ACIT, CHENNAI v. M/s Madras Medical Mission, CHENNAI

ITA 1472/CHNY/2010 | 2005-2006
Pronouncement Date: 30-07-2012 | Result: Dismissed

Appeal Details

RSA Number 147221714 RSA 2010
Assessee PAN AAATT0433G
Bench Chennai
Appeal Number ITA 1472/CHNY/2010
Duration Of Justice 1 year(s) 10 month(s) 22 day(s)
Appellant ACIT, CHENNAI
Respondent M/s Madras Medical Mission, CHENNAI
Appeal Type Income Tax Appeal
Pronouncement Date 30-07-2012
Appeal Filed By Department
Order Result Dismissed
Bench Allotted A
Tribunal Order Date 30-07-2012
Date Of Final Hearing 20-06-2012
Next Hearing Date 20-06-2012
Assessment Year 2005-2006
Appeal Filed On 08-09-2010
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL A BENCH CHENNAI BEFORE DR. O.K. NARAYANAN VICE-PRESIDENT AND SHRI V.DURGA RAO JUDICIAL MEMBER I.T.A. NOS. 1149 TO 1152/MDS/2010) ASSESSMENT YEARS : 2003-04 2004-05 2006-07 & 2008 -09 THE MADRAS MEDICAL MISSION 1 ST FLOOR 4-A DR. JJ NAGAR MOGAPPAIR CHENNAI 600 037. PAN AAATT0433G VS. THE ASSISTANT COMMISSIONER OF INCOME-TAX CENTRAL CIRCLE-III(4) CHENNAI 34. (APPELLANT) (RESPONDENT) AND I.T.A. NOS. 1470 TO 1475/MDS/2010) ASSESSMENT YEARS : 2003-04 TO 2008-09 THE ASSISTANT COMMISSIONER OF INCOME-TAX CHENNAI 34. VS. THE MADRAS MEDICAL MISSION CHENNAI 600 037. (APPELLANT) (RESPONDENT) APPELLANT BY : DR. ANITA SUMANTH ADVOCAT E RESPONDENT BY : SHRI SHAJI P. JACOB IRS ADDL. CIT DATE OF HEARING : 20 TH JUNE 2012 DATE OF PRONOUNCEMENT : 30 TH JULY 2012 ITA 1149 TO 1152/10 ETC. :- 2 -: O R D E R PER DR. O.K. NARAYANAN VICE-PRESIDENT THIS IS A BUNCH OF 10 APPEALS. THE ASSESSEE HAS FI LED FOUR APPEALS AND THE REVENUE HAS FILED SIX APPEALS. THE APPEALS RELATE TO SIX CONSECUTIVE ASSESSMENT YEARS 2003-04 TO 2008-09. 2. THE CROSS APPEALS FILED FOR THE ASSESSMENT YEARS 2003-04 AND 2004-05 ARE DIRECTED AGAINST THE INDIVIDUAL ORD ERS PASSED BY THE COMMISSIONER OF INCOME-TAX(APPEALS)II AT CHENN AI ON 20.5.2010. THE REMAINING CROSS APPEALS FILED FOR THE ASSESSMENT YEARS 2005-06 TO 2008-09 ARE DIRECTED AGAINST THE C OMMON ORDER PASSED BY THE SAME APPELLATE AUTHORITY ON 20.5.2010 . ALL THESE APPEALS ARISE OUT OF THE ASSESSMENTS COMPLETED UNDE R SEC.143(3) READ WITH SEC.153A OF THE INCOME-TAX ACT 1961. 3. THE ASSESSEE MADRAS MEDICAL MISSION MOGAPPAIR AT CHENNAI IS A SOCIETY REGISTERED UNDER THE SOCIETIES REGISTRATION ACT. THE ASSESSEE SOCIETY RUNS A HOSPITAL AT MOGAP PAIR AT CHENNAI AND ALSO RUNS A MEDICAL COLLEGE IN PUDUCHER Y. THE ASSESSEE SOCIETY IS ALSO RUNNING COURSES IN NURSING AND OTHER PARAMEDICAL DISCIPLINES. THE ASSESSEE IS REGISTER ED AS A ITA 1149 TO 1152/10 ETC. :- 3 -: CHARITABLE SOCIETY UNDER SEC.12AA OF THE ACT. SO A LSO THE ASSESSEE SOCIETY ENJOYS THE APPROVAL FOR THE PURPO SE OF SEC.80G. AS A REGISTERED CHARITABLE INSTITUTION THE ASSESSE E HAS BEEN LEGITIMATELY ENJOYING THE BENEFITS OF EXEMPTION FRO M TAXATION AS PROVIDED IN SEC.11 OF THE ACT ALONG WITH OTHER ENAB LING PROVISIONS OF LAW. 4. WHILE THE MATTER BEING SO A SEARCH WAS CARRIED OUT BY THE REVENUE ON 13.8.2007. THE SEARCH WAS SIMULTANEOU SLY CARRIED AT THE PREMISES OF THE ASSESSEE SOCIETY PREMISES O F THE HOSPITAL AND EDUCATIONAL INSTITUTIONS AND ALSO IN THE RESIDE NCE OF THE OFFICE BEARERS OF THE SOCIETY. ON THE BASIS OF THE MATERI ALS COLLECTED IN THE COURSE OF SEARCH NOTICES WERE ISSUED TO THE AS SESSEE TO FILE ITS RETURNS FOR SIX ASSESSMENT YEARS FROM 2003-04 T O 2008-09 UNDER SEC.153A. THE RETURNS WERE FILED IN COMPLIAN CE WITH THE NOTICES AND THE ASSESSMENTS WERE ACCORDINGLY COMPLE TED. 5. IN THE COURSE OF ASSESSMENT PROCEEDINGS IT WAS BROUGHT TO THE NOTICE OF THE REVENUE THAT THE ASSESSEE SOCIETY HAS BEEN ACCEPTING REFUNDABLE DEPOSITS FROM STUDENTS ADMITTE D TO MBBS COURSE. ACCORDING TO THE SOCIETY THE DEPOSITS ARE INTEREST-FEE AND TO BE REFUNDED AFTER 10 YEARS. FOR SOME YEARS THE DEPOSIT PER STUDENT WAS ` 21 LAKHS AND FOR SOME YEARS IT WAS ` 25 LAKHS ITA 1149 TO 1152/10 ETC. :- 4 -: PER STUDENT. IN THE LIGHT OF THE ABOVE FACT THAT T HE SOCIETY HAS BEEN ACCEPTING REFUNDABLE DEPOSITS AGAINST THE ALLO TMENT OF MBBS SEATS THE REVENUE SOUGHT FURTHER DETAILS AND CLARIFICATION TO CONFIRM THE BONA FIDES OF THE EXPLANATIONS OFFER ED BY THE ASSESSEE SOCIETY. NOTICES WERE ISSUED TO THE PAREN TS OF THE STUDENTS WHO WERE PURSUING MBBS COURSE IN THE MEDIC AL COLLEGE RUN BY THE ASSESSEE. MANY OF THE PARENTS REPLIED O R APPEARED BEFORE THE AUTHORITIES AND CONFIRMED THAT THEY HAD MADE REFUNDABLE DEPOSITS WHILE SECURING MEDICAL SEATS FO R THEIR CHILDREN. IN CERTAIN CASES CONFIRMATIONS WERE NOT RECEIVED. SO ALSO IN THE COURSE OF SEARCH AT THE RESIDENCE OF T HE OFFICE BEARERS OF THE ASSESSEE SOCIETY WHO HAD GIVEN STATEMENTS COULD NOT GIVE ACCURATE DETAILS OF REFUNDS OF THE DEPOSITS MA DE IF ANY TO THE PARENTS OF THE STUDENTS WHO HAVE ALREADY