THE SOUTH INDIAN EDUCATON SOCIETY, MUMBAI V. DCIT CEN CIR CIR 10, MUMBAI

ITA 6675/MUM/2014

• Counselvise Citation: [2015] 140 COUNSELVISE.COM (IT) 101060 (ITAT-MUMBAI)
• Duration Of Justice: 10 month(s) 11 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 16-09-2015
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: E
• Assessment Year: 2003-2004
• Appeal Filed On: 05-11-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: MANJUNATHA SWAMY
• Keywords: Depreciation; Charitable institution; Cancellation of registration; Capital expenditure
• Section: 143(3); 133A; 80G; 12A; 12AA; 132

Judgement Text

`` , , IN THE INCOME TAX APPELLATE TRIBUNAL E BENCH, MUMBAI BEFORE SHRI N.K . BILLAIYA, ACCOUNTANT MEMBER AND RAM L AL NEGI, JUDICIAL MEMBER SIPHONED / I .T.A. NO. 6675/MUM/2014 ( / ASSESSMENT YEAR :2003 - 04 THE SOUTH INDIA N EDUCATION SOCIETY, K.A. SUBRAMANIAM ROAD, OPP. INDIAN GYMKHANA, MATUNGA, MUMBAI - 400 019 / VS. THE DCIT, CENTRAL CIRCLE - 10 CGO BLDG., MUMBAI - 400 020 / I .T.A. NO. 65 6 3/MUM/2014 ( / ASSESSMENT YEAR :2003 - 04 THE DCIT, CENTRAL CIRCLE - 10 CGO BLDG., MUMBAI - 400 020 / VS. THE SOUTH INDIA N EDUCATION SOCIETY, K.A. SUBRAMANIAM ROAD, OPP. INDIAN GYMKHANA, MATUNGA, MUMBAI - 400 019 / I .T.A. NO. 6676/MUM/2014 ( / ASSESSMENT YEAR :2005 - 06 THE SOUTH INDIA N EDUCATION SOCIETY, K.A. SUBRAMANIAM ROAD, OPP. INDIAN GYMKHANA, MATUNGA, MUMBAI - 400 019 / VS. THE DCIT, CENTRAL CIRCLE - 10 CGO BLDG., MUMBAI - 400 020 / I .T.A. NO. 66 03 /MUM/2014 ( / ASSESSMENT YEAR :2005 - 06 THE DCIT, CENTRAL CIRCLE - 10 CGO BLDG., MUMBAI - 400 020 / VS. THE SOUTH INDIAN EDUCATION SOCIETY, K.A. SUBRAMANIAM ROAD, OPP. INDIAN GYMKHANA, THE SOUTH INDIAN EDUCATION SOCIETY 2 MATUNGA, MUMBAI - 400 019 / I .T.A. NO. 667 7 /MUM/2014 ( / ASSESSMENT YEAR :200 6 - 0 7 THE SOUTH INDIA N EDUCATION SOCIETY, K.A. SUBRAMANIAM ROAD, OPP. INDIAN GYMKHANA, MATUNGA, MUMBAI - 400 019 / VS. THE DCIT, CENTRAL CIRCLE - 10 CGO BLDG., MUMBAI - 400 020 / I .T.A. NO. 66 04 /MUM/2014 ( / ASSESSMENT YEAR :200 6 - 0 7 THE DCIT, CENTRAL CIRCLE - 10 CGO BLDG., MUMBAI - 400 020 / VS. THE SOUTH INDIAN EDUCATION SOCIETY, K.A. SUBRAMANIAM ROAD, OPP. INDIAN GYMKHANA, MATUNGA, MUMBAI - 400 019 / I .T.A. NO. 667 8 /MUM/2014 ( / ASSESSMENT YEAR :200 7 - 0 8 THE SOUTH INDIA N EDUCATION SOCIETY, K.A. SUBRAMANIAM ROAD, OPP. INDIAN GYMKHANA, MATUNGA, MUMBAI - 400 019 / VS. THE DCIT, CENTRAL CIRCLE - 10 CGO BLDG., MUMBAI - 400 020 / I .T.A. NO. 66 05 /MUM/2014 ( / ASSESSMENT YEAR :200 7 - 0 8 THE DCIT, CENTRAL CIRCLE - 10 CGO BLDG., MUMBAI - 400 020 / VS. THE SOUTH INDIA N EDUCATION SOCIETY, K.A. SUBRAMANIAM ROAD, OPP. INDIAN GYMKHANA, MATUNGA, MUMBAI - 400 019 / I .T.A. NO. 667 9 & 6680 /MUM/2014 ( / ASSESSMENT YEAR : 200 8 - 0 9 THE SOUTH INDIAN EDUCATION SOCIETY 3 THE SOUTH INDIA N EDUCATION SOCIETY, K.A. SUBRAMANIAM ROAD, OPP. INDIAN GYMKHANA, MATUNGA, MUMBAI - 400 019 / VS. THE DCIT, CENTRAL CIRCLE - 10 CGO BLDG., MUMBAI - 400 020 / I .T.A. NO. 6 5 6 4 & 6606 /MUM/2014 ( / ASSESSMENT YEAR :200 8 - 0 9 THE DCIT, CENTRAL CIRCLE - 10 CGO BLDG., MUMBAI - 400 020 / VS. THE SOUTH INDIAN EDUCATION SOCIETY, K.A. SUBRAMANIAM ROAD, OPP. INDIAN GYMKHANA, MATUNGA, MUMBAI - 400 019 / I .T.A. NO. 66 81 /MUM/2014 ( / ASSESSMENT YEAR :200 9 - 1 0 THE SOUTH INDIA N EDUCATION SOCIETY, K.A. SUBRAMANIAM ROAD, OPP. INDIAN GYMKHANA, MATUNGA, MUMBAI - 400 019 / VS. THE DCIT, CENTRAL CIRCLE - 10 CGO BLDG., MUMBAI - 400 020 / I .T.A. NO. 66 07 /MUM/2014 ( / ASSESSMENT YEAR :200 9 - 1 0 THE DCIT, CENTRAL CIRCLE - 10 CGO BLDG., MUMBAI - 400 020 / VS. THE SOUTH INDIAN EDUCATION SOCIETY, K.A. SUBRAMANIAM ROAD, OPP. INDIAN GYMKHANA, MATUNGA, MUMBAI - 400 019 / I .T.A. NO. 66 82 /MUM/2014 ( / ASSESSMENT YEAR :20 1 0 - 11 THE SOUTH INDIA N EDUCATION SOCIETY, K.A. SUBRAMANIAM ROAD, OPP. INDIAN GYMKHANA, MATUNGA, / VS. THE DCIT, CENTRAL CIRCLE - 10 CGO BLDG., MUMBAI - 400 020 THE SOUTH INDIAN EDUCATION SOCIETY 4 MUMBAI - 400 019 / I .T.A. NO. 66 08 /MUM/2014 ( / ASSESSMENT YEAR :20 1 0 - 11 THE DCIT, CENTRAL CIRCLE - 10 CGO BLDG., MUMBAI - 400 020 / VS. THE SOUTH INDIAN EDUCATION SOCIETY, K.A. SUBRAMANIAM ROAD, OPP. INDIAN GYMKHANA, MATUNGA, MUMBAI - 400 019 / I .T.A. NO. 66 83 /MUM/2014 ( / ASSESSMENT YEAR :20 11 - 12 THE SOUTH INDIA N EDUCATION SOCIETY, K.A. SUBRAMANIAM ROAD, OPP. INDIAN GYMKHANA, MATUNGA, MUMBAI - 400 019 / VS. THE DCIT, CENTRAL CIRCLE - 10 CGO BLDG., MUMBAI - 400 020 / I .T.A. NO. 66 09 /MUM/2014 ( / ASSESSMENT YEAR :20 11 - 12 THE DCIT, CENTRAL CIRCLE - 10 CGO BLDG., MUMBAI - 400 020 / VS. THE SOUTH INDIAN EDUCATION SOCIETY, K.A. SUBRAMANIAM ROAD, OPP. INDIAN GYMKHANA, MATUNGA, MUMBAI - 400 019 ./ ./ PAN/GIR NO. : ( / APPELLANT ) .. ( / RESPONDENT ) / A SSESSEE BY: SHRI VIJAY MEHTA SHRI PARESH SHAPARIA / REVENUE BY: SHRI MANJUNATHA SWAMY / DATE OF HEARING : 3 1 .0 8 .2015 / DATE OF PRONOUNCEMENT : 16 .0 9 .2015 / O R D E R THE SOUTH INDIAN EDUCATION SOCIETY 5 PER N.K. BILLAIYA, AM: THE CAPTIONED APPEALS ARE BY THE ASSESSEE AND THE REVENUE DIRECTED AGAINST THE ORDER OF THE LD. CIT(A) - 37, MUMBAI PERTAINING TO ASSESSMENT YEARS 2003 - 04 AND 2005 - 06 TO 2011 - 12. THESE BUNCH OF APPEALS WERE HEARD TOGETHER . A S COMMON ISSUES ARE INVOLVED IN THE APPEALS FILED BY THE ASSESSEE AS WELL AS THE REVENUE AND THEREFORE THEY ARE DISPOSED OF BY T HIS COMMON ORDER FOR THE SAKE OF CONVENIENCE AND BREVITY. 2. REPRESENTATIVES OF BOTH SIDES ARGUED THEIR CASES AT LENGTH. THE LD. COUNSEL FOR THE ASSESSEE TOOK US TO THE RELEVANT DOCUMENTARY EVIDENCES FILED IN THE FORM OF PAPER BOOK. 3. WE HAVE GIVEN A VERY THOUGHTFUL CONSIDERATION TO THE SUBMISSIONS MADE BY THE REPRESENTATIVES. WE HAVE ALSO CAREFULLY GONE THROUGH THE RELEVANT DOCUMENTARY EVIDENCES QUA THE ISSUES. WE HAVE ALSO PERUSED THE ORDERS OF THE AUTHORITIES BELOW. 4. BRIEFLY STATED THE FACTS O F THE CASE ARE THAT THE ASSESSEE - SOCIETY WAS FORMED IN 1932 WITH THE ONLY AIM AND OBJECT OF RUNNING EDUCATIONAL INSTITUTIONS. THE ASSESSEE IS IMPARTING EDUCATION THROUGH VARIOUS HIGH SCHOOLS, DEGREE COLLEGES OF COMMERCE AND SCIENCE, MANAGEMENT STUDIES IN T ECHNOLOGY, P ACK AG ING ETC. AT VARIOUS PLACES IN MUMBAI AND NAVI MUMBAI. 4.1. THE ASSESSEE IS A REGISTERED SOCIETY UNDER SOCIETIES REGISTRATION ACT, XXI OF 1860 DATED 21.4.1932 AND IS ALSO REGISTERED UNDER THE BOMBAY PUBLIC TRUST ACT, 1950. THE ASSESSEE - SOCIETY HAS THE SOUTH INDIAN EDUCATION SOCIETY 6 BEEN GRANTED CERTIFICATE U/S. 80G VIDE ORDER NO. DIT(E)/MC/80G/2430/2009 - 10 DATED 29.5.2009 FOR THE PERIOD 1.4.2009 TO 31.3.2012. IT IS ALSO AN APPROVED INSTITUTION U/S. 35(1)(II) OF THE ACT VIDE NOTIFICATION NO. 39/2009 DATED 28.4.2009. 4. 2. AS MENTIONED ELSEWHERE, THE ASSESSEE - SOCIETY IS RUNNING VARIOUS SECTIONS, COLLEGES AND INSTITUTIONS AND HAS CLAIMED EXEMPTIONS U/S. 10(22) OF THE ACT WHICH IS NOW 10(23C)(IIIAB). THE FOLLOWING CHART WILL EXPLAIN THE POSITION CLEARLY. A.Y SECTION 10(22) ORDER U/S DATED REMARK 1995 - 96 YES 250 ITAT 30/4/1998 28/10/2003 NO APPEAL PREFERRED BY DEPARTMENT BEFORE HIGH COURT. HENCE, FINALITY ACHIEVED. 1996 - 97 YES 143(3) 31/3/1999 1997 - 98 YES 143(3) 20/5/1999 1998 - 99 YES 143(3) 04/01/2001 2003 - 04 YES 143(3) 30/03/2006 2003 - 04 NO 143(3) R.W.S. 147 30/12/2010 APPEAL PENDING BEFORE CIT(A) 2004 - 05 YES 143(3) 250 28/12/2006 10/7/2008 NO APPEAL PREFERRED BY DEPARTMENT BEFORE ITAT. HENCE, FINALITY ACHIEVED 2005 - 06 YES 143(3) 28/11/2007 2006 - 07 YES 143(3) 05/12/2008 2007 - 08 2007 - 08 NOT BY AO ALLOWED BY CIT(A) 143(3) 250 30/12/2009 7/12/2010 NO APPEAL PREFERRED BY DEPARTMENT BEFORE ITAT. HENCE, FINALITY ACHIEVED 4.3. AS CAN BE SEEN FROM THE AFOREMENTIONED CHART, EXEMPTION IN A.Y. 2007 - 08 WAS GRANTED BY THE LD. CIT(A) VIDE ORDER DATED THE SOUTH INDIAN EDUCATION SOCIETY 7 7.12.2010 AND NO APPEAL HAS BEEN FILED AGAINST THIS ORDER OF THE LD. CIT(A). 4.4. FOR ASSESSMENT YEAR 2008 - 09, THE FIRST APPELLATE AUTHO RITY VIDE HIS ORDER DATED 28.8.29014 WHILE DISPOSING THE APPEALS FILED AGAINST THE ASSESSMENT ORDERS MADE U/S. 153C R.W. SEC. 143(3) OF THE ACT FOR ASSESSMENT YEAR 2005 - 06 TO 2011 - 12 DID NOT ALLOW EXEMPTION U/S. 10(23C)(IIIAB) OF THE ACT. THUS THE FIRST G RIEVANCE RELATES TO NON - GRANTING OF EXEMPTION U/S. 10(23C)(IIIAB). 