Dy.DIT, (Exemptions)-II, Hyderabad V. Sri Saraswathi Vidya Peetham, Hyderabad

ITA 657/HYD/2013

• Counselvise Citation: [2013] 140 COUNSELVISE.COM (IT) 69714 (ITAT-HYDERABAD)
• Duration Of Justice: 3 month(s) 9 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 12-08-2013
• Appeal Filed By: Department
• Order Result: Allowed
• Bench Allotted: A
• Assessment Year: 2009-2010
• Appeal Filed On: 03-05-2013
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: AMISHA S GUPT
• Keywords: Benefit of exemption
• Section: 12A; 12AA; 11

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD BENCH A', HYDERABAD BEFORE SHRI CHANDRA POOJARI, ACCOUNTANT MEMBER AND SHRI SAKTIJIT DEY, JUDICIAL MEMBER ITA NO. 657/HYD/2013 A.Y. 2009-10 DY. DIRECTOR OF INCOME-TAX (EXEMPTION)-II, HYDERABAD. VS. SRI SARASWATHI VIDYA PEETHAM, HYDERABAD. PAN AABTS9169B. APPELLANT RESPONDENT ASSESSEE BY: SMT. AMISHA S. GUPT RESPONDENT BY: NONE DATE OF HEARING: 12.08.2013 DATE OF PRONOUNCEMENT: 12.08.2013 O R D E R PER CHANDRA POOJARI, AM: THIS APPEAL BY THE REVENUE IS DIRECTED AGAINST THE ORDER OF THE CIT(A)-IV, HYDERABAD DATED 19/02/2013 FOR THE ASSESSMENT YEAR 2009-10. 2. BRIEFLY THE FACTS OF THE CASE ARE THAT THE ASSESSEE COMPANY FILED ITS RETURN OF INCOME ON 27/10/2009 DECLARING NIL INCOME AFTER CLAIMING EXEMPTION U/S 1 1 OF THE ACT. THE ASSESSEE TRUST IS RUNNING 332 SCHOO LS ALL OVER ANDHRA PRADESH IMPARTING EDUCATION IN TELU GU MEDIUM FROM PRIMARY TO HIGH SCHOOL LEVEL. THE ASSESSEE IS A SOCIETY REGISTERED U/S 12AA OF THE AC T. 3. THE ASSESSING OFFICER OBSERVED FROM THE RECORDS THAT THOUGH THE SOCIETY'S GROSS ANNUAL RECEIPTS FOR THE IT A NO. 657/HYD/2013 SRI SARASWATHI VIDYA PEETHAM 2 YEAR UNDER CONSIDERATION EXCEEDED THE PRESCRIBED LI MIT OF RS. 1 CRORE, IT HAD NOT OBTAINED APPROVAL FROM T HE PRESCRIBED AUTHORITY U/S 10(23C)(VI) OF THE ACT. TH E ASSESSING OFFICER HELD THAT SINCE THE ASSESSEE WAS COVERED BY THE SPECIFIC PROVISIONS OF SEC.10(23C)(V I), THE GENERAL PROVISIONS OF SEC. 11 WERE NOT APPLICAB LE FOR IT. HENCE, HE DENIED THE CLAIM OF EXEMPTION AND BROUGHT THE EXCESS OF INCOME OVER EXPENDITURE TO TAX. 4. AGGRIEVED THE ASSESSEE CARRIED THE MATTER IN APPEAL BEFORE THE CIT(A). 5. THE CIT(A) OBSERVED THAT THE ASSESSEE IS ADMITTEDLY REGISTERED UNDER SEC. 12A BUT HAD NOT BE EN NOTIFIED U/S. 10(23C) OF THE ACT AND THE ALLOWABILI TY OF THE ALTERNATIVE CLAIM U/S 11 UNDER SIMILAR CIRCUMSTANCE S IS SUPPORTED BY THE FOLLOWING JUDICIAL PRONOUNCEMENTS: 1. CIT VS. BAR COUNCIL OF MAHARASTHTRA [1981] 130 ITR 28(SC) 2. AMERICAN HOTEL AND LODGING ASSOCIATION/ EDUCATIONAL INSTITUTE VS. CBDT (2008) (170 TAXMAN 306) (SC) 3. RAJASTHANI SIKSHA SAMITHI (ITA NO. 80 & 81/HYD/2008) 4. ST. THERESA'S CONVENT SOCIETY, HYDERABAD (ITA NO. 844/HYD/08) 5. ADIT(EXEMPTIONS) VS LOUIS EDUCATIONAL SOCIETY, (ITA NO 1456/HYD/2008 DT 26.12.2008) 6. AP SOCIETY FOR KNOWLEDGE (ITA NO. 843/HYD/09 9.10.2009) 6. THE CIT(A) NOTED THAT IT WAS HELD IN THESE CASES THAT ONCE ALL THE REQUISITE CONDITIONS FOR EXEMPTIO N IT A NO. 657/HYD/2013 SRI SARASWATHI VIDYA PEETHAM 3 UNDER SEC. 11 WERE MET, EVEN IF THE CONDITIONS UNDE R SEC. 10(23C)(VI) HAD NOT BEEN COMPLIED WITH, THERE WOULD BE NO BAR TO SEEK EXEMPTION UNDER SEC. 11. 