COMPL ETED THEIR MBBS COURSE. THEREFORE THE AUTHORITIES HELD A VIE W THAT THE DEPOSITS WERE NOT REFUNDED AS CLAIMED BY THE ASSESS EE SOCIETY AND IN FACT WHAT HAS BEEN COLLECTED BY THE ASSESSEE SOCIETY WAS ONLY CAPITATION FEE AND NOT ANY REFUNDABLE DEPOSITS . IN OTHER WORDS THE AUTHORITIES DID NOT ACCEPT THE EXPLANATI ONS OFFERED BY THE ASSESSEE SOCIETY THAT THEY WERE ACCEPTING REFUN DABLE ITA 1149 TO 1152/10 ETC. :- 5 -: DEPOSITS AND TREATED ALL THESE DEPOSITS AS CAPITATI ON FEE COLLECTED BY THE ASSESSEE AGAINST THE ALLOTMENT OF MEDICAL SE ATS. 6. IN ADDITION TO THE ABOVE STATEMENTS WERE TAKEN FROM THE STAFF OF THE ASSESSEE SOCIETY AS WELL. ON THE BASI S OF THOSE STATEMENTS THE REVENUE MADE OUT A CASE OF ACCEPTIN G CAPITATION FEE FOR ALL THE IMPUGNED SIX ASSESSMENT YEARS. AS THE DETAILS WERE NOT AVAILABLE THE ASSESSING OFFICER ESTIMATED THE CAPITATION FEE BY MULTIPLYING THE NUMBER OF STUDENTS ADMITTED TO THE MEDICAL COURSE WITH THE CAPITATION FEE PER HEAD. 7. IN THE LIGHT OF THE ABOVE ALL THESE ASSESSMENTS WERE MADE BY THE ASSESSING AUTHORITY AFTER MAKING ADDITIONS A GAINST THE REFUNDABLE DEPOSITS/CAPITATION FEE. THE ADDITIONS HAVE BEEN MADE BY THE ASSESSING AUTHORITY UNDER SEC.68 OF THE ACT AS UNEXPLAINED CREDITS. AMONG OTHER THINGS THE ASSES SING OFFICER HAS ALSO MADE OBSERVATION THAT CERTAIN AMOUNTS RECE IVED BY THE ASSESSEE SOCIETY HAVE NOT BEEN RECORDED IN THE BOOK S OF ACCOUNT AND THEREFORE SUCH AMOUNTS COULD NOT BE TREATED A S APPLIED FOR CHARITABLE PURPOSES. ULTIMATELY ALL THE ADDITIONS HAVE BEEN MADE BY THE ASSESSING AUTHORITY UNDER SEC.68 OF THE ACT. 8. IN FIRST APPEALS THE COMMISSIONER OF INCOME-TAX (APPEALS) EXAMINED THE MATERIALS AVAILABLE ON RECORD AND ACCE PTED THE ITA 1149 TO 1152/10 ETC. :- 6 -: CONTENTIONS OF THE ASSESSEE SOCIETY IN PART. WHERE VER THE PARENTS OF THE STUDENTS HAVE APPEARED BEFORE THE AU THORITIES AND CONFIRMED MAKING REFUNDABLE DEPOSITS THE COMMISSIO NER OF INCOME-TAX(APPEALS) ACCEPTED THE CONTENTION OF THE ASSESSEE SOCIETY. IN SUCH CASES THE COMMISSIONER OF INCOM E- TAX(APPEALS) HELD THAT THOSE DEPOSITS ARE EXPLAINED AND THOSE DEPOSITS CANNOT BE TREATED AS CAPITATION FEE AS AL LEGED BY THE ASSESSING AUTHORITY. SUCH ADDITIONS HAVE BEEN DELE TED BY THE COMMISSIONER OF INCOME-TAX(APPEALS). WHEREVER CONF IRMATIONS HAVE NOT BEEN OBTAINED FROM THE PARENTS OF THE STUD ENTS THE ADDITIONS WERE CONFIRMED BY THE COMMISSIONER OF INC OME- TAX(APPEALS). WHILE DELETING THE ADDITIONS MADE BY THE ASSESSING AUTHORITY AGAINST REFUNDABLE DEPOSITS THE COMMISSI ONER OF INCOME-TAX(APPEALS) HAS ALSO MADE ANOTHER DIRECTION THAT IF THE DEPOSITS ARE NOT REFUNDED AFTER EXPIRY OF 10 YEARS PERIOD SUCH DEPOSITS MUST BE TREATED AS INCOME OF THE ASSESSEE UNDER SEC.41(1) OF THE ACT. THE FIRST APPEALS WERE DISPO SED OF IN THE ABOVE LINES. 9. THE REVENUE AS WELL AS THE ASSESSEE SOCIETY ARE AGGRIEVED BY THE ORDERS PASSED BY THE COMMISSIONER OF INCOME- TAX(APPEALS). THE REVENUE IS AGGRIEVED FOR THE REA SON THAT THE ITA 1149 TO 1152/10 ETC. :- 7 -: COMMISSIONER OF INCOME-TAX(APPEALS) HAS DELETED THO SE ADDITIONS WHICH ARE SUPPORTED BY THE CONFIRMATION O F THE PARENTS OF THE STUDENTS. THE ASSESSEE SOCIETY IS AGGRIEVED FOR THE ADDITIONS SUSTAINED BY THE COMMISSIONER OF INCOME-T AX(APPEALS) AND ALSO FOR OTHER OBSERVATIONS MADE BY THE COMMISS IONER OF INCOME-TAX(APPEALS). IT IS HOW THESE CROSS APPEAL S PLACED ARE BEFORE US. 10. THE FRAME AND FEATURES OF ALL THESE IMPUGNED AS SESSMENTS ARE SAME AND SIMILAR AS THEY RELATE TO SAME SET OF FACTS ARISING OUT OF SEARCH CARRIED OUT ON 13.8.2007. THE DIFFER ENT GROUNDS RAISED FOR DIFFERENT ASSESSMENT YEARS ARE IN FACT O NLY WITH REFERENCE TO QUANTUM DIFFERENTIALS. THE BASIC CONT ENTIONS AND ARGUMENTS ARE COMMON. IN VIEW OF THIS POSITION LE T US BRIEFLY RECORD THE ARGUMENTS ADVANCED BY BOTH SIDES. 11. SHRI SHAJI P. JACOB THE LEARNED COMMISSIONER O F INCOME- TAX APPEARED FOR THE REVENUE AND ARGUED THE CASE. THE ARGUMENTS ADVANCED BY THE LEARNED COMMISSIONER MAY BE SUMMARIZED AS BELOW. (I) THE BOOKS OF ACCOUNT OF THE ASSESSEE SHOWS CRED ITS IN THE NAME OF SEVERAL PERSONS WHICH THE ASSESSEE FAILED TO SUBSTANTIATE. THOUGH THE ASSESSEE HAS CLAIMED THAT THE ITA 1149 TO 1152/10 ETC. :- 8 -: AMOUNTS ARE REFUNDABLE DEPOSITS RECEIVED FROM THE P ARENTS OF MEDICAL STUDENTS THE ASSESSEE SOCIETY HAS NOT P RODUCED THEM AND IN MANY CASES LETTERS ISSUED BY THE ASSES SING AUTHORITY TO SOME OF THE PARENTS WERE RETURNED UNSE RVED BY THE POSTAL AUTHORITY. (II) IT IS IN THE ABOVE CIRCUMSTANCES THAT THE ASS ESSING OFFICER HAS TREATED THOSE AMOUNTS AS UNEXPLAINED CR EDITS AND ASSESSED UNDER SEC.68. THIS PROPOSITION IS SUPPORT ED BY THE DECISION OF THE HONBLE MADRAS HIGH COURT RENDERED IN THE CASE OF MANGILAL JAIN V. ITO (315 ITR 105). (III) THOUGH THE CREDITS WERE