ADIT, Hyderabad v. Vasavi Academy of Education, Hyderabad

IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD BENCH A HYDERABAD BEFORE SHRI G.C. GUPTA VICE PRESIDENT AND SHRI CHANDRA POOJARI ACCOUNTANT MEMBER ITA NO.: 1120/HYD/2009 ASSTT. YEAR : 2005-06 THE ADIT(EXEMPTIONS)-III HYDERABAD VS M/S VASAVI ACADEMY OF EDUCATION HYDERABAD (PAN: AAA TV 1119 R)) (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI M.S. CHANDRA SEKHARAN RESPONDENT BY : SHRI C.P. RAMASWAMI O R D E R PER : CHANDRA POOJARI ACCOUNTANT MEMBER THIS APPEAL PREFERRED BY THE REVENUE IS DIRECTED A GAINST THE ORDER PASSED BY THE CIT (A)-IV HYDERABAD AND PERTAIN S TO THE ASSESSMENT YEARS 2005-06. 2. THE REVENUE RAISED THE FOLLOWING GROUNDS: 1. THE CIT(A) HAS FAILED TO APPRECIATE THAT OBTAIN ING APPROVAL OF THE PRESCRIBED AUTHORITY IS MANDATORY AS PER THE PLAIN MEANING OF THE PROVISIONS. 2. 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) RESPECTI VELY. 3. THE LEARNED CIT(A) HAS FAILED TO APPRECIATE THA T SUB CLAUSES (VI) AND (VIA) ARE ENTIRELY NEW PROVISIONS MEANT TO PROVIDE THE MUCH NEEDED MONITORING MECHANISM THAT WAS LACKING IN THE EARLIE R PROVISIONS (AS STATED IN CIRCULAR NO.772) 4. THE CIT(A) HAS WRONGLY HELD THAT PROVISIONS OF S EC.10(23C) (VI) A AND SEC.11 ARE AVAILABLE TO THE ASSESSEE ALTERNATIV ELY. 2 2 3. WE HAVE HEARD BOTH THE PARTIES AND PERUSED THE M ATERIAL ON RECORD. THE LEARNED AUTHORIZED REPRESENTATIVE FOR TH E ASSESSEE SUBMITTED THAT THIS ISSUE COVERED IN FAVOUR OF THE ASSESSEE BY THE ORDER OF THE HYDERABAD BENCH A OF THE TRIBUNAL DATED 15.4 .2009 IN ASSESSEES OWN CASES IN ITA NO.1133/HYD/2006 FOR THE ASSESSMENT YEARS 2003-04 AND ORDER DATED 17.4.2009 IN ITA NO.1 206/HYD/2007 FOR THE ASSESSMENT YEAR 2004-05. HOWEVER WE FIND THAT TH E 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 FEE S 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 PR ESCRIBED CANNOT BE CONSTRUED AS CHARITABLE/EDUCATION INSTITUTION. APEX COURT FURTHER OBSERVED THAT THE FEES COLLECTED OVER AND ABOVE THE PRESCRIBED FEE FOR ADMISSION OF THE STUDENT HAS TO BE CONSTRUCTED AS C APITATION FEE. THE APEX COURT FURTHER OBSERVED THAT THE CONCERNED UN IVERSITY AND REGULATED BODY HAS TO TAKE ACTION FOR WITHDRAWAL OF THE RECOGNITION IN CASE IT IS FOUND THAT THE EDUCATIONAL INSTITUTION RECEIV ED ANY MONEY OVER AND ABOVE THE FEES PRESCRIBED FOR THE COURSES. SAME VIE W WAS TAKEN BY APEX COURT IN THE CASE OF ISLAMIC ACADEMY OF EDUCATION A ND ANOTHER VS. STATE OF KARNATAKA & ANOTHER (2003) 6 SCC 697. IF THE DONATIONS WERE RECEIVED COMPULSORILY FOR ADMISSION OF STUDENTS THE ASSESSEE IS NOT ENTITLED FOR EXEMPTION EITHER U/S 10(23C) OR U/S 11 OF THE IT ACT. SINCE THE LOWER AUTHORITIES WERE NOT EXAMINED THE COLL ECTION OF CAPITATION FEES IN THIS CASE IN OUR OPINION THE MATTER REQUIRES TO BE EXAMINED BY THE ASSESSING OFFICER WHETHER THE ASSESSEE IS CO LLECTING THE CAPITATION FEES FROM STUDENTS OR NOT AND IT IS NECESSARY FO R BRINGING THE ACTUAL FACTS ON RECORD FOR DECIDING THE ISSUE EFFECTIVELY. SIMILAR VIEW WAS TAKEN BY US IN THE CASE OF M/S. JAMIA NIZAMIA IN I TA 3 3 NO.763/HYD/2007 DATED 30.6.2008 IN THE CASE OF INTERN ATIONAL EDUCATIONAL ACADEMY HYDERABAD IN ITA NO.494/HYD/2007 AND 518/HYD/2008 FOR THE ASSESSMENT YEARS 2002- 2003 AND 200 4-05 AND SRI SAI SUDHIR EDUCATIONAL SOCIETY HYDERABAD IN ITA NO.999/HYD/20-06 FOR THE ASSESSMENT YEAR 2003-04. THEREFORE WE SET ASI DE THE ORDERS OF THE LOWER AUTHORITIES AND REMIT BACK THE MATTER TO THE FILE OF ASSESSING OFFICER WITH A DIRECTION TO ASSESSING OFFICER THAT H E SHALL RECONSIDER THE ENTIRE ISSUE IN THE LIGHT OF JUDGEMENT O F 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 OTHE RS (SUPRA) AND FIND OUT WHETHER THE ASSESSEE HAS RECEIVED ANY MONEY OVE R AND ABOVE THE FEES PRESCRIBED AND THEREAFTER DECIDE THE ISSUE AFRE SH IN ACCORDANCE WITH LAW AFTER GIVING REASONABLE OPPORTUNITY OF HEAR ING TO THE ASSESSEE . WE MAKE IT CLEAR THAT THE ASSESSEE IS NOT ENTITLED FOR EX EMPTION EITHER U/S 11 OR U/S 10(23C) IN CASE IT COLLECTED ANY MONEY BY W HATEVER NAME IT IS CALLED I.E. DONATION BUILDING FUND AUDITORIU M FUND ETC. ETC. OVER AND ABOVE THE PRESCRIBED FEE FOR ADMISSION OF STUDENTS. 4. IN THE RESULT REVENUES APPEAL IS ALLOWED FOR ST ATISTICAL PURPOSE. ORDER PRONOUNCED IN THE OPEN COURT : 29 .1.2010 SD/- SD/- G.C. GUPTA CHANDRA POOJARI VICE PRESIDENT ACCOUNTANT MEMBER DATED THE 29 TH JANUARY 2010 4 4 COPY FORWARDED TO: 1. THE ASSESSMENT. DIRECTOR OF INCOME TAX (E)-III AP OLY MPIC BHAVAN L.B. STADIUM BASHEERBAGH HYDERABAD-4. 2. M/S VASAVI ACADEMY OF EDUCATION HYDERABAD 3. CIT(A)-IV HYDERABAD. 4. CIT HYDERABAD 5. THE D.R. ITAT HYDERABAD. NP