Chaitanya Bharati Education Society, Hyderabad V. ADIT, Hyderabad

ITA 707/HYD/2009

• Counselvise Citation: [2014] 140 COUNSELVISE.COM (IT) 74697 (ITAT-HYDERABAD)
• Duration Of Justice: 4 year(s) 9 month(s) 10 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 07-03-2014
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Next Hearing Date: 10-03-2011
• Assessment Year: 2003-2004
• Appeal Filed On: 27-05-2009
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: D SUDHAKAR RAO
• Assessee Lawyers: P MURALI MOHAN RAO
• Keywords: Charitable institution; Capital expenditure
• Section: 11

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD BENCH B', HYDERABAD BEFORE SHRI CHANDRA POOJARI, ACCOUNTANT MEMBER AND SMT. ASHA VIJAYARAGHAVAN, JUDICIAL MEMBER ITA NO.707/HYD/09 : ASSESSMENT YEAR 2003 - 04 CHAITANYA BHARATI EDUCATIONAL SOCIETY, HYDERABAD. ( PAN - AAATC 1076 E) V/S. ASST. DIRECTOR OF INCOME - TAX(EXEMPTION) I, HYDERABAD (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI P.MURALI MOHAN RAO RESPONDENT BY : SHRI D.SUDHAKAR RAO DR DATE OF HEARING 10.1.2014 DATE OF PRONOUNCEMENT O R D E R PER SMT. ASHA VIJAYARAGHAVAN, JUDICIAL MEMBER: THIS APPEAL BY THE ASSESSEE IS DIRECTED AGAINST THE ORDER OF THE COMMISSIONER OF INCOME - TAX(APPEALS) IV, HYDERABAD DATED 31 . 3 .20 09 , FOR THE ASSESSMENT YEAR 2003 - 04 . 2. BRIEF FACTS OF THE CASE LEADING TO THE FILING O F THE PRESENT APPEAL ARE THAT THE ASSESSEE , AN EDUCATIONAL SOCIETY RUNNING ENGINEERING COLLEGES AND SUCH OTHER EDUCATIONAL INSTITUTIONS, FILED ITS RETURN OF INCOME FOR THE ASSESSMENT YEAR 2003 - 04 ON 28.11.2003, ADMITTING NIL INCOME AFTER CLAIMING EXEMPTION UNDER S.11 OAF THE ACT. THOUGH THE SAME HAS INITIALLY BEEN PROCESSED UNDER S.143(1) OF THE AC T ON 25.3.2004, IN THE COU R SE OF REGULAR ASSESSMENT THAT FOLLOWED, THE ASSESSING OFFICER NOTED THAT IN THE COMPU T ATION OF TOTAL INCOME ENCLOSED TO THE RETURN, ASSESSEE HAD SHOWN AN AMOUNT OF RS .2,88,51,943 AS DEPOSIT ACCOUNT, CRE D ITED TO THE CA P I TAL FOUND ACCOUNT OF CH AITANYA BHARATI INSTITUTE O F TECHNOLOGY (CBIT) FOR THE ASSESSMENT YEAR 2002 - 03. SIMILARLY, AN AMO U NT OF RS .62,49,000 WAS SHOWN AS DEVELOPMENT FEES CREDITED TO THE CAPITAL FUN D IN MAHATMA GANDHI INS T ITUTE OF TECHNOLOGY. ITA NO. 707/ HYD/20 09 CHAITANYA BHARATI EDUCATIONAL SOCIETY, HYDERABAD 2 LIKEWISE, DONATIONS OF RS.17,00 0 WERE CREDITE D TO THE CA PI T AL F UN D IN CHAITANYA BHARATI PUBLIC SCHOOL. IT WAS EXPLAINED BY THE ASSESSEE BEFORE THE ASSESSING OFFICER THAT THE SAID AMOUN T S REPRESENTED DONATION S RECEIVED FOR INFRASTRUCTURE AND OTHER DEVELOPMENTAL ACTIVITIES. IT WAS ALSO CLAIMED T H A T THOUGH THE SAID AMO UNTS WERE NO T SHOWN ON THE INCOME - SIDE OF THE INCOM E AND EXPENDITURE SIDE OF THE CBIT FOR THE FINANCIAL YEAR 2002 - 03, THE SAME WAS TAKEN INTO CONSIDERATION AND ADDED IN THE COMPUTATION OF TOTAL INCOME FIL E D WITH THE RETURN. THE ASSESSEE ALSO FILED A LI S T O F DONATIONS REC E IVED FOR THE FINANCIAL YEAR 2002 - 03 WITH THE NAMES OF VARIOUS PERSONS, AGAINST RECEIPT NOS., TOTALING TO RS .2,88,51,943. IT WAS SUBMI T TED HAT SIMILAR DONATIONS WERE RECEIVED IN MGIT ALSO AS DEVELOPMENT FEES. A LI S T OF VARIOUS MEMBERS IN RE SPECT OF SUCH DONATIONS WAS FURNISHED, WHEREIN THE AMOUNTS RANGED FROM RS.30,000 TO R S .6,00,000. THE ASSESSING OFFICER REQUIRED THE ASSESSEE TO EXPLAIN AS TO WHY THE SO CALLED DONATION S WERE REFLECTED IN THE DEPOSIT ACCOUNT IN CB I T, DONATIONS IN CB P UB LIC SCHOOL AND DEVEL O PMENT FEES IN MAHATMA GANDHI INS T ITUTE OF T EC HNOLOGY, WHEREAS IT WAS APPARENT THAT THE SAME WERE NO T CONTRIBUTED VOLUNTARILY BUT WERE PAID BY TH E PARENTS, GUARDIANS OF STUDENTS SEEKING TO GAIN ADMISSION IN THE MANAGEMENT QUOTA IS OF THE E NGIN E ERING COU R SE OF CBIT AND MGIT AND THE SCHOOL. IT WAS FOUND THAT ON TH E RECEIPTS ISSUED FOR THE SAME, THE NAMES O F THE DEPOSITORS AND ADDRESSES W E RE W RITTEN AL ON G WITH VARIOUS AMOUNTS PAID BY DIFFE RE NT DEMAND DRAFTS, WHICH TOTALED TO THE AMOUN T REFLECT ED AS DONATIONS IN ANNEXURE A ENCLOSED TO THE ASSESSMENT ORDER. THE ASSESSING OFFICER FOUND THAT THERE WERE ALSO CERTAIN OBVIOUS OVER WRITINGS OF TH E TERM CORPUS FUN D ABOVE THE AMOUNT O F DEPOSIT ON THE RECEIPT. HE FURTHER FOUND THAT EH SO CALLED DEPO S I T S APPEARED TO BE CON D IT I ONAL AS I T WAS MENTIONED THEREON THAT I OFFER THE ABOVE DEPOSIT AND WILL TAKE BACK THE SAME IF NO T ACCEPTED BY THE MAN A GEMENT SUBJECT TO THE RUL E S AND REGULATION S O F CHAITANYA BHARATI