7. THE CIT(A) FURTHER NOTED THAT THE JURISDICTIONAL ITAT HAS HELD THAT IF DONATIONS ARE RECEIVED COMPULSORILY FOR THE ADMISSION OF STUDENTS, BY WHATEVER NAME CALLED, I.E. DONATION, BUILDING FUND, AUDITORIUM FUND, ETC, OVER AND ABOVE THE PRESCRIBED FEE, FROM THE STUDENTS, THE ASSESSEE WOULD NOT BE ENTITLED FRO EXEMPTION U/S 10(23C) OR U/S 11. THIS VIEW HAS REPEATEDLY BEEN EXPRESSED BY THE ITAT AS IN THE FOLLOWING CASES: I. VASAVI ACADEMY OF EDUCATION (ITA NO. 1133/HYD/2006, DATED 15.4.2009 II. JAMIA NIZAMIA (ITA NO. 763/HYD/2007, DATED 30.6.2008 III. INTERNATIOAL EDUCATIONAL ACADEMY (ITA NO. 494/HYD/2007) IV. SRI VENKATA SAI EDUCATIONAL SOCIETY (ITA NO. 1440/HYD/2011, DATED 9.4.2012) 8. FOLLOWING THE ABOVE DECISIONS OF THE JURISDICTIO NAL ITAT, THE CIT(A) HELD THAT IF THE ASSESSING OFFICE R FINDS THAT BESIDES FULFILLING OTHER PREREQUISITES F OR EXEMPTION U/S. 11, AS STIPULATED IN SECTIONS 11 TO 13 OF LE ACT, THE ASSESSEE DID NOT CHARGE ANY MONEY, BY WHATEVER NAME IT IS CALL ED, I.E. DONATION, BUILDING FUND, AUDITORIUM FEE ETC., OVER AND ABOVE THE PRESCRIBED FEE FOR THE ADMISSION OF THE STUDENT, THE ASSESSEE WOUL D BE ENTITLED FOR EXEMPTION U/S. 11, EVEN IF THE NOTIFICATION U/S. 10(23C) OF THE ACT HAS NOT OBTAIN ED BY IT. THE GROUNDS TAKEN IN THIS ISSUE ARE, THEREFORE, IT A NO. 657/HYD/2013 SRI SARASWATHI VIDYA PEETHAM 4 DECIDED IN FAVOUR OF THE ASSESSEE, SUBJECT TO VERIFICATION OF FULFILMENT OF THE ABOVE CONDITIONS. 9. AGGRIEVED BY THE ORDER OF THE CIT(A), THE REVENU E IS IN APPEAL BEFORE RAISING THE FOLLOWING GROUNDS O F APPEAL: 1. THE ORDER OF THE CIT(A) IS ERRONEOUS BOTH ON FACTS AND IN LAW. 2. THE CIT(A) ERRED IN HOLDING THAT THE ASSESSEE IS ELIGIBLE FOR CLAIM OF EXEMPTION U/S 11 OF THE IT ACT, 1961 EVEN IN THE ABSENCE OF APPROVAL UNDER SUB-CLAUSE (VI) TO SECTION 10(23C) OF THE IT ACT, 1961. 3. THE CIT(A) OUGHT TO HAVE APPRECIATED THE FACT THAT APPROVAL UNDER SUB-SECTION (VI) TO THE SECTION 10(23C) IS DISTINCT FROM REGISTRATION U/S 12A OF THE ACT. 4. THE CIT(A) FAILED TO SEE THAT SUB-CLAUSE (VI) OF THE SECTION 10(23C) AS INSERTED BY THE FINANCE ACT, 1998 W.E.F. 01/04/1999 STATES THAT THE UNIVERSITY OR OTHER EDUCATIONAL INSTITUTION EXISTIN G SOLELY FOR EDUCATIONAL PURPOSE, AND WHICH MAY BE APPROVED BY THE PRESCRIBED AUTHORITY. THE ISSUE IS EXPLICITLY DEALT WITH BY THE ACT ITSELF AND THE INTENTION OF THE LEGISLATURE IS QUITE CLEAR FROM IT . 