4.5. THE SECOND ISSUE RELATES TO THE CLAIM OF EXEMPTION U/S. 11 OF THE ACT. THE FACTS ON RECORD SHOW THAT THE EXEMPTION U/S. 11 OF THE ACT WAS GRANTED TO THE ASSESSEE WHICH CAN BE UNDERSTOOD CLEARLY BY THE FOLLOWING CHART: A.Y EXEMPTION U/S. 11 GRANTED ORDER U/S. DATED 1995 - 96 NOT CLAIMED AS EXEMPTION U/S. 10(22) WAS GRANTED 250 & BY ITA 30/4/1998 & 28/10/2003 1996 - 97 NOT CLAIMED AS EXEMPTION U/S. 10(22) WAS GRANTED 143(3) 31/3/1999 1997 - 98 YES 143(3) 20/5/1999 1998 - 99 YES 143(3) 04.1.2001 2003 - 04 YES 143(3)(ORIGINAL ASSESSMENT) 30/3/2006 2003 - 04 (REASSESSMENT) NO 143(3)RWS 147 30/12/2010 2004 - 05 NOT BY AO BUT CIT(A) NOT ALLOWED CORPUS DONATION U/S. 11(1)(D) BUT ALLOWED OTHER INCOME U/S. 11 AND EXEMPTION U/S. 12(23C) ALSO ALLOWED. 250 10/7/2008 2005 - 06 YES 143(3) 28/11/2007 2006 - 07 YES 143(3) 5/12/2008 2007 - 08 NOT BY AO BUT ALLOWED BY CIT(A) 143(3) 250 30/12/2009 7/12/2010 THE SOUTH INDIAN EDUCATION SOCIETY 8 4.6. IT WOULD BE PERTINENT TO MENTION HERE THAT THERE WAS A SURVEY OPERATION U/S. 133A OF THE ACT ON 11.5.2010 IN THE CASE OF THE ASSESSEE AND SOME OF THE MANAGING COUNSEL MEMBERS WERE SEARCHED U/S. 132 OF THE ACT. 4.7. DURING THE COURSE OF THE SEARCH IT WAS NOTICED BY THE DEPARTMENT THAT THE ASSESSEE HAS BEEN ACCEPTING CAPITATION FEES FROM ITS STUDENTS. THE AUTHORITIES CAME TO KNOW THE MODUS OPERANDI WHICH WAS LIKE WHERE THE STUDENTS PAID CAPITATION FEES IN CHEQUE, THE SAME WAS ACCOUNTED FOR BUT WHERE THE CAPITATION FEES WAS PAID IN CASH, THE SAME WAS RO U TED THROUGH CHEQUE BY TAKING DONATIONS FROM PARTIES IN LIEU OF CASH . FURTHER, SUCH CAPITATION FEES WAS CLASSIFIED INTO TWO CATEGORIES, ( I ) RECEIPTED I.E. WHERE REC EIPTS WERE ISSUED WHICH ARE DULY FOUND REFLECTED IN THE BOOKS OF ACCOUNT AND (II) NON - RECEIPTED I.E. IN CASES WHERE RECEIPTS WERE NOT ISSUED. THIS NON - RECEIPTED CAPITATION FEES WAS BROUGHT BACK SUBSEQUENTLY BY ACCEPTING CHEQUES FROM THIRD PARTIES IN EXCH ANGE OF UNACCOUNTED CAPITATION FEES 4.8. SINCE THE REVENUE AUTHORITIES WERE OF THE FIRM BELIEF THAT THE ASSESSEE HAS BEEN TAKING CAPITATION FEES THEREBY MAKING THE INSTITUTION A PROFIT MAKING INSTITUTION. THE ASSESSEE WAS DENIED THE BENEFITS OF EXEMPTION U/S. 11 ALSO. 5 . THE THIRD ISSUE RELATES TO THE ADDITIONS MADE ON ACCOUNT OF ANONYMOUS DONATION U/S. 115BBC OF THE ACT. 5.1. WE ALSO FIND THAT THE FIRST APPELLATE AUTHORITY HAS ALLOWED THE CLAIM U/S. 11 OF THE ACT IN RESPECT OF RECEIPTS OTHER THAN CAPIT ATION FEES. THE DEPARTMENT HAS PREFERRED AN APPEAL AGAINST THIS ACTION OF THE SOUTH INDIAN EDUCATION SOCIETY 9 THE LD. CIT(A) AND THE ASSESSEE IS IN APPEAL AGAINST THE REJECTION OF ITS CLAIM U/S. 10(23C)(IIIAB) OF THE ACT AS WELL AS U/S. 11 OF THE ACT. 6. WE WILL FIRST TAKE UP THE ISSUE REL ATING TO THE GRANTING OF EXEMPTION U/S. 10(23C) OF THE ACT. THE PROVISIONS OF SEC. 10(23C)(IIIAB) OF THE ACT READ AS UNDER: 10(23C)(IIIAB) ANY UNIVERSITY OR OTHER EDUCATIONAL INSTITUTION EXISTING SOLELY FOR EDUCATIONAL PURPOSES AND NOT FOR PURPOSES OF PROFIT AND WHICH IS WHOLLY OR SUBSTANTIALLY FINANCED BY THE GOVERNMENT, OR 6.1. THE AFOREMENTIONED PROVISION WERE SUBSTITUTED FOR THE PROVISIONS OF SEC. 10(22) OF THE ACT. A PERUSAL OF THE AFOREMENTIONED PROVISION SHOWS THAT IN ORDER TO CLAIM EXEMPTI ON, THE ASSESSEE IS REQUIRED TO MEET THE FOLLOWING THREE CONDITIONS: A) INSTITUTION SHOULD SOLELY EXIST FOR PURPOSES OF EDUCATIONAL PURPOSES. B) INSTITUTION SHOULD NOT EXIST FOR THE PURPOSES OF PROFIT C) INSTITUTION SHOULD BE WHOLLY OR SUBSTANTIALLY FIN ANCED BY THE GOVERNMENT . NOW LET US SEE WHETHER THE ASSESSEE FULFILLS ALL THESE MANDATORY CONDITIONS OR NOT. IT IS CLEAR THAT THE INSTITUTION SHOULD EXIST FOR THE PURPOSES OF EDUCATION. THUS THE PROVISION DOES NOT PROHIBIT THE INSTITUTION FROM GENERATING SURPLUS FROM ITS ACTIVITIES. IT IS AN UNDISPUTED FACT THAT THE ASSESSEE - SOCIETY IS ENGAGED IN IMPARTING EDUCATION SINCE ITS IN CEPTION FROM THE YEAR 1932. THE ONLY REASON FOR DENYING THE EXEMPTION IS THAT DURING THE COURSE OF THE SEARCH THE SOUTH INDIAN EDUCATION SOCIETY 10 PROCEEDINGS, IT C AME TO THE NOTICE OF THE DEPARTMENT THAT THE ASSESSEE IS COLLECTING CAPITATION FEES. THE ISSUE WHICH HAS TO BE DECIDED NOW IS WHETHER COLLECTION OF CAPITATION FEES WOULD MAKE THE INSTITUTION EXISTING FOR THE PURPOSES OF PROFIT. IN OUR CONSIDERED OPINION, MERE COLLECTION OF CAPITATION FEES BY AN EDUCATIONAL INSTITUTION BY ITSELF WOULD NOT MAKE IT INELIGIBLE TO CLAIM EXEMPTION U/S. 10(23C)(IIIAB) OF THE ACT. IN OTHER WORDS, THERE MAY BE AN EDUCATIONAL INSTITUTION WHICH IS NOT COLLECTING CAPITATION FEES BUT STILL CAN BE SAID TO EXIST FOR THE PURPOSE OF PROFIT. 