EDUCAT I ONAL SO C I E TY. THE ASSESSING OFFICER THE REFORE, PROCEEDED TO MAKE FURTHER ENQUI R I E S INTO THE R E AL NATURE OF TH E SE TRANSACTIONS. THE ASSESSING OFFICER ISSUED SUMMONS TO SOME O F THE DONORS APPEARING IN THE ANNEXURE A TO THE ASSESSMENT ORDERS. ON THE BASIS OF LETTERS AND THE SWORN ITA NO. 707/ HYD/20 09 CHAITANYA BHARATI EDUCATIONAL SOCIETY, HYDERABAD 3 STATEMENTS OF THE PARENTS RECORDED, THE ASSESSING OFFICER CONCLU D ED THAT THE AMOUNTS SHOWN BY TH E ASSESSEE AS DEVELOPM E N T FEES AND DEPOSITS WERE NOT IN THE NATURE OF SO CALLED DONATIONS, BUT WERE AMOUNTS COLLECTED AND EXTRACTED TO GRANT ADMISSION TO T H EIR WARDS/CHILDR EN IN THE MANAGEMENT QUOTA TO VARIOUS STREAMS OF ENGINEERING COURSES, WHICH WERE IN THE NATURE OF QUID PRO QUO FOR ALLOTMENT O F SEAT AND DID NO T HAVE THE ELEMENT OF VOLUNTARINESS. CON S IDERING THAT COLLECTION OF SUCH HUGE SUMS, OVER AND ABOVE THE S T IPULATED OFFICIAL FEE, WAS CONTR A RY TO THE RUL E S AND REGUL A TION S AND WAS IN VIOLATION OF THE NORMS PRESCRIBED BY THE HONBLE SUPREM E C OU R T IN THE MATTER O F COLLECTION OF CAPI TA TION FEE/DEPO S ITS, THE ASSESSING OFFICER CONCLUDED THAT THE INSTITUTION DOES NO T EXI S T S OLELY FOR EDUCATIONAL PURPOSE, BUT IT WAS EXI S TING FOR PROFIT. HE OPINED THAT SUCH AN IN S TITUTION WAS NO T ELIGIBLE FOR EXEMPTION AVAILABLE UNDER SUB - C LAUSE (IIIA ) (D) OF S.10 (23C)(VI) OF THE A C T. THE ASSESSING OFFICER ALSO HELD THE VIEW THAT THE ASSESSEE WAS NOT ENTITLED TO EXEMPTION UNDER S.10(23C)(VI), AS IT HAS NO T OBTAINED THE MANDATORY APPROVAL F R OM THE PRESCRIBED AUTHORITY, EVEN THOUGH ITS GROSS RECEIPTS EXCEEDED R S .1 CORE., THE ASSESSING OFFICER TH E REFORE, PROCEEDED TO TAX THE INCOME OF THE ENGINEE RING COLLEGE , AS PER THEIR INCOME AND EXPENDITURE STATEMENT, TOGETH E R WITH THE AMOUNT O F RS .3,51,17,943 COLLECTED FROM OR ON BEHALF OF THE ENGINEERING STUDENTS/OTHER STU D EN T S AS ADDITIONAL FEE/DONATION . 3. IT WAS ALSO SUBMITTED BEFORE THE ASSESSING OFFICER THAT IN THE PROJECT O F DEVELOPMENT O F EDUCATION, LOT OF FUNDS WERE REQUIRED AND THE GOVERNMENT, BEING NOT I N A POSITION TO ESTABLISH ENGINEERING COLLEGES WITH PROPER FACIL IT I E S, PERMITTED THE ENGINEERING COLLEGES TO C OLLE C T FEES FOR PROVIDING INFRA ST R UC T URE FACIL I TIES TO STUDENTS . IT WAS CLAIMED THAT THE PARENTS O F TH E STUDENTS WERE W ILLING TO PAY D E VELOPMENT FE E NOT ONLY FOR THEIR OWN CHIL D RE N , BU T FOR OTHER STUDENTS ALSO. IT WAS SUBMI T TED THAT THE SUMS COLLECTED WERE NO T CONTRARY TO RUL E S AND R EGUL A TIONS, AND THE HUGE CAPITAL INCURRED FOR PROVIDING GOOD INFRAST R U CT URE WAS SOLELY FOR EDUCATIONAL PURPO S E AND NO T FOR PRO F IT. B Y VIRTUE OF THE AMOUNTS BEING DECL A RED IN TH E COMPU T ATION OF INCOME ITA NO. 707/ HYD/20 09 CHAITANYA BHARATI EDUCATIONAL SOCIETY, HYDERABAD 4 STATEMENT, THE CONDITIONS HAD BEEN FULFILLED AND THE REA SONABLE OPPORTUNITY REGARDING RECEIPT OF DONATION S H A D NOT BEEN PROVIDED TO THE ASSESSEE. IT WAS ALSO PLEADED THAT THE DECISION OF THE APEX COURT IN ADINANTAR E D UCATIONAL INSTITU T ION BE APPLIED TO THE ASSESSEES CASE AND SIN C E THE PRIMARY PU R PO S E OF THE TRUST WAS PHILANTHROPIC, THE INCLUSION OF SOME OBJECTS FOR EARNING PROFITS WOULD NO T ALTER THE CHARACTER OF THE PRIMARY OBJECT. 4. DURING THE ASSESSMENT PROCEEDINGS, THE ASSESSING OFFICER ALSO R ECORDED THE STATEMENT OF D.KAMLAKAR REDDY, S E CRETARY AND G OVERNING BODY MEMBER OF THE ASSESSEE SOCIETY. IT WAS STATED BY HIM THAT THE DEPOSITS REPRESENTED AMOUNTS RECEIVED FROM WELL WISHERS FOR DEVELOPM E N T AND INFRAST R U CT URE. THOUGH IT WAS SUBMI T TED INITIALLY THAT THE D EPOSITS WERE RECEIVED FROM THE DONORS, WHO WALKED INTO THE OFFICE AND THAT SUCH DONATION S WERE TERMED AS DEPOSITS AS THEY WERE CON D IT I ONAL AND SUBJECT TO TH E APP RO VAL OF THE COMMITTEE, HE LATER PLEADED THAT THEY WERE NOT AWARE OF THE PROVI SI ON S OF LAW AND THAT THE NOTING C ORPUS FUN D , ABOVE THE TYPED AMOUNT OF DEP O SIT, WAS MADE BY AN ADVOCATE ON THE RECEIPTS BOOK WITHOUT THEIR KNOWLEDGE. HE ADMITTED THAT THE DEPO S ITS MENTIONED IN THE STATEMENTS RECORDED ON OATH AND ME N TION E D IN THE LETTERS RECEIVED FROM THE PARENTS AND WERE LINKED TO ADMISSION . HE HOWEVER, CLAIMED T HAT THE SOCIETY WAS NOT INSISTING ON DONATION S AND THAT PARENTS HAD VOLUNTARILY CAME FORWARD AND DONATED THE AMOUNTS, AS THAT WAS THE PRACTICE IN ALL ENGIN E E RI NG COLLEGES, WH E R E IN P A YM E N T S OVER AND ABOVE THE TUITION FEE AND DEVELOPME NT FEE IS B E IN G COLLECTED IN RESPECT OF MANAG EMENT QUOT A SEATS. HE SUBMI T TED THAT THE SOCIETY DID NO T KNOW HOW TO FORMULATE THE RECEIPT BOOKS AND THE DEPOSITS AND THAT THEY WILL ENSURE THAT AT THE TIME O F RECEIPT OF SUCH AMOUNTS, INTENTION OF DON O RS IS CLEARLY INCLUDED. 