M/s Oasis Educational Society, Warangal v. ADIT, Hyderabad

ITA 259/HYD/2006 | 2000-2001
Pronouncement Date: 05-03-2010 | Result: Partly Allowed

Appeal Details

RSA Number 25922514 RSA 2006
Assessee PAN AAATO0701E
Bench Hyderabad
Appeal Number ITA 259/HYD/2006
Duration Of Justice 3 year(s) 11 month(s) 22 day(s)
Appellant M/s Oasis Educational Society, Warangal
Respondent ADIT, Hyderabad
Appeal Type Income Tax Appeal
Pronouncement Date 05-03-2010
Appeal Filed By Assessee
Order Result Partly Allowed
Bench Allotted B
Tribunal Order Date 05-03-2010
Date Of Final Hearing 22-02-2010
Next Hearing Date 22-02-2010
Assessment Year 2000-2001
Appeal Filed On 14-03-2006
Judgment Text
IN THE INCOME TX APPELLATE TRIBUNAL HYDERABAD BENCH B' HYDERABAD BEFORE SHRI G.C.GUPTA VICE PRESIDENT AND SHRI CHANDRA POOJARI ACCOUNTANT MEMEBR ITA NO.284/HYD/07 : ASSTT . YEAR 2003-04 ITA NO.258/HYD/06 : ASSTT. Y EAR 1999-2000 ITA NO.259/HYD/06 : ASSTT . YEAR 2000-01 ITA NO.260/HYD/06 : ASSTT . YEAR 2001-02 ITA NO.261/HYD/06 : ASSTT . YEAR 2002-03 ITA NO.1261/HYD/08 : A SSTT. YEAR 2004-05 OASIS EDUCATIONAL SOCIETY WARANGAL. ( PAN AAATO 0701 E ) V/S. ASSTT./DY. DIRECTOR OF INCOME- TAX (EXEMPTION) HYDERABAD. (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI K.C.DEVADAS RESPONDENT BY : SMT. NIVEDITA BISWSAS O R D E R PER BENCH: THESE SIX APPEALS BY THE ASSESSEE FOR THE ASSESSMENT YEARS FROM 1999-2000 TO 2004-05 ARE DIRECTED AGAINST THE ORDERS OF THE CIT(A). SINCE IDENTICAL ISSUES ARE INVOLVED IN ALL THESE APPEALS THESE ARE BEING DISPOSED OFF BY THIS COMMON ORDER FOR TH E SAKE OF CONVENIENCE ITA NO.261/HYD/06 : ASSESSMENT YEAR : 2002-03 2. GROUNDS OF APPEAL NO.1 TO 4 AND 6 TO 10 ARE A S UNDER- '1. THE ORDER OF THE CIT(A)-IV HYDERABAD IN HOLDIN G THAT THE APPELLANT SOCIETY WAS NOT ENTITLED TO EXEMPTION U/S . 10(23C)(IIIAD) OF THE I.T. ACT 1961 AS AN EDUCAT IONAL INSTITUTION IS UNSUSTAINABLE BOTH UNDER FACTS AND I N LAW. ITA NO.258/HYD/06 AND FIVE OTHERS M/S. OASIS EDUCATIONAL SOCIETY WARANGAL 2 2. THE LEARNED CIT(A)-IV HYDERABAD FAILED TO NOTE TH AT THE GROSS RECEIPTS OF THE APPELLANT EDUCATIONAL SOCIETY FOR THE ASSESSMENT YEARS IN QUESTION INCLUDING THE ADDITION S MADE BY THE ASSESSING OFFICER WERE ALL BELOW ON CRORE AS TABULATED BELOW AND THEREFORE THE LEARNED CIT(A)- IV HYDERABAD OUGHT TO HAVE CLEARLY HELD