ADIT(E)-III, Hyderabad V. Sultan-Ul-Uloom Education Society, Hyderabad

ITA 887/HYD/2011

• Counselvise Citation: [2012] 140 COUNSELVISE.COM (IT) 61841 (ITAT-HYDERABAD)
• Duration Of Justice: 11 month(s) 6 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 17-04-2012
• Appeal Filed By: Department
• Order Result: Allowed
• Bench Allotted: B
• Assessment Year: 2007-2008
• Appeal Filed On: 11-05-2011
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: V SIVA KUMAR
• Assessee Lawyers: RAO
• Section: 260A; 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 I.T.A. NO. 887/HYD/2011 ASSESSMENT YEAR 2007-08 THE ASST. DIRECTOR OF INCOME-TAX (EXEMPTIONS)-III HYDERABAD VS. M/S. SULTAN-UL-ULOOM EDUCATION SOCIETY, HYDERABAD PAN: AAETS1333E ASSESSEE RESPONDENT ASSESSEE BY: SHRI M.S. RAO REVENUE BY: SHRI V. SIVA KUMAR DATE OF HEARING: 17.04.2012 DATE OF PRONOUNCEMENT: 17.04.2012 O R D E R PER CHANDRA POOJARI, AM: THIS APPEAL BY THE REVENUE IS DIRECTED AGAINST THE ORDER OF CIT(A)-IV, HYDERABAD DATED 25.2.2011 FOR THE ASSESS MENT YEAR 2007-08. 2. THE REVENUE RAISED THE FOLLOWING GROUNDS OF APPEAL: A) THE LEARNED CIT(A)S ORDER IS ERRONEOUS BOTH IN LAW AND IN FACTS. B) THE LEARNED CIT(A) HAS FAILED TO APPRECIATE THAT OBTAINING APPROVAL U/S. 10(23C) OF THE PRESCRIBED AUTHORITY IS MANDATORY AS PER THE PLAIN MEANING OF THE PROVISIONS. C) THE DECISION OF THE ITAT IN ST. THERESAS SOCIETY HAS NOT BEEN ACCEPTED BY THE DEPARTMENT AND APPEAL U/S. 260A HAS BEEN PREFERRED BEFORE THE A.P. HIGH COURT. 3. WE HAVE HEARD BOTH THE PARTIES AND PERUSED THE MATE RIAL ON RECORD. WE ARE OF THE OPINION THAT SIMILAR ISSUE C AME FOR CONSIDERATION BEFORE THIS TRIBUNAL IN THE CASE OF M /S. ISLAMIA I.T.A. NO. 887/HYD/2011 M/S. SULTAN-UL-ULOOM EDUCATION SOCIETY =============================== 2 EDUCATIONAL SOCIETY, SECUNDERABAD IN I.T.A. NO. 161 6/HYD/2011 FOR A.Y. 2008-09. THE TRIBUNAL VIDE ORDER DATED 22 .3.2012 IN PARAS 3 AND 4 HELD AS FOLLOWS: 3. WE HAVE HEARD BOTH THE PARTIES AND PERUSED THE MATERIAL ON RECORD. THE MAIN ISSUE INVOLVED IN TH IS APPEAL RELATES TO ASSESSEES CLAIM FOR EXEMPTION OF ITS INCOME UNDER S.11 OF THE ACT. WE FIND THAT THIS MA IN ISSUE INVOLVED IN THE ABOVE GROUNDS IS COVERED BY T HE ORDER OF THE HYDERABAD BENCH A OF THE TRIBUNAL DA TED 15.4.2009 IN THE CASES OF VASAVI ACADEMY OF EDUCATION, HYDERABAD IN ITA NO.1133/HYD/2006 FOR THE ASSESSMENT YEAR 2003-04 AND ORDER DATED 17.4.2009 IN ITA NO.1206/HYD/2007 FOR THE ASSESSMENT YEAR 2004-05, WHEREIN IT WAS HELD THAT I F DONATIONS ARE RECEIVED COMPULSORILY FOR THE ADMISSI ON OF STUDENTS, BY WHATEVER NAME IT MAY BE CALLED, I.E . DONATION, BUILDING FUND, AUDITORIUM FUND, ETC. OVER AND ABOVE THE PRESCRIBED FEE, FROM THE STUDENTS, THE ASSESSEE WOULD NOT BE ENTITLED FOR EXEMPTION EITHER UNDER S.10(23C) OR UNDER S.11 OF THE ACT. FURTHER, WE FIND THAT THE CONSTITUTIONAL