DDIT, Hyderabad V. M/s Loyola Academy society, Secunderabad

ITA 847/HYD/2009

• Counselvise Citation: [2010] 119 COUNSELVISE.COM (IT) 5939 (ITAT-HYDERABAD)
• Duration Of Justice: 6 month(s) 27 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 11-02-2010
• Appeal Filed By: Department
• Order Result: Partly Allowed
• Bench Allotted: A
• Next Hearing Date: 03-02-2010
• Assessment Year: 2006-2007
• Appeal Filed On: 15-07-2009
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: H PHANI RAJU
• Assessee Lawyers: B KRISHNA SWAMY
• Section: 6; 11

Judgement Text

` IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD BENCH A', HYDERABAD BEFORE SHRI G.C.GUPTA, VICE PRESIDENT AND SHRI CHANDRA POOJARI, ACCOUNTANT MEMEBR ITA NO.847/HYD/09 : ASSTT . YEAR 2006-07 DY. DIRECTOR OF INCOME-TAX(E), III, HYDERABAD V/S. M/S. LOYALA ACADEMY SOCIETY SECUNDERABAD. ( PAN AAATL 1740 Q ) (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI H.PHANI RAJU RESPONDENT BY : SHRI B.KRISHNA SWAMY O R D E R PER G.C.GUPTA, VICE PRESIDENT: THIS APPEAL OF THE REVENUE FOR THE ASSESSMENT YEAR 200 6- 07 IS DIRECTED AGAINST THE ORDER OF THE COMMISSIONER OF INCOME- TAX(APPEALS). 2. GROUNDS OF APPEAL OF THE REVENUE ARE AS UNDER- 1. THE LEARNED CIT(A) 'S ORDER IS ERRONEOUS BOTH IN L AW AND IN FACTS. 2. THE CIT(A) HAS FAILED TO APPRECIATE THAT OBTAINING APPROVAL OF THE PRESCRIBED AUTHORITY IS MANDATORY AS PER THE PLAIN MEANING OF THE PROVISIONS. 3. THE CIT(A) HAS FAILED TO APPRECIATE THAT SEC.10(23C ) AS SUCH IS NOT REPLACEMENT OF SECTION 10(22) AND (22A) AS STATED I N THE ASSESSEE APPELLATE ORDER BUT ONLY SUB CLAUSES (IIIAD) AND (I IIAE) ARE REPLACEMENTS OF THE ERSTWHILE SEC.10(22) AND SEC. ( 22A) RESPECTIVELY. 4. THE LEARNED CIT(A) HAS FAILED TO APPRECIATE THAT SU B CLAUSES (VI) AND (VIA) ARE ENTIRELY NEW PROVISIONS MEANT TO PROV IDE THE MUCH NEEDED MONITORING MECHANISM THAT WAS LACKING IN THE EARLIER PROVISIONS (AS STATED IN CIRCULAR NO.772) ITA NO.8471/HYD/09 M/S. LOYALA ACADEMY SOCIETYSECUNDERABAD. 2 5. THE CIT(A) HAS WRONGLY HELD THAT PROVISIONS OF SEC. 10(23C) (VI) DO NOT OVERRIDE SEC. 11 IN SPITE OF OVERWHELMING JU DICIAL OPINION THAT SPECIFIC PROVISIONS OVERRIDE GENERAL PROVISION S. 6. THE LEARNED CIT(A) OUGHT TO HAVE APPRECIATED THAT AMOUNT APPLIED FOR THE MAINTENANCE OF MOSQUE IS NOT FOR TH E OBJECTS OF THE TRUST (I.E. IMPARTING EDUCATION).' 3. LEARNED DEPARTMENTAL REPRESENTATIVE HAS RELIED O N THE ORDER OF THE ASSESSING OFFICER. 4. LEARNED COUNSEL FOR THE ASSESSEE SUBMITTED THAT THE M AIN ISSUE INVOLVED IN THE GROUNDS OF APPEAL OF THE REVENUE IS COVERED IN FAVOUR OF THE ASSESSEE WITH A SERIES OF DECISIONS CITED BY T HE CIT(A) IN HIS IMPUGNED APPELLATE ORDER. HE RELIED ON THE ORDER OF THE CIT(A). 5. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS. WE FIND THAT THE ISSUE REGARDING EXEMPTION FROM TAX INVOLVED IN TH E GROUNDS OF THIS APPEAL IS COVERED IN FAVOUR OF THE ASSESSEE WITH SERIES OF DECISIONS CITED BY THE CIT(A) IN HIS APPELLATE ORDER. HOWEVER, W E FIND THAT THE CONSTITUTIONAL BENCH OF APEX COURT IN THE CASE OF T.M. A. PAI FOUNDATIONS AND OTHERS V/S. STATE OF KARNATAKA & OTHER S (2002) 8 SCC 481 EXAMINED THE ISSUE OF COLLECTION OF CAPITATION FEES FOR THE ADMISSION OF