ADIT (Exemptions)-I, Hyderabad V. Chaitanya Bharathi Educational Soceity, Hyderabad

ITA 823/HYD/2011

• Counselvise Citation: [2014] 140 COUNSELVISE.COM (IT) 74474 (ITAT-HYDERABAD)
• Duration Of Justice: 2 year(s) 8 month(s) 16 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 21-01-2014
• Appeal Filed By: Department
• Order Result: Partly Allowed
• Bench Allotted: B
• Assessment Year: 2006-2007
• Appeal Filed On: 05-05-2011
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: P MURALI MOHANA RAO
• Assessee Lawyers: D SUDHAKARA RAO
• Keywords: Competent authority; Tax effect
• Section: 260A; 12A; 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.823/HYD/11 : ASSTT. YEAR 2006 - 07 ITA NO.480/HYD/13 : ASSTT. YEAR 2005 - 06 DY. DIRECTOR OF INCOME - TAX(EXEMPTION) I, HYDERABAD V/S. CHAITANYA BHARATI EDUCATIONAL SOCIETY, HYDERABAD ( PAN - AAATC 1076 E ) (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI D.SUDHAKARA RAO DEPARTMENT BY : SHRI P.MURALI MOHANA RAO DR DATE OF HEARING 6.1.2014 DATE OF PRONOUNCEMENT 21.1.2014 O R D E R PER SMT. ASHA VIJAYARAGHAVAN, JUDICIAL MEMBER: THESE TWO APPEAL S BY THE RE VENUE ARE DIRECTED AGAINST THE ORDER S OF THE COMMISSIONER OF INCOME - TAX(APPEALS) IV HYDERABAD DATED 19.3.2013 FOR THE ASSESSMENT YEAR 2008 - 09. SINCE IDENTICAL ISSUES ARE INVOLVED, BOTH THESE APPEALS ARE BEING DISPOSED OF WITH THIS COMMON ORDER FOR THE SAKE OF CONVENIENCE. 2. FACTS OF THE CASE IN BRIEF ARE THAT THE ASSESSEE, AN EDUCATIONAL INSTITUTION, FILED RETURNS OF INCOME FOR THE YEARS UNDER APPEAL, DECLARING NIL INCOME AFTER CLAIMING EXEMPTION UNDER S.10( 23C)(VI)/11 OF THE ACT. THE ASSESSING OFFICER, HOWEVER, OBSERVING THAT THE ASSESSEE HAS BEEN GRANTED APPROVAL UNDER S.10 ( 23C ) (VI) OF THE ACT ONLY FROM ASSESSMENT YEAR 2007 - 08 ONWARDS, REJECTED THE CLAIM OF EXEMPTION UNDER S.10(23C)(VI) AS WELL AS UNDER S .11 OF THE ACT FOR ASSESSMENT YEARS 2005 - 06 AND 2006 - 07 . HE THEN PROCEEDED TO COMPLETE THE ASSESSMENT DETERMINING THE INCOME OF THE ASSESSEE AT RS.4,97,71,544 FOR ASSESSMENT YEAR 200 5 - 0 6 VIDE ORDER OF ASSESSMENT DATED 18.12.2009 PASSED UNDER S.143(3) READ W I TH S.147 OF THE ACT; AND AT I TA NO. 823/ HYD/2011 & ANR CHAITANYA BHARATI EDUCATIONAL SOCIETY, HYDERABAD 2 RS.5,29,66,510 FOR THE ASSESSMENT YEAR 200 6 - 0 7 VIDE ORDER OF ASSESSMENT DATED 29.12.2008 PASSED UNDER S.143(3) OF THE ACT. 3. ON APPEAL, THE CIT(A), BY THE IMPUGNED ORDER FOR THE ASSESSMENT YEAR 2005 - 06 , THOUGH, IN THE FIRST PLACE, UPHELD THE ACTION OF THE ASSESSING OFFICER IN DENYING THE EXEMPTION CLAIMED BY THE ASSESSEE UNDER S.10(23C)(VI), CONSIDERING THE ALTERNATIVE CLAIM FOR EXEMPTION UNDER S.11 OF THE ACT, DIRECTED THE ASSESSING OFFICER TO EXAMINE THE CLAIM FOR SUCH EXEMPTION UNDER S.11 OF