6.2. THIS ISSUE WAS ELABORATELY DISCUSSED BY THE TRIBUNAL WHEN THE ASSESSEE PREFERRED AN APPEAL AGAINST THE CANCELLATION OF REGISTRATION U/S. 12A OF THE ACT IN ITA NO. 3288/M/2013. THE COMMISSIONER HA S CANCELLED THE REGISTRATION ON THE GROUND THAT THE ASSESSEE HAS COLLECTED CAPITATION FEE IN CONTRAVENTION OF MAHARASHTRA EDUCATIONAL INSTITUTIONS (PROHIBITION OF CAPITATION FEE ACT, 1987). THEREFORE, THE ACTIVITIES CANNOT BE REGARDED AS GENUINE ACTIVITY. THERE ALSO THE FACTUM OF COLLECTION OF CAPITATION FEE AND CONVERSION PART OF THE SAME INTO DONATION WAS UNDER CONSIDERATION. THE RELEVANT PART OF THE FINDINGS OF THE TRIBUNA L ARE AT PARA - 13 OF ITS ORDER WHICH READ AS UNDER: IT IS CLEAR FROM THE SERIES OF DECISIONS RELIED UPON BY THE ASSESSEE THAT THE MERE ACCEPTING THE CAPITATION FEE CANNOT BE BROUGHT INTO THE SCOPE OF SECTION 12AA(3) IF THE PROMINENT ACTIVITY OF THE ASSESSEE ARE NOT DOUBTED BE ING IMPARTING OF EDUCATION AND PROMOTION OF EDUCATION. THE ASSESSEE HAS BEEN CARRYING ON THE ACTIVITY IN THE FIELD OF EDUCATION THROUGH ITS AIDED AND UNAIDED INSTITUTIONS SINCE THE YEAR 1932. THE VARIOUS EDUCATIONAL INSTITUTIONS RUN BY THE ASSESSEE ARE AFF ILIATED WITH THE BOARDS OF SCHOOL EDUCATION AND UNIVERSITIES. THESE ACTIVITIES IN THE FIELD OF EDUCATION THROUGH VARIOUS INSTITUTIONS ARE NOT IN DISPUTE AND THEREFORE, THE GENUINENESS OF THE SAME ARE NOT IN DISPUTE. THE THE SOUTH INDIAN EDUCATION SOCIETY 11 COMMISSIONER HAS ALSO ACCEPTED THE F ACT OF THE ACTIVITY OF THE ASSESSEE THAT THE ASSESSEE IS ENGAGED IN THE EDUCATIONAL ACTIVITY BUT HE HAS OPINED THAT THE EDUCATIONAL ACTIVITY HAS BEEN CONVERTED INTO COMMERCIAL VENTURE. THEREFORE, IT IS NOT THE CASE OF THE COMMISSIONER THAT THE ASSESSEE HAS DIVERTED ITS ACTIVITY FROM EDUCATION TO SOME OTHER FIELD AND THEREFORE, THE ACTIVITY OF IMPARTING EDUCATION IS NO MORE GENUINE. WHEN NOTHING HAS BEEN BROUGHT ON RECORD TO SAY THAT THE ASSESSEE HAS CARRIED OUT THE ACTIVITIES OTHER THEN IMPARTING AND PROMOT ING THE EDUCATION THEN THE CANCELLATION OF REGISTRATION ON THE GROUND OF ACCEPTING THE CAPITATION FEE WHICH HAS BEEN USED FOR THE PURPOSE OF ACHIEVING THE OBJECTS OF THE ASSESSEE IS NOT SUSTAINABLE IN LAW IN VIEW OF THE VARIOUS DECISIONS AS DISCUSSED ABOVE . ACCORDINGLY, WE SET ASIDE THE IMPUGNED ORDER OF THE COMMISSIONER AND RESTORED THE REGISTRATION U/S 12A. 6.3. A PERUSAL OF THE FACTUAL MATRIX SHOWS THAT WHATEVER SURPLUS GENERATED BY THE ASSESSEE IS PLOUGHED BACK AND UTILIZED IN THE OBJECT OF THE ASSES SEE - SOCIETY. THE TRIBUNAL WHILE RESTORING THE REGISTRATION U/S. 12A OF THE ACT BY ITS ORDER (SUPRA) HAS ELABORATELY CONSIDERED THIS FACT. 6.4. IT IS NOT THE CASE OF THE REVENUE AUTHORITIES THAT THE CAPITATION FEE RECEIVED BY THE ASSESSEE - SOCIETY HAS BEEN SIPHONED FOR THE BENEFITS OF THE MEMBERS OF THE SOCIETY OR HAS BEEN USED FOR THE PURPOSE OTHERWISE TH A N ON THE OBJECTS OF THE SOCIETY. THERE IS NOT EVEN A WHISPER OF MAL - APPROPRIATION OF THE SOCIETIES FUND BY THE MEMBERS FOR THEIR PERSONAL BENEFITS . 6.8. AT THIS JUNCTURE, IT WOULD BE RELEVANT TO CONSIDER THE DECISION OF THE HONBLE SUPREME COURT IN THE CASE OF QUEENS EDUCATIONAL SOCIETY VS CIT 372 ITR 699 WHEREIN THE HONBLE SUPREME COURT HAS REFERRED TO AND RELIED UPON TESTS LAID DOWN BY IT IN ITS EARLIER JUDGEMENTS IN THE CASE OF SURAT ART SILK CLOTH MFR. ASSOCIATION 121 ITR 01, ADITANAR EDUCATIONAL INSTITUTION 224 ITR 310 AND AMERICAN HOTEL AND LODGING THE SOUTH INDIAN EDUCATION SOCIETY 12 ASSOCIATION EDUCATIONAL INSTITUTE 301 ITR 86. IN ALL THESE CASES, THE HONBLE SUPREME COURT HAS HELD THAT WHEN A SURPLUS IS PLOUGHED BACK FOR EDUCATIONAL PURPOSES, THE EDUCATIONAL INSTITUTION EXISTS SOLELY FOR EDUCATIONAL PURPOSE AND NOT FOR PURPOSES OF PROFIT. THE HONBLE SUPREME COURT APPROVED THE FOLLOWING REASONING OF THE TRIBUNAL. DURING THE YEARS RELEVANT FOR ASSTT. YEARS 2000 - 01 AND 2001 - 02, THE EXCESS OF INCOME OVER EXPENDITURE STOOD AT RS. 