M/s Sadvidya Educational Institution (R), Mysore V. Addl.C.I.T., Mysore

ITA 604/BANG/2011

• Counselvise Citation: [2014] 140 COUNSELVISE.COM (IT) 73404 (ITAT-BANGALORE)
• Duration Of Justice: 2 year(s) 10 month(s) 4 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 28-03-2014
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: A
• Next Hearing Date: 20-03-2014
• Assessment Year: 2006-2007
• Appeal Filed On: 24-05-2011
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: BIJU M K
• Assessee Lawyers: V CHANDRASEKHAR
• Keywords: Gift; Depreciation; Charitable institution; Capital receipt; Benefit of exemption; Revenue expenditure; Capital expenditure
• Section: 133A; 234B; 80G; 12A; 12AA; 68; 12; 11

Judgement Text

ITA NOS.604, 605 AND 324 SADVIDYA EDUCATIONAL INSTI TUTIONS MYSORE. PAGE 1 OF 32 IN THE INCOME TAX APPELLATE TRIBUNAL BANGALORE C BENCH, BANGALORE BEFORE SHRI GEORGE GEORGE K. JUDICIAL MEMBER AND SHRI JASON P. BOAZ, ACCOUNTANT MEMBER ITA NOS.604/BANG/2011 & 324/BANG/2012 (ASSESSMENT YEARS: 2006-07 & 2008-09) M/S.SADVIDYA EDUCATIONAL INSTITUTION, NO.7 NARAYANA SHASTRY ROAD, MYSORE 570024 PAN: AABAS 6788 H VS. ADDITIONAL COMMISSIONER OF INCOME TAX, RANGE-1 MYSORE (APPELLANT) (RESPONDENT) ITA NOS.605/BANG/2011 (ASSESSMENT YEAR: 2007-08) M/S.SADVIDYA EDUCATIONAL INSTITUTION, NO.7 NARAYANA SHASTRY ROAD, MYSORE 570024 PAN: AABAS 6788 H VS. INCOME TAX OFFICER WARD -1(1) MYSORE (APPELLANT) (RESPONDENT) ASSESSEE BY: SHRI V.CHANDRASEKHAR, ADVOCATE DEPARTMENT BY: SHRI BIJU M.K. (DR) DATE OF HEARING: 20/03/2014 DATE OF PRONOUNCEMENT: 28/03/2014 O R D E R PER BENCH. 1. THESE THREE APPEALS, AT THE INSTANCE OF THE ASSESSEE-TRUST, ARE DIRECTED AGAINST THE ORDERS OF THE CIT (A), MYSORE, DATED: 21.3.2011 FOR THE A.YS 2006-07 AND 2 007-08 AND DATED 30.11.2011 FOR THE AY 2008-09. 2. THOUGH THE ASSESSEE, IN ITS MEMORANDU M OF APPEALS, HAS RAISED SEVERAL GROUNDS, IN THE COURSE OF HEARING, ITA NOS.604, 605 AND 324 SADVIDYA EDUCATIONAL INSTI TUTIONS MYSORE. PAGE 2 OF 32 THE LEARNED A.R CONFINED HIS ARGUMENTS TO THE FOLLO WING ISSUES: I. ITA NO.604/B/2011 AY 2006-07: (I) WHETHER THE ASSESSEE WAS ELIGIBLE TO CLAIM EXEMPTION U/S 11 OF THE ACT IN RESPECT OF RECEIPTS OF RS.50,21,500/- AND RS.40,93,600/- TOWARDS BUILDING AND DEVELOPMENT FUNDS RESPECTIVELY? ALTERNATIVELY (II) WHETHER THE ASSESSEE WAS ELIGIBLE FOR EXEMPTIO N U/S 11, IF THOSE FUNDS WERE APPLIED TOWARDS THE OBJ ECT OF THE INSTITUTION? (III) WHETHER AUTHORITIES WERE JUSTIFIED IN DENYING THE CLAIM OF DEPRECIATION AS APPLICATION OF INCOME U/S 11 OF THE ACT. (IV) WHETHER, THE ASSESSEE WAS LIABLE TO BE CHARGED INTEREST U/S 234B OF THE ACT WHEN THE LEVY WAS NOT IN ACCORDANCE WITH THE PROVISIONS OF THE ACT? II. ITA NO.605/B/2011 AY 2007-08: (I) WHETHER THE ASSESSEE WAS ELIGIBLE TO CLAIM EXEMPTION U/S 11 OF THE ACT IN RESPECT OF RECEIPTS OF RS.58,21,800/- AND RS.74,75,535/- (SIC) RS.74,74,535/- TOWARDS BUILDING FUNDS AND DEVELOPMENT FEES RESPECTIVELY? ALTERNATIVELY (II) WHETHER THE ASSESSEE WAS ELIGIBLE FOR EXEMPTIO N U/S 11, IF THOSE FUNDS WERE APPLIED TOWARDS THE OBJECT OF THE INSTITUTION? (III) WHETHER THE AMOUNT OF RS.49,02,517/-ADVANCED TO KAVERI CHARITABLE TRUST (WHICH WAS ALSO CARRYING ON CHARITABLE ACTIVITIES) AMOUNTS TO APPLICATION OF INCOME FOR THE PURPOSES OF S. 11 OF THE ACT? ITA NOS.604, 605 AND 324 SADVIDYA EDUCATIONAL INSTI TUTIONS MYSORE. PAGE 3 OF 32 (III) WHETHER THE DEPRECIATION OF RS.24,20,012/-ON ASSETS AMOUNT TO APPLICATION OF INCOME FOR THE PURPOSES OF S. 11 OF THE ACT? (IV) WHETHER, THE ASSESSEE WAS LIABLE TO BE CHARGED INTEREST U/S 234B OF THE ACT WHEN THE SAID LEVY WAS NOT IN ACCORDANCE WITH THE PROVISIONS OF THE ACT? III. ITA NO.324/B/2012 AY 2008-09: (I) WHETHER THE ASSESSEE WAS ELIGIBLE TO CLAIM EXEMPTION U/S 11 OF THE ACT EVEN WHEN THERE WAS SURPLUS FUNDS OF RS.60,59,220/-AND IN VIEW OF COLLECTING OF BUILDING AND DEVELOPMENT FUNDS RESPECTIVELY FROM THE STUDENTS? ALTERNATIVELY (II) WHETHER THE ASSESSEE WAS ELIGIBLE FOR EXEMPTIO N U/S 11, IF THOSE FUNDS WERE APPLIED TOWARDS THE OBJ ECT OF THE INSTITUTION? (III) WHETHER THE AUTHORITIES WERE JUSTIFIED TO DEN Y THE CLAIM OF DEPRECIATION AS APPLICATION OF INCOME U/S. 11 OF THE ACT? (IV) WHETHER THE ASSESSEE WAS LIABLE TO BE CHARGED TO INTEREST U/S 234B OF THE ACT WHEN THE SAID LEVY WAS NOT IN ACCORDANCE WITH THE PROVISIONS OF THE ACT? 3. AS THE ISSUES RAISED IN THESE APPEALS BEING RELATED TO THE SAME ASSESSEE, FOR THE SAKE OF CONVENIENCE, THEY WERE HEARD TOGETHER AND DISPOSED OF IN THIS CONSOLIDATED ORDER. 4. BRIEFLY STATED, THE FACTS OF THE ISSUE S ARE AS UNDER: THE ASSESSEE-TRUST RUNS A NUMBER OF S CHOOLS AT MYSORE. THE ASSESSEE IS REGISTERED U/S 12AA OF THE ACT AND ALSO OBTAINED EXEMPTION UNDER SECTIONS 11 AND 12 OF THE ACT. FOR THE ASSESSMENT YEARS UNDER DISPUTE, THE ASSESSE E HAD FURNISHED ITS RETURNS OF INCOME, ADMITTING NIL IN COME FOR THE ITA NOS.604, 605 AND 324 SADVIDYA EDUCATIONAL INSTI TUTIONS MYSORE. PAGE 4 OF 32 AYS 2006-07 & 2008-09 AND DECLARING A LOSS OF RS.14,11,381/- FOR THE AY 2007-08 AFTER CLAIMING EX EMPTION UNDER SECTIONS 11(1)(A) AND 11(1)(D) OF THE ACT RES PECTIVELY. IN THE MEANWHILE, THERE WAS A SURVEY CONDUCTED U/S 133 A OF THE ACT IN THE ASSESSEES PREMISES ON 17.5.2007. ACCOR DING TO THE AO, THE ENQUIRIES CONDUCTED DURING THE SURVEY AND SUBSEQUENT ASSESSMENT PROCEEDINGS, IT HAD REVEALED THAT THE ASSESSEE WAS COLLECTING DONATIONS AGAINST THE ADMIS SIONS GIVEN UNDER THE MANAGEMENT QUOTA IN THE INSTITUTION S RUN BY THE ASSESSEE-TRUST. AFTER REFERRING TO VARIOUS JUD GMENTS, THE AO HELD THAT THE ASSESSEES ACTIVITIES WERE NOT OF CHARITABLE NATURE AND, THEREFORE, NOT ELIGIBLE FOR EXEMPTION U /S 11 OF THE ACT. ACCORDINGLY, THE AO HAD BROUGHT THE ENTIRE AM OUNT OF DONATIONS TO TAX IN THE RESPECTIVE ASSESSMENT ORDER S UNDER DISPUTE, ON THE PREMISE THAT THE VOLUNTARY CONTRIBUTIONS/BUILDING FUNDS/DEVELOPMENT FUNDS COLL ECTED FROM THE STUDENTS ADMITTED AGAINST THE MANAGEMENT Q UOTA IN THE INSTITUTIONS RUN OF THE ASSESSEE. HE HAD, FURT HER, HELD THAT THERE WAS CLEAR NEXUS BETWEEN THE ADMISSION OF STUDENTS AND THE AMOUNTS COLLECTED FROM THE STUDENTS AS VOLU NTARY CONTRIBUTION. IT WAS THE STAND OF THE AO THAT THE VOLUNTARY CONTRIBUTIONS/BUILDING FUND/DEVELOPMENT FUNDS WERE NOTHING BUT FEES COLLECTED OVER AND ABOVE THE FEE PRESCRIBE D BY THE GOVERNMENT. 5. AGGRIEVED, THE ASSESSEE TOOK UP THE IS SUES, AMONG OTHERS, BEFORE THE CIT (A) FOR THE AYS. 2006-07, 20 07-08 AND 2008-09. 5.1. FOR THE ASSESSMENT YEARS 2006-07 A ND 2007-08, THE CIT (A) HAD, AFTER TAKING INTO ACCOUNT THE ASSE SSEES CONTENTIONS, THE STATEMENT OF ITS SECRETARY RECORDE D U/S 133A ITA NOS.604, 605 AND 324 SADVIDYA EDUCATIONAL INSTI TUTIONS MYSORE. PAGE 5 OF 32 OF THE ACT AND EXTENSIVELY REPRODUCING THE FINDINGS OF (I) THE HONBLE MUMBAI TRIBUNAL IN THE CASE OF DCIT V. HIND USTAN DORR OLIVER LTD [48 TTJ 555]; AND (II) HONBLE CHEN NAI ITAT IN ACIT V. PS GOVINDA SWAMY NAIDU & SONS CHARITIES V. ACIT DATED 21.10.2005, RECORDED HIS FINDINGS AS UNDER: 8. (ON PAGE 15)IT IS CLEAR FROM THE ABOVE DISCUSSION THAT SIMILAR PAYMENTS MADE IN THE APPELL ANTS CASE ARE NOTHING BUT CAPITATION FEES AND CANNOT BE TREATED AS VOLUNTARY DONATIONS. 9. THE FIRST ISSUE IS THUS DECIDED AGAINST THE APPE LLANT AND IT IS HELD THAT THE AMOUNTS COLLECTED BY THE APPELL ANT FROM THE STUDENTS OR THEIR PARENTS WERE IN THE NATURE OF CAPITATION FEE, BECAUSE THE COLLECTION WAS DIRECTLY LINKED TO ADMISSION GIVEN UNDER THE MANAGEMENT QUOTA. THE FA CT THAT THE APPELLANT HAS ACCOUNTED THESE COLLECTIONS AS VOLUNTARY CONTRIBUTIONS DOES NOT CHANGE THE TRUE NA TURE OF THE RECEIPT. IT IS SETTLED LAW THAT ACCOUNTING TRE ATMENT GIVEN BY THE ASSESSEE IS NOT THE CONCLUSIVE PROOF O F TRUE NATURE OF A RECEIPT OR EXPENDITURE. 