CLAIMED TO BE REFUNDA BLE DEPOSITS IT IS FOR THE FIRST TIME THAT THE ASSESSE E HAS PRODUCED A LIST BEFORE THE TRIBUNAL AND THAT TOO CO NTAINS VERY FEW NAMES ALONE WITHOUT ADDRESS. THE COMPLETE PART ICULARS OF THE PERSONS WHO HAD GIVEN SUCH REFUNDABLE DEPOSI TS HAVE NOT BEEN FURNISHED EVEN BEFORE THE TRIBUNAL. THERE FORE THE ADDITIONS MADE FOR THE ASSESSMENT YEARS 2003-04 AN D 2004- 05 ARE VERY MUCH JUSTIFIED. (IV) EVIDENCES COLLECTED IN THE COURSE OF SEARCH AN D SUBSEQUENT ENQUIRY HAVE PROVED THAT THE ASSESSEE IS COLLECTING CAPITATION FEE/DONATION FOR ADMITTING ST UDENTS TO ITA 1149 TO 1152/10 ETC. :- 9 -: MBBS COURSE. THE ASSESSEE RUNS ITS MEDICAL COLLEG E AS A SELF-FINANCING INSTITUTION. SUCH ACTIVITY CANNOT B E TREATED AS A CHARITABLE ACTIVITY OF THE ASSESSEE AS RUNNING A S ELF-FINANCING COLLEGE ITSELF IS A BUSINESS ACTIVITY. THEREFORE THE ESTIMATED ADDITIONS MADE FOR THE ASSESSMENT YEARS 2005-06 TO 2008-09 ARE JUSTIFIED. (V) SOME OF THE COLLECTIONS BY WAY OF DONATION/CAP ITATION FEE ARE NOT ACCOUNTED IN THE BOOKS OF ACCOUNT OF THE AS SESSEE SOCIETY. IN THE CIRCUMSTANCES SUCH AMOUNT CANNOT BE TREATED AS APPLIED FOR CHARITABLE PURPOSES AS THOS E COLLECTIONS ARE NOT EVEN FINDING A PLACE IN THE BOO KS OF ACCOUNT. 12. THE LEARNED COMMISSIONER HAS FURTHER RELIED ON THE FOLLOWING DECISIONS IN SUPPORT OF HIS ARGUMENTS : (I) P.S.GOVINDASAMY NAIDU & SONS V. ACIT (MAD) 324 ITR 44 (II) VALLIAMMAL SOCIETY V. DGIT(INV.) (MAD) 327 ITR 337 (III) VODITHALA EDUCATION SOCIETY VS. ADIT (EXEM) ( ITAT HYD.) 20 SOT 353 (IV) CIT V. NATIONAL INSTITUTE OF AERONAUTICAL ENGI NEERING EDUCATIONAL SOCIETY (UTTARAKHAND) 315 ITR 428 (V) RAJAH SIR ANNAMALI CHETTIAR FOUNDATION V. DIT ( EXEM) (ITAT CHENNAI) 10 ITR (TRIB) 424. ITA 1149 TO 1152/10 ETC. :- 10 -: 13. DR. ANITA SUMANTH THE LEARNED COUNSEL WHO APPE ARED FOR THE ASSESSEE SOCIETY PLACED HER ARGUMENTS IN THE FO LLOWING MANNER : (I) IN THE COURSE OF ASSESSMENT PROCEEDINGS STATEM ENTS WERE RECORDED FROM S/SHRI VERGHESE EAPEN E.J.THOMA S K.V.GEORGE V.J.POULOSE AND AJIT JOHN PUNNOSE WHO ARE FUNCTIONARIES OF THE ASSESSEE SOCIETY. THE REVENUE HAS PLACED MUCH RELIANCE ON THE CONTENTS STATED TO BE R EFLECTED IN THE STATEMENTS MADE BY THESE OFFICE BEARERS. IN FA CT THE STATEMENTS WERE EXTRACTED UNDER DURESS. S/SHRI K.V .GEORGE E.J.THOMAS AND VERGHESE EAPEN ARE SENIOR CITIZENS W HO HAD TO FACE THE PROCEEDINGS QUESTIONS AND QUERIES THROUGH- OUT THE NIGHT WHICH HAD EVEN IMPAIRED THEIR REFLEXE S. SO ALSO EXACT DETAILS RELATING TO MANY OF THE QUERIES MADE BY THE OFFICERS WERE NOT TRACEABLE FROM MEMORIES ALONE WITHOUT REFERRING TO ACCOUNTS AND DOCUMENTS. (II) THE COPIES OF THE STATEMENTS WERE FURNISHED TO THOSE PERSONS ONLY AFTER REPEATED REQUESTS MADE TO THE AU THORITIES AND ONCE THE COPIES WERE FURNISHED TO THEM THE STA TEMENTS WERE RETRACTED AS THEY FOUND THAT THE STATEMENTS WE RE NOT ITA 1149 TO 1152/10 ETC. :- 11 -: DOING JUSTICE TO THE ACTUAL AFFAIRS OF THE ASSESSEE SOCIETY. IT IS ON THE BASIS OF THE ABOVE UNACCEPTABLE STATEMENT S OF THE OFFICE BEARERS THAT THE ASSESSING OFFICER HAS COME TO AN ERRONEOUS CONCLUSION THAT THE CAPITATION FEES WERE COLLECTED BY THE ASSESSEE PURPORTED TO BE REFUNDABLE DEPOSITS . (III) IN REPLY FILED BY THE ASSESSEE ON 12.11.2009 FULL DETAILS AND PARTICULARS OF THE DEPOSITORS RECEIVED AND REFU NDS MADE WERE FURNISHED BEFORE THE AUTHORITIES. ALL THE AMO UNTS WERE RECEIVED BY THE ASSESSEE SOCIETY THOUGH BANK INSTRU MENTS. ALL SUCH AMOUNTS RECEIVED THROUGH BANK INSTRUMENTS HAVE BEEN PROPERTY ACCOUNTED IN THE BOOKS OF ACCOUNT MAI NTAINED BY THE ASSESSEE. THE ASSESSEE SOCIETY HAD ISSUED PROPER RECEIPTS FOR THE AMOUNTS RECEIVED FROM THE PARENTS OF THE STUDENTS. (IV) IN RESPONSE TO THE SUMMONS ISSUED BY THE ASSES SING AUTHORITY UNDER SEC.133(6) THE MAJORITY OF THE PAR ENTS HAVE APPEARED AND RESPONDED. IN THE ASSESSMENT YEAR 200 3-04 OUT OF 54 PARENTS 33 PARENTS HAVE REPLIED IN AFFIR MATIVE CONFIRMING THE ACCEPTANCE OF INTEREST FREE DEPOSITS AND IN THE ASSESSMENT YEAR 2004-05 OUT OF 55 PARENTS 4 2 HAVE ITA 1149 TO 1152/10 ETC. :- 12 -: CONFIRMED THE REFUNDABLE DEPOSITS MADE BY THEM. TH ERE WAS NOT A SINGLE CASE WHERE ANY DEPOSITS HAVE BEEN DENI ED OR DISPUTED BY ANY OF THE PARENTS. THESE CONFIRMATION S FURNISHED BY THE PARENTS OF THE MEDICAL STUDENTS PR OVE THE CASE OF THE ASSESSEE THAT WHAT HAVE BEEN RECEIVED B Y THE ASSESSEE SOCIETY ARE ONLY INTEREST FREE REFUNDABLE DEPOSITS. 