5. THE CIT(A) OUGHT TO HAVE APPRECIATED THE FACT THAT OBTAINING APPROVAL FROM THE PRESCRIBED AUTHORITY IS MANDATORY AS PER THE PLAIN MEANING OF SECTION 10(23C)(VI) OF THE IT ACT, 1961 WHENEVER THE AGGREGATE GROSS RECEIPTS OF EDUCATIONAL INSTITUTION RUN BY THE ASSESSEE SOCIETY EXCEEDS RS. 1 CRORE. 6. FROM THE OBSERVATIONS MADE AND THE SPECIFIC DIRECTION GIVEN BY THE CIT(A) VIDE PARA 7 OF HER SAID ORDER, SHE HAS PRACTICALLY SET ASIDE THE ASSESSMENT ON THAT ISSUE TO THE FILE OF THE ASSESSING OFFICER, WHEREAS THE CIT(A) HAS NO SUCH POWER AS PER THE PRESENT PROVISIONS OF THE IT ACT, 1961. IT A NO. 657/HYD/2013 SRI SARASWATHI VIDYA PEETHAM 5 10. NONE APPEARED ON-BEHALF OF THE RESPONDENT ASSESSEE AT THE TIME OF HEARING OF THIS APPEAL. THEREFORE, WE HAVE HEARD THE LEARNED DR AND PERUSED THE MATERIAL ON RECORD AND HAVE GONE THROUGH THE ORDERS OF THE AUTHORITIES BELOW. 11. REGARDING BENEFIT OF EXEMPTION U/S. 11 FOR COLLECTION OF FEE IN CASE OF PRESCRIBED LIMIT BY TH E STATE GOVERNMENT, WE THAT FIND SIMILAR ISSUE WAS CONSIDERED BY THIS TRIBUNAL IN THE CASE OF VASAVI ACADEMY OF EDUCATION, HYDERABAD IN ITA NO. 1794/HYD/ 2008 DATED 4 TH FEBRUARY, 2010 WHICH APPLIES SQUARELY TO THE FACTS OF THE PRESENT CASE WHEREIN THE TRIBUNAL IN PARAS 3 AND 4 OBSERVED AS FOLLOWS: 3. AFTER HEARING BOTH THE PARTIES, WE ARE OF THE OPINION THAT THIS ISSUE HAS ALREADY BEEN DECIDED BY THE TRIBUNAL VIDE ITS ORDER DATED 29.1.2009 IN ASSESSEES OWN CASE FOR THE ASSESSMENT YEAR 2005-06 IN ITA NO. 1120/HYD/2009 BY HOLDING AS FOLLOWS: WE HAVE HEARD BOTH THE PARTIES AND PERUSED THE MATERIAL ON RECORD. THE LEARNED AUTHORIZED REPRESENTATIVE FOR THE ASSESSEE SUBMITTED THAT THIS ISSUE COVERED IN FAVOUR OF THE ASSESSEE BY THE ORDER OF THE HYDERABAD BENCH A OF THE TRIBUNAL DATED 15.4.2009 IN ASSESSEES OWN CASES IN ITA NO. 1133/HYD/2006 FOR THE ASSESSMENT YEARS 2003-04 AND ORDER DATED 17.4.2009 IN ITA NO. 1206/HYD/2007 FOR THE ASSESSMENT YEAR 2004-05. HOWEVER, WE FIND THAT THE CONSTITUTIONAL BENCH OF APEX COURT IN THE CASE OF T.M.A. PAI FOUNDATIONS AND OTHERS VS. STATE OF KARNATAKA & OTHERS (2002) 8 SCC 481 EXAMINED THE ISSUE OF COLLECTION IT A NO. 657/HYD/2013 SRI SARASWATHI VIDYA PEETHAM 6 OF CAPITATION FEES FOR THE ADMISSION OF STUDENTS OVER AND ABOVE FEES PRESCRIBED BY THE PRIVATE INSTITUTION AND HELD THAT THE INSTITUTION WHICH ARE COLLECTING CAPITATION FEES FOR ADMISSION OF STUDENTS OVER AND ABOVE THE FEES PRESCRIBED CANNOT BE CONSTRUED AS CHARITABLE/EDUCATION INSTITUTION. APEX COURT FURTHER OBSERVED THAT THE FEES COLLECTED OVER AND ABOVE THE PRESCRIBED FEE FOR ADMISSION OF THE STUDENT HAS TO BE CONSTRUCTED AS CAPITATION FEE. THE APEX COURT, FURTHER OBSERVED THAT THE CONCERNED UNIVERSITY AND REGULATED BODY HAS TO TAKE ACTION FOR WITHDRAWAL OF THE RECOGNITION IN CASE IT IS FOUND THAT THE EDUCATIONAL INSTITUTION RECEIVED ANY MONEY OVER AND ABOVE THE FEES PRESCRIBED FOR THE COURSES. SAME VIEW WAS TAKEN BY APEX COURT IN THE CASE OF ISLAMIC ACADEMY OF EDUCATION AND ANOTHER VS. STATE OF KARNATAKA & ANOTHER (2003) 6 SCC 697. IF THE DONATIONS WERE RECEIVED COMPULSORILY FOR ADMISSION OF STUDENTS, THE ASSESSEE IS NOT ENTITLED FOR EXEMPTION EITHER U/S 10(23C) OR U/S 11 OF THE IT ACT. SINCE THE LOWER AUTHORITIES WERE NOT EXAMINED THE COLLECTION OF CAPITATION FEES IN THIS CASE, IN OUR OPINION, THE MATTER REQUIRES TO BE EXAMINED BY THE ASSESSING OFFICER WHETHER THE ASSESSEE IS COLLECTING THE CAPITATION FEES FROM STUDENTS OR NOT AND IT IS NECESSARY FOR BRINGING THE ACTUAL FACTS ON RECORD FOR DECIDING THE ISSUE EFFECTIVELY. SIMILAR VIEW WAS TAKEN BY US IN THE CASE OF M/S. JAMIA NIZAMIA IN ITA NO.763/HYD/2007 DATED 30.6.2008, IN THE CASE OF INTERNATIONAL EDUCATIONAL ACADEMY, HYDERABAD IN ITA NO.494/HYD/2007 AND 518/HYD/2008 FOR THE ASSESSMENT YEARS 2002- 2003 AND 2004-05 AND SRI SAI SUDHIR EDUCATIONAL SOCIETY, HYDERABAD IN ITA NO.999/HYD/20-06 FOR THE ASSESSMENT YEAR 2003-04. THEREFORE, WE SET ASIDE THE ORDERS OF THE LOWER AUTHORITIES AND REMIT BACK THE MATTER TO THE FILE OF ASSESSING OFFICER WITH A DIRECTION TO ASSESSING OFFICER THAT HE SHALL RECONSIDER THE ENTIRE ISSUE IN THE LIGHT OF JUDGEMENT OF IT A NO. 657/HYD/2013 SRI SARASWATHI VIDYA PEETHAM 7 SUPREME COURT IN THE CASE OF M/S ISLAMIC ACADEMY OF EDUCATION & ANOTHER VS. STATE OF KARNATAKA AND ANOTHER (SUPRA), AND IN THE CASED OF T.M.A. PAI FOUNDATION AND OTHERS VS. STATE OF KARNATAKA AND OTHERS (SUPRA), AND FIND OUT WHETHER THE ASSESSEE HAS RECEIVED ANY MONEY OVER AND ABOVE THE FEES PRESCRIBED AND THEREAFTER DECIDE THE ISSUE AFRESH IN ACCORDANCE WITH LAW AFTER GIVING REASONABLE OPPORTUNITY OF HEARING TO THE ASSESSEE . WE MAKE IT CLEAR THAT THE ASSESSEE IS NOT ENTITLED FOR EXEMPTION EITHER U/S 11 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. 4. RESPECTFULLY FOLLOWING THE RATIO LAID DOWN BY THE TRIBUNAL IN THE ABOVE ORDER, WE SET ASIDE THE ISSUE IN DISPUTE TO THE FILE OF ASSESSING OFFICER ON SIMILAR DIRECTIONS FOR FRESH CONSIDERATION. 12. IN VIEW OF THE ABOVE DISCUSSION, WE SET ASIDE T HE ORDER OF THE CIT(A) AND REMIT THE ISSUE TO THE FILE OF THE ASSESSING OFFICER WITH A DIRECTION TO CONSIDER THE ENTIRE ISSUE AFRESH AND VERIFY THE RECORDS WHETHER THE ASSESSEE COLLECTED CAPITATION FEES FROM STUDENTS FO R THE PURPOSE OF GIVING ADMISSION. IF SO, THE ASSESSEE I S NOT ENTITLED FOR DEDUCTION U/S. 11 OF THE ACT. 13. IN THE RESULT, APPEAL OF THE REVENUE IS ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN OPEN COURT ON 12 TH AUGUST, 2013. SD/- (SAKTIJIT DEY) JUDICIAL MEMBER SD/- (CHANDRA POOJARI) ACCOUNTANT MEMBER HYDERABAD, DATED 12 TH AUGUST, 2013 IT A NO. 657/HYD/2013 SRI SARASWATHI VIDYA PEETHAM 8 KV COPY FORWARDED TO: 1. DDIT(E)-II, ROOM NO. 307A, 3 RD FLOOR, AAYAKAR BHAVAN, BASHEERBAGH, HYDERABAD 2. SRI SARASWATHI VIDYA PEETHAM, 6-3-597/A/7, VENKATARAMA COLONY, HYDERABAD. 3. THE CIT(A)-IV, HYDERABAD 4. THE DIT (EXEMPTIONS), HYDERABAD 5. THE DR, ITAT, HYDERABAD.