BENCH OF APEX COURT IN THE CASE OF T.M.A. PAI FOUNDATIONS AND OTHERS VS. STATE OF KARNATAKA & OTHERS (2002) 8 SCC 481 EXAMINED THE ISSUE OF COLLECTION OF CAPITATION FEES FOR THE AD MISSION OF STUDENTS OVER AND ABOVE FEES PRESCRIBED BY THE PRIVATE INSTITUTION AND HELD THAT THE INSTITUTION W HICH ARE COLLECTING CAPITATION FEES FOR ADMISSION OF STU DENTS OVER AND ABOVE THE FEES PRESCRIBED CANNOT BE CONSTR UED AS CHARITABLE/EDUCATION INSTITUTION. APEX COURT FUR THER OBSERVED THAT THE FEES COLLECTED OVER AND ABOVE THE PRESCRIBED FEE FOR ADMISSION OF THE STUDENT HAS TO BE CONSTRUCTED AS CAPITATION FEE. THE APEX COURT, FUR THER OBSERVED THAT THE CONCERNED UNIVERSITY AND REGULATE D BODY HAS TO TAKE ACTION FOR WITHDRAWAL OF THE RECOGNITION IN CASE IT IS FOUND THAT THE EDUCATIONA L INSTITUTION RECEIVED ANY MONEY OVER AND ABOVE THE F EES PRESCRIBED FOR THE COURSES. SAME VIEW WAS TAKEN BY APEX COURT IN THE CASE OF ISLAMIC ACADEMY OF EDUCAT ION AND ANOTHER VS. STATE OF KARNATAKA & ANOTHER (2003) 6 SCC 697. IF THE DONATIONS WERE RECEIVED COMPULSORI LY FOR ADMISSION OF STUDENTS, THE ASSESSEE IS NOT ENTI TLED FOR EXEMPTION EITHER U/S 10(23C) OR U/S 11 OF THE I T ACT. SINCE THE LOWER AUTHORITIES HAVE NOT EXAMINED THE 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 CAPI TATION I.T.A. NO. 887/HYD/2011 M/S. SULTAN-UL-ULOOM EDUCATION SOCIETY =============================== 3 FEES FROM STUDENTS OR NOT AND IT IS NECESSARY FOR BRINGING THE ACTUAL FACTS ON RECORD FOR DECIDING TH E ISSUE EFFECTIVELY. SIMILAR VIEW WAS TAKEN BY US IN THE CASE OF M/S. JAMIA NIZAMIA IN ITA NO.763/HYD/2007 DATED 30.6.2008, IN THE CASE OF INTERNATIONAL EDUCATIONAL ACADEMY, HYDERABAD IN ITA NO.494/HYD/2007 AND 518/HYD/2008 FOR THE ASSESSMENT YEARS 2002- 2003 AND 2004-05 AND SRI SAI SUDHIR EDUCATIONAL SOCIETY, HYDERABAD IN ITA NO.999/HYD/20-06 FOR THE ASSESSMENT YEAR 2003-04. THEREFORE, WE SET ASIDE THE ORDERS OF THE LOWER AUTHORITIES AND REMIT BACK THE MATTER TO THE FILE O F ASSESSING OFFICER WITH A DIRECTION TO ASSESSING OFF ICER THAT HE SHALL RECONSIDER THE ENTIRE ISSUE IN THE LI GHT OF JUDGMENT OF SUPREME COURT IN THE CASE OF M/S ISLAMI C 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), AND FIND OUT WHETHER THE ASSESSEE HAS RECEIVED ANY MONEY OVER AND ABOVE THE FEES PRESCRIBED AND THEREAFTER DECIDE THE ISSUE AFRESH IN ACCORDANCE WITH LAW AFTER GIVING REASONAB LE OPPORTUNITY OF HEARING TO THE ASSESSEE. WE MAKE IT CLEAR THAT THE ASSESSEE IS NOT ENTITLED FOR EXEMPTI ON U/S 11 IN CASE IT COLLECTED ANY MONEY BY WHATEVER NAME IT IS CALLED I.E., DONATION, BUILDING FUND, AUDITORIUM FUND ETC. ETC., OVER AND ABOVE THE PRESCRIBED FEE FOR ADMISSION OF STUDENTS. 