THAT THE APPEL LANT'S SOCIETY'S INCOME WAS EXEMPT U/S. 10(23C)(IIIAD) OF THE IT. ACT 1961- GROSS RECEIPTS AS DISCLOSED BY APPELLANT RS. ADDITIONS TO RECEIPTS MADE BY A.D.I.T. (EXEMPTIONS)-I HYDERABAD RS. TOTAL RECEIPTS RS. 24 47 168 20 51 751 44 98 919 29 12 879 23 63 652 52 76 531 33 09 475 28 83 658 59 93 133 35 19 424 21 01 254 56 20 678 3. THE LEARNED CIT(A) IV HYDERABAD IN HOLDING THAT T HE APPELLANT SOCIETY'S- (I) IS RUNNING AN EDUCATIONAL INSTITUTION AS A COMM ERCIAL VENTURE; (II) REAL PURPOSE WAS TO CREATE ASSETS IN THE NAME OF INTERESTED PERSONS. (III) CHARITABLE PURPOSE IS ONLY IN NAME'S SAKE WHEREAS THE ULTIMATE BENEFICIARIES ARE THE FAMILY MEMBERS WHO OWN THE ASSETS; (IV) EDUCATIONAL INSTITUTION DOES NOT EXIST SOLELY FOR EDUCATION PURPOSE; IS TOTALLY CONTRARY TO THE FACTS AND EVIDENCE ON RE CORD AND IS WHOLLY UNSUSTAINABLE. 4. THE ORDER OF THE LEARNED CIT(A)-IV HYDERABAD IN H OLDING THAT THE APPELLANT IS NOT ENTITLED TO THE CLAIM OF EXEMPTION ON U/S. 10(23C)(IIIAD) FOR THE REASONS MENTIONED IN GROUND NO.3 IS WHOLLY UNSUSTAINABLE AND IS TO BE QUASHED. 5. . 6. ALTERNATIVELY THE LEARNED CIT(A)-IV HYDERABAD FAI LED TO NOTE THAT THE ENTIRE FEE COLLECTED AS BUILDING FUND FEE WAS WHOLLY UTILIZED FOR CONSTRUCTION OF SCHOOL BUILDING WHICH AMOUNTS TO APPLICATION OF INCOME FOR THE OBJECTS OF THE SOCIETY AND THEREFORE NOT TAXABLE. ITA NO.258/HYD/06 AND FIVE OTHERS M/S. OASIS EDUCATIONAL SOCIETY WARANGAL 3 7. THE ORDER OF THE CIT(A)-IV HYDERABAD IN HOLDING TH AT THE APPELLANT IS NOT ENTITLED TO DEPRCICIATION ON SCHOO L BUILDING IS WHOLLY UNSUSTAINABLE IN LAW. 8. THE ORDER OF THE CIT(A)-IV HYDERABAD IN CONFIRMING THE ADDITION OF RS.75 000 ON ACCOUNT OF SALE OF FILES A ND DIARIES IS UNSUSTAINABLE IN LAW. 9. THE LEARNED CIT(A) IV HYDERABAD HAVING FOUND AS A MATTER OF FACT THAT THE ADDITION MADE UNDER THE FOLLOWING 'HEADS OF RECEIPTS' ARE FULLY ACCOUNTED AND HAVING ACCEPTED T HE GROUNDS AND ALLOWED THEM ERRED IN SUBJECTING THE SA ME FOR FURTHER VERIFICATION WHICH IS NOT WARRANTED IN LAW. TUITION FEE RS. SPECIAL FEE RS. BUS FARE RS. BUILDING CONSTRUC- TION A/C. RS. 25 580 3 64 600 35 251 5 94 011 10. THE LEARNED CIT(A)-IV HAVING FOUND AS A MATTER OF FACT THAT THE ASSESSING OFFICER WAS NOT JUSTIFIED IN MAKING A DDITIONS OF UNSECURED LOANS OBTAINED BY THE APPELLANT SOCEIT 6Y AT RS.2 50 