THE ACT, SINCE THE ASSESSEE SOCIETY HAS BEEN REGISTERED UNDER S.12A OF THE ACT. 4. AS FOR THE ASSESSMENT YEAR 2006 - 07, THE CIT(A) BY THE IMPUGNED ORDER DATED 29.12.2010 , FOLLO W IN G THE DECISION OF THE TRIBUNAL IN THE CAS E OF J.B. EDUCATION SOCIETY IN ITA NO .1144/HYD/2003 FOR ASSESSMENT YEAR 2000 - 01 DATED 26.7.2004, H E L D THAT THE ASSESSING OFFICER WAS NOT JU S TIFIED IN DENYING THE EXEMPTION AS CLAIMED BY THE ASSESSEE, AND ACCORDINGLY DELETED THE ADDITION MADE IN THE ASSE SSMENT. 5 . AGGRIEVED BY THE ORDERS OF THE CIT(A), REVENUE PREFERRED THE PRESENT APPEALS BEFORE US. 6 . THOUGH GROUNDS RAISED HAVE BEEN WORDED IN THESE APPEALS ARE NOT IDENTICAL , AS THEY ARE DIFFERENTLY WORDED, THE ONLY EFFECTIVE COMMON GRIEVANCE OF THE REVENUE IS THAT THE CIT(A) ERRED IN HOLDING THAT THE ASSESSEE IS ELIGIBLE FOR CLAIM UNDER S.11, EVEN IN THE ABSENCE OF APPROVAL UNDER SUB - CLAUSE (VI) TO S.10(23C) OF THE INCOME - TAX ACT. 7. GROUNDS TAKEN BY THE REVENUE IN ITA NO.823/HYD/2011 F OR ASSESSMENT YEAR 2006 - 07 READ AS FOLLOWS - (I) . THE ORDER OF THE CIT(A) IS NO T ACCEPTABLE AS IT IS ERRONEOUS BOTH IN LAW AND ON FACTS MOREOVER THE ORDER O F TH E CIT(A) IV, HYDERABAD IN THE APPEAL NO.003DDIT(I)(E)/CIT/0307 - 08 IS AS UNDER - I TA NO. 823/ HYD/2011 & ANR CHAITANYA BHARATI EDUCATIONAL SOCIETY, HYDERABAD 3 I DIRECT ASSE SSING OFFICER TO V E RIFY THE MAT T ER WITH CONCERNED AUTHORITY WITH REGARD TO APP RO VAL/REJECTION OF THE APPELLANTS APPLICATION IN FORM NO.56D FOR CLAIMING EXEMPTION U/S. 210(23C)(VI) OF THE I.T. ACT. BEING AGGRIEVED, THE DEPARTMENT HAS PREFERRE D AN APPEAL BEFORE THE I TAT, HYDERABAD. (II) THE CIT(A) OUGHT T O HAVE APPRECIATED THE FACT THAT OBTAINING APP R O V AL U/S. 10(23C)(VI) OF THE I.T. ACT OF THE PRESCRIBED AUTHORITY IS MANDATORY SIN C E TH E GROSS RECEIPTS OF THE SOCIETY HAVE EXCEEDED R S .ONE CRORE. (III) TH E CIT(A) OUGHT TO HAVE APPRECIATED THE FACT THAT IT WAS SECTION 10(23C)(VI) THAT PROVIDED FOR EXEMPTION OF TH E EDUCATIONAL IN C OM E O F THE TRUSTS, SOCIETIES ETC. AND NO T SECTION 11. (IV) THE DECISION OF THE ITAT IN RAJASTHAN SIKSHA SAMITHI HAS NO T BEEN ACCEPTED IN PRINCIPLE BUT THE APPEAL HAS NO T BEEN PREFERRED BEFORE THE HIGH COU R T U / S. 260A DUE TO THE FACT THAT THE TAX EFFECT IS BELOW THE MONETARY LIMITS. (V) IN THE CASE OF S T .THERESAS SOCIETY, THE DECISION OF THE ITAT HA S NOT BEEN ACCEPTED AND APPEAL HAS BEEN FIL E D BEFORE THE HIGH COURT. (VI) . CORRESPONDING GROUNDS TAKEN BY THE REVENUE IN ITS APPEAL FOR ASSESSMENT YEAR 2005 - 06, BEING ITA NO.480/HYD/2013 ARE AS FOLLOWS 1. THE ORDER OF THE LEARNED CIT(A) IS ERRONEOUS BOTH ON FACTS AND IN LAW. 2. THE LEARNED. CIT(A) ERRED IN HOLDING THAT THE ASSESSEE IS ELIGIBLE FOR CLAIM U/S. 11 EVEN IN ABSENCE OF APPROVAL UNDER SUB - CLAUSE 90VI0 - TO SECTION 10(23C) OF THE I.T. ACT, 1961. 