDGE. THE OBSERVATIONS OF THE SUPREME COURT ONLY INDICATE THE PROPER CONFINES OF THE WORD EDUCATION IN THE CONTEXT OF T HE PROVISIONS OF SECTION 2(15) OF THE ACT. IT WILL NOT BE PROPER TO C ONSTRUE THESE OBSERVATIONS IN A MANNER IN WHICH THEY ARE CONSTRUE D BY THE TRIBUNAL WHEN IT INFERS FROM THESE OBSERVATIONS, IN PARA 17 O F ITS JUDGMENT, THAT THE WORD EDUCATION IS LIMITED TO SCHOOLS COL LEGES AND SIMILAR INSTITUTIONS AND DOES NOT EXTEND TO ANY OTHER MEDIA FOR SUCH ACQUISITION OF KNOWLEDGE. THE OBSERVATIONS OF THE SUPREME COURT DO NOT CONFINE THE WORD EDUCATION ONLY TO SCHOLASTIC INSTRUCTIONS BUT OTHER FORMS OF EDUCATION ALSO ARE INCLUDED IN THE W ORD SCHOOLING ALSO MEANS INSTRUCTING OR EDUCATING. IT, THEREFORE , CANNOT BE SAID THAT THE WORD EDUCATION HAS BEEN GIVEN AN UNDULY RESTRICTED MEANING BY THE SUPREME COURT IN THE SAID DECISION. 26 I.T.A. NO. 579/MDS/12 THOUGH, IN THE CONTEXT OF THE PROVISION OF SECTION 1 0(22), THE CONCEPT OF EDUCATION NEED NOT BE GIVEN ANY WIDE OR EXTENDED MEANING, IT SURELY WOULD ENCOMPASS SYSTEMATIC DISSE MINATION OF KNOWLEDGE AND TRAINING IN SPECIALISED SUBJECTS AS I S DONE BY THE ASSESSEE. THE CHANGING TIMES AND THE EVER WIDENING HORIZONS OF KNOWLEDGE MAY BRING IN CHANGES IN THE METHODOLOGY O F TEACHING AND A SHIFT FOR THE BETTER IN THE INSTITUTIONAL SET-UP. ADVANCEMENT OF KNOWLEDGE BRINGS WITHIN ITS FOLD SUITABLE METHODS O F ITS DISSEMINATION AND THOUGH THE PRIMARY METHOD OF SITT ING IN A CLASSROOM MAY REMAIN IDEAL FOR MOST OF THE INITIAL EDUCATION, IT MAY BECOME NECESSARY TO HAVE A DIFFERENT OUTLOOK FOR FU RTHER EDUCATION. IT IS NOT NECESSARY TO NAIL DOWN THE CONCEPT OF EDU CATION TO A PARTICULAR FORMULA OR TO FLOW IT ONLY THROUGH A DEF INED CHANNEL. ITS PROGRESS LIES IN THE ACCEPTANCE OF NEW IDEAS AND DE VELOPMENT OF APPROPRIATE MEANS TO REACH THEM TO THE RECIPIENTS. ASSESSEE HERE, IN OUR OPINION, DID FALL WITHIN THE CONCEPT OF RENDERING A FORMAL EDUCATION AND COULD NOT BE EQUATED WITH A CO ACHING INSTITUTE. WE ARE, THEREFORE, OF THE OPINION THAT ASSESSEE COULD NOT HAVE BEEN DENIED THE ELIGIBLE EXEMPTION UNDER SECTIONS 11 AND 12 OF THE ACT FOR A REASON THAT IT WAS NOT DOING CHARITABLE ACTIVITY AS DEFINE D UNDER SECTION 2(15) OF THE ACT. 13. COMING TO THE ASPECT OF VIOLATION UNDER SECTION 13(1)(C) OF THE ACT, IT IS AN ADMITTED POSITION THAT A SUM OF ` 30 LAKHS WAS WITHDRAWN FROM THE ASSESSEE-TRUST ON 4.3.2008 AND HELD BY ONE OF T HE TRUSTEES SHRI VICTOR VIJAYARAJ FOR TWO DAYS AND RETURNED ON 6.3.2 008. THE PERIOD FOR WHICH THE AMOUNT WAS HELD BY THE TRUSTEE CAME TO TW O DAYS ONLY AND IT WILL NOT BE REASONABLE TO TAKE A VIEW THAT ANY BENE FIT COULD HAVE BEEN DERIVED BY SHRI VICTOR VIJAYARAJ IN SUCH A SHORT PE RIOD OF TWO DAYS. 27 I.T.A. NO. 579/MDS/12 ASSESSEES CONTENTION THAT THE MONEY WAS RETURNED A S SOON AS THE MISTAKE WAS RECOGNIZED, APPEARS TO BE REASONABLE. A LOOK AT SECTION 13(1)(C)(II) WOULD CLEARLY SHOW THAT ONLY IF A PART OF THE INCOME OR PROPERTY OF THE TRUST IS USED OR APPLIED DIRECTLY O R INDIRECTLY FOR THE BENEFIT OF A TRUSTEE, IT WOULD RESULT IN DENIAL OF EXEMPTION UNDER SECTIONS 11 AND 12 OF THE ACT. AS MENTIONED BY US, REVENUE HAS NOT BEEN ABLE TO DEMONSTRATE THAT ANY BENEFIT WAS DERIVED BY SHRI VICTOR VIJAYARAJ OUT OF THE SUM OF ` 30 LAKHS LYING IN HIS BANK ACCOUNT FOR A PERIOD OF TWO DAYS. 14. INSOFAR AS THE OTHER VIOLATIONS NOTED BY THE A. O. VIZ., ` 5,60,000/- DRAWN BY SHRI VICTOR VIJAYARAJ DURING THE PERIOD 9. 