6,58,862/ - AND RS. 7,82,632/ - RESPECTIVELY. IT WAS ALSO NOTICED THAT THE APPELLANT SOCIETY HAD MADE INVESTMENT IN FIXED ASSETS INCLUDING BUILDING AT RS. 9,52,010/ - IN F. Y. 1999 - 2000 AND RS. 847,742/ - IN F. Y. 2000 - 01 RELEVANT FOR ASSTT. YEARS 2000 - 01 AND 2001 - 02 RESPECTIVELY. THUS, IF THE AMOUNT OF INVESTMENT INTO FIXED ASSETS SUCH AS BUILDING, FURNITURE AND FIXTURE ETC. WERE ALSO KEPT IN VIEW, THERE WAS HARDLY ANY SURPLUS LEFT. ... THE ASSESSEE SOCIETY IS UNDOUBTEDLY ENGAGED IN IMPARTING EDUCATION AND HAS TO MAINTAIN A TEACHING AND NON - TEACHING STAFF AND HAS TO PAY FOR THEIR SALARIES AND OTHER INCIDENTAL EXPENSES. IT, THEREFORE, BECOMES NECESSARY T O CHARGE CERTAIN FEE FROM THE STUDENTS FOR MEETING ALL THESE EXPENSES. THE CHARGING OF FEE IS INCIDENTAL TO THE PROMINENT OBJECTIVE OF THE TRUST I.E. IMPARTING EDUCATION. THE TRUST WAS INITIALLY RUNNING THE SCHOOL IN A RENTED BUILDING AND THE SURPLUS, I.E. THE EXCESS OF THE RECEIPTS OVER EXPENDITURE. IN THE YEAR UNDER APPEAL (AND IN THE EARLIER YEAR APPEALS) HAS ENABLED THE APPELLANT TO ACQUIRE ITS OWN PROPERTY, ACQUIRE COMPUTERS, LIBRARY BOOKS, SPORTS EQUIPMENTS ETC. FOR THE BENEFIT OF THE STUDENTS. AND MORE IMPORTANTLY THE MEMBERS OF THE SOCIETY HAV E NOT UTILIZED ANY PART OF THE SURPLUS FOR THEIR OWN BENEFIT. THE A.O WRONGLY INTERPRETED THE RESULTANT SURPLUS AS THE MAIN OBJECTIVE OF THE ASSESSEE TRUST. AS HELD ABOVE, PROFIT IS ONLY INCIDENTAL TO THE MAIN OBJECT OF SPREADING EDUCATION. IF THERE IS NO SURPLUS OUT OF THE DIFFERENCE BETWEEN RECEIPTS AND OUTGOINGS, THE TRUST WILL NOT BE ABLE TO ACHIEVE THE OBJECTIVES. ANY EDUCATION INSTITUTION CANNOT BE RUN IN RENTED PREMISES FOR ALL THE TIMES AND WITHOUT NECESSARY EQUIPMENT AND WITHOUT PAYING TO THE STAFF ENGAGED IN IMPARTING EDUCATION. THE ASSESSEE IS NOT GETTING ANY THE SOUTH INDIAN EDUCATION SOCIETY 13 FINANCIAL AID/ASSISTANCE FROM THE GOVERNMENT OR OTHER PHILANTHROPIC AGENCY AND, THEREFORE, TO ACHIEVE THE OBJECTIVE, IT HAS TO RAISE ITS OWN FUNDS. BUT SUCH SURPLUS WOULD NOT COME WITHIN THE AMBIT OF DENYING EXEMPTION U/S. 10(23C) (IIIAD) OF THE ACT.' 6.9. AN IDENTICAL ISSUE WAS CONSIDERED BY THE TRIBUNAL, PUNE BENCH IN THE CASE OF DECCAN EDUCATION SOCIETY IN ITA NO. 1480/PN/2014 WHEREIN ALSO THE TRIBUNAL HAD THE OCCASION TO CONSIDER THE FACT THAT THE INSTITUTION WAS ACCEPTING CAPITATION FEES IN THE FORM OF DONATION AND THE TRIBUNAL ALLOWED EXEMPTION U/S. 10(23C)(IIIAB) OF THE ACT FINDING THAT NOTHING WAS BROUGHT ON RE CORD TO SHOW THAT SUCH DONATION HAS NOT BEEN ACCOUNTED FOR OR UTILIZED BY ANY TRUSTEES OR THEIR RELATIVES OR UTILIZED FOR PURPOSES OTHER THAN EDUCATION. THUS, FROM THE TOTALITY OF THE AFORESTATED FACTS IN THE LIGHT OF THE JUDICIAL DECISIONS DISCUSSED H EREINABOVE, THE TWO CONDITIONS VIS - - VIS INSTITUTION SHOULD SOLELY EXIST FOR THE PURPOSE OF EDUCATION AND IT SHOULD NOT EXIST FOR THE PURPOSE PROFIT HAVE BEEN SUCCESSFULLY FULFILLED BY THE ASSESSEE SOCIETY. 7. NOW THE THIRD CONDITIONS REMAINS TO BE SEEN WHICH IS THE INSTITUTION SHOULD BE WHOLLY OR SUBSTANTIALLY FINANCED BY THE GOVERNMENT. 7.1. AT THE VERY OUTSET, WE HAVE TO STATE THAT NO PERCENTAGE HAS BEEN SPECIFIED IN THE ACT TO DEFINE WHAT THE LAW MEANT BY WHOLLY OR SUBSTANTIALLY FINANCED BY THE GOV ERNMENT NOR ANY METHODOLOGY IS PRESCRIBED IN THE ACT TO COMPUTE THE CONTRIBUTION MADE BY THE GOVERNMENT. IN OUR UNDERSTANDING, THE PERCENTAGE OF AMOUNT RECEIVED FROM THE GOVERNMENT SHOULD BE COMPUTED WITH REFERENCE TO TOTAL EXPENDITURE MINUS THE FEES RECE IVED BY THE INSTITUTION BECAUSE IN OUR OPINION, IT IS THE SHORTFALL WHICH IS FINANCED BY THE THE SOUTH INDIAN EDUCATION SOCIETY 14 GOVERNMENT. THE FOLLOWING CHART WILL EXPLAIN THE POSITION MORE CLEARLY. STATEMENT OF GOVERNMENT GRANTS AND NET EXPENDITURE A.Y. TOTAL EXPENDITURE (INCL.CAPITAL EXPENDITURE) STUDENTS FEES RECEIVED NET EXPENDITURE (EXCLUDING STUDENT FEES) GOVERNMENT GRANTS % OF GOVT. GRANT TO NET EXPENDITURE A B C=(A) - (B) D E =(D)/(C) 2003 - 04 248,533,000 74,125,000 174,408,000 58,919,000 34% 2004 - 05 226,043,000 110,181,000 115,862,000 57,878,000 50% 2005 - 06 247,681,000 134,875,000 112,806,000 49,426,000 44% 2006 - 07 297,549,000 167,259,000 130,290,000 