5. CONSIDERING THE MATTER IN THE LIGHT OF THE STATEMENT OF SHRI KAMALAKAR AND THE G.O.NO.950 DATED 6.12.2000 AND G.O. NO.33 DATED 11.6.2000, THE ASSESSING OFFICER NOTED THAT AMOUNTS HAVE BEEN PR E SCRIBED UNDER VARIOUS HEADS AND COLLEGES FOUND TO BE VIOLATING THE NORMS ARE LIABLE TO ITA NO. 707/ HYD/20 09 CHAITANYA BHARATI EDUCATIONAL SOCIETY, HYDERABAD 5 HAVE THEIR PERMISSION CANC E LL E D. HE NO T ED THAT IN ASSESSEES CASE, AMOUNTS OVER AND ABOVE THE TUITION FEE/DEVELOPMENT FEE AS PR E SCRIBED BY THE GOVERNMENT, HAD BEEN COLL ECTED IN THE FORM OF DEPOSITS/DONATION /DEVELOPMENT FEE AND THEREFORE, THE ASSESSEE COULD NO T BE CONSIDERED AS FOLLOWING THE LAW. THE ASSESSING OFFICER FURTHER NOTED THAT THE SAID ORDERS SPECIFICALLY PROHIBIT COLLECTING THE AMOUNTS OTHER THAN THOSE FIXED UNDER THE HEAD TUITION FEE AND DEVELO P MENT FEE AND THEREFORE, THE INSTIT U T I ONS CHARGING FEES, BY WHATEVER NAME CALLED, HIGHER THAN THOSE FIXED OR INS T ITU T ION FALLING TO MAINTAIN ACCOUNTS IN THE MANNER LAID DOWN OR OTHERWISE FOUND TO CONTRAVENE THE P R O V I SION S , ARE LIABLE TO HAVE THEIR PERMISSION CANCELLED. TH E N REFERRING TO THE DECISION S O F T H E APEX CO U R T IN THE CASE OF TMA P AI FOUN D ATION AND OTHERS V/S. STATE OF K ARNATAKA AND OTHERS, THE ASSESSING OFFICER FELT THAT THE ACTIVITIES OF SUCH TRUSTS / INST ITUTIONS REMAIN NO MORE CHARITABLE BUT IN FACT SUPPORT THE BENEFICIARIES, WHO REPRESENT AN AFFLUENT SECTION OF THE SOCIETY, FOR PROFIT AND ENGAGE IN SUCH ACTIVITIES FOR PROFIT. THE ASSESSING OFFICER ACCORDINGLY PROCEED ED TO DENY EXEMPTION UNDER S.11 TO THE ASSESSEE AND BROUG H T THE EXCESS INCOME OVER EXPENDITURE OF ALL THE INSTITUTION S O F TH E SOCIETY AMOUNTING TO RS .4,58,040, BESIDES THE DEPO S ITS/DONATIONS/DEVELOPMENT FEE TOTALLIN G TO R S .3,51,17,913, AS APPEARING IN THE COMPUTATION OF IN C OM E AND EXPENDITURE STATEMENT, TO TAX. 6. REITERATING THE CONTENTION S URGED BEFORE THE ASSESSING OFFICER, THE ASSESSEE SUBMITTED BEFORE THE CIT(A) T HAT THE CON D ITION S PRESCRIBED UNDER S.10(23C)(IIIAD) HAD BEEN FULFILLED AND THE CON DI TIONS UNDER CLAUSE ( VI) IS ALSO FULFILLED AS AN APPLI C A T ION MADE BY THE ASSESSEE WAS PENDING BEFORE THE PRESCRIBED AUTHORITY . IT WAS ALSO PLEADED THAT SINCE THE ASSESSEE SOCIETY ALSO HOL D S REGISTRATION UNDER S.12A AND CONSEQUENTLY ANY I N COME, IF AT ALL TAXABLE, IS TO BE E XE MPTED UN D ER S.11 OF THE AC T. IT WAS FURTHER CONTENDED THAT LIST OF DONORS TOWARDS CAPITAL FUND AND DEVELOPMENT FEE H A D BEEN FURNISHED BY THE ASSESSEE ITSELF, HOWEVER NO OPPORTUNITY WAS G I V EN TO THE ASSESSEE IN TH E MATTER OF O BTAININ G STATEMENTS AND LETTE RS FROM DONORS, AND THE ASSESSING ITA NO. 707/ HYD/20 09 CHAITANYA BHARATI EDUCATIONAL SOCIETY, HYDERABAD 6 OFFICER HAS WORKED BEHIND THE BACK OF THE ASSESSEE WITHOUT ITS KNOWLEDGE. IT WAS FURTHER CONTENDED THAT REASONABLE OPPORTUNITY FOR ESTABLISHING/ PROVIN G TH E CLAIM REGARDING DONATION S WAS NO T GIVEN AND AS SUCH , THE FIN D IN G S OF THE ASSESSING OFFICER CANNOT BE MADE BIN D IN G AND CANNO T B E CON S I DE RED AS A BA S IS FOR DECIDIN G ELIGIBILITY FOR EXEMPTION. IN VIEW O F THE DECISIONS OF T H E APEX C OU R T IN THE CASE OF A D INATAR EDUCA T IONAL INSTI T UTION(224 ITR 310); WHICH WAS FOLLOWED BY THE MADRAS HIGH C OURT ALSO IN CIT V/S. ANN ARUNACHALAM EDUCA T IONAL SOCIETY(243 ITR 229), IT WAS PL E ADED THAT THE ASSESSEE WAS ELIGIBLE FOR EXEMPTION AS I T S OBJECT WAS RUNNING EDUCATIONAL INSTITUTIONS SOLE L Y FOR ED UCATIONAL PU R PO S ES AND NO T F O R TH E PURPOSES OF PROFIT. IT WAS ALSO SUBMIT TE D T HAT THE SOURCE FROM WHICH MONEY WAS RECEIVED WAS NO T O F ANY CON SE QUENCE AND WHAT IS RELEVANT IS ITS APPL I CA T ION, AND SO LONG AS THE INSTITUTION IS AN EDUCATIONAL IN S T I TUTION W HICH IS NO T ENGAGED IN EARNING PROFIT, INCOME O F SUCH INSTITUTION WOULD BE EXEMPT UN D ER S.10(22). IT WAS ALSO SUBMITTED THAT THE REAL TE ST TO BE APPLIED WAS WHAT IS THE DOMINANT OR PRIMARY PU R PO S E O F THE INSTITUTION AND I F THE SAME IS PHILANTHROPIC, THE INCLUSION OF SOME OBJECTS FOR EARNIN G PROFITS FOR THE IMPLEMENTATION OF TH E PRIMARY OBJECT, WOULD NOT ALTER THE CHARACTER OF THE PRIMARY OBJECT. 