5.1.1. WITH REGARD TO THE SECOND ISSUE WHE THER THE ASSESSEE CAN BE ALLOWED EXEMPTION U/S 11 OF THE ACT IN RESPECT OF THE RECEIPT OF VOLUNTARY CONTRIBUTIONS? AFTER ANALYSING THE RECEIPT AND EXPENDITURE ACCOUNT OF TH E ASSESSEE, THE CIT (A) HAD OPINED THAT 13 IT IS WORTH NOTING THAT IN BOTH THE YEARS THE APPELLANT HAS MADE PROFIT MORE THAN OR EQUAL TO THE TOTAL EXPENDITURE INCURRED. THIS TYPE OF PROFIT CA N HARDLY BE CONSIDERED AS INCIDENTAL TO THE MAIN ACTI VITY. THE PROFITS ARE A DIRECT RESULT OF THE ADDITIONAL A MOUNT (CAPITATION FEE) COLLECTED FROM THE STUDENTS ADMITT ED UNDER THE MANAGEMENT QUOTA. 14. THE ABOVE CLEARLY GIVES A LIE TO THE APPELLANT S CLAIM THAT HE HAD TO INDULGE IN COLLECTION OF ADDITIONAL AMOUNTS FROM THE STUDENTS/PARENTS TO MEET THE REGUL AR ITA NOS.604, 605 AND 324 SADVIDYA EDUCATIONAL INSTI TUTIONS MYSORE. PAGE 6 OF 32 EXPENSES OF THE TRUST. IT IS APPARENT THAT THE APP ELLANT HAS BEEN COLLECTING FAR TOO MUCH MONEY FROM THE STUDENTS WHEN COMPARED WITH ITS EXPENSES. IT IS AL SO APPARENT FROM A LOOK AT THE EXPENSES INCURRED BY TH E APPELLANT THAT THE PROVIDING EXTRA EDUCATIONAL FACI LITY TO THE STUDENTS IS NOT A PRIORITY OF THE TRUST. THE EXPENDITURE IS PALTRY BY ALL ACCOUNTS. 5.1.2. THE CIT (A) AFTER ANALYZING AND REPRODU CING: (I) THE RELEVANT RULE OF THE STATE GOVERNMENT ; (II) THE FINDINGS OF THE ITAT, HYDERABAD IN ITA T NO.1138/11/06 [AY 2003-04 IN VODITHALA EDUCATION SOCIETY V. ADIT (EXEMPTION-II) DATED: 31.10.2007; (III) THE JUDGMENT OF HONBLE SUPREME COURT IN ACIT V. THANTHI TRUST (2001) 247 ITR 785 (SC); (IV) THE FINDINGS OF THE ITAT, ALLAHABAD IN TH E CASE OF BALBHARATI NURSERY SCHOOL [82 ITD 71] - ON THE ISSU E OF ABNORMALLY HIGH PROFITS AND PROFITEERING BY EDUCATIONAL INSTITUTIONS; (V) THE FINDINGS OF ITAT DELHI IN THE CASE OF ALL INDIA PERSONALITY ENHANCEMENT AND CULTURAL CENTRE FOR SCHOOLS, AIPECS SOCIETY V. DCIT [91 ITD 240]; (VI) QUEENS EDUCATIONAL SOCIETY AND ST PAULS S R. SECONDARY SCHOOL 2007-TIOL-807-HC-UTTRANCHAL- IT; (VII) M/S. P S GOVINDASAMY NAIDU & SONS CHARITIES, PEELAMEDU V. ACIT TAX CASE (APPEAL) NO.1307 OF 2007 DT: 23.10.2007 MADRAS HC AND ALSO DISTINGUISHING THE CASE LAWS RELIED BY THE ASSESSEE, RECORDED HIS CONCLUSIONS AS UNDER: 27.. (ON PAGE 60)IN SHORT, THE APPELLANT HAS NO T BEEN ABLE TO CITE ANY DECISION OF ANY COURT SUPPORT ING ITA NOS.604, 605 AND 324 SADVIDYA EDUCATIONAL INSTI TUTIONS MYSORE. PAGE 7 OF 32 CAPITATION FEE OR PROFITEERING FROM EDUCATION. I WI LL LIKE TO REFER TO A RECENT DECISION OF THE HONBLE ITAT, HYDERABAD BENCH A IN THE CASE OF M/S. VASAVI ACADEMY [ITA NO.1749/HYD/2008 AY 2004-05] DATED 4.2.2010. IN ITS ORDER, THE HONBLE TRIBUNAL CONSI DERED THE ISSUE OF COLLECTION OF CAPITATION FEE DIRECTLY OR INDIRECTLY AND ITS EFFECT ON THE CHARITABLE NATURE OF THE INSTITUTION. THE HONBLE TRIBUNAL HELD AS UNDER: WE HAVE HEARD..WE MAKE IT CLEAR THAT THE ASSESSEE IS NOT ENTITLED FOR EXEMPTION EITHER U/S 1 1 OR U/S 10(23C) IN CASE IT COLLECTED ANY MONEY BY WHATEVER NAME IT IS CALLED I.E., DONATION, BUILDING FUND, AUDITORIUM FUND ETC., ETC. , OVER AND ABOVE THE PRESCRIBED FEE FOR ADMISSION OF STUDENTS. THIS IS A DIRECT DECISION ON THE ISSUE OF COLLECTIO N OF DONATIONS FROM STUDENTS/THEIR PARENTS AGAINST ADMISSIONS. THE RATIO OF THIS DECISION IS FULLY APPLICABLE IN THE APPELLANTS CASE. 28. IN VIEW OF THE ABOVE DISCUSSION, I HOLD THAT TH E APPELLANT IS NOT ENTITLED TO CLAIM EXEMPTION U/S 11 OF THE ACT. ALL THE GROUNDS OF APPEAL RAISED BY THE APPELLANT ARE BASICALLY IN THE NATURE OF ARGUMENTS CONTENDING THAT THE VOLUNTARY CONTRIBUTIONS COLLECT ED BY THE APPELLANT ARE NOT IN THE NATURE OF CAPITATION F EE AND THAT THE APPELLANT TRUST BEING AN EDUCATIONAL INSTI TUTION, IS ENTITLED TO EXEMPTION U/S 11 OF THE ACT. I HAVE ALREADY DISCUSSED BOTH THE ISSUES ABOVE. THERE IS A DIRECT NEXUS BETWEEN THE ADMISSIONS GRANTED UNDER T HE MANAGEMENT QUOTA AND THE VOLUNTARY CONTRIBUTIONS COLLECTED BY THE APPELLANT. IT IS NOTHING BUT CAPI TATION FEE. THE APPELLANT IS ALSO HELD TO BE INDULGING IN PROFITEERING FROM EDUCATION AND, HENCE, IT IS NOT E LIGIBLE FOR EXEMPTION U/S 11 OF THE ACT. 29. THE ASSESSING OFFICER HAS BROUGHT TO TAX THE G ROSS AMOUNT OF VOLUNTARY CONTRIBUTIONS DISCLOSED BY THE APPELLANT. THIS IS NOT CORRECT. HENCE, THE AO IS DIRECTED TO ALL THE EXPENSES INCURRED AND BRING TO TAX ONLY PROFITS/SURPLUS AFTER ALLOWING DEPRECIATION AN D OTHER EXPENSES. AS REGARDS DEPRECIATION, I WILL CL ARIFY THAT IN A RECENT DECISION OF THE HONBLE COCHIN ITA T IN THE CASE OF THE DEPUTY DIRECTOR OF INCOME-TAX (EXEMPTION), RANGE-2, ERNAKULAM V. LISSIE MEDICAL INSTITUTIONS [ITA NO.1010/COCH/2008 & CO. NO.6/COCH/2009- ASSESSMENT YEAR 2005-06] DATED ITA NOS.604, 605 AND 324 SADVIDYA EDUCATIONAL INSTI TUTIONS MYSORE. PAGE 8 OF 32 26.10.2010, THE ITAT HELD THAT A TRUST CANNOT CLAIM DEPRECIATION ON THE SAME ASSETS WHOSE COST HAS ALREADY BEEN ALLOWED EARLIER AS APPLICATION OF INCO ME. TO QUOTE FROM THE TRIBUNALS ORDER: WE MAY CLARIFY THAT WE HAVE NOT IN ANY MANNER SUGG ESTED A PRESCRIPTION AGAINST ALLOWANCE OF DEPRECIATION ON C APITAL ASSETS HELD BY A PUBLIC CHARITABLE INSTITUTION FOR ITS PUR POSES. DEPRECIATION IS AN ACCEPTED CHARGE FOR COMPUTING BO OK INCOME, AS WELL AS INCOME UNDER THE HEAD PROFITS AND GAINS OF BUSINESS OR PROFESSION AND INCOME FROM OTHER SOURCES, I.E., UNDER CHAPTER IV D AND IV F OF THE ACT. ALL THAT WE HAVE SAID IS THAT ALLOWANCE THEREOF ON THE SAME CAPITAL EXPENDITURE, I.E., WHIC H ALREADY STANDS ALLOWED AS DEDUCTION BY WAY OF APPLICATION OF INC OME IN COMPUTING INCOME UNDER THE ACT, WHICH IS TO ACCORD WITH THE PRINCIPLES OF COMMERCIAL ACCOUNTING, IS NOT PERMISS IBLE, EVEN IF THE DEPRECIATION IS TO BE ALLOWED UNDER THE ACT, SE RVE AS IT DOES THE SAME PURPOSE AND IS ON THE SAME FOOTINGS, CITIN G OUR REASONS FOR THE SAME IN DETAIL, DRAWING EXTENSIVE SUPPORT F ROM THE DECISION IN THE CASE OF ESCORTS LTD & OTHERS V. UOI (SUPRA) HOLDING OF THE SAME AS SQUARELY COVERING THE PROPOS ITION. IT FOLLOWS AS A COROLLARY THAT WHERE THE COST OF AN AS SET HAS NOT BEEN SO ALLOWED, DEPRECIATION THEREON WOULD BE EXIGIBLE FOR DEDUCTION IN COMPUTING THE INCOME U/S 11(1) OF THE ACT. ACCORDINGLY, THE AO WILL ALLOW ALL THE REVENUE EXPENDITURE INCURRED BY THE TRUST DURING THE YEAR A ND COMPUTE THE TRUSTS INCOME ON COMMERCIAL PRINCIPLES. DEPRECIATION SHALL BE ALLOWED ON THE ASSETS WHOSE C OST HAS NOT BEEN ALLOWED AS APPLICATION OF INCOME IN THE PAST. ON THE REVENUE SIDE, ALL THE RECEIPTS SHOULD BE CONSIDERED EXCLUDING LOANS AND ADVANCES. 5.2. LIKEWISE, FOR THE ASSESSMENT YEA R 2008-09, THE CIT (A) DISMISSED THE ASSESSEES APPEAL WITH THE FO LLOWING REASONING, NAMELY: (ON PAGE 9) I HAVE GONE THROUGH THE ASSESSMENT ORD ER AND THE ARGUMENTS OF THE APPELLANT. SIMILAR ISSUE CROPPED UP IN APPEAL FOR THE A.Y 2006-07AND FOR THE AY 2007-08. A VERY DETAILED COMMON ORDER WAS PASSED BY MY PREDECESSOR, VIDE ITA NO.161/CIT (A)MYS/08-09 AND ITA NO.101/CIT (A)MYS/09-10 DATED 21.3.2011. SINCE THE FACTS ARE IDENTICAL, IN LINE WITH THE DEC ISION FOR ITA NOS.604, 605 AND 324 SADVIDYA EDUCATIONAL INSTI TUTIONS MYSORE. PAGE 9 OF 32 THE AYS 2006-07 AND 2007-08, THE APPELLANTS APPEAL IS DISMISSED FOR THE REASONS MENTIONED THEREIN. 