14. THE LEARNED COUNSEL FURTHER EMPHASIZED ON THE F OLLOWING FACTUAL PREMISES RELATING TO THE ISSUE OF INTEREST FREE REFUNDABLE DEPOSITS: (I) THE AMOUNTS WERE RECEIVED FROM THE PERSONS AS I NTEREST FREE REFUNDABLE DEPOSITS. (II) THE MANNER OF DEPOSITS WAS SIMILAR IN ALL CASE S. (III) ALL THE DEPOSITS WERE RECEIVED THROUGH BANK I NSTRUMENTS. (IV) THE REFUNDS WERE MADE AGAIN THROUGH BANK INSTR UMENTS. (V) NAMES AND PARTICULARS OF ALL THE DEPOSITORS WER E AVAILABLE WITH THE ASSESSEE AND ALL SUCH PARTICULARS WERE PLA CED BEFORE THE DEPARTMENT. (VI) A MAJORITY OF THE PARENTS HAVE CONFIRMED THE D EPOSITS 33 OUT OF 54 IN THE FIRST YEAR AND 42 OUT OF 55 IN THE SECOND YEAR AS PER THE ASSESSMENT ORDERS ITSELF. THE REMAINING DEPOSITS ITA 1149 TO 1152/10 ETC. :- 13 -: ALSO STOOD CONFIRMED AS EVIDENCED FROM THE DOCUMENT S RELATING TO THE STUDENTS MAINTAINED BY THE ASSESSEE AND FORMING PART OF THE RECORDS AVAILABLE WITH THE DEPA RTMENT. 15. IN THE ABOVE CIRCUMSTANCES THE LEARNED COUNSEL ARGUED THAT THERE IS NO BASIS FOR MAKING ANY PRESUMPTION T HAT THE ASSESSEE HAD ACCEPTED CAPITATION FEE FOR THE PURPOS E OF ADMITTING STUDENTS TO THE MEDICAL COURSE. THE COMMISSIONER O F INCOME- TAX(APPEALS) HAVING ACCEPTED THE FACT THAT IN MAJOR ITY OF THE CASES INTEREST FREE DEPOSITS HAVE BEEN PROVED SHOULD HAV E ARRIVED AT A LOGICAL CONCLUSION ON THE SAME PATTERN AND OUGHT TO HAVE DELETED THE ENTIRE ADDITION MADE BY THE ASSESSING AUTHORITY . THE COMMISSIONER OF INCOME-TAX(APPEALS) ALSO SHOULD HAV E HELD THAT THERE WERE ABSOLUTELY NO MATERIAL ON RECORD TO ALLE GE ANY CASE OF CAPITATION FEE AND HE WAS NOT JUSTIFIED IN CONFIRMI NG THE ADDITIONS PARTIALLY WHEREVER HE MADE SO. 16. WE HEARD BOTH SIDES IN DETAIL AND PERUSED THE R IVAL CONTENTIONS IN A CAREFUL MANNER. WE HAVE GONE THRO UGH THE RECORDS OF THE CASE INCLUDING THE ORDERS PASSED BY THE LOWER AUTHORITIES. WE HAVE ALSO GONE THROUGH THE PAPER B OOKS NOTES ITA 1149 TO 1152/10 ETC. :- 14 -: AND SUBMISSIONS PLACED BY THE PARTIES BEFORE US IN THE COURSE OF HEARING. 17. THE INDIVIDUAL GROUNDS RAISED BOTH BY THE ASSES SEE AND THE REVENUE IN DIFFERENT APPEALS PLACED BEFORE US RELAT E TO THE QUESTION OF ADDITIONS MADE UNDER SEC.68. THERE ARE SOME GROUNDS FILED BY THE ASSESSEE OBJECTING TO CERTAIN DIRECTIONS GIVEN BY THE COMMISSIONER OF INCOME-TAX(APPEALS) AS WELL. FACT-WISE AND ISSUE-WISE THE GROUNDS IN ALL THESE APPEALS AR E ALMOST IDENTICAL AND REPETITIVE. THEREFORE IT IS NECESS ARY FOR US BEFORE GOING THROUGH THE INDIVIDUAL APPEALS TO DISCUSS UP ON THE LARGER PREMISES ON WHICH THE IMPUGNED ASSESSMENTS HAVE BEE N MADE AND THE RESPECTIVE CONTENTIONS RAISED BOTH BY THE A SSESSEE AND THE REVENUE. 18. IN THE COURSE OF HEARING OF THESE APPEALS FERV ENT ARGUMENTS WERE MADE BY BOTH SIDES REGARDING THE CHA RITABLE NATURE OF ACTIVITIES CARRIED ON BY THE ASSESSEE SOC IETY AND ON THE APPLICABILITY OF SEC.11 TO THE ASSESSEE. 19. BUT AS A MATTER OF FACT IT IS TO BE SEEN THAT THE ASSESSEE SOCIETY IS ENJOYING REGISTRATION UNDER SEC.12AA AND APPROVAL UNDER SEC.80G AS A RECOGNIZED CHARITABLE INSTITUTIO N. THE REGISTRATION GRANTED TO THE ASSESSEE UNDER SEC.12AA AS WELL AS ITA 1149 TO 1152/10 ETC. :- 15 -: THE APPROVAL GIVEN TO THE ASSESSEE UNDER SEC.80G HA VE NOT BEEN DISTURBED SO FAR. IT MEANS THAT THE ASSESSEE IS A RECOGNIZED CHARITABLE INSTITUTION FOR THE PURPOSE OF THE INCOM E-TAX ACT FOR ALL THESE IMPUGNED ASSESSMENT YEARS UNDER APPEAL. WHEN THAT IS THE POSITION THERE IS NO PROVOCATION AT ALL TO GO INTO AGITATING WHETHER THE ASSESSEE SOCIETY IS CARRYING ON CHARITA BLE ACTIVITIES OR NOT. ALL THOSE QUESTIONS AND DELIBERATIONS ARE OUT SIDE THE PURVIEW OF THE SUBJECT MATTER OF APPEALS PLACED BEFORE US. WE FIND THAT THE ASSESSEE IS A REGISTERED CHARITABLE INSTITUTION FOR ALL THE PURPOSES OF THE INCOME-TAX ACT 1961 AND THEREFORE THERE IS NO OCCASION TO DISCUSS SUCH BASIC ISSUES AND FUNDAMENT AL MATTERS WHILE DISPOSING THESE APPEALS. THEREFORE WE ARE N OT INDULGING IN ANY SUCH DISCUSSION AS THEY ARE ABSOLUTELY UNCALLED FOR. 20. THE LIMITED ISSUE TO BE CONSIDERED BY THE TRIBU NAL IN ALL THESE APPEALS IS THAT WHETHER THE ASSESSING AUTHORI TY IS JUSTIFIED IN MAKING ADDITIONS UNDER SEC.68 AND TREATING THOSE AD DITIONAL AMOUNTS AS TAXABLE IN THE HANDS OF THE ASSESSEE SOC IETY. NOW LET US CONSIDER THE APPEALS ONE BY ONE. 21. THE REVENUE HAS FILED ITS APPEAL FOR THE ASSESS MENT YEAR 2003-04 IN ITA NO.1470/MDS/2010. THE GROUND RAISED BY THE ITA 1149 TO 1152/10 ETC. :- 16 -: REVENUE IS THAT THE COMMISSIONER OF INCOME-TAX(APPE ALS) HAS ERRED IN TREATING THE DEPOSITS OF ` 4.2 CRORES AS GENUINE RELYING ONLY ON THE FINDINGS OF THE TRIBUNAL. THE COMMISSI ONER OF INCOME-TAX(APPEALS) HAS FAILED TO NOTE THAT THE ORD ER OF THE TRIBUNAL WITH REFERENCE TO THE APPROVAL UNDER SEC.8 0G HAS BEEN TAKEN UP IN HIGHER FORUM AND HAS NOT BECOME FINAL. IT IS THE CASE OF THE REVENUE THAT THE COMMISSIONER OF INCOME-TAX( APPEALS) HAS FAILED TO NOTE THAT THE STATEMENTS UNDER SEC.13 2(4) FROM OFFICE BEARERS OF THE ASSESSEE HAVE MADE OUT A CASE OF ACC EPTING CAPITATION FEE. 22. IT IS THE CASE OF THE ASSESSEE THAT ON VERIFICA TION OF THE STATEMENTS OF OFFICE BEARERS OF THE ASSESSEE