7. THE CIT(A) FORWARDED THE SUBMI S SION S O F TH E ASSESSEE TO THE ASSESSING OFF ICER VIDE LETTER DATED 29.8.2006, FOR HIS COMMENTS. IN RESPONSE, ASSESSING OFFICER SUBMITTED REMAND REPORT DATED 20.9.2006, WHICH , IN TURN, WAS FORWARDED TO THE ASSESSEE. ASSESSEE THEREUPON VIDE SUBMI S SION S DATED 6.12.2006 SUBMI T TED THAT THE PERSON S CONC ERNED HAD MENTIONED THAT THE AMOUN TS HAD BEEN PAID BY TH E M AS DONATIONS TO TH E SOCIETY AND NO ONE HAS COMPELLED FOR THE PAYMENT O F THE AMOUNT AND THEREFORE THE AMOUNTS W E RE PAID VOLUN T ARILY. 8. THE CIT(A) FURTHER WROTE A LETTER DATED 22.4.2007 DIRECT E D THE A D DL. DIRECTOR OF INCOME - TAX(EXEMPTION), HYDERABAD TO ENQUIRY FROM THE SEC RETARY TO GOVERNMEN T OF A.P., HIGHER EDUCA T ION(EC - I I) DEPT., TO ASCERTAIN ITA NO. 707/ HYD/20 09 CHAITANYA BHARATI EDUCATIONAL SOCIETY, HYDERABAD 7 WHETHER THE COLLECTION OF FEE AGAINST THE PR E SCRIB E D NORMS FIXE D BY THE GO V ERNMEN T OF AP HAD BEEN TAK EN INTO COGNIZANCE IN VIEW OF THE GO NOS.950 AND GOMS NO. 33 AND WH E TH E R ANY ACTION HAD BEEN TAKEN AGAINST THE ASSESSEE - SOCIETY FOR ANY YEAR. IN RESPONSE, A REPORT WAS SUBMI T TED BY THE ASSESSING OFFICER ON 18.2.2008, WHEREIN AFTER DISCUSSION O F T H E EARLIER REPORTS, IT W AS SUBMI T TED THAT THE DONATION S MADE TO THE SO C I E TY WERE VOLUNTARY, AND TH E R EF ORE, THERE IS MERIT IN THE CON T ENTION. 9. ON DUE CONSIDERATION OF THE ELABORATE SUBMI S SIONS O F THE ASSESSEE, IN THE LI G H T O F THE REMAND REPORTS OF THE ASSESSING OFFICER, THE CIT(A) FOUND THAT THE ASSESSEE HAS BEEN CHANGING ITS STAND REGARDING THE DONATION S RECEIVED AS C A PI T AL FUND, DEVELOPMENT FEE, ETC. BY THE VARIOUS INSTI T UT I ONS OF TH E SOCIETY. HE FOUND THAT THE ASSERTIONS OF THE ASSESSEE ARE NOT IN C ONSONANCE WITH THE EVIDENCE GATHERED DURING THE COURSE OF ASSESSMENT PROCEEDINGS. CO N SIDERING THE PROCEEDINGS BEFORE THE ASSESSING OFFICER AND THE STATEMENTS RECORDED FROM VARIOUS PERSONS AND OTHER MATERIAL ON RECORD, THE CIT(A) OBSERVED IN PARA 7.5 AND 7.6 OF THE IMPUGNED ORDER AS FOLLOWS - 7.5 THE FACTS EMERGING FROM TH E CON F IRMATIONS/STATEMENTS ESTABLISH THAT TH E DONATIONS CANNOT B E CONSIDERED VOLUNTARY. IT IS BEYOND THE HUMAN PROBABILITIES THAT ANY PE R SONS WOULD GIVE DONATION S BY BORROWING FUNDS FROM FRIENDS AND RELATIVES AND EVEN FROM BANK, AT INTER E ST. EVEN SHRI C.V.SUBRAMANYAM IN HIS SUBSEQUENT STATEMENT ALSO ADMITTED THAT HE FOUND IT REASONABLE TO GIV E A DONATION OF R S .6 LAKHS TO THE SOCIETY AFTER VERIFYING THE AMOU N T BY OTHERS AT THAT POINT OF TIME . HIS STATEMENT THEREFORE ESTABLISHES THAT THIS WAS A NORMAL PRACTICE FOR THE APP E LL A NT SOCIETY TO TAKE DONATION/CAPITATION FEE FOR GRANTING ADMISSIONS. THOUGH H E CONTENDED THAT H E FOUND IT REASONABLE TO GIVE SUCH DONATION AS THE APPELLANT HAD GOOD INFRAST R UC T URE, SUCH AS S ERTION DOES NOT BRING OUT THE PHILANTHROPIC INTENTION BEHIND SUCH PAYMENT. IN FACT HAD THE INTENTION BEEN REALLY PHILANTHROPIC, THE DONATION WOULD HAVE BEEN GIVEN TO ANY GOOD COLLEGE WHICH DOES NOT HAVE GOOD I NFRASTRUCTURE. IT MAY ALSO BE NOTED THAT THE ASSESSING OFFICER FOUND THAT THE SO CALLED 'DEPOSITS' WERE CONDITIONAL AS IT WAS MENTIONED THEREON THAT THE DONOR WOULD TAKE IT BACK IF THE SAME IS NO T ACCEPTED BY THE MANAGEMENT. OBVIOU S LY, A VOLUNTARY DONATION CANNOT BE CONDITIONAL. 7.6. THE RE FORE, TH E FINAL ASSERTION OF THE APPELL A N T THAT NOTHING BEYOND THE PRE S CRIB E D FEES WAS COLL E C T ED FROM TH E S TUDENTS FOR GRANTING ADMISSION, IS DEVOID OF ANY MERIT. THE ITA NO. 707/ HYD/20 09 CHAITANYA BHARATI EDUCATIONAL SOCIETY, HYDERABAD 8 IN VE STIGATION S MADE BY TH E ASSESSING OFFICER HAVE DULY P R OVED THAT THE APPELLANT WAS CHARGING AMOUNTS IN TH E FORM OF C A PITAL FUN D /DEVELOPM E N T FEE ETC., OVER AND ABOVE SUCH PRESCRIBED FEE, WHICH WERE ESTABLISHED AS BEING IN THE NATURE OF DONATION/CAPI TATI ON FEE PAID AS QUID PRO QUO AND WAS BEIN G COLL E CTED IN A CIRCUITUS MANNER. THE CIT(A) THEREAFTER, REFERRED TO THE DECISION OF THE TRIBUNAL IN THE CASE OF VODITHALA EDUCATIONAL SOCIETY IN ITA NO.1138/HYD/2006 FOR ASSESSMENT YEAR 2003 - 04, ON THE POINT AT ISSUE AND OBSERVED THAT ANY AMOUNTS COLL E C T ED OVER AND ABOVE THE PRESCRIBED FEDS HA TO BE CLASSIFIED AS CAPITATION FEE AND WOULD PROVE THAT THE INSTITUTION EXISTS FOR THE PUR P OSE OF PROFIT AND NOT SOLELY FOR EDUCATIONAL PURPOSE. HE ACCORDINGLY CONCLUDED THAT THE ASSESSEE BY COLLECTION DONATION S , AS E VIDENCED BY CONFIRMATIONS FORM DONORS, HAS FAILED TO C O M PLY WITH THE