DDIT, Hyderabad V. Vardhaman college of Engg., Hyderabad

ITA 741/HYD/2009

• Counselvise Citation: [2011] 134 COUNSELVISE.COM (IT) 3392 (ITAT-HYDERABAD)
• Duration Of Justice: 1 year(s) 10 month(s) 4 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 08-04-2011
• Appeal Filed By: Department
• Order Result: Partly Allowed
• Bench Allotted: A
• Next Hearing Date: 14-03-2011
• Assessment Year: 2005-2006
• Appeal Filed On: 03-06-2009
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: K V N CHARYA
• Assessee Lawyers: K A SAI PRASAD
• Keywords: Tax effect
• Section: 260A; 11

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD BENCH A', HYDERABAD BEFORE SHRI G.C.GUPTA, VICE PRESIDENT AND SHRI AKBER BASHA, ACCOUNTANT MEMBER ITA NO.741/HYD/2009 : ASSESSMENT YEAR 2005- 06 DY. DIRECTOR OF INCOME - TAX(EXEMPTION)I, HYDERABAD VS VARDHAMAN COLLEGE OF ENGINEERING, HYDERABAD (PAN AACFV 7302 C) (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI K.V.N.CHARYA RESPONDENT BY : SHRI K.A.SAI PRASAD O R D E R PER G.C.GUPTA, VICE PRESIDENT: THIS APPEAL BY THE REVENUE FOR THE ASSESSMENT YEA R 2005-06, IS DIRECTED AGAINST THE ORDER OF THE COMMISSIONER OF I NCOME-TAX(APPEALS). 2. GROUNDS OF APPEAL OF THE REVENUE ARE AS UNDER- (I) THE ORDER OF THE CIT(A) IS NOT ACCEPTABLE AS I T IS ERRONEOUS BOTH IN LAW AND ON FACTS. (II) THE CIT(A) OUGHT TO HAVE APPRECIATED THE FACT THAT OBTAINING APPROVAL OF THE PRESCRIBED AUTHORITY IS MANDATORY A S PER THE PLAIN MEANING OF THE PROVISIONS OF 10(23C)(VI) OF T HEY I.T. ACT AND IT DOES NOT CALL FOR ANY INTERPRETATION. (III) THE CIT(A) FAILED TO APPRECIATE THAT SECTION 10(23C) AS SUCH IS NOT A REPLACEMENT OF SECTION 10(22A) AS STATED IN T HE APPELLATE ORDER BUT ONLY SUB-CLAUSES (III)(AD) AND (IIIAC) AR E REPLACEMENTS OF THE ERSTWHILE SEC. 10(22) AND 10(22 A) RESPECTIVELY. (IV) THE CIT(A) OUGHT TO HAVE CONSIDERED THE FAC T THAT SUB-CLAUSE (IV) AND (VIA) ARE ENTIRELY NEW PROVISIONS MEANT TO PROVIDE THE MONITORING MECHANISM THAT WAS LACKING IN THE EARLIE R PROVISIONS. ITA NO.741/HYD/09 VARDHAMAN COLLEGE OF ENGINEERING, HYD 2 (V) THE CIT(A) OUGHT TO HAVE APPRECIATED THE FAC T THAT IT WAS SECTION 10(22) THAT PROVIDED FOR EXEMPTION OF THE E DUCATIONAL INCOME OF THE TRUSTS, SOCIETIES ETC. AND NOT SECTIO N 11. (VI)_ THE CIT(A) ERRED IN OBSERVING THAT SECTION 1 1 PROVIDES SUFFICIENT MONITORING MECHANISM TO CHECK THE ASSESS EES ACTIVITIES AND CONDITIONS OF SECTION 11 ARE AS THE CONCLUSION OF THE CIT(A) IS NOT FOUNDED ON SOUND REASONING AND EV EN THE CITATION OF SUPREME COURT IN 195 ITR 8, IN FACT, PU RPORTS JUST THE OPPOSITE VIEW. (VII) THE DECISION OF THE ITAT IN RAJASTAN SIKSHA SAMITHI HAS NOT BEEN ACCEPTED IN PRINCIPLE BUT THE APPEAL HAS NOT B EEN PREFERRED BEFORE THE HIGH COURT U/S. 260A DUE TO TH E FACT THAT THE TAX EFFECT IS BELOW THE MONETARY LIMITS. (VIII) IN THE CASE OF ST. THERESAS SOCIETY, THE DE CISION OF THE ITAT HAS NOT BEEN ACCEPTED AND APPEAL HAS BEEN FILED BEF ORE THE HIGH COURT. 