6. AGGRIEVED, THE ASSESSEE HAS COME UP BEFORE US WITH THE PRESENT APPEALS. DURING THE COURSE OF HEAR ING, THE ELABORATE SUBMISSIONS MADE BY THE LEARNED AR ARE SUMMARIZED AS UNDER: BUILDING FUND > THAT THE ASSESSEE HAD COLLECTED A SUM OF RS.50.2 1 LAKHS AS DEVELOPMENT FUND ALONG WITH THE ADMISSION FEES F ROM THE STUDENTS AND THE CONTRIBUTIONS MADE FOR A SPECI FIC PURPOSE OF BUILDING DEVELOPMENT FORMED PART OF CORP US AND, THUS, ELIGIBLE FOR EXEMPTION U/S 11(1)(D) OF T HE ACT. THE CONTRIBUTIONS MADE BY THE STUDENTS WERE VOLUNTA RY AND NOT QUID PRO QUO TO THE ADMISSIONS INTO THE SOC IETY. THE ASSESSEE HAD ALSO PRODUCED CONFIRMATION LETTERS BEFORE THE AUTHORITIES BELOW TO VOUCH THAT THE CONTRIBUTIONS FROM THE STUDENTS COMMUNITY WERE VOLUNTARY; > THAT THE AUTHORITIES BELOW HAVE, HOWEVER, CONCLU DED THAT THERE WAS A NEXUS BETWEEN THE ADMISSIONS AND THE VOLUNTARY DONATIONS AND, ACCORDINGLY, DENIED THE BE NEFIT OF EXEMPTION UNDER SECTIONS 11 AND 12 OF THE ACT T O THE ASSESSEE, CITING THE FOLLOWING REASONS, NAMELY: (A) THAT THE DONATIONS WERE RECEIVED ONLY AS A QUI D- PRO-QUO FOR GETTING ADMISSION AND WERE NOT VOLUNTARY; & (B) THAT THE TRUST HAS BEEN INDULGING IN PROFITEER ING AND HELD THAT THE TYPE OF PROFITS EARNED BY THE ASSESSEE CANNOT BE CONSIDERED AS INCIDENTAL SURPLUS. > DISPUTING THE LEARNED DRS STAND IN RELYING ON T HE AO AS WELL AS THE CIT(A)S REASONING, IT WAS CLAIMED THAT THE CONTRIBUTIONS RECEIVED BEING VOLUNTARY WHICH WERE G IVEN FOR A SPECIFIC PURPOSE OF BUILDING FUND. THE GENUIN ENESS OF SUCH CONTRIBUTIONS WAS ESTABLISHED BY THE FACT T HAT THE SAME WAS APPLIED FOR CONSTRUCTION OF BUILDING. THIS WAS NOT DISPUTED BY THE REVENUE; ITA NOS.604, 605 AND 324 SADVIDYA EDUCATIONAL INSTI TUTIONS MYSORE. PAGE 10 OF 32 > AS PER THE PROVISIONS OF S. 11(1)(D) OF THE ACT, THE CONTRIBUTIONS MADE (RECEIVED) FOR A SPECIFIC PURPO SE OF BUILDING DEVELOPMENT AND FORMED PART OF CORPUS WERE ELIGIBLE TO CLAIM AS EXEMPTION BY THE ASSESSEE; > THAT THE DONATIONS TOWARDS THE BUILDING FUND WER E GIVEN WITH A SPECIFIC DIRECTION THAT THEY SHALL FORM PART OF THE CORPUS I.E., THE BUILDING FUND WHICH HAS BEEN EXP LICITLY DISCLOSED BY THE ASSESSEE IN ITS FINANCIAL STATEMEN TS AS BUILDING FUND UNDER THE HEAD CAPITAL FUND; > THAT THE PARENTS OF THE STUDENTS OUT OF THEIR FR EE WILL HAVE MADE THE VOLUNTARY CONTRIBUTIONS WHICH WERE SUBSEQUENTLY SUBSTANTIATED BY WAY OF CONFIRMATION LETTERS. THIS FACT IS ALSO FINDING A PLACE IN ANSW ER TO Q.NO.15 IN THE STATEMENT OF THE SECRETARY OF THE AS SESSEE RECORDED ON OATH AT THE TIME OF SURVEY; > THAT THE PRIMARY PURPOSE/OBJECT OF THE ASSESSEE WAS TO IMPART EDUCATION AND IN THAT PROCESS COLLECTED CERT AIN FEES AND VOLUNTARY CONTRIBUTIONS. THE VOLUNTARY CONTRIBUTIONS SO RECEIVED WERE FOR THE SPECIFIC PUR POSE OF BUILDING AND THE ASSESSEE HAD APPLIED SUCH CONTRIBUTIONS TOWARDS THE CONSTRUCTION OF BUILDING; > DISTINGUISHED THE JUDGMENT OF HONBLE MADRAS HIG H COURT REPORTED IN 324 ITR 44 (MAD) RELIED ON BY THE LEARNED DR, SINCE IN THE ASSESSEES CASE, THE VOLUN TARY CONTRIBUTIONS WERE RECEIVED AS BUILDING FUND SPECIFICALLY FOR THE PURPOSE OF CONSTRUCTING BUILD ING(S) WHICH FORMED PART OF THE CORPUS. THE AMOUNT COLLEC TED TOWARDS BUILDING FUND WAS VOLUNTARY AND THE FACT THAT THOSE FUNDS WERE APPLIED FOR THE PURPOSE FOR WHICH THEY WERE RECEIVED FORTIFIES THE CONTENTION OF THE ASSES SEE THAT IT WAS ELIGIBLE FOR EXEMPTION UNDER THE ACT; > THE FINDINGS OF THE HONBLE ITAT, HYDERABAD IN T HE CASE OF VODIHITHALA EDUCATION SOCIETY V. ADIT [20 SOT 35 3] RELIED BY THE REVENUE IS ALSO DISTINGUISHABLE SINCE IN THAT CASE THE ASSESSEE WAS DENIED EXEMPTION ON A FINDING THAT THE ASSESSEE HAD VIOLATED THE PROVISIO NS OF S. 13 OF THE ACT BY DIVERTING THE MONIES TOWARDS THE CHAIRMAN OF THE INSTITUTION. IN THE PRESENT CASE, EVEN IF THE FEES COLLECTED WERE IN VIOLATION OF THE STATE GOVERNMENTS NORMS, APPLICATION OF FUNDS WERE TOWAR DS ITA NOS.604, 605 AND 324 SADVIDYA EDUCATIONAL INSTI TUTIONS MYSORE. PAGE 11 OF 32 THE OBJECTS AND AS SUCH, THERE WAS NO VIOLATION OF 13 OF THE ACT TO DENY EXEMPTION TO THE ASSESSEE; > THE FINDINGS OF THE ALLAHABAD TRIBUNAL REPORTED IN 82 ITD 71 RELIED ON BY THE LD. DR IS ALSO NOT APPLICABLE T O THE ISSUE ON HAND SINCE THAT ASSESSEE BEING AN EDUCATIO NAL INSTITUTION WAS EARNING SURPLUS AND SUCH SURPLUS WA S DIVERTED TOWARDS PERSONAL ENJOYMENT OF ITS SECRETAR Y AND HIS FAMILY MEMBERS WHEREAS IN THE PRESENT CASE, THE RE WAS NO DIVERSION OF THE PROFITS EARNED AND SUCH PRO FITS HAVE BEEN APPLIED TOWARDS THE OBJECTS OF THE INSTIT UTION; RELIES ON THE FOLLOWING CASE LAWS : (I) ACIT V. BALAJI EDUCATIONAL AND CHARITABLE PUB LIC TRUST 11 (TRIB.) ITR 179 ITAT, CHENNAI; (II) DIT (E) V. N. H. KAPADIA 136 ITD 111 ITAT , AHD.; IN VIEW OF THE ABOVE, IT IS PRAY ED THAT THE AMOUNT OF RS.50.21 LAKHS WAS TO BE TREATED AS VOLUNTARY CO NTRIBUTIONS AND EXEMPTION U/S 11(1)(D) BE GRANTED. COLLEGE DEVELOPMENT FUND > THAT THE ASSESSEE BEING AN UN-AIDED EDUCATIONAL INSTITUTION COLLECTS DEVELOPMENT FEES FROM STUDENTS WHICH WERE IN ACCORDANCE WITH THE STATE GOVERNMENT S RULES. COUNTERING THE LEARNED DRS SUBMISSION THAT THE FEES COLLECTED OVER AND ABOVE THE PRESCRIBED AMOUNT CANNOT BE CONSIDERED AS A CHARITABLE ACTIVITY WITHI N THE MEANING OF S. 2 (15) OF THE ACT, IT WAS SUBMITTED T HAT IF THE FEES COLLECTED WERE IN CONTRAVENTION OF THE STA TE RULES, THE REGULATORY AUTHORITIES WOULD HAVE RECORD ED THE VIOLATIONS AND THE INSTITUTION COULD NOT HAVE CONTINUE TO GET AFFILIATIONS FROM VARIOUS UNIVERSIT IES. ASSUMING, SINCE THE REVENUE HAS NOT DISPUTED THE APPLICATION OF THOSE FUNDS, THE CONTRAVENTION OF STATEMENT GOVERNMENT LAWS SHOULD NOT BE A REASON FO R DENYING EXEMPTION U/S 11 OF THE ACT. FURTHER, THE DEVELOPMENT FEES WERE ACCOUNTED AS INCOME AND HAVE BEEN APPLIED FOR THE OBJECTS OF THE TRUST; > REFUTING THE REVENUES CONTENTION THAT THE ASSES SEE HAD INDULGED IN PROFITEERING, IT WAS ARGUED THAT NO DOU BT THE ASSESSEE HAD EARNED A SURPLUS OUT OF THE ACTIVITY C ARRIED ON. BUT SUCH PROFITS HAVE BEEN APPLIED TO THE OBJE CTS OF ITA NOS.604, 605 AND 324 SADVIDYA EDUCATIONAL INSTI TUTIONS MYSORE. PAGE 12 OF 32 THE TRUST I.E., FOR IMPARTING EDUCATION; AND MERELY THERE WAS SURPLUS, IT WOULD NOT AUTOMATICALLY DISENTITLE THE ASSESSEE FROM EXEMPTION OR IT CANNOT BE HELD TO BE INDULGED IN PROFITEERING. THE ASSESSEE HAD, IN ITS STATEMENT OF TOTAL INCOME, CLEARLY APPROPRIATED AND CARRIED FORWARDED THE SURPLUS FOR APPLICATION TO TH E SUBSEQUENT YEARS WHICH WAS SUBSEQUENTLY APPLIED TO THE OBJECTS OF THE TRUST AND NOT USED FOR THE PURPOSE O F MAKING PROFIT IN REAL-ESTATE AS ALLEGED BY THE CIT (A); RELIES ON THE FOLLOWING CASE LAWS : (I) PINEGROVE INTERNATIONAL CHARITABLE TRUST V. UOI 327 ITR 73 (P&H); (II) DY.DIT V. SHANTI DEVI PROGRESSIVE EDUCATION SOCIETY (2011 52 DTR 225 [DEL]; (III) DCIT V. VELLORE INSTITUTE OF TECHNOLOGY (2011) 12 TAXMANN.COM 272 ITAT, CHENNAI APPLICATION OF THE SAID FUNDS TOWARDS OBJECT OF THE INSTITUTION WOULD ENTITLE EXEMPTION U/S 11 OF THE A CT : > WITHOUT PREJUDICE THAT IF IT WERE TO BE HELD THA T THE CONTRIBUTIONS WERE NOT VOLUNTARY, EVEN THEN THE ASSESSEE WAS ELIGIBLE TO CLAIM EXEMPTION UNDER THE ACT BY VIRTUE OF SECTIONS 11 & 12 OF THE ACT. THE ASSE SSEE HAD APPLIED ALL THE CONTRIBUTIONS TO ITS OBJECTS AN D NONE OF THE AUTHORITIES BELOW HAVE GIVEN A FINDING THAT THE FUNDS HAVE BEEN DIVERTED FOR THE PURPOSES OTHER THA N THE OBJECTS OF THE TRUST. THUS, THE ASSESSEE HAD A PPLIED THE FUNDS/CONTRIBUTIONS RECEIVED TOWARDS ITS OBJECT IVES; > THAT THE REVENUE HAD NOWHERE CONTENDED THAT THE FUNDS COLLECTED HAVE BEEN UTILIZED BY THE TRUST FOR THE P URPOSES OTHER THAN ITS OBJECTS. THE ONLY REASON FOR THE RE VENUE TO DENY EXEMPTION WAS THAT THE CONTRIBUTIONS WERE N OT VOLUNTARY AND THE ASSESSEE WAS HAVING A SURPLUS OVE R ITS EXPENDITURE; > THE ASSESSEE BEING A TRUST REGISTERED U/S 12AA O F THE ACT AND ACCORDING TO THE SCHEME OF THE ACT, ANY INCOME OF A TRUST REGISTERED U/S 12AA AND ESTABLISHED FOR CHARI TABLE PURPOSE WOULD BE EXEMPT, IF THE INCOME DERIVED FROM SUCH TRUST WAS APPLIED FOR ITS OBJECTS EXCEPT FOR T HE PURPOSES AS LAID DOWN IN S. 13 