BASIC C ONDITION OF EXEMPTION UNDER S .10(23C), AS IT HAS BEEN FOUND TO EXIST FOR THE PU R PO S E OF PROFIT. HE ALSO REFERRED TO TH AT VERY DECISION OF THE TRIBUNAL IN THE CASE OF VODITHALA EDU CATIONAL SOCIETY (SUPRA), AMONG OTHERS, WHEREIN IT WAS HELD THAT IF AN EDUCATIONAL INSTITUTION IS USED AS A TOOL AND AN APPARATUS FOR COLLECTING MONEY OVER AND ABOVE THE FEE PRESCRIBED, IT WOULD NOT BE ENTITLED FOR EXEMPTION UNDER S.11 ALSO. SINCE IT HAS BEEN ESTABLISHED IN THE PRESENT CASE THAT THE ASSESSEE HAS TAKEN DONATIONS, WHICH ARE FOUND TO BE LINKED TO THE ADMISSION OF STUDENTS TO THE COLLEGE, THE CIT(A) HELD THAT THE ASSESSEE IS NOT ENTITLED FOR EXEMPTION EITHER UNDER S.10(23C) OR UNDER S.11 OF T HE ACT, AND ACCORDINGLY CONFIRMED THE ASSESSMENT MADE BY THE ASSESSING OFFICER, DENYING EXEMPTION CLAIMED BY THE ASSESSEE. 10. AGGRIEVED, ASSESSEE IS IN SECOND APPEAL BEFORE US. 11. ASSESSEE ORIGINALLY RAISED ELABORATE/ARGUMENTATIVE GROUNDS OF APPEAL. HOWEVER, DURING THE COURSE OF APPELLATE PROCEEDINGS BEFORE US, PRECISE GROUNDS/ADDITIONAL GROUNDS OF APPEAL HAVE BEEN RAISED. WE PROCEED TO DISPOSE OF THIS APPEAL ON THE BASIS OF THESE PRECISE GROUNDS/ADDITIONAL GROUNDS, WHICH READ AS FOLLOWS - ITA NO. 707/ HYD/20 09 CHAITANYA BHARATI EDUCATIONAL SOCIETY, HYDERABAD 9 1. THE LD. CIT(A) - IV HAS ERRED IN CONFI R MING THE ORDER OF THE AO REGARDING THE DEPOSITS OF RS.2,88,51,943/ - 2. THE LD. CIT(A) - IV HAS ERRED IN CONFIRMING THE ORDER OF THE AO WHEREIN THE DONATIO N OF RS.17,000/ - HAS BEEN ADDED. 3. THE LD. CIT(A) - IV HAS ERRED IN CONFIRMING THE ORDER OF THE AO WHEREIN THE ADDITION TO THE INCOME OF RS.62,49,000/ - WAS MADE. 4. THE LD. CIT(A) - IV OUGHT TO HAVE APPRECIATED THAT THE FEES HAS BEEN COLLECTED AS PER THE G .O. AND HENCE THE SAME CANNOT BE DISALLOWED AND ADDED TO INCOME. 5. THE LD. CIT(A) - IV OUGHT TO HAVE APPRECIATED THAT THE APPELLANT IS RUNNING/EXISTING SOLELY FOR EDUCATIONAL PURPOSES AND NOT FOR THE PURPOSES OF PROFIT. \ 6. THE LD. CIT(A) - IV OUGHT TO H AVE APPRECIATED THAT THERE IS NO QUESTION OF QUID PRO QUO AS THE AMOUNT HAS BEEN RECEIVED BY THE SOCIETY VOLUNTARILY FROM THE PARENTS OF THE STUDENTS. 7. THE LD. CIT(A) - IV OUGHT TO HAVE APPRECIATED THAT THE SOCIETY IS NOT RUNNING FOR THE PURPOSE OF PRO FIT AND HAT AMOUNTS RECEIVED HAVE BEEN UTILISED FOR TITS OBJECTS AND NOT FOR THE PURPOSE OF PROFIT. 8. THE LD. CIT(A) - IV HYDERABAD OUGHT TO HAVE APPRECIATED THE FACT THAT THE AMOUNT RECEIVED TOWARDS CORPUS FUNDS ARE ELIGIBLE FOR EXEMPTION U/S. 11(1)(D). 9. THE LD. CIT(A) - IV HYDERABAD OUGHT TO HAVE APPRECIATED THE FACT THAT THE CONTRIBUTIONS RECEIVED OTHER THAN CORPUS HAVE BEEN UTILIZED FOR THE OBJECTS OF THE SOCIETY AND HENCE EXEMPTION U/S. 11 CANNOT BE DENIED. 10, THE LD. CIT(A) - IV OUGHT TO HAVE APP RECIATED THAT SECTION 11(4A) IS NOT APPLICABLE WHERE THE INCOME HAS BEEN ACCOUNTED FOR IN THE BOOKS OF ACCOUNTS. 11. THE LD. CIT(A) - IV HYDERABAD OUGHT TO HAVE APPRECIATED THE FACT THAT THE SOCIETY HAD NOT VIOLATED ANY PROVISIONS FOR LOSING THE EXEMPTION. 12. THE LD. CIT(A) - IV ERRED IN RELYING ON THE DECISION OF VODITHALA EDUCATION SOCIETY (20 SOT 353 HYD 2008) WHICH IS DISTINGUISHABLE ON FACTS OF THE CASE ON HAND. 13. THE LD. CIT( A) - IV HYDERABAD OUGHT TO HAVE APPRECIATED THAT 85% OF THE INCOME HAS BEEN APPLIED TO CHARITABLE PURPOSE IN INDIA DURING THE YEAR OF ACCOUNT. 14. THE LD. CIT(A) - IV HYDERABAD OUGHT TO HAVE APPRECIATED THAT THERE IS NO VIOLATION OF ANY PROVISIONS OF THE IT ACT, 1961 AND HENCE TRUST IS ENTITLED TO EXEMPTION U/S. 11 OF THE IT ACT, 1961. ITA NO. 707/ HYD/20 09 CHAITANYA BHARATI EDUCATIONAL SOCIETY, HYDERABAD 10 15. THE LD. CIT(A) - IV OUGHT TO HAVE APPRECIATED THAT SOURCE OF INCOME IS NOT RELEVANT BUT WHAT IS RELEVANT IS APPLICATION OF THE INCOME IN THE CASE OF THE APPELLANT TRUST F OR THE PURPOSE OF SECTION 11 OF THE IT ACT. 16. THE LD. CIT(A) - IV OUGHT TO HAVE CONFINED HIS DECISION TO THE PROVISIONS OF IT ACT, 1961 AND OUGHT NOT TO HAVE PASSED HIS ORDER ON BREACH OF SOME OTHER STATUTE. 17. THE LD. CIT(A) - IV OUGHT TO HAVE APPRECIA TED THAT THE AO IS NOT EMPOWERED UNDER THE STATUTE TO DENY THE EXEMPTION U/S. 11 IN THE ABSENCE OF WITHDRAWAL OF REGISTRATION UNDER S.12A BY THE DIT(EXEMPTION) IN THE APPELLANTS CASE. 18. THE LD. CIT(A) - IV OUGHT TO HAVE HELD THAT THE APPELLANT IS ENTITLED TO EXEMPTION U/S. 11 OF THE ACT 19. THE LD. CIT(A) - IV ERRED IN RELYING ON THE DECISIONS OF TMA PAI FOUNDATION AND OTHERS VS. STATE OF KARNATAKA AND OTHERS (8 SCC 481 2002)AND ISLAMIC ACADEMY OF EDUCATION AND ANOTHER VS. STATE OF KARNATAKA AND AN OTHER (6 SSC 6907 2003) WHICH ARE NOT APPLICABLE TO THE APPELLANTS CASE FOR THE YEAR UNDER CONSIDERATION. 