SOCIET Y AND OTHER RELEVANT MATERIALS THE COMMISSIONER OF INCOME-TAX( APPEALS) HAS COME TO A FINDING THAT THE MANAGEMENT OF THE ASSESS EE SOCIETY HAS TAKEN A CONSCIOUS DECISION NOT TO CHARGE ANY CA PITATION FEE FOR THE SEATS ALLOTTED FROM MANAGEMENT QUOTA. ON T HE OTHER HAND THE ASSESSEE SOCIETY HAD DECIDED TO TAKE NON- INTEREST- BEARING REFUNDABLE DEPOSITS FROM THE STUDENTS WHO H AD SECURED ADMISSIONS FOR MBBS COURSE UNDER MANAGEMENT QUOTA. THE COMMISSIONER OF INCOME-TAX(APPEALS) FOUND NOTHING C ONTRARY TO THE ABOVE POSITION IN THE STATEMENTS FURNISHED BY T HE ITA 1149 TO 1152/10 ETC. :- 17 -: FUNCTIONARIES OF THE ASSESSEE SOCIETY. ALL THOSE D EPOSITS RECEIVED BY THE ASSESSEE SOCIETY WERE PROPERLY RECORDED IN T HE BOOKS AND RECEIPTS WERE ISSUED TO THE PARENTS OF THE STUDENTS . THE COMMISSIONER OF INCOME-TAX(APPEALS) RELIED ON THE D ECISION OF THE TRIBUNAL TO HOLD THAT SUCH TRANSPARENT TRANSACT IONS CANNOT BE HELD TO BE IN THE NATURE OF CAPITATION FEE. THE CO MMISSIONER OF INCOME-TAX(APPEALS) ALSO FOUND OUT OF 54 STUDENTS 33 PARENTS HAD REPLIED IN AFFIRMATIVE CONFIRMING THE FACTS EXP LAINED BY THE ASSESSEE SOCIETY. IT IS IN THE LIGHT OF SPEAKING F ACTS THE COMMISSIONER OF INCOME-TAX(APPEALS) HELD THAT THE AMOUNT OF ` 4.2 CRORES IN FACT RELATED TO INTEREST FREE REFUNDA BLE DEPOSITS ACCEPTED BY THE ASSESSEE SOCIETY. 23. WE FIND THAT THE COMMISSIONER OF INCOME-TAX(APP EALS) HAS ARRIVED AT A REASONABLE AND SUSTAINABLE FINDING. A LL THE 54 STUDENTS WERE ADMITTED TO THE MEDICAL COURSE AFTER COMPLYING ALL OFFICIAL FORMALITIES OF THE ASSESSEE SOCIETY AS WEL L AS FORMALITIES REQUIRED UNDER UNIVERSITY AND GOVERNMENT REGULATION S. ADDRESSES AND PARTICULARS OF ALL THE STUDENTS ARE V ERY MUCH AVAILABLE IN THE RECORD MAINTAINED BY THE ASSESSEE SOCIETY. THEREFORE IT IS BEYOND COMPREHENSION TO ARGUE THAT ANY PARENT OF THE STUDENTS WAS NOT TRACEABLE. OUT OF 54 STUDENTS PARENTS OF 33 ITA 1149 TO 1152/10 ETC. :- 18 -: STUDENTS HAVE REPLIED IN AFFIRMATIVE CONFIRMING THA T THEY HAD GIVEN INTEREST FREE REFUNDABLE DEPOSITS TO THE ASSESSEE S OCIETY. THE MAJORITY OF THE PARENTS HAVE GIVEN TESTIMONY IN SUP PORT OF THE STATEMENTS GIVEN BY THE ASSESSEE SOCIETY. THE REAS ON THAT THE REMAINING 11 PARENTS HAVE NOT GIVEN ANY CONFIRMATIO N DOES NOT DILUTE THE PROBATIVE VALUE OF THE MATERIAL EVIDENCE AVAILABLE ON RECORD. MINORITY OF THE PARENTS MIGHT NOT BE AVAIL ABLE AT THAT POINT OF TIME AT THE ADDRESSES AVAILABLE ON RECORD AND IT MIGHT NOT BE POSSIBLE FOR THEM TO GIVE CONFIRMATION LETTERS WITH IN THE TIME FRAME GIVEN BY THE AUTHORITIES. THEREFORE THE FACT THAT THOSE 11 PARENTS COULD NOT CONFIRM THE DEPOSITS CANNOT BE TAKEN AS AN ADVERSE FINDING AGAINST THE ASSESSEE SOCIETY. BY AND LARGE THE ASSESSEE SOCIETY HAS PROVED THAT THE AMOUNTS WERE COLLECTED BY IT BY WAY OF INTEREST FREE REFUNDABLE DEPOSITS. THEREFORE W E FIND THAT THE COMMISSIONER OF INCOME-TAX(APPEALS) IS JUSTIFIED IN DELETING THE SAID ADDITION MADE BY THE ASSESSING AUTHORITY. THE REVENUE FAILS IN ITS APPEAL FILED FOR THE ASSESSMENT YEAR 2003-04 . 24. IN THE APPEAL FILED BY THE ASSESSEE FOR THE ASS ESSMENT YEAR 2003-04 IN ITA NO.1149/MDS/2010 THE ONLY GROUND RA ISED IS THAT THE COMMISSIONER OF INCOME-TAX(APPEALS) HAS ERRED I N RECORDING ITA 1149 TO 1152/10 ETC. :- 19 -: A FINDING THAT IF THE DEPOSITS WERE NOT REFUNDED T HOSE AMOUNTS WOULD BE MADE TAXABLE UNDER SEC.41(1) OF THE ACT. THE COMMISSIONER OF INCOME-TAX(APPEALS) HAS ALREADY ACC EPTED THAT THE AMOUNTS RECORDED BY THE ASSESSEE SOCIETY WERE I N FACT INTEREST-FREE DEPOSITS REFUNDABLE AFTER 10 YEARS. WHEN THE NATURE OF THE AMOUNTS CREDITED BY THE ASSESSEE IN ITS BOOK S ARE FOUND GENUINE AS EXPLAINED BY IT THERE IS NO JUSTIFICAT ION FOR THE COMMISSIONER OF INCOME-TAX(APPEALS) TO GO FURTHER A ND RECORD A PREMATURE DIRECTION WHAT TO BE DONE IN FUTURE. IF AND WHEN THE ASSESSEE SOCIETY DOES NOT REFUND THOSE DEPOSITS AS REQUIRED THE LAW WILL TAKE ITS OWN COURSE AT THAT POINT OF TIME. EVEN IF THOSE DEPOSITS WERE NOT REFUNDED QUESTIONS MAY STILL ARI SE AS TO WHETHER THE SAME WOULD BE TAXABLE AT ALL AND WHERE THE ASSESSEE SOCIETY HAS USED SUCH AMOUNTS FOR CHARITABLE PURPOS ES AND THE PARENTS OF THE STUDENTS DO NOT HAVE ANY COMPLAINT A GAINST THE ASSESSEE SOCIETY. THEREFORE WE FIND THAT THE DIRE CTION GIVEN BY THE COMMISSIONER OF INCOME-TAX(APPEALS) IS PREMATUR E AND UNWARRANTED. THE SAID DIRECTION IS ACCORDINGLY VAC ATED. 25. IN THE APPEAL FILED BY THE REVENUE FOR THE ASSE SSMENT YEAR 2004-05 IN ITA NO.1471/MDS/2010 AGAIN THE GROUND I S THAT THE ITA 1149 TO 1152/10 ETC. :- 20 -: COMMISSIONER OF INCOME-TAX(APPEALS) HAS ERRED IN TR EATING THE DEPOSITS OF ` 2.6 CRORES AS GENUINE RELYING ONLY ON THE FINDINGS OF THE TRIBUNAL. ALL OTHER GROUNDS ARE SIMILAR TO THE GROUNDS RAISED FOR THE EARLIER ASSESSMENT