OF THE ACT. IN THE PRESENT ITA NOS.604, 605 AND 324 SADVIDYA EDUCATIONAL INSTI TUTIONS MYSORE. PAGE 13 OF 32 CASE, EVEN IF THE BUILDING FUND AND THE DEVELOPMENT FUND WAS CONSIDERED AS INCOME OF THE ASSESSEE, SINCE THO SE FUNDS WERE APPLIED FOR THE OBJECTS OF THE ASSESSEE, THE INCOME OF THE ASSESSEE WOULD BE EXEMPT FROM TAX; RELIES ON THE FOLLOWING CASE LAWS : (I) DDIT(E) V. CMR JANARDHANA TRUST ITA NO.3024 & 820/BANG/2007; (II) ADIT V. MBA NAHATA CHARITABLE TRUST IN ITA NOS.118 & 120/BANG/06; & (III) DIT (E) V. BELI MATHA MAHA SAMSTHANA SOCIO CULTURAL AND EDL. TRUST 336 ITR 694 (IV) ACIT V. BALAJI EDUCATIONAL AND CHARITABLE PUBLIC TRUST 11 (TRIB) ITR 179 ITAT, CHENNAI > THAT THE BUILDING FUND FORMS PART OF THE CORPUS DIRECTLY EXEMPT U/S 11(1)(D) OF THE ACT AS THE APPLICATION O F WHICH IS TOWARDS THE OBJECTS OF THE INSTITUTION AND THE COLL EGE DEVELOPMENT FUND IS OFFERED AS INCOME WHICH IS APPL IED TOWARDS THE OBJECTS OF THE INSTITUTION > WITHOUT FURTHER PREJUDICE TO THE MAIN CONTENTION S, RELIANCE IS PLACED ON THE ON THE FOLLOWING CASE LAWS, NAMELY : (I) DR T.A. QURESHI V. CIT [287 ITR 547 (SC)]; (II) CIT V. CHILDRENS EDUCATION SOCIETY 92 DTR 158 (KAR); (III) ACIT V. M/S. JSS MAHAVIDYAPEETHA ITA NO.735/BANG/2012 DT: 19.4.2013 IN CONCLUSION, IT WAS SUBMITTED THAT (I) THE BUILDING FUND OF RS.50.21 LAKHS WAS A VOLUNTARY CONTRIBUTION AND, FURTHER, FORMS PART OF THE CORPUS ELIGIBLE TO CLAIM EXEMPTION U/S 11(1)(D) OF THE ACT; (II) THE COLLEGE DEVELOPMENT FEE OF RS.40.93 LAKHS WAS A VOLUNTARY CONTRIBUTION AND THE ASSESSEE WAS ELIGIBLE FOR EXEMPTION OF THE SAME U/S 11(1)(A) OF THE ACT; (III) MERE EXISTENCE OF PROFIT/SURPLUS DOES NOT CHANGE THE CHARACTER OF EDUCATIONAL INSTITUTION TO A PROFI T MAKING ENTITY; ITA NOS.604, 605 AND 324 SADVIDYA EDUCATIONAL INSTI TUTIONS MYSORE. PAGE 14 OF 32 (IV) WITHOUT PREJUDICE, EVEN IF THE CONTRIBUTIONS WERE CONSIDERED AS INVOLUNTARY, BUT, IF THEY WERE APPLIE D TO THE OBJECTS OF THE INSTITUTION, IT WAS SUFFICIEN T COMPLIANCE OF S. 11 OF THE ACT; & (V) WITHOUT PREJUDICE, IF THE DEVELOPMENT FUND AND BUILDING FUND, IF HELD TO BE TAXABLE, THEN, ONL Y THE SURPLUS I.E., EXCESS OF INCOME OVER EXPENDITURE CAN BE TAXED AND NOT ON THE GROSS AMOUNT OF DEVELOPMENT FUND. 6.1. ON THE OTHER HAND, THE LEARNED DR SU MMED UP HIS SUBMISSION AS UNDER: - THAT THE SECRETARY OF THE ASSESSEE-TRUST ON OATH SUBMITTED THAT IT WAS THE NORMAL PRACTICE TO COLLEC T THE DDS FROM THE PARENTS OF THE ASPIRANTS BEFORE THE ADMISSION AND TO KEEP SUCH DDS WITH THE MANAGEMENT TILL THE PROCESS OF ADMISSION WAS COMPLETED AND THE N THE DDS RECEIVED FROM THE SUCCESSFUL CANDIDATES WERE ON LY DEPOSITED IN THE BANK ACCOUNT AND THE REMAINING DDS RELATED TO THE UNSUCCESSFUL CANDIDATES WERE RETURNE D TO THEM. THUS, IT WAS CLEARLY ESTABLISHED THAT THE DONATIONS WERE RECEIVED ONLY AS A QUID-PRO-QUO OR A S A RETURN FOR GETTING ADMISSION. THUS, THE INTENTION O F THE PERSONS MAKING THE DONATIONS WAS QUITE CLEAR AND OBVIOUS AND THAT WAS ONLY TO GET ADMISSION, DONATIO NS WERE PAID BY THEM. HENCE, THE DONATIONS RECEIVED BY THE ASSESSEE CANNOT BE CONSIDERED AS VOLUNTARY CONTRIBUTIONS IN NATURE. ACCORDING TO THE JUDICIAL PRONOUNCEMENT, THE WORD VOLUNTARY HAS BEEN HELD T O BE AN ACT DONE OUT OF ONES FREE WILL; - THAT IT IS WELL SETTLED LEGAL POSITION THAT VOL UNTARILY MEANS AN ACT DONE OUT OF ONE FREE WILL. IT DOES NO T INSIST UPON ANY PARTICULAR MANNER IN WHICH THE CONTRIBUTIO NS SHOULD BE MADE. ONE OF THE MAIN INGREDIENTS OF THE VOLUNTARY CONTRIBUTION IS THAT THE CONTRIBUTION MUS T BE MADE WITHOUT THERE BEING ANY CONSIDERATION THEREFOR . TO PUT IT IN A NUTSHELL, ANY MONEY PAID WILLINGLY ON I TS OWN BY ANY PERSON WITHOUT COMPULSION AND QUID-PRO-QUO I S KNOWN AS VOLUNTARY CONTRIBUTION. AS SUCH, IN A CAS E OF VOLUNTARY DONATION, THE DONORS WILL GENERALLY GIVE THE MONEY OR THE GIFT TO THE TRUSTS/SOCIETIES RUNNING ITA NOS.604, 605 AND 324 SADVIDYA EDUCATIONAL INSTI TUTIONS MYSORE. PAGE 15 OF 32 EDUCATIONAL INSTITUTIONS GRACIOUSLY WITHOUT ANY COMPULSION OR SUGGESTION EITHER DIRECTLY OR INDIREC TLY FROM SUCH TRUSTS OR SOCIETIES AND ALSO WITHOUT EXPE CTING ANY RETURN OR PRIVILEGE FOR DOING SO; - IN THE PRESENT CASE, THE STUDENTS/THEIR PARENTS HAVE CONTRIBUTED SUCH AMOUNTS TITLED AS BUILDING FUND TO THE ASSESSEES TRUST IN VIEW OF THE FACT THAT THERE WAS A SUGGESTION OR UNWRITTEN DIRECTION FROM THE ASSESSEE THAT PAYMENT OF SUCH AMOUNT WAS MANDATORY FOR THE PURPOS E OF SECURING ADMISSION IN THE EDUCATIONAL INSTITUTIO N RUN BY THE TRUST; AND THAT THE STUDENTS/THEIR PARENTS H AVE NOT WRITTEN ANY LETTERS ADDRESSED TO THE ASSESSEE EXPRESSING THEIR WILLINGNESS TO GIVE DONATIONS TOWA RDS CORPUS FUND AT THE TIME OF MAKING THE PAYMENT BY WA Y OF DDS. THIS WAS PRECISELY BECAUSE OF THE REASON T HAT, THE ASSESSEE HAD RECEIVED THE DONATIONS PRIOR TO FINALISING THE ADMISSION PROCEDURE FROM NOT ONLY TH E STUDENTS/THEIR PARENTS WHO HAVE SECURED ADMISSION LATER, BUT ALSO FROM OTHER STUDENTS/PARENTS WHO EXPRESSED THEIR INTEREST IN ADMISSION TO THE EDUCAT IONAL INSTITUTIONS RUN BY THE ASSESSEE. AFTER COMPLETING THE PROCESS OF ADMISSION, THE DDS RECEIVED FROM THE SUCCESSFUL STUDENTS WERE DEPOSITED IN THE BANK ACCO UNT AND THE DDS PERTAINING TO THE UNSUCCESSFUL CANDIDAT ES WERE RETURNED TO THEM. THE ASSESSEE HAD OBTAINED T HE SIGNATURES OF THE PARENTS OF THE SUCCESSFUL STUDENT S IN A PRE-PRINTED LETTERS WITHOUT GIVING THE DETAILS OF A MOUNT DONATED, DATE OF CONTRIBUTION, RECEIPT NUMBERS ETC. , THIS CLEARLY DEMONSTRATED THE ACTUAL NATURE OF DONA TIONS RECEIVED BY THE ASSESSEE FROM THE SUCCESSFUL STUDEN TS IN THE GUISE OF BUILDING FUNDS. THE FACT OF RETURN OF THE DDS PERTAINING TO UNSUCCESSFUL CANDIDATES WOULD CLEARLY INDICATE THAT THERE WAS A DIRECT NEXUS BETW EEN SECURING ADMISSION IN THE EDUCATIONAL INSTITUTIONS RUN BY THE ASSESSEE AND PAYMENT OF DONATION BY SUCH SUCCESSFUL STUDENTS TO THE ASSESSEE WHICH IS TERMED AS BUILDING FUND. ACCORDINGLY, THE BASIC PARAMETERS TO TREAT THE DONATION AS VOLUNTARY DONATIONS WERE NOT FULFILLED AS EXPLAINED BELOW: (I) THE DONOR HAD NOT PAID THE AMOUNT BY EXERCISIN G HIS OWN FREE WILL WITHOUT EXPECTING ANY RETURN OR PRIVI LEGE. THE DONORS HAVE ACTUALLY PAID THE AMOUNT TO THE ASSESSEE FOR A CONSIDERATION OR RETURN OR PRIVILEGE IN THE ITA NOS.604, 605 AND 324 SADVIDYA EDUCATIONAL INSTI TUTIONS MYSORE. PAGE 16 OF 32 FORM OF ADMISSION TO THEIR WARD IN THE EDUCATIONAL INSTITUTION RUN BY THE ASSESSEE; (II) THE ASSESSEE HAD FORCED THE STUDENTS/PARENTS TO REMIT THE DONATION FOR ADMISSION PURPOSE AND ACCEPTED THE SAME FROM THE SUCCESSFUL STUDENTS/PARENTS ESTABLISH ING THE QUID-PRO-QUO; - THAT AS PER THE PROVISIONS OF S. 11(1), THE ASSE SSEE WAS ENTITLED TO CLAIM DEDUCTION IN RESPECT OF ANY INCOM E DERIVED FROM PROPERTIES HELD, UNDER TRUST WHOLLY FO R CHARITABLE OR RELIGIOUS PURPOSE. AS PER CLAUSE (D) OF S. 11 (1), INCOME IN THE FORM OF VOLUNTARY CONTRIBUTIO NS MADE WITH A SPECIFIC DIRECTION TO THE EFFECT THEY S HALL FROM PART OF THE CORPUS OF THE TRUST OR INSTITUTION IS ALSO EXEMPT FROM TAX. SIMILARLY, U/S 12(1) OF THE ACT, ANY VOLUNTARY CONTRIBUTIONS RECEIVED BY A TRUST CREATED WHOLLY FOR A CHARITABLE OR RELIGIOUS PURPOSE SHALL BE DEEMED TO THE INCOME DERIVED FROM PROPERTY HELD UND ER TRUST AS ENVISAGED U/S 11(1); - THAT AS THE FACTUAL MATRIX BROUGHT OUT BY THE AO , IT CANNOT BE STATED THAT THE DONATIONS RECEIVED BY THE ASSESSEE WERE VOLUNTARY IN NATURE SO AS TO BE EXEMP T FROM TAX. RELY ON THE JUDGMENT OF THE HONBLE MADR AS HIGH COURT IN THE CASE OF P.S. GOVINDA SAMY NAIDU & SONS V. ACIT 324 ITR 44 (MAD). - THAT THE CIT (A) HAD HELD THAT THE ASSESSEE WAS NOT ABLE TO ESTABLISH THAT THE DONATIONS RECEIVED WERE VOLUN TARY IN NATURE. THUS, THE