20. .. 12. THE LEARNED COUNSEL FOR THE ASSESSEE, NARRATING THE FACTS OF THE CASE, AND REITERATING THE CONTENTIONS URGED BEFORE THE REVENUE AU THORITIES SUBMITTED THAT DURING THE YEAR UNDER CON S IDE R ATION, ASSESSEE SOCIETY WAS IN RECEIPT OF SOME VOLUNTARY DONATION S TOWARDS CORPUS FUND WHICH WERE CREDITED DIRECTLY TO THE BALANCE SHEET. ACCORDIN G TO HIM, THE ASSESSING OFFICER HAS OPINED THAT TH E DONATION S ARE NO T HIN G BUT CAPITATION FEE CHAR G ED FORM THE STUDENTS AND THEIR GUARDIANS AND THAT THE ASSESSEE HAS DONE PROFITEERING ACTIVITIES WHICH CANNOT BE TERMED AS CHARITABLE. HE DENIED THE ASSESSEE EXEMPTION OF ITS INCOME FROM TAX ON THIS COUNT, AND B ROUGHT TO TAX. THE LEARNED COUNSEL ALSO DREW OUR ATTENTION TO THE OBJECTS OF THE SOCIETY AS APPEARING IN THE MEMORANDUM OF ASSOCIATION AND SUBMITTED THAT THE SOCIETY RUNS VARIOUS EDUCATIONAL INSTITUTIONS, INCLU D IN G CHAITANYA BHA R ATHI INS T ITUTE OF T E CHN OL O GY, WHICH IS ON E O F THE PREMIER ENGIN E ERING COLLEGES IN TH E SELF - FINANCING CATEGORY IN A N DHRA PRADESH. LEARNED COUNSEL H AS BROUGHT TO OUR NO T ICE THAT THE ASSESSEE SOCIETY RECEIVED SEVERAL VOLUNTARY CONTRIBUTION S FROM DIFFERENT PERSON S TOWARDS CORPUS FUN D OF THE SO C I E TY, AND THE ASSESSEE HAS CREDITED THE SAME IN THE ITA NO. 707/ HYD/20 09 CHAITANYA BHARATI EDUCATIONAL SOCIETY, HYDERABAD 11 B ALANCE S HEET. DURIN G THE ASSESSMENT PROCEEDINGS, THE ASSESSEE HAS FIL E D A LI S T OF ALL THE DON A TION S RECEIVED FOR FINANCIAL YEAR 2002 - 03, WITH THE NAMES OF VARIOUS PERSONS AGAINST RECEIPT NUM BERS AND THE AMOUNT S TOTALING TO THE AMOUNT CR E DITED IN THE B ALANCE S HEET. IT WAS ALSO SUBMI T TED THAT THE IN THE REMAND REPORT SUBMITTED BY THE DY. DIRECTOR OF INCOME - TAX(EXEMPTION) IT WAS OB S ERVED THAT THE DON A TION S MADE TO THE SOCIETY ARE VOLUNTARY ONLY. FURTH E R THE SAID AUTHORITY IN HIS ANOTHER REMAND REPORT DATED 22.11.2006 HAS ALSO OBSERVED THAT THERE ARE SOME INHERENT OMISSION S IN THE ASSESSMENT ORDER AND THERE IS MERIT IN THE SUBMI S SION S O F THE ASSESSEE SOCIE TY, AND SINCE THE ASSESSEE WAS REGISTERED UNDER S.12A, PROVISION S OF S.11(1) ARE TO BE APPLIED. IT IS ALSO SUBMITTED THAT THE CIT(A) HIMSELF HAS, VIDE PARA 5.5. OF THE IMPUGNED ORDER, HAS STATED THAT HIS PREDECESSOR VIDE LETTER DATED 2.4.2007 HAD DIRE C TED THE ADDL. DIRECTOR OF INCOME - TAX(EXEMPTION) HYDERABAD TO ENQUIRE FROM THE SECRETARY TO GOVERNMENT OF ANDHRA PRADESH HIGHER EDUCATION(EC II ) DEPT. WH E TH E R THE C OLL E CTION OF FEE AGAINST THE PR E SCRIBED NORMS FIXED BY THE GOVERNMENT OF ANDH R A PRADESH HAS BEEN TAKEN COG N ISAN C E OF, IN VIEW OF THE GO NOS. RT 950 AND GOS NO.33, AND WH E TH E R ANY ACTION HAS BEEN TAKEN AGAINST THE ASSESSEE SOCIETY FOR ANY Y E AR. IN REPLY, THE SE CRETARY HAS STATED NO ACTION HAS BEEN TAKEN. IN SUPPORT OF HI S CON T ENTION S , THE L EARNED C OUNSEL HAS RELIED ON A NUMBER OF DECISIONS/CIRCULARS, NUMBERING TO AS MANY AS 31, DULY FURNISHING COPIES THEREOF IN THE PAPER - BOOKS. 13. THE LEARNED DEPARTMENTAL REPRESENTATIVE ON THE OTHER HAND, RELIED ON THE IMPUGNED ORDERS OF THE REVENUE AUTHORITIES AND SPECIFICALLY RELIED ON THE JUDGMENT OF THE APEX COU R T IN THE CASE OF TMA PAI FOUNDATION AND OTHERS V/S. STATE OF KARNATAKA AND OTHERS (8 SCC 481) AND ISLAMIC ACADEMY OF EDUCATION AND OTHERS V/S. STATE OF KARNATAKA AND ANR.(6 SCC 697). HE ALSO RELIED ON THE DECISION OF THE COORDINATE BENCH OF ITA NO. 707/ HYD/20 09 CHAITANYA BHARATI EDUCATIONAL SOCIETY, HYDERABAD 12 THE TRIBUNAL IN THE CASE OF VODITALA EDU C ATIONAL SOCIETY (20 SOT 353) - HYD. 14. WE HEARD BOTH THE PARTIES AND PERUSED THE MATERIAL AVAILABLE ON RECORD. IT IS AN UNDISPUTED FACT THAT THE ASSESSEE IS AN EDUCATIONAL SOCIETY REGI S TERED UNDER S.12A OF THE ACT, AND ITS OBJECTS AS APPEARING IN THE MEMORANDUM OF ASSOCIATION ARE FOR CARRYING ON ACTIVITIES OF GENERAL PUBLIC UTILITY IN THE FIELD OF EDUCATION AND CHARITABLE PURPOSES. DURING THE Y E AR UNDER CON S I D ER ATION, ASSESSEE HAS RECEIVED DONATIONS FROM THE PARENTS OF THE PROSPECTIVE STUDENTS SEEKING ADMISSIONS INTO THE ASSESSEES EDUCATIONAL INSTITUTIONS. A LIST OF SUCH DON A TION S TOGETH E R WITH TH E PARTICULARS OF THE DONORS HAS ALSO BEEN FURNISH ED BEFORE THE R E VENU E AUTHORITIES. AFFIDAVITS OF SOME OF THE DONORS WERE ALSO FURNISHED