58,441,000 45% 2007 - 08 326,004,135 209,091,973 116,912,162 77,789,619 67% 2008 - 09 324,309,198 240,738,421 83,570,777 86,456,961 103% 2009 - 10 388,151,926 273,525,517 114,626,409 95,942,503 84% 2010 - 11 518,856,628 291,789,070 227,067,558 99,006,591 44% 2011 - 12 492,282,047 319,719,588 172,562,459 148,484,944 86% 7.2. IF THE GOVERNMENT GRANTS ARE CONSIDERED IN THE LIGHT OF THE AFOREMENTIONED FACTS, IT WOULD BE CLEAR THAT THE CONTRIBUTION RANGES FROM 34% TO 103%. ACCORDING TO THE REVENUE AUTHORITIES, SINCE THE GOVERNMENT HAS NOT FINANCED 75% OR MORE THE INSTITUTION CANN OT BE CONSIDERED AS WHOLLY OR SUBSTANTIALLY FINANCED BY THE GOVERNMENT. WE FIND THAT THE FIRST APPELLATE AUTHORITY HAS ALSO RELIED ON THE PROVISIONS OF SEC. 14 OF C&AG ACT TO HOLD THAT SUBSTANTIALLY WOULD MEAN ATLEAST 60% OR MORE. THE TRIBUNAL MUMBAI BE NCH IN THE CASE THE SOUTH INDIAN EDUCATION SOCIETY 15 OF VIVEK EDUCATION SOCIETY IN ITA NO. 5896/M/2011 DATED 7.12.2012 HAS CATEGORICALLY HELD THAT PROVISIONS OF SEC. 14 OF C&AG ACT ARE NOT APPLICABLE WHILE INTERPRETING PROVISIONS OF SEC. 10(23C)(IIIAB) OF THE ACT. IT WOULD BE PERTINENT TO REFER THE RATIO LAID DOWN BY THE HONBLE KARNATAKA HIGH COURT IN THE CASE OF NATIONAL EDUCATION SOCIETY IN ITA NO. 808 OF 2009, INDIAN INSTITUTE OF MANAGEMENT 196 TAXMAN 279 AND CIT VS DESHIYA VIDYA SHALA SAMITHI IN ITA NO. 1133 OF 2008 WHEREIN IT HAS BE EN HELD THAT IF THE GOVERNMENT GRANT RECEIPT IS LESS THAN 50%, THE ASSESSEE CANNOT BE DENIED EXEMPTION U/S. 10(23C)(IIIAB) OF THE ACT ON THE GROUND THAT THE CONDITION OF SUBSTANTIALLY FINANCED BY THE GOVERNMENT STANDS VIOLATED . 7.3. THE FACTS IN THE CASE OF NATIONAL EDUCATIONAL SOCIETY (SUPRA) WAS THAT THE GOVERNMENT GRANT CONST IT UTED 36.42% OF THE TOTAL RECEIPTS. AT PARA - 4, THE HONBLE HIGH COURT OBSERVED THAT THE WORD SUBSTANTIAL HAS NOT BEEN DEFINED UNDER THE INCOME TAX ACT. HOWEVER, IT HAS BEEN THE SUBJECT MATTER OF INTERPRETATION BY VARIOUS COURTS IN VARIOUS CONTEXTS. THE AUTHORITIES IN DECIDING WHAT CONSTITUTES A SUBSTANTIAL PORTION OF THE FINANCE HAVE TAKEN NOTE OF THE STATUTORY PROVISIONS CONTAINED IN THE BANKING REGULATION ACT, 1949 , WHERE A PERSON WHO HAS THE BENEFICIAL INTEREST OF MORE THAN 10% OF THE TOTAL CAPITAL SUBSCRIBED BY ALL THE PARTNERS OF THE FIRM HAS BEEN HELD TO BE HAVING SUBSTANTIAL INTEREST. SIMILARLY, SUBSTANTIAL INTEREST HAS ALSO BEEN DEFINED IN EXPLANATION TO SE C. 40A(2)(A) OF THE INCOME TAX ACT WHERE A PERSON WHO IS HAVING VOTING POWER OF NOT LESS THAN 20% IN THE CASE OF THE COMPANY, IS DEEMED TO HAVE SUBSTANTIAL INTEREST IN THE BUSINESS OF THE COMPANY. 7.4. AND AT PARA - 6, THE HONBLE HIGH COURT OBSERVED AS UNDER: THE SOUTH INDIAN EDUCATION SOCIETY 16 VIEWED FROM THAT ANGLE, AFTER EXCLUDING FEES RECEIVED FROM THE STUDENTS, WHEN WE LOOK AT THE AMOUNT RECEIVED BY WAY OF DONATION FROM OTHERS WHEN COMPARED TO THE AMOUNT GRANTED BY THE GOVERNMENT, THE GRANT OF 36.42% OF THE TOTAL REVENUE DO CONSTITUT E SUBSTANTIAL FINANCIAL AID FROM THE GOVERNMENT AND THUS THE INSTITUTION ASSESSEE IS ENTITLED TO THE BENEFIT OF THE AFORESAID PROVISIONS. 7.5. SIMILARLY, IN THE CASE OF NATIONAL EDUCATION SOCIETY, THE HONBLE HIGH COURT HAS CONSIDERED WHETHER 35.94% OF C ONTRIBUTION WOULD AMOUNT TO SUBSTANTIALLY FINANCED BY THE GOVERNMENT AND THE COURT ANSWERED YES. 7.6. SIMILARLY, IN THE CASE OF INDIAN INSTITUTE OF MANAGEMENT (SUPRA), THE HONBLE COURT ACCEPTED THE CONTRIBUTION OF 37.85% AS SUFFICIENT FOR MAKING THE I NSTITUTION SUBSTANTIALLY FINANCED BY THE GOVERNMENT. 7.7. CONSIDERING THE AFOREMENTIONED DECISION OF THE HONBLE COURT IN THE LIGHT OF THE FACTUAL MATRIX OF CONTRIBUTION AS EXHIBITED AT PARA - 7.1 ABOVE, WE HAVE NO HESITATION TO HOLD THAT THE INSTITUTION IS SUBSTANTIALLY FINANCED BY THE GOVERNMENT. THUS, FULFILLING THE THIRD CONDITION ALSO FOR THE ELIGIBILITY FOR CLAIMING EXEMPTION U/S. 10(23C)(IIIAB) OF THE ACT. 8. IT WOULD NOT BE OUT OF PLACE TO MENTION HERE THAT EVEN AFTER THE SURVEY AND SEARCH OPER ATION, THE GOVERNMENT GRANTS ARE STILL RECEIVED BY THE INSTITUTION WHICH ESTABLISHES THE FACT THAT EVEN IN THE EYES OF THE GOVERNMENT, THE INSTITUTION IS SOLELY EXISTING FOR IMPARTING EDUCATION. WE, THEREFORE, DIRECT THE AO TO GRANT EXEMPTION U/S. 10(23C) (IIIAB) OF THE ACT. THE SOUTH INDIAN EDUCATION SOCIETY 17 9. CONTINUING FURTHER AND FOR THE SAME OF COMPLETENESS, LET US NOW CONSIDER THE ISSUE RELATING TO THE GRANT OF BENEFITS OF SEC. 11 OF THE ACT WHICH HAS BEEN DENIED FOR THE FACT THAT THE ASSESSEE HAS BEEN RECEIVING CAPITATION FEES. PRO VISIONS OF SEC. 11 RELATES TO THE INCOME FROM PROPERTY HELD FOR CHARITABLE OR RELIGIOUS PURPOSES AND SUCH INCOME HAS BEEN DERIVED FROM THE PROPERTY TO THE EXTENT TO WHICH SUCH INCOME IS APPLIED TO SUCH PURPOSES IN INDIA. IT IS A SETTLED LAW THAT IMPARTING EDUCATION IS INCLUDED IN CHARITABLE PURPOSE. 