ASSESSEES CLAIM THAT THE AMO UNTS WERE RECEIVED VOLUNTARILY TOWARDS BUILDING FUND WAS FOUND TO BE NOTHING BUT CAPITATION FEES RECEIVED IN THE GARB OF BUILDING FUND COLLECTION. THE AMOUNT WAS NOTHING BUT CAPITATION FEE COLLECTED AGAINST THE ADMISSIONS AND AS SUCH IT CANNOT BE TREATED AS VOLUNTARY CONTRIBUTIONS MADE BY THE PUBLIC. - THAT THE CIT (A) HAD BROUGHT OUT CLEARLY AS TO H OW THE ASSESSEE TRUST HAS BEEN INDULGING IN PROFITEERING A ND HELD THAT THE TYPES OF PROFITS EARNED BY THE ASSESS EE CANNOT BE CONSIDERED AS INCIDENTAL SURPLUS. RELIAN CE IS PLACED ON THE FINDINGS OF (I) THE HONBLE ITAT, HYD ERABAD IN M/S VODITHALA EDUCATION SOCIETY V. ACIT REPORTED IN 20 SOT 353 (HYD) AND (II) BALBHARATHI NURSERY SCHOO L [82 ITD 71] ITAT, AHMEDABAD; ITA NOS.604, 605 AND 324 SADVIDYA EDUCATIONAL INSTI TUTIONS MYSORE. PAGE 17 OF 32 COLLEGE DEVELOPMENT FUND OF RS.40,93,600/-: - THAT THE ASSESSEE HAD COLLECTED RS.40.93 LAKHS IN T HE GUISE OF COLLEGE DEVELOPMENT FEE FROM THE STUDENTS WITHOUT HAVING ANY SANCTION FROM THE GOVERNMENT. I T WAS CLEAR THAT THE COLLECTIONS WERE MADE BY THE ASS ESSEE IN CONTRAVENTION OF THE STATE LAWS. SINCE THE ASSE SSEE WAS FOUND TO HAVE INDULGED IN PROFITEERING, AS POIN TED OUT BY THE CIT (A), THE ASSESSEE IS NOT ENTITLED TO CLAIM EXEMPTION U/S 11 OF THE ACT; - THAT THE COLLECTION OF FEE OVER AND ABOVE THE FE ES PRESCRIBED BY THE GOVERNMENT IN THE GARB OF VOLUNTA RY CONTRIBUTION CANNOT BE CONSIDERED A CHARITABLE ACTI VITY WITHIN THE MEANING OF S. 2 (15) OF THE ACT AND ONCE THE INSTITUTION/TRUST IS CONSIDERED AS NON-CHARITABLE ORGANISATION, IT IS NOT ELIGIBLE FOR EXEMPTION U/S 11 OF THE ACT; AY 2007-08 : - THAT A LOAN OF RS.49.02 LAKHS WAS ADVANCED TO M/ S. KAVERI CHARITABLE TRUST AND AS SUCH THE BENEFIT OF CBDT CIRCULAR NO.100 WAS NOT APPLICABLE TO THE ASSESSEE S CASE, AS THE SAID CIRCULAR ONLY ADDRESSES ABOUT THE CASES WHERE SCHOLARSHIP LOANS WERE ADVANCED TO STUDENTS FOR EDUCATION PURPOSES AND NOT TO THE KIND OF LOANS WHICH THE ASSESSEE HAD MADE TO ANOTHER INSTITUTION. AS SUCH, THE ADVANCEMENT OF LOAN CANNO T BE CONSIDERED AS AN APPLICATION OF INCOME U/S 11(1)(IA ) OF THE ACT; - THAT THE ACTION OF THE AO IN DENYING THE CLAIM O F DEPRECIATION IS CORRECT IN AS MUCH AS THE ASSESSEE HAD CLAIMED DEDUCTION TWICE THAT IS ONCE AT THE TIME OF ACQUISITION OF THE ASSET AND AGAIN DEPRECIATION IN RESPECT OF THE SAME ASSET. SINCE CLAIMING OF DOUBLE DEDUCTI ON IS IMPERMISSIBLE UNDER THE ACT, THE STAND OF THE AO REQUIRES TO BE SUSTAINED; - ASSUMING THAT THE PROVISIONS OF S. 11(1)(A) ARE APPLICABLE TO THE FACTS OF THE CASE, HOWEVER, IT IS NOTICED TH AT A CHUNK OF THE ADDITIONAL FEE COLLECTED IN THE FORM O F BUILDING FUND AND COLLEGE DEVELOPMENT FEE HAS BEEN PARKED IN FDS FOR A CONSIDERABLE PERIOD OF TIME, IM PLYING ITA NOS.604, 605 AND 324 SADVIDYA EDUCATIONAL INSTI TUTIONS MYSORE. PAGE 18 OF 32 THAT THE ASSESSEE HAD NOT APPLIED THE FUND TOWARDS THE OBJECTS STIPULATED IN THE TRUST DEED. FURTHER, A SUBSTANTIAL AMOUNT OF SURPLUS GENERATED OVER A PERI OD OF TIME, AMOUNTING TO RS.1.36 CRORES WAS PAID TO ANOTH ER TRUST UNDER THE SAME MANAGEMENT, NAMELY, M/S. KAVER I CHARITABLE TRUST AS ON 31.3.2007. THIS FACT INDICA TES THAT THE ASSESSEE HAD NOT UTILIZED THE ADDITIONAL F UNDS RECEIVED IN THE FORM OF BUILDING FUND AND DEVELO PMENT FUND TOWARDS THE OBJECT OF THE TRUST; - THAT THE DETAILS OF NET SURPLUS AS WELL AS INCRE ASE IN SURPLUS RECORDED ON ACCOUNT OF CONTRIBUTIONS FROM T HE STUDENTS/PARENTS IN THE FORM OF BUILDING FUND AND COLLEGE DEVELOPMENT FUND ARE AS UNDER: ASST. YEAR NET SURPLUS BUILDING FUND COLLEGE DEV. FUND 2006-07 RS. 76,68,953 RS. 50,21,500 RS.66,99,832 2007-08 RS. 92,67,907 RS. 58,21,800 RS.74, 74,535 2008-09 RS.1,57,23,253 RS.1,03,36,134 RS.76,3 6,522 - THAT IT IS CLEAR THE ASSESSEE HAS BEEN GENERATING SUBSTANTIAL AMOUNT OF SURPLUS ON ACCOUNT OF BUILDIN G FUND AND DEVELOPMENT FUND RECEIVED FROM THE STUDENT S; AND THAT THE MAIN MOTIVE BEHIND THE COLLECTION OF H UGE AMOUNT OF THE SAME WAS NONE OTHER THAN GENERATION O F HUGE AMOUNT OF SURPLUS AND PARKING THE SAME IN FDS AND WITH OUTSIDE TRUST WHICH WAS UNDER THE SAME MANAGEMENT. THUS, THE ASSESSEE HAD NOT FULFILLED T HE REQUIREMENT OF APPLICATION OF SURPLUS TOWARDS ITS O WN OBJECTS, SUCH AS CONSTRUCTION SCHOOL BUILDINGS, PRO VIDING SCHOLARSHIP TO THE POOR AND NEEDY, PROVIDING COMPUT ERS AND OTHER FACILITIES TO THE STUDENTS, CONSTRUCTION OF SPORTS INFRASTRUCTURE ETC., - THAT THE ASSESSEE HAD FAILED ON BOTH THE COUNTS ON THE BASIS OF WHICH IT FORTIFIED ITS GROUNDS FOR EXEMPTI ON OF INCOME U/S 11 OF THE ACT FOR THE FOLLOWING REASONS, NAMELY: (I) THE AMOUNTS RECEIVED AS BUILDING FUND AND COL LEGE DEVELOPMENT FUNDS WERE NOT IN THE NATURE OF VOLUNTARY CONTRIBUTIONS IN ORDER TO CLAIM EXEMPTION U/S 11; (II) THE ASSESSEE HAD NOT APPLIED THE S URPLUS GENERATED BY WAY OF COLLECTING BUILDING FUND AND DEVELOPMENT FUND TOWARDS THE OBJECTS OF THE ITA NOS.604, 605 AND 324 SADVIDYA EDUCATIONAL INSTI TUTIONS MYSORE. PAGE 19 OF 32 ASSESSEE BUT MADE FDS AND DIVERTED TO OUTSIDE TRUST WHICH WAS UNDER THE SAME MANAGEMENT; (III) THE ACTIVITIES OF THE ASSESSEE HAD RESUL TED IN HUGE AMOUNT OF SURPLUS I.E., MORE THAN 50% OF THE GROSS RECEIPTS IMPLYING THAT THE ASSESSEE WAS IN EXISTENCE FOR GENERATING PROFITS THROUGH RUNNING THE EDUCATIONAL INSTITUTION AS AGAINST THE MAIN OBJECT OF RUNNING THE EDUCATIONAL INSTITUTION. THE ASSESSEE HAD USED THE EDUCATIONAL ACTIVITIES AS A TOOL TO ATTAIN ITS MAIN MOTIVE OF PROFIT GENERATION ; & (IV) THAT THE ASSESSEE HAD NOT ONLY VIOLATED THE OBJ ECTS AS ENSHRINED IN THE TRUST DEED BUT ALSO FAILED TO COMPLY WITH THE PROVISIONS OF SECTIONS 11, 12 & 13 OF THE ACT. ACCORDINGLY, THE ASSESSEE IS NOT ENTIT LED TO CLAIM EXEMPTION U/S 11 OF THE ACT IN RESPECT OF INCOME RECEIVED IN THE FORM OF BUILDING FUND AND DEVELOPMENT FUND. 7. WE HAVE CAREFULLY CONSIDERED THE RIVAL SU BMISSIONS, PERUSED THE RELEVANT MATERIALS ON RECORD, THE VOLUM INOUS DOCUMENTARY EVIDENCES PRODUCED BY EITHER OF THE PAR TY IN THE FORM OF PAPER BOOKS AND ALSO THE CASE LAWS. 7.1. IT IS A FACT THAT THE ASSESSEE TRUST IS A REGISTERED SOCIETY WHICH RUNS SEVERAL EDUCATIONAL I NSTITUTIONS IN THE CITY OF MYSORE STARTING FROM NURSERY TO PUC. THE ASSESSEE TRUST IS ALSO REGISTERED U/S 12A OF THE AC T. ACCORDING TO THE AO, SOME OF THE EDUCATIONAL INSTITUTIONS RUN BY THE ASSESSEE ARE AIDED INSTITUTIONS, IN THE SENSE, THAT THE SALARIES OF THE TEACHING/NON-TEACHING STAFF ARE MET BY THE G OVERNMENT GRANTS. AS PER THE NORMS FIXED BY THE STATE GOVERN MENT, THE ASSESSEE IS ENTITLED TO GIVE 50% OF ADMISSIONS UNDE R THE MANAGEMENT QUOTA IN RESPECT OF PU COURSE. HOWEVER, THERE IS NO DIFFERENCE BETWEEN THE GOVERNMENT AND NON-GOVERN MENT ITA NOS.604, 605 AND 324 SADVIDYA EDUCATIONAL INSTI TUTIONS MYSORE. PAGE 20 OF 32 SEATS WITH REGARD TO FEE STRUCTURE. ALL THE ADMISS IONS WERE REQUIRED TO BE GIVEN ON THE BASIS OF MERITS. APART FROM THE FEE STRUCTURES FIXED BY THE GOVERNMENT, ACCORDING TO TH E AO, THE ASSESSEE WAS COLLECTING COLLEGE DEVELOPMENT FEE AT RS.5,000/- AND RS.3,000/- PER STUDENT FOR SCIENCE AND COMMERCE COURSES RESPECTIVELY IN RESPECT OF PUC. 7.2. IN THE MEANWHILE, THE PREMISES OF THE ASSESSEE WAS SUBJECTED TO A SURVEY U/S 133A OF THE ACT ON 17 .5.2007. DURING THE COURSE OF SUCH SURVEY, CERTAIN BOOKS AND DOCUMENTS CONTAINING THE DETAILS OF STUDENT-WISE DO NATIONS COLLECTED BY WAY OF DDS AND DONATION - RECEIPT BOOK S FOR ADMISSIONS GIVEN DURING THE FYS 2005-06 AND 2006-07 RELATING TO FEES AND ALLEGED DONATIONS COLLECTED FR OM THE STUDENTS WHO GOT ADMISSIONS INTO THE SCHOOLS/COLLEG E RUN BY THE ASSESSEE WERE IMPOUNDED. 