BEFORE THE ASSESSING OFFICER. IT IS THE CASE OF THE REVENUE THAT SUCH DONATIONS ARE NOT VOLUNTARY AND THEY ARE LINKED TO THE ADMISSION OF THE STUDENTS TO THE EDUCATIONAL INSTITUTIONS OF THE ASSESSEE, AND THUS, THE ASSESSEE HAS COLLECTED HIGHER FEE OVER AND ABOVE THE PRESCRIBED FEE LIMIT AND ALSO CAMOUFLAGED THESE AMOUNTS UNDER OTHER HEADS, WHICH ESTABLISHED THE INTENT OF DEFRAUD THE REVENUE. SUCH A SOCIETY, ACCORDING TO THE REVENUE CA NNOT BE SAID TO BE GENUINELY CHARITABLE, AND AS SUCH, IT IS NOT ENTITLED TO EXEMPTION UNDER S.11 OF THE ACT. IT IS THE CASE OF THE ASSESSEE THAT THE DONATIONS ARE PURELY VOLUNTARY AND HAVE NOTHING TO DO WITH THE ADMISSION OF THE STUDENTS. 15. ON CAREF UL CONSIDERATION OF THE MATERIAL ON RECORD, WE FIND MERIT IN THE SUBMISSIONS OF THE ASSESSEE THAT THE DONATIONS ARE VOLUNTARY AND THERE WAS NO VIOLATION WHATSOEVER BY THE ASSESSEE , SO AS TO WARRANT DENIAL OF EXEMPTION UNDER S.11 OF THE ACT . IN THE REMAND REPORT SUBMITTED BY THE DY. DIRECTOR OF INCOME - TAX(EXEMPTION) DATED 18.2.2008, I T WAS OBSERVED AS FOLLOWS - ITA NO. 707/ HYD/20 09 CHAITANYA BHARATI EDUCATIONAL SOCIETY, HYDERABAD 13 6. AS SEEN FROM THE ABOVE M A TERIAL, IT APPEARS THAT THE DONATIONS MADE TO THE SOCIETY HAVE BEEN MADE VOLUNTARILY ONLY AND THERE IS MERIT IN THE C ONTENTION OF THE ASSESSEE. I AM ENCLO S IN G THE TWO REMAND REPORTS SUBMITTED BY MY PREDECESSOR A.O. AND THE ENCLOSURES ALSO. IN THE OTHER REMAND REPORT DATED 20.9.2006 SUBMITTED EARLIER , ASST. DIRECTOR OF INCOME - TAX(EXEMPTION) HAS O B S ER V ED THAT THERE AR E INHERENT OMISSIONS IN THE ASSESSMENT ORDER AND THERE IS MERIT IN THE SUBMISSIONS OF THE ASSESSEE - SOCIETY. RELEVANT EXTRA C T OF THE SAID REMAND REPORT IS AS UNDER - 9. IN THE IN S TANT CA S E, THE ASSESSING OFFICER DID NO T FIND ANY SITUATION OF APPLICATION OF FUN D S FOR THE PU R POSES OTHER THAN THE ONE FOR WHICH THE ASSESSEE WAS CONSTITUTED. THE ONLY R E ASON FOUND BY THE ASSESSING OFFICER WAS THAT THE ASSESSEE H A D COLLECTED ON QUID PRO QUID BASIS AND IT AMOUNTS TO PROFITEERI NG. THE ASSESSING OFFICER HAD DENIED EXEMPTION U/S. 11 A ND TAX E D THE EXCESS O F INCOME OVER EXPENDITURE AND ALSO THE CAPITALIZED AMOUNTS. HE OPTED TO DENY THE EXEMPTION U/S. 11 AND ALSO U/S. 10(23C) MAINLY ON THE REASON OF PROFIT MAKING. A DOUBT MAY ARISE A S TO WHETHER THE PROFIT ACCRUES TO THE ASSESSEE OR ANY PERSONS CONNECTED TO THE ASSESSEE. AS CLAIMED BY THE ASSESSEE IN THE SUBMISSIONS ENCLOSED TO THE ABOVE REFERENCE, IF PROFIT ACCRUES TO THE ASSESSEE AND WITHOUT ESTABLISHING THE ACCRUAL TO ANY PARTICULA R PERSON AS SPECIFIED IN SEC.13, THE EX E MPTION MIGHT NOT BE DENIES. HE MADE OUT A CA S E FOR DENIAL E X EMP T ION US. 10(23C) AS THERE WAS NO EXEMPTION CERTIFICATE FOR THAT PURPOSE. BUT FOR DENIAL OF EX E MPTION U/S. 11 HE DID NO T MAKE OUT ANY LAPSE ON THE PART OF THE ASSESSEE. S E CTION 11 SP E AKS OF GROSS RECEIPTS FROM PROPERTY HELD UND E R TRUST AND EXEMPTION TO THE EXTENT OF ITS APPLICATION FOR THE PURPOSE OF TRUST INCLU D IN G CAPITAL EXPENDITURE AND AMOUNTS NOTIFIED U/S. 11(2). SIN C E THE ASSESSEE WAS REGI S TERED U/S . 12A, AND THE P R OVI S ION S OF S.11(1A) ARE TO BE APPLIED. 10. A OVER ALL STUDY OF THE ASSESSMENT ORDER WITH REFERENCE TO THE PROVISION S AND CASE LAWS UNDER CITATION REVEALS THAT THERE ARE SOME INHERENT OMISSION IN THE ASSESSMENT ORDER AND I FEEL THAT THE SE MIGHT NOT STAND THE TEST OF APPEAL. I ALSO FEEL THAT THERE ARE MERITS IN THE SUBMI S SION S TO SOME EXTENT IN FAVOUR OF THE ASSESSEE. HENCE, I REQUEST YOUR HONOU R TO DECIDE THE MAT T ER AS PER LAW. 16. THE CIT( A) HAS ALSO TAKEN NOTE THAT IN THE REMAND REPORT SUBMITTED BY THE ASSESSING OFFICER ON 18.2.2008, AFTER DISCUSSION OF THE EARLIER REPORTS, IT WAS SUBMITTED THAT THE DONATIONS MADE TO THE SOCIETY WERE VOLUNTARY AND THEREFORE, THERE IS MERIT IN THE CONTENTIO N OF THE ITA NO. 707/ HYD/20 09 CHAITANYA BHARATI EDUCATIONAL SOCIETY, HYDERABAD 14 ASSESSEE , BUT STILL PROCEEDED TO UPHOLD THE VIEW TAKEN BY THE ASSESSING OFFICER WITHOUT PROPER REASONING. WE FIND THAT THE ASSESSING OFFICER HAS PROCEEDED TO DECIDE THE ISSUE OF ASSESSEES CLAIM FOR EXEMPTION, MERELY ON THE BASIS OF SUSPICIONS AN D SURMISES, AND THE CIT(A) SIMPLY CONFIRMED THE ACTION OF THE ASSESSING OFFICER, IGNORING THE FINDINGS AND OBSERVATIONS OF THE ASSESSING OFFICER IN THE REMAND REPORTS AND OTHER MATERIAL AVAILABLE ON RECORD. 