000/- FROM - S.NO. NAME OF THE LENDER AMOUNT IN RS. 1. J.S.PARANJYOTHI 1 00 000 2. J.S.PRABHUDAS 1 50 000 ERRED IN SUBJECTING THE ADDITIONS TO FURTHER VERIFI CATION BY THE ASSESSING OFFICER WHICH IS UNWARRANTED IN LAW. ...' THESE GROUNDS OF APPEAL OF THE ASSESSEE CENTRE AROUND THE ISSUE WHETHER THE ASSESSEE IS ENTITLED TO EXEMPTION UNDER S.1 0(23C)(IIIAD) OF THE INCOME-TAX ACT 1961. 4. THE LEARNED COUNSEL FOR THE ASSESSEE SUBMITTED THAT THE ASSESSEE SOCIETY IS REGISTERED UNDER THE PROVISIONS OF SOCIET IES REGISTRATION ACT ON 5.6.1986 AND WAS RUNNING A SCHOOL F OR PROMOTING THE CAUSE OF EDUCATION IN THE DISTRICT OF WARANGAL A.P . THERE WAS A SURVEY UNDER S.133A OF THE ACT ON 7.11.2002 AND THE REAFTER A NOTICE ITA NO.258/HYD/06 AND FIVE OTHERS M/S. OASIS EDUCATIONAL SOCIETY WARANGAL 4 UNDER S.148 WAS ISSUED TO THE ASSESSEE ON 25.8.2003. ASSE SSEE FILED RETURN OF INCOME IN RESPONSE TO NOTICE UNDER S.148 OF T HE ACT DECLARING AN INCOME OF RS.28 189. THE ASSESSING OFFICER RE JECTED THE CLAIM OF THE ASSESSEE FOR EXEMPTION UNDER S.10(23C)(III AD) OF THE ACT MAINLY ON TWO GROUNDS. THE FIRST GROUND ON WHICH THE ASSESSING OFFICER REFUSED EXEMPTION TO THE ASSESSEE SOCIETY IS THAT T HE LAND ON WHICH THE SCHOOL BUILDING WAS CONSTRUCTED WAS NOT OWNED BU T TAKEN UNDER AN ORAL LEASE FROM THE SONS OF THE PRINCIPAL OF THE SCHOOL OF THE ASSESSEE SOCIETY AND ACCORDINGLY THE LAND DOES NOT BELONG TO THE ASSESSEE SOCIETY. THE SECOND GROUND ON WHICH THE EXEMPTION WAS DENIED TO THE ASSESSEE WAS THAT THE PRINCIPAL WAS PAID A SA LARY OF RS.10 000 PER MONTH AND THEREFORE HE WAS GIVEN PECUN IARY BENEFIT WHICH IS IN CONTRAVENTION OF THE STATUTORY PROVISIONS OF S.13 OF THE ACT THE LEARNED COUNSEL FOR THE ASSESSEE SUBMITTED THAT MERE LY BECAUSE THE LAND ON WHICH THE SCHOOL BUILDING WAS CONSTRUCTED WAS O BTAINED BY THE ASSESSEE SOCIETY UNDER AN ORAL LEASE FORM THE SONS OF TH E PRINCIPAL THE REVENUE AUTHORITIES ARE NOT JUSTIFIED IN DENYING EXEMPTION TO THE ASSESSEE SOCIETY. HE SUBMITTED THAT A WRITTEN AGREEMENT OF LEASE WAS ALSO EXECUTED BETWEEN THE ASSESSEE AND THE OWNERS OF THE LAND ON 11.7.2005 WHICH COULD NOT HOWEVER BE REGISTERED. HE SUBMITTED THAT ON 8.10.2008 THE ENTIRE LAND ON WHICH THE SCHOOL BU ILDING WAS CONSTRUCTED WAS GIFTED BY ITS OWNERS TO THE ASSESSEE SOCIETY VIDE REGISTERED GIFT DEED DATED 8.10.2008 