YEAR 2003-04. FOR THE R EASONS DISCUSSED FOR THE EARLIER ASSESSMENT YEAR 2003-04 WE HOLD THAT THE COMMISSIONER OF INCOME-TAX(APPEALS) IS JUSTIFIE D IN DELETING THE ADDITION OF ` 2.6 CRORES. THE APPEAL FILED BY THE REVENUE FOR THE ASSESSMENT YEAR 2004-05 IS LIABLE TO BE DISMISS ED. 26. IN THE CORRESPONDING APPEAL FILED BY THE ASSESS EE FOR THE ASSESSMENT YEAR 2004-05 IN ITA NO.1150/MDS/2010 T HE GROUND IS THAT THE COMMISSIONER OF INCOME-TAX(APPEALS) HAS ERRED IN GIVING A DIRECTION THAT IF THE DEPOSITS WERE NOT RE FUNDED IN TIME THOSE AMOUNTS WOULD BE TREATED AS TAXABLE UNDER SEC .41(1) OF THE ACT. FOR THE SAME REASONS DISCUSSED FOR THE EARLIE R ASSESSMENT YEAR 2003-04 WE HOLD THAT THE SAID DIRECTION GIVEN BY THE COMMISSIONER OF INCOME-TAX(APPEALS) IS NOT JUSTIFIE D. THE DIRECTION WITH REFERENCE TO INVOKING OF SEC.41(1) I S ACCORDINGLY VACATED. THE APPEAL FILED BY THE ASSESSEE FOR THE ASSESSMENT YEAR 2004-05 IS THUS SUCCESSFUL. ITA 1149 TO 1152/10 ETC. :- 21 -: 27. NEXT WE WILL CONSIDER THE APPEAL FILED BY THE REVENUE FOR THE ASSESSMENT YEAR 2005-06 IN ITA NO.1472/MDS/2010 . THE GROUND RAISED BY THE REVENUE IS THAT THE COMMISSION ER OF INCOME-TAX(APPEALS) HAS ERRED IN DELETING THE ADDIT ION OF ` 4 17 77 200/- OBSERVING THAT THE CASE OF RECEIPT OF CAPITATION FEE IS NOT PROVED. THE COMMISSIONER OF INCOME-TAX(APPE ALS) HAS EXAMINED IN DETAIL THE BASIS ON WHICH THE ASSESSIN G OFFICER HAS MADE THE ADDITION. THE ASSESSING OFFICER HAS MADE THE ADDITION ON THE BASIS OF PURPORTED ADMISSIONS MADE BY THE FU NCTIONARIES OF THE ASSESSEE SOCIETY IN THE STATEMENTS FURNISHED B Y THEM. IT IS TO BE SEEN THAT THOSE STATEMENTS HAVE BEEN SUBSEQUENTL Y RETRACTED. THE RETRACTIONS OF THOSE STATEMENTS MA DE BY THE FUNCTIONARIES OF THE SOCIETY ARE WELL SUPPORTED BY THE BOOKS OF ACCOUNT MAINTAINED BY THE ASSESSEE WITH SUPPORTING DOCUMENTS AND EVIDENCES. THE RECEIPTS OF DEPOSITS ARE PROPER LY ACCOUNTED AND ACKNOWLEDGED BY GIVING RECEIPTS. IN ADDITION T O THOSE AMOUNTS THERE IS NO CASE OF SEIZURE OF ANY SPEAKIN G MATERIAL TO ALLEGE ANY COLLECTION AGAINST THE ASSESSEE. WHEREV ER THE COMMISSIONER OF INCOME-TAX(APPEALS) HAS UPHELD THE ADDITIONS TO THAT EXTENT PROPER ACCOUNTS WERE AVAILABLE WITH THE ASSESSEE. THEREFORE AS A MATTER OF FACT WE FIND THAT THE CO MMISSIONER OF ITA 1149 TO 1152/10 ETC. :- 22 -: INCOME-TAX(APPEALS) HAS DELETED THE ADDITION ON THE BASIS OF MATERIALS AVAILABLE ON RECORD. WE FIND THAT THE GR OUND RAISED BY THE REVENUE IS WITHOUT ANY BASIS. THE CONTENTION O F THE REVENUE THAT THERE IS VIOLATION OF RULE 46A OF THE I.T. RUL ES 1962 IN FURNISHING THE DETAILS BEFORE THE COMMISSIONER OF I NCOME- TAX(APPEALS) IS ALSO NOT CORRECT. ALL THE BASIC D ETAILS ARE VERY MUCH AVAILABLE BEFORE THE ASSESSING AUTHORITY HIMS ELF. IN THE CIRCUMSTANCES WE FIND THAT THE APPEAL FILED BY THE REVENUE FOR THE ASSESSMENT YEAR 2005-06 IS LIABLE TO BE DISMISS ED. 28. NEXT WE WILL CONSIDER THE APPEAL FILED BY THE REVENUE FOR THE ASSESSMENT YEAR 2006-07 IN ITA NO.1473/MDS/2010 . IN THIS APPEAL THE ONLY GROUND RAISED BY THE REVENUE IS TH AT THE COMMISSIONER OF INCOME-TAX(APPEALS) HAS ERRED IN DE LETING THE ADDITION OF ` 17 52 000/- RELATING TO SHRI AMUL JOHN JACOB. ON GOING THROUGH THE ORDERS OF THE COMMISSIONER OF INC OME- TAX(APPEALS) WE FIND THAT THE COMMISSIONER OF INCO ME- TAX(APPEALS) HAS DELETED THE ADDITION FOR THE REASO N THAT THAT MUCH AMOUNT WAS RECEIVED FROM SHRI AMUL JOHN JACOB THROUGH BANK INSTRUMENT AND RECORDED IN THE BOOKS OF ACCOUN T. WHEN THESE FACTS ARE APPARENT FROM THE RECORD THERE IS NO REASON TO ITA 1149 TO 1152/10 ETC. :- 23 -: INTERFERE WITH THE ORDER OF THE COMMISSIONER OF INC OME- TAX(APPEALS). THIS GROUND IS REJECTED. THIS APPEA L ALSO FAILS. 29. IN THE CORRESPONDING APPEAL FILED BY THE ASSESS EE FOR THE ASSESSMENT YEAR 2006-07 IN ITA NO.1151/MDS/2010 TH E ONLY GROUND IS THAT THE COMMISSIONER OF INCOME-TAX(APPEA LS) HAS ERRED IN CONFIRMING AN ADDITION OF ` 6 LAKHS BEING THE ALLEGED AMOUNT OF CASH RECEIVED FROM SHRI AMUL JOHN JACOB. IT IS THE CASE OF THE ASSESSEE THAT THE COMMISSIONER OF INCOM E- TAX(APPEALS) HAS ALREADY DELETED AN ADDITION OF ` 17 52 000/- MADE BY THE ASSESSING AUTHORITY IN THE LIGHT OF THE CONFIRMATION OF RECEIPTS MADE BY THE ASSESSEE. EVEN THOUGH CONFIR MATION IS ONLY TO THAT EXTENT THE COMMISSIONER OF INCOME-TAX (APPEALS) IS NOT JUSTIFIED IN GOING BEYOND AND SUSTAINING THE AD DITION OF ` 6 LAKHS. IN FACT THE BASIS OF THE ADDITION WAS A SH EET OF PAPER FOUND IN THE COURSE OF SEARCH. ACCORDING TO THE ASS ESSING OFFICER A SUM OF ` 23 52 000/- WAS STATED TO HAVE BEEN PAID TO THE ASSESSEE. THE ASSESSEE EXPLAINED THAT A SUM OF ` 17 52 000/- HAD BEEN RECEIVED BY CHEQUE FROM SHRI AMUL JOHN JAC OB AND IT WAS NOT AWARE OF ANY MONEY RECEIVED IN CASH. AS AL READY FOUND IN THE APPEAL