8.2007 TO 6.2.2008, SUBMISSION OF THE ASSESSEE WAS THAT IT WAS ONLY A M ISTAKE AND THE SUM WAS ONLY ` 1,90,000/-. AGAIN, AS PER THE ASSESSEE, OUT OF THI S ` 1,90,000/-, SUM OF ` 1,80,000/- WAS SALARY PAID TO THE SAID TRUSTEE, WH O WAS AN ENGINEERING GRADUATE WITH SEVEN YEARS EXPER IENCE. THESE SUBMISSIONS OF THE ASSESSEE HAVE NOT BEEN OBJECTIVE LY CONSIDERED BY THE LOWER AUTHORITIES. SIMILARLY, ASSESSEES EXPLA NATION THAT THE SUM OF ` 2,78,000/- APPEARING AS PCP EXPENSES WAS NOTHING BU T SUMS DUE TO A TRUSTEE HAS ALSO NOT BEEN VERIFIED. SIMILAR CLAIM O F THE ASSESSEE THAT A SUM OF ` 2,50,000/- CONSIDERED DRAWN BY DR. LOUIS PRAKASAM KANNAIAH ON 2.1.2008 WAS NOT, IN FACT, DRAWING AT ALL, BUT W AS EXPENSES INCURRED UNDER THE HEAD BUILDING ACCOUNT ALSO HAS NOT BEEN VERIFIED. ITS CLAIM 28 I.T.A. NO. 579/MDS/12 THAT ` 7200/- DRAWN FROM BANK BY DR. LOUIS PRAKASAM KANNA IAH EVERY MONTH, WAS RENT FOR PREMISES TAKEN ON LEASE HAS ALS O NOT BEEN VERIFIED. INSOFAR AS ` 7,25,000/- ADVANCED TO SRI RAMACHANDRA EDUCATIONAL TRUST, ASSESSEES SUBMISSION WAS THAT THIS WAS AN EDUCATIO NAL TRUST REGISTERED UNDER SECTION 12AA OF THE ACT AND HENCE, NOT A VIOL ATION UNDER SECTION 11(5) OF THE ACT AND THIS ASPECT HAS ALSO NOT BEEN LOOKED INTO BY THE LOWER AUTHORITIES. ASSESSEES EXPLANATION THAT AN ADVANCE OF ` 2,86,000/- MENTIONED BY THE A.O. HAD NO CONNECTION WITH ANY RELATED PARTY HAS ALSO NOT BEEN VERIFIED. IN OUR OPINION N ONE OF THE EXPLANATIONS ON THE ALLEGED VIOLATIONS HAVE BEEN VERIFIED BY THE AUTHORITIES BELOW. THEREFORE, WE ARE OF THE OPINION THAT THE QUESTION WHETHER THERE WAS ANY VIOLATION UNDER SECTION 13(1)(C) OF THE ACT AND / O R SECTION 11(5) OF THE ACT, REQUIRES A RECONSIDERATION BY THE A.O. 15. THUS WHILE HOLDING THAT ASSESSEE IS ELIGIBLE FO R EXEMPTION UNDER SECTIONS 11 AND 12 OF THE ACT, WE DIRECT THE A.O. T O VERIFY THE EXPLANATIONS GIVEN BY THE ASSESSEE INSOFAR AS ALLEG ED VIOLATION UNDER SECTION 13(1)(C) WAS CONCERNED, FOR THE AMOUNTS OF ` 5,60,000/-, ` 1,80,000/-, ` 2,78,000/-, ` 2,50,000/-, ` 7200 AND ` 7,25,000/-. IF THESE ARE EXPLAINED SATISFACTORILY, ASSESSEE SHALL BE GIV EN EXEMPTION CLAIMED UNDER SECTIONS 11 AND 12 OF THE ACT. 29 I.T.A. NO. 579/MDS/12 16. IN THE RESULT, APPEAL FILED BY THE ASSESSEE IS ALLOWED FOR STATISTICAL PURPOSES. ORDERED ACCORDINGLY. THE ORDER WAS PRONOUNCED IN THE COURT ON THURSDAY, THE 31 ST OF MAY, 2012, AT CHENNAI. SD/- SD/- (VIKAS AWASTHY) (ABRAHAM P. GEORGE) JUDICIAL MEMBER ACCOUNTANT MEMBER CHENNAI, DATED THE 31 ST MAY, 2012. KRI. COPY TO: (1) APPELLANT (2) RESPONDENT (3) CIT(A)-XII, CHENNAI-34 (4) CIT, PONDICHERRY (5) D.R. (6) GUARD FILE