4. BEFORE PARTING WE MAY NOTE THAT THE LEARNED COUNSEL FOR THE ASSESSEE SUBMITTED BEFORE US THAT T HERE IS NO NECESSITY OF SETTING ASIDE THE MATTER TO THE FILE OF THE ASSESSING OFFICER AND PLACED RELIANCE ON THE JUDGMENT OF THE HONBLE JURISDICTIONAL HIGH COURT I N THE CASE OF S.A. RAHIM AND OTHERS V/S. CIT(333 ITR 379 ), WHEREIN IT WAS HELD PLACING RELIANCE ON THE EARLIE R JUDGMENT OF THE JURISDICTIONAL HIGH COURT IN THE CA SE OF CIT V/S. KRISHNA MINING CO. (107 ITR 702), THAT TH E TRIBUNAL CAN GO INTO THE ONLY ISSUE RAISED BEFORE I T AND NOT ON OTHER ISSUES. IT WAS OBSERVED BY THE HONBL E HIGH COURT THAT THE EXPRESSION SUCH ORDER AS IT TH INKS FIT IN S.254(1) WAS WIDE ENOUGH TO INCLUDE THE PO WER OF REMAND TO THE AUTHORITY, COMPETENT TO MAKE THE REQUISITE ORDER IN ACCORDANCE WITH LAW, EVEN THOUGH THE TRIBUNAL COULD NOT HAVE MADE AN ORDER ENHANCING TH E ASSESSMENT. HOWEVER, THE TRIBUNAL IS NOT SUPPOSED TO MAKE OUT A THIRD CASE ARBITRARILY. WE HAVE CAREFU LLY GONE THROUGH THIS JUDGMENT. THIS JUDGMENT IS DELIVE RED IN THE CONTEXT, WHEREIN THE ISSUE IS WHETHER THE SA LE I.T.A. NO. 887/HYD/2011 M/S. SULTAN-UL-ULOOM EDUCATION SOCIETY =============================== 4 TRANSACTIONS WERE GENUINE OR NOT AND NOT RELATING T O THE QUANTUM OF SALE PRICE. HOWEVER, THE TRIBUNAL ON APPEAL REDUCED THE SALE PRICE TO HALF OF THE AMOUNT CLAIMED BY THE ASSESSEE, INSTEAD OF DECIDING ON THE GENUINENESS OF THE TRANSACTION, WITHOUT ANY DOCUMENTARY EVIDENCE. IN THAT CIRCUMSTANCE, THE HONBLE HIGH COURT HAS HELD AS ABOVE. IN THE PRESE NT CASE, THE ISSUE IS RELATING TO ALLOWABILITY OF EXEM PTION UNDER S.11 OR UNDER S.10(23C), AND WHILE ADJUDICATI NG ON THIS ISSUE ONE HAS TO SEE THE ELIGIBILITY OF CL AIMING OF DEDUCTION UNDER S.11. THIS ASPECT HAS NOT BEEN PROP ER ADDRESSED BY THE CIT(A) WHILE GRANTING THE ALTERNAT IVE CLAIM OF THE ASSESSEE FOR EXEMPTION UNDER S.11. SI NCE THE ASSESSING OFFICER HAS NO OCCASION TO EXAMINE TH E CLAIM OF THE ASSESSEE UNDER S.11, WE HAVE GIVEN SUITABLE DIRECTIONS, IN THE PRECEDING PARA, TO THE ASSESSING OFFICER FOR VERIFICATION. THAT BEING SO, THE RATIO LAID DOWN BY THE JURISDICTIONAL HIGH COURT IN THE CASE NOTED ABOVE, HAS NO APPLICATION TO THE FACTS O F THE PRESENT CASE. 4. RESPECTFULLY FOLLOWING THE ABOVE ORDER OF THE TRIBU NAL, WE DIRECT THE ASSESSING OFFICER TO DECIDE THE ISSUE IN SIMILAR MANNER. THE GROUNDS RAISED BY THE REVENUE ARE DISPOSED OF A CCORDINGLY. 5. IN THE RESULT, APPEAL FILED BY THE REVENUE IS ALLOW ED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON 17 TH APRIL, 2012. SD/- (ASHA VIJAYARAGHAVAN) JUDICIAL MEMBER SD/- (CHANDRA POOJARI) ACCOUNTANT MEMBER HYDERABAD, DATED THE 17 TH APRIL, 2012 COPY FORWARDED TO: 1. THE ASST. DIRECTOR OF INCOME-TAX (EXEMPTIONS)-II I, A.P. OLYMPIC BHAVAN, L.B. STADIUM, BASHEERBAGH, HYDERABA D- 500 004. 2. M/S. SULTAN-UL-ULOOM EDUCATION SOCIETY, 8-2-249, MOUNT PLEASANT, ROAD NO. 3, BANJARA HILLS, HYDERA BAD. 3. THE CIT(A)-IV, HYDERABAD. 4. THE DIT (EXEMPTIONS), HYDERABAD. 5. THE DR B BENCH, ITAT, HYDERABAD TPRAO