3. THE LEARNED. CIT(A) OUGHT TO HAVE APPRECIATED THE FACT THAT APPROVAL UNDER SUB - SECTION (VI) TO THE SECTION 10(23C)P IS DISTINCT FROM REGISTRATION U/ S . 12A OF THE ACT. 4 . THE LEARNED. CIT(A) FAIL E D TO SEE THAT SUB - CLAUSE ( VI ) OF THE ACTION 10(23C) AS INSERTED BY THE F INANCE ACT, 1998 W.E.F. 01.04.1999 STATES THAT THE UNI V ERSITY OR OTHER EDUCATIONAL INSTITUTION EXISTING SOLELY FOR EDUCATIONAL PU R PO S E, AND WHICH MAY BE APPROVED BY TH E 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 LEARNED. CIT(A) OUGHT TO HAVE APPRECIATED THE FACT THAT OBTAINING APPROVAL O F THE PR E S C RIBED AUTHORITY IS MANDATORY AS PER THE PLAIN MEANING OF SECTION 10(23C ) (V I ) OF THE I.T. ACT, 1961 WHENEVER THE AGGREGATE GROSS RECEIPTS OF EDUCATIONAL INSTI TUTIONS ARE OVER AND ABOVE RS.ONE CRORE. 6. FROM, THE OBSERVATIONS MADE AND THE SPECIFIC DIRECTION GIVEN BY THE LEARNED CIT(A) TO THE ASSESSING OFFICER IN PARA 7 OF HER ORDER, I TA NO. 823/ HYD/2011 & ANR CHAITANYA BHARATI EDUCATIONAL SOCIETY, HYDERABAD 4 PRACTICALLY, SHE HAS SET ASIDE THE ASSESSMENT WITH REFERENCE TO THAT ISSUE, WH EREAS THE CIT(A) HAS NO SUCH POWER UNDER THE PRESENT PROVI S ION S O F THE ACT. 7. ANY OTHER GROUND THAT MAY BE URGED AT THE TIME OF HEARING. 8 . WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AND PERUSED THE ORDERS OF THE LOWER AUTHORITIES. THE ONLY ISSUE ARISING FOR CONSIDERATION IN THESE APPEALS IS WITH REGARD TO ELIGIBILITY OF ASSESSEE FOR EXEMPTION UNDER S.11 OF THE ACT, HAVING BEEN REGISTERED UNDER S.12A OF THE ACT, NOTWITHSTANDING THE FACT THAT IT HAS BEEN DENIED EXEMPTION UNDER S.10(2 3C)(VI) OF THE ACT IN THE ABSENCE OF APPROVAL OF THE COMPETENT AUTHORITY FOR THE YEARS UNDER APPEAL AS SUCH APPROVAL HAS BEEN RECEIVED ONLY FROM ASSESSMENT YEAR 2007 - 08 ONWARDS. THIS ISSUE HAS BEEN COVERED IN FAVOUR OF THE ASSESSEE BY VARIOUS JUDICIAL PRON OUNCEMENTS INCLUDING THE DECISIONS REFERRED TO AND FOLLOWED BY THE CIT(A) IN THE IMPUGNED ORDER DATED 18.1.2013 FOR ASSESSMENT YEAR 2005 - 06, WHICH ARE AS FOLLOWS - ( I ) CIT V/S. BAR COUNCIL OF MAHARASHTRA(1981)130 ITR 28(SC) ( II ) AMERICAN H OTEL AND L ODGING AS S OCIA TION/EDUCATIONAL INSTITUTE V/S. CBDT(2008) 170 TAXMAN 306(SC) ( III ) RAJASTHANI SIKSHA SAMITHI (ITA NO.80 & 81/HYD/2008) ( IV ) ST. THERESAS CONVENT SOCIETY, HYDERABAD 9ITA NO.844/HYD/08) ( V ) ADIT(EXEMPTIONS) V/S. LOUIS EDUCATIONAL SOCIETY (ITA NO.1456/HYD/2008 DATED 26.12.2008) ( VI ) AP SOCIETY OF KNOWLEDGE (ITA NO.843/HYD/09 DATED 9.10.2009) FOLLOWING THE ABOVE DECISIONS, THE CIT(A) HELD THAT ONCE ALL THE REQUISITE CONDITIONS FOR EXEMPTION UNDER S.11 WERE M ET, EVEN IF THE CONDITIONS UNDER S.10(23C)(VI) HAD NOT BEEN COMPLIED