3. THE LEARNED COUNSEL FOR THE ASSESSEE, AT THE OU TSET, SUBMITTED THAT THE ISSUE OF ASSESSEES ALTERNATIVE CLAIM FOR EXEMPTION UNDER S.11 OF THE ACT IS COVERED IN FAVOUR OF THE ASSESSEE WITH S ERIES OF DECISIONS OF THE HYDERABAD BENCHES OF THE TRIBUNAL INCLUDING IN RAJ ASTHAN SIKSHA SAMITI (ITA NO.80-81/HYD/2008); ST. THERESAS CONVENT SOCI ETY (ITA NO.844/HYD/2008); AND ST. LOUIS EDUCATIONAL SOCIETY (ITA NO.1456/HYD/2008), WHEREIN IT WAS HELD THAT EXEMPT ION UNDER S.10(23C) AND UNDER S.11 OF THE ACT CAN BE ALTERNATIVELY CLAI MED BY THE ASSESSEE. 4. THE LEARNED DEPARTMENTAL REPRESENTATIVE HAS RE LIED ON THE ORDER OF THE DY. DIRECTOR OF EXEMPTION. HE SUBMITT ED THAT THE DECISIONS OF THE TRIBUNAL IN THE CASE OF ST. THERESAS CONVENT SOCIETY (SUPRA) HAS NOT BEEN ACCEPTED BY THE DEPARTMENT AND THE ISSUE IS PE NDING BEFORE THE HONBLE JURISDICTIONAL HIGH COURT. 5. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS CAREF ULLY. WE FIND THAT IT IS NOW SETTLED WITH SERIES OF DECISIONS OF THE H YDERABAD BENCHES OF THE TRIBUNAL THAT AN ASSESSEE CAN MAKE ALTERNATIVE CLA IM UNDER S.11 OF THE ACT ITA NO.741/HYD/09 VARDHAMAN COLLEGE OF ENGINEERING, HYD 3 AND IT IS NOT MANDATORY FOR THE ASSESSEE TO OBTAIN A NOTIFICATION UNDER S.10(23C)(VI) OF THE ACT. THE ISSUE BEING COVERED IN FAVOUR OF THE ASSESSEE WITH SERIES OF DECISIONS OF THE TRIBUNAL, WE HOLD T HAT THE ASSESSEE CAN MAKE ALTERNATIVE CLAIM FOR EXEMPTION UNDER S.11 OF THE A CT AND THERE BEING NO MISTAKE IN THE ORDER OF THE CIT(A), ON THIS ISSUE, WE HOLD THAT NO INTERFERENCE WITH HIS ORDER IS CALLED FOR. 6. WE HOWEVER, FIND THAT THE HYDERABAD BENCH OF T HE TRIBUNAL IN DIRECTOR OF INCOME-TAX(EXEMPTION) V/S. VASAVI ACADE MY OF EDUCATION IN ITA NO.1449/HYD/2008, VIDE ORDER DATED 4.2.2010, HAS HE LD THAT AN EDUCATIONAL INSTITUTION IS ENTITLED FOR EXEMPTION UNDER S.10(23 C) OR UNDER S.11, IF NO DONATION WAS COLLECTED FROM THE STUDENTS. WE BEING IN AGREEMENT WITH THE ORDER OF THE COORDINATE BENCH OF THE TRIBUNAL IN TH E CASE OF VASAVI ACADEMY OF EDUCATION (SUPRA), DIRECT THE ASSESSING OFFICER TO VERIFY THE ASPECT OF DONATION, CAPITATION FEE ETC. IF ANY COLLECTED BY T HE ASSESSEE, AND FURTHER DIRECT THAT IF IT IS FOUND THAT BESIDES FULFILLING OTHER PREREQUISITES FOR EXEMPTION UNDER S.11, THE ASSESSEE HAS NOT CHARGED ANY MONEY BY WHATEVER NAME IT IS CALLED, I.E. DONATION, BUILDING FUND, AUDITORIUM FEE ETC, OVER AND ABOVE THE PRESCRIBED FEE FOR THE ADMISSION OF STUDENTS, THE ASSESSEE WOULD BE ENTITLED FOR EXEMPTION UNDER S.11 , EVEN THOUGH THE NOTIFICATION UNDER S.10(23C)(VI) OF THE ACT HAVE NO T BEEN RECEIVED BY IT. WE DIRECT ACCORDINGLY. 7. IN THE RESULT, REVENUES APPEAL IS ALLOWED FO R STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE COURT ON 8.4.2011 SD/- SD/- (AKBER BASHA) (G.C.GUPTA) ACCOUNTANT MEMBER VICE PRESIDENT DT/- 8 TH APRIL, 2011 ITA NO.741/HYD/09 VARDHAMAN COLLEGE OF ENGINEERING, HYD 4 COPY FORWARDED TO: 1. M/S. VARDHAMAN COLLEGE OF ENGINEERING, KACHARAM VILLAGE, SHAMSHABAD, HYDERABAD 2. DY. DIRECTOR OF INCOME - TAX(EXEMPTION) , I, HYDERABAD 3. COMMISSIONER OF INCOME - TAX(APPEALS), IV, HYDERABAD. 4. DIRECTOR OF INCOME - TAX(EXEMPTION) HYDERABAD 5. DEPARTMENTAL REPRESENTATIVE, ITAT, HYDERABAD. B.V.S.