7.2.1. AFTER TAKING INTO ACCOUNT THE STATEMEN T OF THE SECRETARY OF THE ASSESSEE RECORDED ON OATH, AS PER THE IMPOUNDED DONATION RECEIPT BOOKS AND RELATED DOCUME NTS AS LISTED OUT AND FOR THE ELABORATE REASONS RECORDED I N THE ASSESSMENT ORDER FOR THE AY 2006-07, THE CLAIM OF E XEMPTION U/S 11 OF THE ACT FOR BUILDING FUND AND DEVELOPMENT FEE WAS DENIED BY THE AO FOR THE FOLLOWING REASONS, NAMELY: 26. (ON PAGE 20) BY RESPECTFULLY FOLLOWING THE ABO VE DECISION OF THE HONBLE SUPREME COURT - [ISLAMIC AC ADEMY OF EDUCATION V. STATE OF KARNATAKA (2003) 6 SCC 697 ]- AND ITAT, CHENNAI D BENCH- [ACIT V. P.S. GOVINDASWAMY NAIDU & SONS CHARITIES] I AM OF THE OPINION THAT THE ASSESSEE SOCIETY IS NOT ENTITLED TO CLAIM DEDUCTION U/S 11(1)(A) AND 11(1)(D) IN RESPECT OF DONATIONS COLLE CTED IN THE NAME OF BUILDING FUND AND COLLEGE DEVELOPMENT FE E. ACCORDINGLY, THE ENTIRE AMOUNT OF COLLEGE DEVELOPME NT FUND ITA NOS.604, 605 AND 324 SADVIDYA EDUCATIONAL INSTI TUTIONS MYSORE. PAGE 21 OF 32 AND BUILDING FUND IS BROUGHT TO TAX UNDER THE HEAD OTHER SOURCES BY DENYING EXEMPTION U/S 11 OF THE I.T. AC T. 7.2.2. WHEN THE ISSUE REACHED BEFORE THE CIT (A) FOR ADJUDICATION, THE CIT (A) HAD, AFTER EXTENSIVELY QU OTING VARIOUS CASE LAWS ON THE ISSUE AND PRIMARILY THE FINDINGS O F THE HYDERABAD TRIBUNAL IN THE CASE OF M/S. VASAVI ACADE MY [ITA NO.1749/HYD/2008 ASST. YEAR 2004-05 DATED 4.2.2010] SUSTAINED THE ADDITIONS MADE BY THE AO ON THE PREMI SE THAT 28. I HOLD THAT THE APPELLANT IS NOT ENTITL ED TO CLAIM EXEMPTION U/S 11 OF THE ACT. ALL THE GROU NDS OF APPEAL RAISED BY THE APPELLANT ARE BASICALLY IN THE NATURE OF ARGUMENTS CONTENDING THAT THE VOLUNTARY CONTRIBU TIONS COLLECTED BY THE APPELLANT ARE NOT IN THE NATURE OF CAPITATION FEE AND THAT THE APPELLANT TRUST BEING A N EDUCATIONAL INSTITUTION, IS ENTITLED TO EXEMPTION U /S 11 OF THE ACT. I HAVE ALREADY DISCUSSED BOTH THE ISSUES ABOVE. THERE IS A DIRECT NEXUS BETWEEN THE ADMISSIONS GRAN TED UNDER THE MANAGEMENT QUOTA AND THE VOLUNTARY CONTRIBUTIONS COLLECTED BY THE APPELLANT. IT IS NO THING BUT CAPITATION FEE. THE APPELLANT IS ALSO HELD TO BE I NDULGING IN PROFITEERING FROM EDUCATION AND, HENCE, IT IS NOT E LIGIBLE FOR EXEMPTION U/S 11 OF THE ACT. 7.2.3. HOWEVER, DURING THE COURSE OF HE ARING BEFORE US, THE LEARNED AR CONTRADICTED THE STAND OF THE AU THORITIES BELOW BY ARGUING THAT THOSE CONTRIBUTIONS WERE RECE IVED FROM THE STUDENTS FOR THE SPECIFIC PURPOSE OF BEING BUI LDING FUND WHICH FORMED PART OF THE CORPUS AND, ACCORDINGLY, E XEMPT U/S 11(1)(D) OF THE ACT. HE HAD ALSO URGED THAT THE ST UDENTS/THEIR PARENTS HAVE ACCEPTED THAT THOSE CONTRIBUTIONS HAVE SINCE BEEN MADE OUT OF THEIR OWN FREE WILL AND, THUS, IT CANNOT BE ATTRIBUTED THAT THERE WAS A NEXUS BETWEEN THE ADMIS SIONS AND THE VOLUNTARY CONTRIBUTIONS TOWARDS BUILDING DEVEL OPMENT SO AS TO DENY EXEMPTION U/SS. 11 AND 12 OF THE ACT. TO DRIVE ITA NOS.604, 605 AND 324 SADVIDYA EDUCATIONAL INSTI TUTIONS MYSORE. PAGE 22 OF 32 HOME HIS POINT, THE LEARNED AR ARGUED THAT THE PRIM ARY PURPOSE/OBJECT OF THE ASSESSEE WAS TO IMPART EDUCAT ION AND IN THAT PROCESS, THE ASSESSEE HAD ACCEPTED CERTAIN FEES AND VOLUNTARY CONTRIBUTIONS. THE VOLUNTARY CONTRIBUTIO N, IT WAS URGED, SO RECEIVED WAS ONLY FOR THE SPECIFIC PURPOS E OF BUILDING FUND AND, ACCORDINGLY THE ASSESSEE HAD APPLIED SUCH CONTRIBUTION TOWARDS THE CONSTRUCTION OF BUILDING(S ). 7.3. AT THIS JUNCTURE, WE SHALL PROCEE D TO ANALYSE THE CASE LAWS ON WHICH THE LEARNED DR PLACED RELIANCE, AS UNDER: (I) P.S. GOVINDASAMY NAIDU & SONS V. ACIT (2010) 324 IT R 44 (MAD): THE HONBLE COURT HAD HELD THAT THE PAYMENTS WERE IN FACT PAID ONLY BY WAY OF CAPITATION FEE AND NOT TOWARDS CORPUS ACCOUNT OF THE ASSESSEE. THE ABOVE CONCLUSI ON WAS ARRIVED AT BY THE HONBLE COURT BASED ON A PERUSAL OF THE ORDER OF THE ASSESSING AUTHORITY THAT ON AN EXAMINATION OF A RANDOM NUMBER OF PARENTS WHO ADMITTED THE CHILDREN INTO THE COLLEGE, IT WAS FOUND THAT THE AMOUNT PAID WAS NOT TO THE CORPUS DONATION ACCOUNT, BUT IT WAS COLLECTED ONLY BY WAY OF CAPITATION FEE. HOWEVER, IN THE PRESENT CASE UNDER CONSIDERATION, THE ASSESSEE INSISTED THAT THE PAREN TS OF THE STUDENTS, OUT OF THEIR OWN FREE WILL, HAVE MADE THE VOLUNTARY CONTRIBUTIONS WHICH HAVE BEEN DULY AUTHENTICATED BY WAY OF CONFIRMATION LETTERS. WE HAVE OBSERVED THAT THE AS SESSEE HAD OBTAINED THE SIGNATURES OF THE PARENTS OF THE SUCCE SSFUL STUDENTS IN PRE-PRINTED LETTERS WITHOUT GIVING THE DETAILS OF AMOUNTS DONATED, DATE OF CONTRIBUTIONS ETC., BUT CONTAINED THE DONORS NAMES AND THEIR ADDRESSES [SOURCE: PAGE S 34 TO 60 OF PB DR]. HOWEVER, THE ASSESSING AUTHORITY HAD CHOSEN NOT TO CROSS-EXAMINE SUCH PARENTS WHO HAVE ADMITTED THE IR ITA NOS.604, 605 AND 324 SADVIDYA EDUCATIONAL INSTI TUTIONS MYSORE. PAGE 23 OF 32 CHILDREN TO THE INSTITUTION OF THE ASSESSEE TO VERI FY THE VERACITY OF THE ASSESSEES CLAIM. (II) VODITHALA EDUCATION SOCIETY V. ASST. DIT (2008) 20 SOT 353 (HYD) : THE HONBLE TRIBUNAL OBSERVED THAT THE MATERIAL FOUND DURING THE COURSE OF SURVEY OPERATION, FURTHE R ESTABLISHES THAT THE MONEY COLLECTED OVER AND ABOVE THE PRESCRI BED FEE FOR ADMITTING STUDENTS WAS PAID TO THE CHAIRMAN AND OTH ER INTERESTED PERSONS OF THE SOCIETY. THEREFORE, THERE IS A CLEAR VIOLATION OF THE PROVISIONS OF S. 13(1)(C) OF THE I T ACT. UNDER S. 13(1)(C), IF ANY PART OF INCOME OF THE INSTITUTION, IS USED OR APPLIED DIRECTLY/INDIRECTLY FOR THE BENEFIT OF A PE RSON, I.E., THE FOUNDER OR ANY INTERESTED PERSON, AS REFERRED TO IN S.13 (3) OF THE IT ACT, THEN THE ASSESSEE SHALL NOT BE ENTITLED TO EXEMPTION UNDER SS. 11 AND 12 OF THE IT ACT. THEREFORE, THE ASSESSEE IS NOT ENTITLED FOR EXEMPTION UNDER S. 11. HOWEVER, IN THE PRESENT CASE, EVEN IF THE FEES COLLECTED WERE IN VI OLATION OF THE NORMS SUBSCRIBED BY THE STATE GOVERNMENT, THE APPLI CATION OF THE FUNDS WERE TOWARDS THE OBJECTS OF THE ASSESSEE TRUST AND AS SUCH, THERE WAS NO VIOLATION OF S. 13 OF THE ACT AS ASCRIBED BY THE REVENUE. 7.3.1. WE SHALL NOW TAKE UP THE CASE LAWS, ON W HICH, THE ASSESSEE PLACED RELIANCE FOR CONSIDERATION AS B ELOW: (I) ACIT V. BALAJI EDUCATIONAL AND CHARITABLE PUBLIC TRUST (2011) 11 ITR (TRIB) 179 (MAD): THE HONBLE TRIBUNAL HAS HELD THAT THERE IS NO CONCEPT OF INVOLUNTARY CONTRIBUTIONS I N THE SCHEME OF LAW OF CHARITIES PROVIDED IN THE INCOME-T AX ACT, 1961. THE ONLY DISTINCTION RECOGNIZED BY LAW IS TH AT ITA NOS.604, 605 AND 324 SADVIDYA EDUCATIONAL INSTI TUTIONS MYSORE. PAGE 24 OF 32 VOLUNTARY CONTRIBUTIONS ARE TO BE TREATED AS INCOME UNDER SECTION 12 AND CORPUS DONATION ARE TO BE TREATED AS CAPITAL RECEIPTS UNDER SECTION 11(1)(D). VOLUNTARY CONTRIB UTIONS ARE TAXABLE, ONLY IF NOT APPLIED FOR CHARITABLE PURPOSE S. EVEN IF THE CONTRIBUTIONS ARE TREATED AS NOT VOLUNTARY, THE DEPARTMENT WILL NOT TREAT SUCH INVOLUNTARY CONTRIBU TIONS AS CAPITAL. IN BOTH CASES, THEY WILL BE BROUGHT TO TA XATION, IF THE ASSESSEE HAS NOT UTILISED THE CONTRIBUTIONS FOR CHARITABLE PURPOSES. THE EXPRESSION VOLUNTARY CONTRIBUTIONS IS USED IN THE ACT INSTEAD OF CONTR IBUTIONS TO HIGHLIGHT THE PRINCIPLE OF NON-COMPULSION IN MATTER S OF PARTICIPATING IN CHARITABLE ACTIVITIES AND TO UNDER LINE THE GRATUITOUS NATURE OF DONATIONS AND CHARITABLE ACTIV ITIES. (II) IN THE CASE OF ACIT V. JSS MAHAVIDYAPEETHA IN ITA NOS.735 (BANG)/2012 DATED 19-4-2013, THE EARLIER BE NCH OF THIS TRIBUNAL HAS RECORDED ITS FINDINGS AS UNDER: 11. (ON PAGE 9).WE ARE OF THE VIEW THAT THE ORDER OF CIT (A) DOES NOT CALL FOR ANY INTERFERENCE . THE AO BASED HIS CONCLUSION ON THE PRESUMPTION THAT THE CONTRIBUTION TO DEVELOPMENT FEE WAS NOT A VOLUNTARY CONTRIBUTION. THE AO DOES NOT DISPUTE THAT THE ASS ESSEE HAS BEEN IMPARTING EDUCATION. ANOTHER UNDISPUTED F ACT IS THAT THE DONATIONS ARE USED FOR THE PURPOSE OF THE ACTIVITIES OF THE