WITH, THERE WOULD BE NO BAR TO SEEK EXEMPTION UNDER S.11 OF THE ACT. WE DO NOT FIND ANY INFIRMITY IN THE ACTION OF THE CIT(A) ON THIS ISSUE, AND ACCORDINGLY REJECT THE GROUNDS OF THE REV ENUE ON THIS ASPECT FOR BOTH THE YEARS UNDER APPEAL BEFORE US, VIZ. ASSESSMENT YEAR 2005 - 06 AND 2006 - 07. I TA NO. 823/ HYD/2011 & ANR CHAITANYA BHARATI EDUCATIONAL SOCIETY, HYDERABAD 5 9 . HOWEVER, WITH REGARD TO THE ADDITIONS MADE AND INCOME DETERMINED BY THE ASSESSING OFFICER FOR THE ASSESSMENT YEAR 2005 - 06, T HE CIT(A) , IN TH E ORDER DATED 18.1.2013, IMPUGNED FOR ASSESSMENT YEAR 2005 - 06, THEN PROCEEDED TO DECIDE THE ISSUE RELATING TO EXEMPTION UNDER S.11 OF THE ACT IN THE FOLLOWING MANNER - 6.0 IT IS FU R TH E R SEEN THAT THE ITAT HAS HELD THAT IF DONATIONS ARE RECEIVED COMPULSORY FOR THE ADMISSION OF STUDENTS, BY WHATEVER NAME CALLED, I.E. DONATION, BUILDING FUND, AUDITORIUM FUND, ETC. OVER AND ABOVE THE PRESCRIBED FEE, FROM TH E STUDENTS, THE ASSESSEE WOULD NO T BE ENTITLED FOR EX E MPTION U/S. 10(23C) OR U/S. 11. THIS VI EW HAS REPEATEDLY BEEN EXPRESS E D BY THE I TAT AS IN TH E FOL L OWING CASES: I . VA S AVI ACADEMY OF EDUCATION (ITA NO.1133/HYD/2006, DATED 15.45.2009 II . JAMIA NIZAMIA ()ITA NO.763/HYD/2O007 DATED 30.6.2008 III . I N TERN A TIONAL EDUCATIONAL ACADEMY (ITA NO.494/HYD/2007) IV . SRI V E NAKATA SAI EDUCATIONAL S O C I E TY (ITA NO.1440/HYD/2011, DATED 9.4.2012) 7.0 FOLLOWING TH E ABOVE DECI S ION S OF THE JURI S DI CT IONAL ITAT, IT I S HELD THAT IF THE ASSESSING OFFICER HAS FOUND THAT BESIDES FULFILLING OTHER PREREQUISITES FOR EXEMPTION U/S. 11, AS STIPUL A TED IN SECTIONS 11 TO 13 OF THE ACT, THE APPELLANT DID NO T CHARGE ANY MONEY, BY WHATSOEVER NAME IT IS CALLED, I.E. DONATION, BUILDIN G FUND, AUDITORIUM FEE ETC., O V ER AND ABOVE THE PR E SCRIBED FEE FOR TH E ADMISSION OF TH E STUDENT, THE APPELL A N T WOULD BE ENTITLED FOR EXEMPTION/S. 11, EVEN IF THE NOTIFICATION U/S. 10(23C ) OF THE ACT HAS NO T BEEN OBTAINED BY IT. . THE GROUNDS TAKEN ON THIS I SSUE ARE, THEREFORE, DECIDED IN FAVOUR O F THE APPELLANT, SUBJECT TO C ER T IFICATION OF FULFILLMENT OF THE ABOVE CONDITIONS. SINCE THE DIRECTIONS GIVEN BY THE CIT( A), AS ABOVE, ARE CONSISTENT WITH THE VIEW TAKEN BY THE VARIOUS BENCHES OF THIS TRIBUNAL IN SIMILAR MATTERS NOTED ABOVE, WE FIND NO INFIRMITY IN THE ORDER OF THE CIT(A), IN THIS BEHALF, FOR THE ASSESSMENT YEAR 2005 - 06. WE ACCORDINGLY UPHOLD THE SAME AND REJECT THE GROUNDS OF THE REVENUE ON THIS ASPECT IN ITS APPEAL FOR ASSESSMENT YEAR 2005 - 06. CONSEQUENTLY, REVENUES GROUNDS IN ITS APPEAL FOR ASSESSMENT YEAR 2005 - 06 ON THIS ASPECT ARE ALSO REJECTED. I TA NO. 823/ HYD/2011 & ANR CHAITANYA BHARATI EDUCATIONAL SOCIETY, HYDERABAD 6 10. IN THE RESULT, REVENUES APPEAL FOR THE ASSESSM ENT YEAR 2005 - 06, BEING ITA NO.480/HYD/2005 - 06 IS DISMISSED. 