10. SECTION 13 CONTAINS THE PROVISION DENYING THE BENEFIT OF SEC. 11 IN CERTAIN CASES AND THE RELEVANT CLAUSE FOR THE CASE IN HAND IS SEC. 13(1 )(C) OF THE ACT WHICH READ AS UNDER: IN THE CASE OF A TRUST FOR C HARITABLE OR RELIGIOUS PURPOSES OR A CHARITABLE OR RELIGIOUS INSTITUTION, ANY INCOME THEREOF - (I) IF SUCH TRUST OR INSTITUTION HAS BEEN CREATED OR ESTABLISHED AFTER THE COMMENCEMENT OF THIS ACT AND UNDER THE TERMS OF THE TRUST OR THE RULES GOVERNING THE INSTITUTION, ANY PART OF SUCH INCOME ENURES, OR (II) IF ANY PART OF SUCH INCOME OR ANY PROPERTY OF THE TRUST OR INSTITUTION (WHENEVER CREATED OR ESTABLISHED) IS DURING THE PREVIOUS YEAR USED OR APPLIED, DIRECTLY OR INDIRECTLY FOR THE BENEFIT OF ANY PERSON REFERRED TO IN SUB - SECTION (3) : 11. IN THE CASE IN HAND, THE EXEMPTION HAS BEEN DENIED SOLELY FOR THE REASON THAT THE INSTITUTION HAS RECEIVED THE CAPITATION FEES. THIS ISSUE HAS BEEN ELABORATELY DISCUSSED BY THE TRIBUNAL WHILE RESTORING THE REGISTRATI ON U/S. 12A OF THE ACT AS MENTIONED ELSEWHERE. THERE IS NOT EVEN A WHISPER IN THE ORDERS OF THE AUTHORITIES BELOW WHICH COULD SUGGEST THAT THE FACTS OF THE CASE ARE HIT BY THE PROVISIONS OF SEC. 13 OF THE ACT. 12. THE TRIBUNAL IN THE CASE OF PADANILAM WELFARE TRUST VS DCIT 20 TAXMAN 113 HAS HELD THAT THE CANCELLATION OF REGISTRATION U/S. 12A ON THE THE SOUTH INDIAN EDUCATION SOCIETY 18 GROUND OF ACCEPTING CAPITATION FEE IS NOT SUSTAINABLE IN LAW WHICH MEANS THAT ACCEPTANCE OF CAPITATION FEE SHOULD NOT P E R SE BE TREATED AS A BUSIN ESS ACTIV ITY RESULTING INTO MAKING THE INSTITUTION FOR RUNNING FOR THE PURPOSE OF MAKING PROFIT. IN THE CASE OF ADIT VS ST. FRANCIS EDUCATION TRUST IN ITA NO. 2669/M/2012 THE TRIBUNAL AFTER CONSIDERING THE DECISION IN THE CASE OF VODITHALA EDUCATION SOCIETY 20 S OT 353 HAS HELD IN PARA - 2.3. AS UNDER: 2.3. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL BEFORE US. IT IS FOUND THAT OUT OF THE TOTAL DONATION OF ` 30.5 LAKHS A SUM OF ` 1.98 LAKHS WAS RECEIVED FROM THE STUDENTS. A.O HAS NOT DOUBTED THE F ACT THAT THE ASSESSEE IS IMPARTING EDUCATION AND AS PER THE SETTLED LAW OF TAXATION IMPARTING EDUCATION IS COVERED BY THE WORD CHARITABLE ACTIVITY. IF INCOME EARNED BY A TRUST IS UTILISED FOR CHARITABLE PURPOSES IT CANNOT BE HELD THAT TRUST IS CARRYING OUT BUSINESS. FAA HAS RIGHTLY POINTED OUT THAT THERE IS NO EVIDENCE ON RECORD THAT PROFIT EARNED BY THE ASSESSEE - TRUST WERE NOT UTILISED BY IT FOR NON CHARITABLE PURPOSES. IT IS ALSO A FACT THAT THERE IS NO INSTANCE OF VIOLATION OF PROVISIONS OF SECTIONS 11 - 1 3 OF THE ACT BY THE TRUST. IN OUR OPINION PRINCIPLES ENUMERATED BY THE HONBLE SUPREME COURT IN THE CASES OF GUJARAT MARITIME BOARD AND SURAT CITY GYMKHANA ARE APPLICABLE TO THE CASE UNDER CONSIDERATION. THEREFORE, WE ARE OF THE OPINION THAT ASSESSEETRUST WAS CARRYING OUT CHARITABLE ACTIVITIES AND WAS ENTITLED TO EXEMPTION. THEREFORE, CONFIRMING THE ORDER OF THE FAA WE DECIDE GROUND NO. 1 AGAINST THE A.O. 13. ALTHOUGH THE AFOREMENTIONED DECISIONS ARE GIVEN IN RESPECT OF GRANTING REGISTRATION U/S. 12A OF THE ACT BUT NEVERTHELESS THE RATIO IN ALL THESE DECISIONS RELATE TO THE ACCEPTANCE OF CAPITATION FEE VIS - - VIS BUSINESS ACTIVITY OF THE INSTITUTION. 14. AFTER CONSIDER ING THE FACTS IN TOTALITY IN THE LIGHT OF THE DECISION OF THE TRIBUNAL IN ASSESSEES OWN CASE WHILE RESTORING THE THE SOUTH INDIAN EDUCATION SOCIETY 19 REGISTRATION U/S. 12A OF THE ACT AND OTHER DECISIONS REFERRED TO HEREINABOVE, IN OUR UNDERSTAND ING OF THE FACTS QUA THE RELEVANT PROVISIONS OF THE ACT, WE ARE OF THE OPINION THAT THE ASSESSEE IS ENTITLED FOR THE BENEFIT OF SEC. 11 OF THE ACT. WE, THEREFORE, DIRECT THE AO TO GRANT THE BENEFITS OF SEC. 11 OF THE ACT. 15. SINCE WE HAVE DIRECTED FOR THE GRANT OF THE BENEFITS AVAILABLE U/S. 10(23C)(IIIAB) OF THE ACT AND ALSO BENEFITS OF SEC. 11 OF THE ACT , THE OTHER ISSUES BECOME OTIOSE. 