17. THE DECISION OF THE COORDINATE BENCH OF THE TRIBUNAL IN TH E CA S E OF VODITALA EDU C ATIONAL SO C IETY (SUPRA) IS DISTINGUISHABLE ON FACTS. IN THAT CASE, THERE WAS A SURVEY ACTION IN THE PR E MISES OF ONE OF THE COLLEGES RUN BY IT, WHEREAS IN THE CASE OF THE ASSESSEE, NO SUCH THING HAS HAPPENED. FURTHE R, IN THAT CASE, THE CONTRIBUTIONS/RECEIPTS WERE NO T RECORDED IN THE BOOKS O F ACCOUNT, AND IT WAS A CASE OF CONCEALMENT OF INCOME, WHICH WAS ALSO NOT THE MATTER IN THE PRESENT CASE. IN THAT VIEW OF THE MATTER, RATIO OF THE SAID DECISION OF THE T RI B UNAL IN TH E CASE OF VODITALA EDUCATIONAL SO C I E TY (SUPRA), IS NO T APPLICABLE TO TH E FACTS OF THE PRESENT CA S E. 18. EVEN THE DECISION OF APEX COURT IN THE CASE OF TMA PAI FOUNDATION (SUPRA) RELIED UPON BY THE CIT(A) IN THE IMPUGNED ORDER, IS DISTINGUISHABLE, IN AS MUCH AS THE FORMATION OF FRAME WORK IN RESPECT OF FIXATION OF FEE FOR THE STUDENTS ADMITTED INTO PRIVATE PROFESSIONAL INSTITUTIONS , IN ACCORDANCE WITH THE SAID DECISION WAS DONE ONLY AFTER 2002 - 03. WE ARE SUPPORTED IN THIS BEHALF BY THE DECISION OF THE M ADHYA PRADESH HIGH COURT IN THE CASE OF KU.PRIYANAKA AND ORS. V/S. STATE OF MP AND ORS. (AIR 2007 MP 182), WHEREIN, CONSIDERING SIMILAR CIRCUMSTANCES , IT WAS HELD JUDGMENT OF APEX COURT IN THE CASE OF TMA P AI FOUN D ATION (SUPRA), COULD NO T BE GIVEN EFFECT, AS THE SAID J U DGMENT WA S GIVEN ON 31.10.2002 WHEREAS THE ACADEMIC YEAR IN THE CASE OF THE ASSESSEE WAS 2002 - 03. THE COURT OBSERVED IN THAT CASE AS FOLLOWS - ITA NO. 707/ HYD/20 09 CHAITANYA BHARATI EDUCATIONAL SOCIETY, HYDERABAD 15 THE COMMITTEE HAD NO JURISDICTION UNDER THE OR D ER OF HONOURABL E SUPREME COU R T FOR FIXING THE DIFFE RE NTIAL FEES FOR THE ACADEMIC YEAR 20O03 - 04. IN FACT, THE COM M I T TEE HAD COME INTO EXI S TENCE ONLY WHEN THOSE ACADEMIC YEARS WERE NE A RING COMPLETION. FOR ALMOST SIMILAR REASONS, THE OTHER DECISION OF THE APEX COURT IN THE CA S E OF ISLAMIC ACADEMY OF EDUCATION AND ANR. V/S. STATE OF KARNATAKA (SUPRA), ALSO RELIED UPON BY THE REVENUE AUTHORITIES, IS NO T APPLICABLE, AS THAT DECISION WAS PRONOUNCED ON 14.8.20 0 3, WHICH IS AFTER THE CLOSURE OF ACADEMIC YEAR UNDER CON S IDERATION, I.E. 2002 - 03 IN THE PRESENT CASE. 19. FURTHER, THE GOMS NO.90 BY THE G OVERNMENT OF ANDH R A PRADESH IN RESPECT OF CONSTITUTION OF COMMITTEE AS PER THE JUDGMENT OF APEX COU R T IN TMA PAI FOUNDATION (SUPRA) WAS ISSUED ON 22.12.2003, WHICH IS AFT E R THE CLOSUR E OF THE ACADEMIC Y E AR UNDER CONSIDERATION I.E. 2002 - 03 . SIMILARLY, THE GO MS. NO.33 BY THE GOVERNMENT OF ANDHRA PRADESH IN RESPECT OF FORM UL ATION OF RULES FOR ADMISSION INTO THE UN D ER GRADUATE P ROFESSIONAL COU R SES IN ENGINEERING IN U NAIDED NON - M INORITY PROFESSIONAL INST IT UTIONS WAS ISSUED ON 20.6.2003, WHICH IS AFTER THE CLOSURE OF THE ACADEMIC YEAR UNDER CON S I D ERATION, VIZ. 2002 - 03. CONSEQUENTLY, THOSE GOVERNMENT ORDERS NOTED ABOVE, ALSO ARE OF NO APPLICATION TO THE YEAR UNDER APPEAL, VIZ. ASSESSMENT YEAR 2003 - 04, IN THE CASE OF THE PRESENT ASSESSEE. IN ANY EVENT, WE AGREE WITH THE ASSESSEE THAT THERE WERE NO VIOLATION OF THE ABOVE RULES . FURTHER, IN THE ABSENCE OF ANY CLINCHING MATERIAL BROUGHT ON RECORD BY THE REVENUE, TO INDICATE THAT THERE WERE, I N FACT, VIOLATIONS WARRANTING DENIAL OF EXEMPTION UNDER S.11 OF THE ACT, THE RATIO OF THE DECISION OF COORDINATE BENCH OF THE TRIBUNAL IN THE CASE OF PRATIMA EDUCATIONAL SOCIETY (SUPRA), RELIED UPON BY THE LEARNED COUNSEL FOR THE ASSESSEE, ALSO SQUARELY AP PLIES TO THE FACTS OF THE PRESENT CASE. ITA NO. 707/ HYD/20 09 CHAITANYA BHARATI EDUCATIONAL SOCIETY, HYDERABAD 16 20. IN THE LIGHT OF THE FOREGOING DISCUSSION, WE HOLD THAT THE ASSESSEE IS ENTITLED TO EXEMPTION UNDER S.11 OF THE ACT, AND CONSEQUENTLY, THE ADDITIONS MADE BY THE ASSESSING OFFICER IN THE IMPUGNED ASSESSMENT ORD ER, HAVE NO LEGS TO STAND. WE ACCORDINGLY SET ASIDE THE IMPUGNED ORDERS OF THE REVENUE AUTHORITIES, ALLOWING THE GROUNDS OF THE ASSESSEE IN THIS APPEAL. 21. IN THE RESULT, ASSESSEES APPEAL IS ALLOWED. ORDER PRONOUNCED IN THE COURT ON 7 TH MARCH, 2014 SD/ - SD/ - (CHAND RA POOJARI ) (ASHA VIJAYARAGHAVAN) ACCOUNTANT MEMBER JUDICIAL MEMBER DT/ - 7 TH MARCH, 2014 COPY FORWARDED TO: 1. CHAITANYA BHARATI EDUCATIONAL SOCIETY, C/O. M/S.P.MURALI & CO., CHARTERED ACCOUNTANTS, 6 - 3 - 6755/2/3, 1ST FLOOR, SOMAJIGUDA, HYDERABAD - 82 2 . ASST. DIRECTOR OF INCOME - TAX(EXEMPTION) I, HYDERABAD 3. COMMISSIONER OF INCOME - TAX(APPEALS) IV HYDERABAD 4. COMMISSIONER OF INCOME - TAX III, HYDERABAD 5 DEPARTMENTAL REPRESENTATIVE, ITAT, HYDERABAD. B.V.S