11 . AS FOR THE ASSESSMENT YEAR 2006 - 07, HOWEVER, WITH REGARD TO THE ADDITIONS MADE AND INCOME DETERMINED BY THE ASSESSING OFFICER FOR THE ASSESSMENT YEAR 2006 - 07, THE CIT(A) VIDE IMPUGNED ORDER DATED 29.12.2010, STRAIGHT AWAY DELETED THE SAME FOLLOWING THE DECISION OF THE TRIBUNAL IN THE CA S E OF J.B. EDUCATIONAL SOCIETY FOR THE ASSESSMENT YEAR 2000 - 01 IN I TA N O.1144/HYD/2003 . HOWEVER, CONSISTENT WITH THE VIEW TAKEN BY US IN THE APPEAL FOR ASSESSMENT YEAR 2005 - 06 ON THIS ASPECT HEREINABOVE, IN THE PRECEDING PARA, WHICH IN TURN IS IN CONSONANCE WITH THE VIEW TAKEN BY THE VARIOUS BENCHES OF THE TRIBUNAL IN SIMILAR MATTERS IN ITS RECENT DECISIONS NOTED ABOVE AND FOLLOWED BY THE CIT(A) IN THE IM PUGNED ORDER FOR THE ASSESSMENT YEAR 2005 - 06, WE SET ASIDE THE IMPUGNED ORDER OF THE CIT(A) FOR THE ASSESSMENT YEAR 2006 - 07 AND RESTORE THE MATTER TO THE FILE OF THE ASSESSING OFFICER WITH A DIRECTION TO VERIFY WHETHER THE ASSESSEE HAS CHARGED ANY MONEY, B Y WHATSOEVER NAME IT IS CALLED, I.E. DONATION, BUILDING FUND, AUDITORIUM FEE ETC., OVER AND ABOVE THE PRESCRIBED FEE FOR THE ADMISSION OF THE STUDENTS, AND ALLOW EXEMPTION UNDER S.11 OF THE ACT, ONLY IF IT IS FOUND THAT THE ASSESSEE HAS NOT CHARGED ANYTHIN G AS ABOVE, OVER AND ABOVE THE FEE PRESCRIBED. UPON SUCH VERIFICATION AND SUBJECT TO FULFILLMENT OF THE CONDITIONS PRESCRIBED, THE ASSESSING OFFICER SHALL REDECIDE THE ISSUE OF EXEMPTION OF THE INCOME OF THE ASSESSEE UNDER S.11 OF THE ACT, IN ACCORDANCE W ITH LAW, AND AFTER GIVING REASONABLE OPPORTUNITY OF HEARING TO THE ASSESSEE. GROUNDS OF THE REVENUE ON THIS AS P E C T ARE PARTLY ALLOWED FOR STATISTICAL PURPOSES. 12. IN THE RESULT, REVENUES APPEAL FOR THE ASSESSMENT YEAR 2006 - 07 IS PARTLY ALLOWED FO R STATISTICAL PURPOSES. I TA NO. 823/ HYD/2011 & ANR CHAITANYA BHARATI EDUCATIONAL SOCIETY, HYDERABAD 7 13 . TO SUM UP, WHILE THE REVENUE S APPEAL FOR ASSESSMENT YEAR 2005 - 06, BEING ITA NO.480/HYD/2013 IS DISMISSED, THE SAME FOR THE ASSESSMENT YEAR 2006 - 07, BEING ITA N O .823 /HYD/2011, IS PARTLY ALLOWED FOR STATISTICAL PURPOSES. O RDER PRONOUNCED IN THE COURT ON 21 ST JANUA R Y , 2014 SD/ - SD/ - (CHANDRA POOJARI ) (ASHA VIJAYARAGHAVAN) ACCOUNTANT MEMBER JUDICIAL MEMBER DT/ - 21 ST JANUARY, 2014 COPY FORWARDED TO: 1. CHAITANYA BHARATI EDUCATIONAL SOCIETY, A.V. COLLEGE CAMPUS, GAGANMAHAL , HYDERABAD 2 . DY./ASST DIRECTOR OF INCOME - TAX(EXEMPTION) I, HYDERABAD 3. 4. COMMISSIONER OF INCOME - TAX(APPEALS) , GUNTUR HYDERABAD COMMISSIONER OF INCOME - TAX(APPEALS) IV, HYDERABAD 5 . 6. COMMISSIONER OF INCOME - TAX GUNTUR COMMISSIONER OF INCOME - TAX III HYDERABAD 5. DEPARTMENTAL REPRESENTATIVE, ITAT, HYDERABAD. B.V.S