16. BEFORE PARTING ONE MORE REASON FOR DECLINING THE EXEMPTION U/S. 10(23C)(IIIAB) OF THE ACT IS THAT SOME OF THE INSTITUTIONS ARE NOT AIDED BY GOVERNMENT. IT HAS TO BE UNDERSTOOD CLEARLY THAT THE DEDUCTION IS NOT GRANTED TO AN ASSESSEE QUA INSTITUTION BUT THE SAME IS GRANTED QUA ASSESSEE. FOR THIS PROPOSITION, WE DRAW SUPPORT FROM THE DECISION OF THE HONBLE KARNATAKA HIGH COURT IN THE CASE OF DESHIYA VIDY A SHALA SAMITHI (SUPRA) AND TRIBUNAL PUNE BENCH IN THE CASE OF DECCAN EDUCATION SOCIETY (SUPRA). ONE MORE REASON FOR DECLINING THE CLAIM OF EXEMPTION TO THE ASSESSEE RELATES TO THE FACT THAT THE ASSESSEE IS RUNNING SENIOR CITIZEN HOME AND THEREFORE DOES NOT EXIST SOLELY FOR EDUCATIONAL PURPOSES. 16.1. A PERUSAL OF THE MEMORANDUM AND RULES OF THE ASSESSEE SOCIETY SHOWS THAT AT CLAUSE - 17 IT IS MENTIONED THAT TO ESTABLISH AND/OR MANAGE, RUN, ADMINISTER OLD - AGE HOMES FOR THE BENEFIT OF THE OLD PERSONS WI TH FOCUS ON THE RETIRED TEACHERS OF THE COUNTRY AND OTHERS WHO HAVE CONTRIBUTED TO THE CLAUSE OF EDUCATION. THE RECEIPTS/EXPENSES FROM SENIOR CITIZEN HOME ARE AS UNDER: PARTICULARS ASSESSMENT YEAR THE SOUTH INDIAN EDUCATION SOCIETY 20 2005 - 06 2006 - 07 2007 - 08 2008 - 09 2009 - 10 2010 - 11 20 01 - 12 INCOME 780326 1918321 1766853 2989134 997137 1113826 1114877 EXPENSE 1844260 1532476 2088327 1663907 1927573 2434473 2018837 16.2. IT CAN BE SEEN FROM THE ABOVE CHART THAT THE REVENUES ARE MINUSCULE AND EXCEPT IN A.Y. 2008 - 09 THE EXPENDITURES ARE MUCH HIGHER THAN THE INCOME. FURTHER IT IS AN UNDISPUTED FACT THAT THIS CLAUSE IS VERY MUCH THERE IN THE MEMORANDUM OF THE SOCIETY SINCE IT S INCEPTION. THEREFORE, WE DO NOT FIND MUCH WEIGHT IN DENYING THE BENEFITS FOR SUCH ACTIVITY. WE HOLD IN FAVOUR OF THE ASSESSEE AND AGAINST THE REVENUE. 17. THE L D. DEPARTMENTAL REPRESENTATIVE HAS FILED A BOOK EXHIBIT ING VARIOUS JUDICIAL DECISION S BUT HAVE REFERRED TO ONLY 2 DECISIONS NAMELY VODITHALA EDUCATION SOCIETY 20 SOT 353 AND TRAVANCORE EDUCATION SOCIETY IN ITA NO. 194 OF 2014. THE DECISION OF VODITHALA EDUCATION SOCIETY HAS BEEN CONSIDERED BY THE TRIBUNAL WHICH HAVE BEEN REFERRED BY US AT PARA - 12 ABOVE AND IN TRAVANCORE EDUCATION SOCIETYS CASE ALSO DOES NOT HELP THE REVENUE INASMUCH AS IT RELATES TO THE REJECTION OF APPLICATION U/S. 12AA OF THE ACT WHEREIN THE REJECTION WAS UPHELD ON ACCOUNT OF THE FACT THAT THE TRUSTEES SHARED AMONGST T HEMSELVES THE ADMISSION COLLECTED WHEREAS IN THE CASE IN HAND AS MENTIONED ELSEWHERE, THERE IS NOT EVEN A WHISPER OF SHARES OF THE FUNDS BY THE MEMBERS OF THE SOCIETY. 18. IN SO FAR AS THE ISSUE RELATING TO THE FUND TRANSFERRED FOR SINKING FUND/PLATINUM J UBILEE SIES - EAT FUND IS CONCERNED, WE FIND THAT THIS ISSUE DOES NOT EMANATE FROM THE SEARCH PROCEEDINGS AND THEREFORE SQUARELY COVERED IN FAVOUR OF THE ASSESSEE AND AGAINST THE REVENUE BY THE THE SOUTH INDIAN EDUCATION SOCIETY 21 DECISION OF THE JURISDICTIONAL HIGH COURT IN THE CASE OF AL L C ARGO GLOBAL LOGISTICS IN ITA NO. 523 OF 2013. THE CLAIM OF DEPRECIATION IS COVERED IN FAVOUR OF THE ASSESSEE AND AGAINST THE REVENUE BY THE DECISION OF THE HONBLE HIGH COURT OF BOMBAY IN THE CASE OF CIT INSTITUTE OF BANKING PERSONNEL SELECTION 264 ITR 1 10. SUMMING UP, THE AO IS DIRECTED TO ALLOW THE ASSESSEE THE BENEFITS OF SEC. 10(23C)(IIIAB) OF THE ACT AND ALSO THE BENEFIT OF SEC. 11 OF THE ACT. ALL INCIDENTAL ISSUES WILL BECOME OTIOSE. 19. IN THE RESULT, THE APPEALS FILED BY THE ASSESSEE ARE ALLOWED AND THAT OF THE REVENUES APPEALS ARE DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 16 TH SEPTEMBER , 2015 SD/ - SD/ - ( RAM L AL NEGI ) (N.K. BILLAIYA) /JUDICIAL MEMBER / ACCOUNTANT MEMBER MUMBAI ; DATED : 16 TH SEPTEMBER , 2015 . . ./ RJ , SR. PS / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT. 3. ( ) / THE CIT(A) - 4. / CIT 5. , , / DR, ITAT, MUMBAI 6. / GUARD FILE . / BY ORDER, //TRUE COPY//