TRUST. THE FACT THAT THE DONATIONS WERE GIV EN BY STUDENTS WHO JOINED THE EDUCATIONAL INSTITUTION OF THE ASSESSEE AS IN RETURN FOR ADMISSION GRANTED WOULD N OT AFFECT THE CHARACTER OF THE CONTRIBUTION AS VOLUNTA RY CONTRIBUTION. THE REASON WHY CLAUSE (D) TO SEC. 11 (1) OF THE ACT WAS INSERTED BY THE DIRECT TAX LAWS (AMENDMENT) ACT, 1987 W. E. F. 1 ST APRIL, 1989 AND SECTION 2 (24) AMENDED BY THE SAME AMENDING ACT TO INCLUDE VOLUNTARY CONTRIBU TION WITH DIRECTION THAT THEY WOULD FORM OF CORPUS OF TH E TRUST AS INCOME, WAS TO TREAT THEM AS INCOME IN THE HANDS OF THE RECIPIENT, BUT IN THE CASE OF TRUSTS OR INSTITUTION S WHO COMPLY WITH THE REQUIREMENTS FOR EXEMPTION UNDER SE CTION 11 OF THE ACT AND NOT TAX SUCH RECEIPTS. PRIOR TO THE INSERTION OF THE ABOVE PROVISIONS, THEY WERE TREATE D AS CAPITAL RECEIPTS NOT CHARGEABLE TO TAX. HOWEVER, I N CASE THE TRUST OR INSTITUTION LOSES THE EXEMPTION UNDER SECT ION 11 OF THE ACT, EITHER BY NOT COMPLYING WITH THE CONDITION S LAID DOWN IN SECTION 12A OR BY FALLING WITHIN THE MISCHI EF OF SECTION 13, CORPUS DONATIONS WILL BE INCLUDED IN IT S INCOME ITA NOS.604, 605 AND 324 SADVIDYA EDUCATIONAL INSTI TUTIONS MYSORE. PAGE 25 OF 32 AND TAXED. THEREFORE, THE QUESTION WHETHER THE DON ATIONS WERE VOLUNTARY OR NOT BECOMES IRRELEVANT AND WHAT BECOMES RELEVANT IS THE APPLICATION OF SUCH CONTRIB UTIONS FOR THE OBJECTS OF THE TRUST WHICH ARE ADMITTEDLY C HARITABLE. THE APPLICATION OF SUCH CONTRIBUTIONS FOR OBJECTS O F THE TRUST IS NOT IN DISPUTE. 12. THE DECISION OF THE CHENNAI BENCH OF ITAT IN T HE CASE OF BALAJI EDUCATIONAL & CHARITABLE PUBLIC TRUST (SU PRA) AND THE DECISION OF THE HONBLE KARNATAKA HIGH COURT IN THE CASE OF SRI BELIMATHA MAHASAMASTHANA (SUPRA) AND GARDEN CITY EDUCATIONAL TRUST (SUPRA) EMPHASIS ONLY ON THE ABOVE ASPECT OF APPLICATION OF INCOME (CONTRIBU TIONS) FOR OBJECTS OF THE TRUST. THE ABOVE JUDICIAL PRONOUNCE MENT MAKES IT CLEAR THAT THE LITMUS TEST OF CHARITABLE I NSTITUTION IS THE TEST OF APPLICATION OF THE FUNDS AND NOT THE COLOUR OF DONATIONS RECEIVED BY THE INSTITUTION. IN THAT VIEW OF THE MATTER, WE DO NOT FIND ANY INFIRMITY IN THE ORDER O F THE CIT (A). 7.3.2. IN THE MEANWHILE, OUR REFERENCE WAS DRAWN TO THE JUDGMENT OF THE HONBLE JURISDICTIONAL HIGH COURT IN THE CASE OF CIT V. BHARATIYA SAMSKRITI VIDYAPITH TRUST IN IT APPEAL NOS.278, 279, 280, 281 AND 282 OF 2007 DATED 13.11.2013. THE ISSUES BEFORE THE HONBLE COURT WE RE: (I) WHEN THE DONATIONS COLLECTED TOWARDS A SPECIFIC FUND AND FOR A SPECIFIC PURPOSE I.E., CORPUS FUND A ND SO, WHETHER THE ASSESSEE WAS ENTITLED TO CLAIM EXEMPTION AS A CHARITABLE INSTITUTION U/S 11 OF THE ACT? AND (II) WHETHER IN THE ABSENCE OF THE PARTICULARS OF THE DONORS AND IN THE ABSENCE OF SPECIFIC DIRECTION BY THE DONORS, WHETHER THE DONATIONS GIVEN BY THEM WOULD FORM PART OF THE CORPUS FUND OF THE TRUST OR THE INSTITUTION AND, THUS, ELIGIBLE FOR EXEMPTION FROM PAYMENT OF TAX U/S 11 OF THE ACT? THE FACT OF THE ISSUE, IN BRIEF, WAS THAT THE ASS ESSEE IS A CHARITABLE TRUST REGISTERED U/S 12AA OF THE ACT AND ALSO ITA NOS.604, 605 AND 324 SADVIDYA EDUCATIONAL INSTI TUTIONS MYSORE. PAGE 26 OF 32 RECOGNIZED U/S 80G OF THE ACT. IT RUNS EDUCATIONAL INSTITUTION. THE ASSESSEE ALLOWED ITS ASSETS, VEHICLES, BUILDING S ETC., TO BE USED BY BHARATIYA SAMSKRITI VIDYA PEETA, FREE OF CO NSIDERATION AND THE SAID ASSOCIATION IS RUNNING AN EDUCATIONAL INSTITUTION IN THE PREMISES WHICH IS OWNED BY THE ASSESSEE. IT IS ALSO MAKING USE OF THE ASSETS OF THE TRUST FOR THE PURPO SE OF EDUCATION. THE TRUST HAD RECEIVED DONATIONS FROM V ARIOUS PERSONS FOR WHICH RECEIPTS HAVE BEEN ISSUED. THE A MOUNTS SO RECEIVED WERE ENTERED IN ITS BOOKS OF ACCOUNT AND D EPOSITED IN ITS BANK ACCOUNTS. IN THE RECEIPTS ISSUED TO THE D ONORS, IT WAS MENTIONED AS DONATIONS RECEIVED TOWARDS BUILDING F UND AS A VOLUNTARY CONTRIBUTION AND, ACCORDINGLY, CLAIMED EX EMPTION U/S 11 OF THE ACT. THE AO DENIED THE EXEMPTION ON V ARIOUS GROUNDS AND THE INCOME FROM DONATIONS WAS TREATED A S TAXABLE U/S 68 OF THE ACT ON THE PREMISE THAT THE A SSESSEE WAS UNABLE TO GIVE THE PARTICULARS OF THE PERSONS F ROM WHOM IT HAD RECEIVED DONATIONS. HOWEVER, THE FIRST APPELLA TE AUTHORITY HELD THAT THE ASSESSEE IS A PUBLIC CHARITABLE TRUST AND IS ENTITLED TO EXEMPTION U/S 11 OF THE ACT. THE TRIBU NAL, AFTER DUE CONSIDERATION OF THE FACTS, HELD THAT THE AMOUN TS RECEIVED AS DONATIONS ARE FOR A SPECIFIC FUND FOR A SPECIFIC ;PURPOSE, THAT IS, CORPUS FUND; AND THAT WHEN ONCE THE INSTIT UTION IN QUESTION IS ELIGIBLE FOR EXEMPTION AS A CHARITABLE INSTITUTION U/S 11 AND WHEN IT IS ALSO NOT DISPUTED THAT THE DO NORS IN QUESTION HAVE RECEIVED THE RECEIPTS FROM THE DONEE AGAINST THEIR VOLUNTARY CONTRIBUTION SO MADE, ONLY FOR THE BUILDING FUND AND THE DONATION MAY BE TREATED AS CORPUS FUND . WHEN THE ISSUE WAS CARRIED BY THE REVENUE BEFORE THE HON BLE COURT, THE HONBLE COURT, AFTER TAKING INTO ACCOUNT THE FA CTS OF THE CASE, HAS RULED AS UNDER: 9 (ON PAGE 9).. ITA NOS.604, 605 AND 324 SADVIDYA EDUCATIONAL INSTI TUTIONS MYSORE. PAGE 27 OF 32 THE ASSESSEE IS RUNNING AN EDUCATIONAL INSTITUTION AND IF PHILANTHROPIC PERSONS VOLUNTARILY DONATE FUNDS FOR EDUCATIONAL PURPOSE AND THEY HAVE PAID IT BY WAY OF CASH, THE ASSESSEE HAS RECEIVED THE SAME AND ISSUED A REC EIPT ACKNOWLEDGING THE SAID AMOUNT. AFTER RECEIPT OF TH E SAID AMOUNT, AN ENTRY IS MADE IN THE ACCOUNT BOOK OF THE TRUST. THEREAFTER, THE AMOUNT IS DEPOSITED IN THE BANK. T HEREFORE, IT IS NOT A CASE WHERE THE AMOUNTS RECEIVED ARE NOT ACCOUNTED FOR OR THERE IS ANY ATTEMPT NOT TO DISCLO SE THE INCOME. THE RECEIPT ISSUED CLEARLY DEMONSTRATES TH AT IT IS RECEIVED FOR THE PURPOSE OF BUILDING FUND. CLAUSE (D) OF SUB-SECTION (1) OF SECTION 11 OF THE ACT PROVIDES T HAT INCOME IN THE FORM OF VOLUNTARY CONTRIBUTION MADE WITH A S PECIFIC DIRECTION THAT THEY SHALL FORM PART OF THE CORPUS O F THE TRUST OR INSTITUTION, SHALL NOT BE INCLUDED IN THE TOTAL INCOME FOR THE PREVIOUS YEAR OF THE PERSON. THEREFORE, TO BE E LIGIBLE FOR THAT EXEMPTION, THE SAID CONTRIBUTION SHOULD BE TOW ARDS A PART OF THE CORPUS. THOUGH THE WORDS SPECIFIC DIR ECTION IS USED IN THE SAID PROVISION, THE LEGISLATURE CONSCIO USLY HAS NOT USED THE WORD IN WRITING. IN THE ABSENCE OF ANY WRITING, ONLY MEANS TO FIND OUT AS TO WHAT IS THE S PECIFIC DIRECTION CAN BE GATHERED BY CONSIDERING HOW THE RE CIPIENT OF THE AMOUNT HAS ACCOUNTED FOR IT. THE RECIPIENT H AS ACCOUNTED THE RECEIPT AS THE AMOUNT RECEIVED TOWARD S BUILDING FUNDS AND THEREAFTER, A SEPARATE ACCOUNT I S MAINTAINED FOR THE SAID AMOUNT. FROM THIS, IT COUL D BE INFERRED THAT THERE IS A SPECIFIC DIRECTION BY THE DONOR. THE SAID AMOUNT IS USED AS PART OF THE CORPUS. IT MAY BE POSSIBLE THAT, IN A GIVEN CASE, THE PROVISION MAY B E ABUSED AND UNACCOUNTED MONIES COULD BE CONVERTED INTO CORP US FUND WITHOUT FURNISHING THE PARTICULARS OF THE PERS ONS WHO ARE CONTRIBUTING AND TO AVOID TAX LIABILITY TO HAVE BENEFIT OF EXEMPTION, BUT THAT IS A QUESTION OF FACT. THE COU RT HAS TO DECIDE ON THE MATERIAL AVAILABLE ON RECORD, WHETHER THE SAID PROVISION IS ABUSED IN THE AFORESAID MANNER OR NOT. IN THE ABSENCE OF ANY MATERIAL TO SHOW THAT THE SAID P ROVISION IS ABUSED AND IF IT IS DEMONSTRATED THAT THE EDUCAT IONAL INSTITUTION HAS COLLECTED MONEY IN THE FORM OF VOLU NTARY CONTRIBUTIONS FROM PUBLIC AND MAY BE FROM THE PAREN TS OF THE STUDENTS WHO ARE STUDYING IN THE INSTITUTION AN D WHEN THEY HAVE ISSUED RECEIPTS ACKNOWLEDGING THE SAID AM OUNT TOWARDS BUILDING FUND AND MADE REQUISITE ENTRIES IN THE BOOKS AND DEPOSITED THE SAME IN THE BANK, IF THE CO URT IS SATISFIED WITH THE GENUINENESS OF THE TRANSACTION, IT IS WELL WITHIN THE POWER OF JUDICIAL AUTHORITY TO HOLD THAT THE ITA NOS.604, 605 AND 324 SADVIDYA EDUCATIONAL INSTI TUTIONS MYSORE. PAGE 28 OF 32 REQUIREMENT OF SECTION 11(1)(D) OF THE ACT IS FULFI LLED AND THE ASSESSEE IS ENTITLED TO BE EXEMPTED. 