FILED BY THE REVENUE FOR THE SAME ASS ESSMENT YEAR ITA 1149 TO 1152/10 ETC. :- 24 -: 2006-07 THE COMMISSIONER OF INCOME-TAX(APPEALS) HA S DELETED THE ADDITION OF THE SAID AMOUNT OF ` 17 52 000/- MADE BY CHEQUE. WHEN THE ASSESSEE HAD ACCOUNTED FOR THE AMOUNT RECE IVED BY CHEQUE THERE IS NO REASON TO GO BEYOND ONLY FOR T HE REASON THAT IN THE SHEET OF PAPER FOUND IN THE COURSE OF SEARCH THE AMOUNT RECORDED WAS ` 23 52 000/-. THERE SHOULD HAVE BEEN SOME CORROBORATING MATERIAL TO SHOW THAT THE ASSESSEE HA D RECEIVED ANY SUM IN CASH FROM SHRI AMUL JOHN JACOB OVER AND ABOVE THE AMOUNT RECEIVED BY CHEQUE. THERE IS NO DIRECT NEXU S WITH THE PROPOSITION MADE BY THE ASSESSING OFFICER AND THE P APER SEIZED IN THE COURSE OF SEARCH. WE FIND THAT NO ADDITION CAN BE CONFIRMED ON THE BASIS OF THAT PAPER ON WHICH BOTH SIDES HAVE NO IDEA AS TO WHAT IT WAS. THEREFORE WE DELETE THE A DDITION OF ` 6 LAKHS SUSTAINED BY THE COMMISSIONER OF INCOME-TAX(A PPEALS). 30. THE ASSESSEE IS SUCCESSFUL IN THE APPEAL FILED FOR THE ASSESSMENT YEAR 2006-07. 31. NEXT WE WILL CONSIDER THE APPEAL FILED BY THE R EVENUE FOR THE ASSESSMENT YEAR 2007-08 IN ITA NO.1474/MDS/2010 . THE ONLY GROUND IS THAT THE COMMISSIONER OF INCOME-TAX( APPEALS) HAS ERRED IN DELETING THE ADDITION OF ` 10 80 000/- OBSERVING THAT THE ITA 1149 TO 1152/10 ETC. :- 25 -: CASE OF RECEIPT OF CAPITATION FEE HAS NOT BEEN PROV ED. WE HAVE ALREADY CONSIDERED THE GROUNDS ON WHICH THE COMMISS IONER OF INCOME-TAX(APPEALS) HAS ARRIVED AT A SIMILAR CONCLU SION ON THE ADDITIONS DELETED BY HIM FOR THE EARLIER ASSESSMENT YEARS. THE ASSESSING OFFICER HAS MADE THE ADDITIONS ONLY ON TH E BASIS OF PRELIMINARY STATEMENTS OBTAINED FROM THE FUNCTIONAR IES OF THE ASSESSEE SOCIETY. AS ALREADY STATED THOSE STATEME NTS WERE LATER RETRACTED. WHEREVER THE ASSESSEE HAS RECEIVED AMOU NTS FROM THE PARENTS OF THE STUDENTS THOSE AMOUNTS HAVE BEE N RECORDED IN THE BOOKS OF ACCOUNT AND THOSE AMOUNTS WERE RECEIVE D THROUGH BANK INSTRUMENTS. THE NUMBER OF STUDENTS ADMITTED FOR MEDICAL COURSE IN DIFFERENT YEARS AND THE CORRESPONDING DEP OSITS COLLECTED FROM THOSE STUDENTS HAVE BEEN PROPERLY ANALYZED AND DETAILED BY THE ASSESSEE SOCIETY IN THE REGULAR BOOKS OF ACCOUN T MAINTAINED BY IT. THEREFORE IT IS TO BE SEEN THAT RETRACTION S MADE BY THE FUNCTIONARIES OF THE ASSESSEE SOCIETY ARE SUPPORTED BY PROPER DOCUMENTARY EVIDENCES AND VALID MATERIALS. IT IS TO BE SEEN THAT THE ADMISSIONS MADE UNDER SEC.132(4) ARE REBUTTABLE IF COGENT MATERIALS OR EVIDENCES ARE AVAILABLE ON RECORD. IN THE PRESENT CASE WE FIND THAT THE RETRACTIONS ARE SUPPORTED BY REGULAR BOOKS OF ACCOUNT OF THE ASSESSEE SOCIETY MAINTAINED IN TH E REGULAR ITA 1149 TO 1152/10 ETC. :- 26 -: COURSE. THEREFORE IN THESE CIRCUMSTANCES THE AS SESSING OFFICER IS NOT JUSTIFIED IN MAKING THE ADDITION ON THE BASI S OF THOSE STALE ADMISSIONS STATED TO HAVE BEEN MADE IN THE PRELIMI NARY STATEMENTS FURNISHED BY THE FUNCTIONARIES OF THE AS SESSEE SOCIETY. WE FIND THAT THE COMMISSIONER OF INCOME-TAX(APPEALS ) IS JUSTIFIED IN DELETING THE ADDITION. THE APPEAL FILED BY THE REVENUE FOR THE ASSESSMENT YEAR 2007-08 FAILS. 32. NEXT WE WILL CONSIDER THE APPEAL FILED BY THE R EVENUE FOR THE ASSESSMENT YEAR 2008-09 IN ITA NO.1475/MDS/2010 . THE ONLY GROUND RAISED BY THE REVENUE IS THAT THE COMMI SSIONER OF INCOME-TAX(APPEALS) HAS ERRED IN DELETING THE ADDIT ION OF ` 6 12 00 000/- OBSERVING THAT THE CASE OF RECEIPT O F CAPITATION FEE HAS NOT BEEN PROVED. FOR THE REASONS STATED FOR TH E ASSESSMENT YEAR 2007-08 WE HOLD THAT THE COMMISSIONER OF INCO ME- TAX(APPEALS) IS JUSTIFIED IN DELETING THE SAID ADDI TION. THE GROUND RAISED BY THE REVENUE IS THEREFORE LIABLE TO BE R EJECTED. 33. THE ASSESSEE HAS FILED AN APPEAL FOR THE ASSESS MENT YEAR 2008-09 IN ITA NO.1152/MDS/2010. THE ONLY GROUND R AISED BY THE ASSESSEE IS THAT THE COMMISSIONER OF INCOME-TAX (APPEALS) HAS ERRED IN CONFIRMING THE ADDITION OF ` 4.68 CRORES AS ITA 1149 TO 1152/10 ETC. :- 27 -: UNDISCLOSED INCOME. IT IS SEEN THAT THE COMMISSION ER OF INCOME- TAX(APPEALS) HAS CONFIRMED THE ADDITION ON THE GROU ND THAT THOSE RECEIPTS WERE NOT RECORDED BY THE ASSESSEE IN THE B OOKS OF ACCOUNT. THIS CONTENTION WAS ALSO RAISED BY THE LE ARNED COMMISSIONER IN THE COURSE OF HIS ARGUMENT. BUT IT IS TO BE SEEN THAT THERE ARE NO MATERIALS AVAILABLE ON RECORD TO SHOW THAT THE ASSESSEE SOCIETY HAD RECEIVED SUCH AMOUNTS OVER AND ABOVE WHAT WAS RECORDED IN ITS BOOKS OF ACCOUNT. THE ASS ESSING OFFICER HAS MADE A PRESUMPTION THAT THE ASSESSEE SOCIETY MI GHT HAVE RECEIVED THAT MUCH AMOUNT ON THE STRENGTH OF STUDEN TS ADMITTED FOR MEDICAL COURSE. THIS IS ONLY AN INTELLIGENT PR ESUMPTION. THE COMMISSIONER OF INCOME-TAX(APPEALS) HAS ALSO MADE A PARTIAL ENDORSEMENT OF THE ABOVE ERRONEOUS PRESUMPTION. W HEN THERE IS NO MATERIAL AVAILABLE ON RECORD IT IS NOT POSSI BLE TO PRESUME THAT THE ASSESSEE MIGHT HAVE COLLECTED CAPITATION F EE FOR ADMITTING STUDENTS FOR MEDICAL COURSE. AS THERE IS NO EVIDEN CE WE FIND THAT THE ADDITION SUSTAINED BY THE COMMISSIONER OF INCOM E- TAX(APPEALS) IS NOT WARRANTED. ACCORDINGLY THE AD DITION OF ` 4.68 CRORES IS DELETED. THE ASSESSEE IS SUCCESSFUL IN ITS APPEAL FOR THE ASSESSMENT YEAR 2008-09. ITA 1149 TO 1152/10 ETC. :- 28 -: 34. IN THE ABOVE PARAGRAPHS WE HAVE DECIDED ALL T HE APPEALS FILED BY THE REVENUE AS WELL AS BY THE ASSESSEE ON THE MERITS OF THE GROUNDS RAISED IN THOSE APPEALS. 