STUDENTS OVER AND ABOVE FEES PRESCRIBED BY T HE PRIVATE INSTITUTION AND HELD THAT THE INSTITUTION WHICH ARE CO LLECTING CAPITATION FEES FOR ADMISSION OF STUDENTS OVER AND ABOVE THE FEES P RESCRIBED CANNOT BE CONSTRUED AS CHARITABLE/EDUCATION INSTITUTION. A PEX COURT FURTHER OBSERVED THAT THE FEES COLLECTED OVER AND ABOVE THE PRESCRIBED FEE FOR ADMISSION OF THE STUDENT HAS TO BE CONSTRUCTED AS CA PITATION FEE. THE APEX COURT, FURTHER OBSERVED THAT THE CONCER NED UNIVERSITY AND REGULATED BODY HAS TO TAKE ACTION FOR WITHDRAWAL OF THE RECOGNITION IN CASE IT IS FOUND THAT THE EDUCATIONAL INSTITUTION R ECEIVED ANY MONEY OVER AND ABOVE THE FEES PRESCRIBED FOR THE COURSES. SAME VIEW WAS ITA NO.8471/HYD/09 M/S. LOYALA ACADEMY SOCIETYSECUNDERABAD. 3 TAKEN BY APEX COURT IN THE CASE OF ISLAMIC ACADEMY OF E DUCATION AND ANOTHER VS. STATE OF KARNATAKA & ANOTHER (2003) 6 SC C 697. IF THE DONATIONS WERE RECEIVED COMPULSORILY FOR ADMISSION OF STUD ENTS, THE ASSESSEE IS NOT ENTITLED FOR EXEMPTION EITHER U/S 10(23C ) OR U/S 11 OF THE ACT. SINCE THE LOWER AUTHORITIES HAVE NOT EXAMINE D THE ISSUE OF 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 DE CIDING THE ISSUE EFFECTIVELY. SIMILAR VIEW WAS TAKEN BY THE HYDERABAD BENCH OF THE TRIBUNAL IN THE CASE OF ADIT V/S. NIRAJ EDUCATIONAL SOCI ETY HYDERABAD (ITA NO.1641/HYD/2008 FOR ASSESSMENT YEAR 2004-05) VIDE ORDER DATED 29.1.2010, WHEREIN THE ISSUE WAS SET ASIDE TO THE FILE OF THE ASSESSING OFFICER WITH A DIRECTION TO RECONSIDER THE ENTIRE ISSUE IN THE LIGHT OF JUDGEMENT OF 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). CONSISTENT WIT H THE DECISION OF THE COORDINATE BENCH OF THE TRIBUNAL IN THE CASE OF M/S. NIRAJ EDUCATIONAL SOCIETY (SUPRA), , TO WHICH BOTH OF US ARE P ARTIES, WE SET ASIDE THE ORDERS OF THE LOWER AUTHORITIES IN THIS CASE AN D RESTORE THE MATTER TO THE FILE OF THE ASSESSING OFFICER WITH A DIRE CTION TO RECONSIDER THE ISSUES INVOLVED IN THE GROUNDS OF APPEAL OF THE RE VENUE IN THE LIGHT OF JUDGEMENT OF SUPREME COURT IN THE CASE OF M/S ISLAM IC ACADEMY OF EDUCATION & ANOTHER V/S. STATE OF KARNATAKA AND ANOTH ER (SUPRA), AND IN THE CASED OF T.M.A. PAI FOUNDATION AND OTHERS VS. S TATE OF KARNATAKA AND OTHERS (SUPRA) AND FIND OUT WHETHER TH E ASSESSEE HAS RECEIVED ANY MONEY OVER AND ABOVE THE FEES PRESCRIBED, AND TO DECIDE THE ISSUE AFRESH AFTER ALLOWING REASONABLE OPPORTUNITY OF HEARING TO THE ASSESSEE. WE MAKE IT CLEAR THAT THE ASSESSEE SHALL BE ENTITL ED TO ITA NO.8471/HYD/09 M/S. LOYALA ACADEMY SOCIETYSECUNDERABAD. 4 EXEMPTION UNDER THE ACT, IN CASE IT HAS NOT COLLECTED ANY MONEY BY WHATEVER NAME IT IS CALLED, I.E. DONATION, BUILDING FUND, ETC., OVER AND ABOVE THE PRESCRIBED FEE FOR ADMISSION OF STUDENTS. 5. IN THE RESULT, REVENUES APPEAL IS ALLOWED FOR ST ATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON 11.2.2010 SD/- SD/- (CHANDRA POOJARI) (G.C.GUPTA) ACCOUNTANT MEMBER VICE PRESIDENT DT/- 11TH FEBRUARY, 2010 COPY FORWARDED TO: 1. M/S. LOYALA ACADEMY SOCIETY, ALWAL, SECUNDERABAD. 2. DEPUTY DIRECTOR OF INCOME TAX(E)-III, HYDERABAD. 3. COMMISSIONER OF INCOME-TAX(APPEALS) IV, HYDERABAD. 4. DIRECTOR OF INCOME-TAX EXEMPTIONS, HYDERABAD . 5. THE DEPARTMENTAL REPRESENTATIVE, ITAT, HYDERABAD. B.V.S.