10. THUS, THE TWO APPELLATE AUTHORITIES HAVE TAKEN THIS VIEW IN THE PRESENT CASE. NO HARD AND FAST RULE CA N BE LAID DOWN. THE LEGAL POSITION CANNOT BE EXPRESSED IN A STRAIGHT JACKET FORM. IN THE FACTS OF THE CASE, WE ARE SATI SFIED FROM THE MATERIAL ON RECORD THAT THESE VOLUNTARY CONTRIB UTION MADE BY THE PUBLIC TO THE ASSESSEE WAS WITH A SPECI FIC DIRECTION TO USE THE SAME FOR BUILDING PURPOSE AND, THEREFORE, THE SAID DONATIONS SHALL FORM PART OF TH E CORPUS OF THE TRUST AND ASSESSEE IS ENTITLED TO THE BENEFI T UNDER SECTION 11 OF THE ACT 7.3.3. FURTHER, ANOTHER SIGNIFICANT FA CT WHICH WE HAVE NOTICED WAS THAT THE EDUCATIONAL INSTITUTION HAS BEEN DEFINED BY THE KARNATAKA EDUCATIONAL INSTITUTIONS (PROHIBIT ION OF CAPITATION FEE) ACT, 1984 AS UNDER: 2. DEFINITIONS.- IN THIS ACT, UNLESS THE CONTEXT O THERWISE REQUIRES,- (A) (C) EDUCATIONAL INSTITUTION MEANS ANY INSTITUTION BY WHATEVER NAME CALLED, WHETHER MANAGED BY GOVERNMENT , PRIVATE BODY, LOCAL AUTHORITY, TRUST, UNIVERSITY OR ANY OTHER PERSON CARRYING ON THE ACTIVITY OF IMPARTING EDUCAT ION IN MEDICINE OR ENGINEERING LEADING TO A DEGREE. 7.3.4. AS PER THE ASSESSEES ASSERTION, IT WAS RUNNING SEVERAL SCHOOLS STARTING FROM NURSERY TO PUC WHICH HAS BEEN ENDORSED BY THE AO IN THE ASSESSMENT ORDER FOR THE AY 2006- 07 THUS 4. SADVIDYA EDUCATIONAL INSTITUTIONS IS A REGISTER ED SOCIETY WHICH IS RUNNING SEVERAL EDUCATION INSTITUT IONS IN MYSORE CITY STARTING FROM NURSERY SCHOOL TO PUC. HOWEVER, AT PARA 22 OF THE SAID ORDER, THE AO HAD R ECORDED THAT 22. AS SEEN FROM THE ABOVE, WITHOUT HAVING ANY SA NCTION OF THE GOVT., THE ASSESSEE HAS FORCEFULLY COLLECTED CAPITATION FEE IN THE GARB OF COLLEGE DEVELOPMENT FEE. THE OBSERVATION ITA NOS.604, 605 AND 324 SADVIDYA EDUCATIONAL INSTI TUTIONS MYSORE. PAGE 29 OF 32 OF THE EDUCATIONAL INSTITUTION BY THE ASSESSING O FFICER IN THE ASSESSMENT ORDER CONTRADICTS THE CONCEPT OF THE ED UCATIONAL INSTITUTION DESCRIBED IN THE ABOVE MENTIONED ACT. THE QUESTION OF COLLECTING CAPITAL FEE WILL ARISE ONLY WHEN ANY INSTITUTION BY WHATEVER NAME CALLED, WHETHER MANAGE D BY GOVERNMENT, PRIVATE BODY, LOCAL AUTHORITY, TRUST , UNIVERSITY OR ANY OTHER PERSON CARRYING ON THE ACTI VITY OF IMPARTING EDUCATION IN MEDICINE OR ENGINEERING LEAD ING TO A DEGREE. . [COURTESY: KARNATAKA EDL. INSTITUTIONS (PROHBN. OF CAPITATION FEE) ACT, 1984]. HOWEVER, T HE PRESENT ASSESSEE HAS BEEN IMPARTING EDUCATION STARTING FRO M NURSERY TO PUC WHICH HAS BEEN ADMITTED BY THE AO IN THE ASS ESSMENT ORDER. THEREFORE, THE QUESTION OF ATTRIBUTING THAT THE ASSESSEE ALLEGEDLY COLLECTED CAPITATION FEES IN THE GUISE OF BUILDING FUND OR DEVELOPMENT FEE DOESNT ARISE. 7.4. TAKING INTO ACCOUNT THE FACTS AND CI RCUMSTANCES OF THE ISSUE AS DELIBERATED UPON IN THE FORE-GOING PAR AGRAPHS AND ALSO IN CONFORMITY WITH THE JUDICIAL VIEWS ON T HE ISSUE (SUPRA), ESPECIALLY (I) THE RULING OF THE HONBLE J URISDICTIONAL HIGH COURT IN THE CASE OF BHARATIYA SAMSKRITI VIDYA PITH TRUST (SUPRA) AND (II) THE FINDINGS OF THE EARLIER BENCH OF THIS TRIBUNAL IN THE CASE OF ACIT V. M/S. JSS MAHAVIDYAP EETHA (SUPRA), WE ARE OF THE VIEW THAT THE AUTHORITIES BE LOW WERE NOT JUSTIFIED TO DENY THE CLAIM OF THE ASSESSEE FOR EXE MPTION U/S 11 OF THE ACT IN RESPECT OF BUILDING FUND AS WELL AS COLLEGE DEVELOPMENT FUND. IT IS ORDERED ACCORDINGLY. 8. WE HAVE SINCE DECIDED THE ISSUES OF BU ILDING FUND AS WELL AS DEVELOPMENT FUND IN FAVOUR OF THE ASSESSE E (SUPRA) FOR ALL THE AYS UNDER DISPUTE, NAMELY, 2006-07, 2007-08 AND ITA NOS.604, 605 AND 324 SADVIDYA EDUCATIONAL INSTI TUTIONS MYSORE. PAGE 30 OF 32 2008-09, THE ALTERNATIVE GROUND, NAMELY, WHETHER TH E ASSESSEE IS ELIGIBLE FOR EXEMPTION U/S 11 OF THE AC T, IF THOSE FUNDS WERE UTILIZED TOWARDS THE OBJECT OF THE INSTI TUTION? BECOMES SUPERFLUOUS AND, THUS, THE SAME HAS NOT BEE N TAKEN UP FOR ADJUDICATION FOR ALL THE AYS UNDER DISPUTE. IT IS ORDERED ACCORDINGLY. A.Y 2007-08: 9. THE SECOND ISSUE RAISED BY THE ASSESSEE I S: WHETHER THE AMOUNT OF RS.49,02,517/-ADVANCED TO KAVERI CHAR ITABLE TRUST AMOUNTS TO APPLICATION OF INCOME FOR THE PURP OSES OF S. 11 OF THE ACT? 9.1. AT THE OUT-SET, WE WOULD LIKE TO POINT O UT THAT THE HONBLE DELHI HIGH COURT HAS, IN THE CASE OF DIT (E XEMPTION) V. ACME EDUCATIONAL SOCIETY REPORTED IN (2010) 326 ITR 146 (DELHI) ON AN IDENTICAL ISSUE TO THAT OF THE PRESEN T ONE, HELD THAT THE INTEREST-FREE LOAN GIVEN BY THE ASSESSEE-SOCIE TY TO THE OTHER SOCIETY DID NOT VIOLATE SECTION 13(1)(D) READ WITH SECTION 11(5) OF ACT, 1961, AS THE LOAN WAS NEITHER AN INV ESTMENT NOR A DEPOSIT. MOREOVER, BOTH SOCIETIES HAD SIMILAR OBJECTS AND WERE REGISTERED UNDER SECTION 12A OF THE ACT AND HA D APPROVALS UNDER SECTION 80G. IN CONFORMITY WITH THE JUDGMENT OF THE HONBLE DELHI HIGH COURT (SUPRA), WE ARE OF THE VIEW THAT THE ASSESSEE IS ENTITLED TO EXEMPTION. IN ESSENCE, THIS ISSUE IS DECIDED IN FAVOUR OF THE ASSESSEE. IT IS ORDERED ACCORDINGLY. 10. THE NEXT IDENTICAL GROUND RAISED BY THE ASSESSEE FOR ALL THE ASSESSMENT YEARS IS: WHETHER THE AUTHORITIES ITA NOS.604, 605 AND 324 SADVIDYA EDUCATIONAL INSTI TUTIONS MYSORE. PAGE 31 OF 32 BELOW WERE JUSTIFIED IN DENYING THE CLAIM OF DEPREC IATION AS APPLICATION OF INCOME U/S. 11 OF THE ACT? 10.1. INCIDENTALLY, A SIMILAR ISSUE TO THA T OF THE ISSUE UNDER DISPUTE CAME UP FOR CONSIDERATION BEFORE THE EARLIER BENCH OF THIS TRIBUNAL IN THE CASE OF ACIT V. SRI ADICHUNCHANAGIRI SHIKSHANA TRUST REPORTED IN (2013) 31 TAXMANN.COM 157 (BANGALORE TRIB.). AFTER ANALYSI NG THE ISSUE IN DEPTH, THE HONBLE BENCH HAD RECORDED ITS FINDINGS AS UNDER: 13THE TRIBUNAL IN THE ASSESSEES OWN CASE FOR THE ASSESSMENT YEAR 2006-07 AT PARAGRAPH 7 OF ITS ORDER HAS DECIDED THE ISSUE IN FAVOUR OF THE AS SESSEE. THE RELEVANT FINDING OF THE TRIBUNAL READS AS FOLLO WS: 7. WE HAVE HEARD BOTH THE PARTIES. WE HAVE IN THE EARLIER PARA REFERRED TO THE FINDS OF THE HONBLE BOMBAY HIGH CO URT IN THE CASE OF INSTITUTE OF BANKING (2003) 264 ITR 110 (BOM). WE HAVE ALSO GONE THROUGH THE DECISION OF THE JURISDICTIONAL HIG H COURT. THE HONBLE JURISDICTIONAL HIGH COURT HELD THAT THE AMO UNT OF DEPRECIATION DEBITED TO THE ACCOUNT OF CHARITABLE I NSTITUTION IS TO BE DEDUCTED TO ARRIVE AT AN AVAILABLE INCOME FROM CHAR ITABLE OR RELIGIOUS PURPOSES. FOLLOWING THE DECISION OF THE JURISDICTIONAL HIGH COURT, WE, THEREFORE, HOLD THAT THE DEPRECIATION IS TO BE DEDUCTED TO ARRIVE AT INCOME AVAILABLE TO CHARITABLE AND RELIGI OUS PURPOSES. 10.2. IN CONSONANCE WITH THE FINDINGS OF THE EARLIER BENCH OF THIS TRIBUNAL ON A SIMILAR ISSUE (SUPRA), WE DEC IDE THE ISSUE IN FAVOUR OF THE ASSESSEE FOR ALL THE AYS UNDER CON SIDERATION. 11. THE ISSUE OF CHARGING OF INTEREST U/S 234B OF THE ACT RAISED FOR ALL THE AYS UNDER DISPUTE IS NOT MAINTAI NABLE SINCE LEVY OF INTEREST U/S 234B IS MANDATORY AND CONSEQUE NTIAL IN NATURE. ACCORDINGLY, THIS GROUND OF APPEAL RAISED FOR ALL THE AYS UNDER CONSIDERATION IS DISMISSED. ITA NOS.604, 605 AND 324 SADVIDYA EDUCATIONAL INSTI TUTIONS MYSORE. PAGE 32 OF 32 12. IN THE RESULT : THE ASSESSEES APPEALS FOR THE AYS. 2006-07, 2007-08 AND 2008-09 ARE PARTLY ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 28 TH MARCH, 2014. SD/- SD/- (JASON P. BOAZ) (GEORGE GEORGE K) ACCOUNTANT MEMBER JUDICIAL MEMBER BANGALORE DATED 28 TH MARCH, 2014. VNODAN/SPS COPY TO: 1. THE APPELLANT 2. THE RESPONDENT 3. THE CONCERNED CIT(A) 4. THE CONCERNED CIT 5. THE DR, ITAT, BANGALORE 6. GUARD FILE BY ORDER SENIOR PRIVATE SECRETARY INCOME TAX APPELLATE TRIBUNAL, BANGALORE BENCHES, BANGALORE