35. APART FROM THE ABOVE WE HAVE TO STATE THAT TH E ASSESSING AUTHORITY HAS NO CASE THAT THE ASSESSEE SOCIETY HAS APPLIED ITS FUNDS FOR ANY PURPOSES OTHER THAN THE PURPOSES FOR WHICH THE ASSESSEE SOCIETY IS ESTABLISHED. AS ALREADY MENTIO NED IN THE EARLIER PARAGRAPHS THE ASSESSEE SOCIETY IS RUNNING A HOSPITAL AND RUNNING EDUCATIONAL INSTITUTIONS INCLUDING A MEDICA L COLLEGE. ALL THESE ACTIVITIES HAVE BEEN CONSIDERED AS CHARITABLE IN THE HANDS OF THE ASSESSEE SOCIETY BY THE REVENUE ITSELF BY GR ANTING REGISTRATION UNDER SEC.12AA AND APPROVAL UNDER SEC. 80G. EVEN WHEN THE REVENUE HAS RAISED CASES OF ACCEPTING CAPI TATION FEE AND THAT OF UNACCOUNTED RECEIPTS THERE IS NO CASE FOR THE REVENUE THAT THE ASSESSEE HAS APPLIED ANY FUNDS FOR THE PURPOSES OTHER THAN RUNNING HOSPITAL AND RUNNING ED UCATIONAL INSTITUTIONS INCLUDING THE MEDICAL COLLEGE. 36. THE WHOLE PURPOSE OF SEC.11 IS TO CONFER EXEMPT ION ON THE INCOME OF A CHARITABLE TRUST SUBJECT TO CERTAIN SAF E-GUARDS IN THE INTEREST OF THE PROPER APPLICATION OF TRUST MONIES AND APPROPRIATE ITA 1149 TO 1152/10 ETC. :- 29 -: INVESTMENT OF THE TRUST FUND. THIS PROPOSITION HAS BEEN HIGHLIGHTED BY THE HONBLE MYSORE HIGH COURT WAY BA CK IN 1974 WHILE DECIDING THE CASE OF SIDDARAMANNA CHARITIES TRUST V. CIT (96 ITR 275). IT IS TO BE SEEN THAT APPLICATION OF INCOME FOR CHARITABLE PURPOSE IS ONE OF THE PREREQUISITE CONDI TIONS FOR EXEMPTION AND THE INCOME OF THE TRUST SHOULD BE APP LIED FOR CHARITABLE PURPOSES. IT IS TO BE SEEN THAT LAW IS MORE CONCERNED ABOUT APPLICATION OF FUNDS BY A CHARITABLE SOCIETY. IN FACT THAT IS THE ESSENCE OF SEC.11. THE FUNDS AVAILABLE IN THE HANDS OF A CHARITABLE SOCIETY MUST BE APPLIED FOR CHARITABLE P URPOSES ALONE AND EVEN INVESTMENTS MUST BE MADE AS PRESCRIBED BY THE ACT AND RULES. THEREFORE THE LITMUS TEST OF DECIDING WHETHER THE ASSESSEE IS ENTITLED FOR EXEMPTION UNDER SEC.11 OR NOT IS THE APPLICATION OF THE FUNDS FOR CHARITABLE PURPOSES. 37. AS FAR AS THE INCOME OF A CHARITABLE SOCIETY IS CONCERNED THERE IS ONLY ONE DISTINCTION THAT IS BETWEEN CORP US DONATIONS AND DONATIONS OTHER THAN CORPUS DONATIONS. CORPUS DONA TIONS IF SO PROVED DO NOT FORM PART OF THE INCOME OF A CHARITA BLE SOCIETY. THE VOLUNTARY DONATIONS OTHER THAN CORPUS DONATION S DO FORM PART OF INCOME OF A CHARITABLE SOCIETY. WHERE AN A SSESSEE HAS ITA 1149 TO 1152/10 ETC. :- 30 -: APPLIED SUCH ENTIRE INCOME TOWARDS CHARITABLE PURPO SES OF COURSE IT IS ENTITLED FOR EXEMPTION UNDER SEC.11. 38. IN THE ABOVE BACKGROUNDS WHEN WE EXAMINE TH E FACTS OF THE PRESENT CASE IN OUR VIEW EVEN THE ADDITIONS M ADE UNDER SEC.68 IF APPLIED FOR CHARITABLE PURPOSES CANNOT BE TREATED AS AN INDEPENDENT SEGMENT OF TAXABLE INCOME. IT IS TO B E SEEN THAT UNEXPLAINED CREDITS ARE ADDED AS INCOME. EVEN I F THE ADDITIONS MADE BY THE ASSESSING OFFICER UNDER SEC.68 ARE UPHE LD THOSE AMOUNTS ALWAYS DO FORM PART OF INCOME IN THE HANDS OF THE ASSESSEE SOCIETY. THOSE ADDITIONAL INCOME ADDED BY THE ASSESSING OFFICER UNDER SEC.68 WILL BE LIABLE FOR T AXATION ONLY IF THOSE AMOUNTS ARE NOT APPLIED FOR CHARITABLE PURPOS ES. IN THIS CASE THE ASSESSEE HAS APPLIED ITS ENTIRE FUNDS IN RUNNING THE HOSPITAL MEDICAL COLLEGE AND OTHER EDUCATIONAL INS TITUTIONS. THEREFORE EVEN IF FOR THE SAKE OF ARGUMENT THE A DDITIONAL AMOUNTS COVERED BY SEC.68 ARE TREATED AS PART OF AS SESSEES INCOME STILL THE AMOUNTS CANNOT BE BROUGHT TO TAX AS THOSE AMOUNTS HAVE BEEN APPLIED FOR CHARITABLE PURPOSES. 39. IN FACT IT IS ALWAYS TO BE SEEN THAT WHERE A C HARITABLE SOCIETY HAS APPLIED ALL THE FUNDS AVAILABLE AT ITS DISPOSAL FOR CHARITABLE PURPOSES THE ADDITION EVEN MADE UNDER S EC.68 CANNOT ITA 1149 TO 1152/10 ETC. :- 31 -: FORM PART OF AN INDEPENDENT SEGMENT OF TAXABLE INCO ME. IN THAT WAY THE CONCEPT OF TAXABLE INCOME UNDER SEC.68 IN THE CASE OF A CHARITABLE SOCIETY IS ALMOST A MIRAGE. 39. IN RESULT THE APPEALS FILED BY THE REVENUE ARE DISMISSED AND THE APPEALS FILED BY THE ASSESSEE ARE ALLOWED. ORDER PRONOUNCED ON MONDAY THE 30 TH OF JULY 2012 AT CHENNAI. SD/- SD/- (V.DURGA RAO) (DR.O.K.NARAYANAN) JUDICIAL MEMBER VICE-PRESIDENT CHENNAI DATED THE 30 TH JULY 2012 MPO* COPY TO : APPELLANT/RESPONDENT/CIT/CIT(A)/DR