EXECUTED BETWEE N THE OWNERS OF THE LAND AND THE ASSESSEE SOCIETY A COPY OF WHICH HAS ALSO BEEN FILED IN THE COMPILATION OF THE ASSESSEE. HE SUBMITTED THAT THE OWNERS OF THE LAND HAVE CHARGED LEASE RENTAL AT THE RATE OF A BOUT RS.2 PER SQUARE YARD WHICH IS MOST REASONABLE. HE RELIED ON THE DECISION OF THE JURISDICTIONAL HIGH COURT IN THE CASE OF CIT V/S . A NDHRA PRADESH RIDING CLUB(168 ITR 393) IN SUPPORT OF HIS ARGUMENTS. HE SUBMITTED THAT DEPRECIATION ON BUILDING CONSTRUCTED BY THE ASSESSEE I S ALSO ITA NO.258/HYD/06 AND FIVE OTHERS M/S. OASIS EDUCATIONAL SOCIETY WARANGAL 5 ALLOWABLE TO THE ASSESSEE SOCIETY ALTHOUGH THE LAND DOE S NOT BELONG TO THE IT AND IN SUPPORT OF THIS CONTENTION HE PLACED R ELIANCE ON THE DECISION OF THE KARNATAKA HIGH COURT IN THE CASE OF CIT KARNATAKA-I V/S. SOCIETY OF THE SISTERS OF ST. ANNE (146 ITR 28) AN D 265 ITR 489. HE SUBMITTED THAT THE ASSESSEE SOCIETY 'S INCOME WAS MUCH LESS T HAN RS.1 CRORES AND THEREFORE IT WAS NOT OBLIGED TO APPLY FOR EXEMPTION UNDER S.10(23C)(IIIAD) OF THE ACT. HE ALSO RELIED IN SUPPORT OF HIS ARGUMENTS ON THE DECISIONS OF THE HON'BLE SUPREME COURT IN P.C. RAJA RATNAM INSTITUTIONS V/S. MUNICIPAL CORPORATION OF DELH I AND OTHERS (181 ITR 354)-SC. AND IN ADITANAR EDUCATIONAL INSTITU TION V.S. ADDITIONAL COMMISSIONER OF INCOME-TAX (224 ITR 310)-S C AND OF THE HYDERABAD BENCH OF THE TRIBUNAL IN ST. JOSEPH UPPER PR IMARY SCHOOL V/S. ITO (4 ITD 231). 5. THE LEARNED DEPARTMENTAL REPRESENTATIVE ON THE OTHER HAD HAS OPPOSED THE SUBMISSIONS OF THE LEARNED COUNSEL F OR THE ASSESSEE. SHE SUBMITTED THAT THE LAND DOES NOT BELONG T O THE ASSESSEE SOCIETY AND THEREFORE NO DEPRECIATION IS ALLOWAB LE TO THE ASSESSEE SOCIETY . MOREOVER THE ASSESSEE HAS COLLECTED BUILDI NG FUND AND THEREFORE THE RATIO OF THE DECISION OF THE HYDERA BAD BENCH OF THE TRIBUNAL IN THE CASE OF ASST. DIRECTOR OF I.T.(EXEMPTION )-III HYDERABAD V/S. VASAVI ACADEMY OF EDUCATION IN ITA NO.1794/HYD/08 D ATED 4.2.2010 IS APPLICABLE TO THE CASE OF THE ASSESSEE SOCIETY A ND THE ASSESSEE IS NOT ENTITLED TO EXEMPTION UNDER THE ACT. SH E RELIED ON THE ORDER OF THE ASSESSING OFFICER AND THE CIT(A) AND REFER RED TO THE RELEVANT PORTIONS THEREOF IN SUPPORT OF HER CASE. 6. LEARNED COUNSEL FOR THE ASSESSEE IN HIS REJOINDER SUBMITTED THAT THE ISSUE RELATING TO THE NATURE OF BUI LDING FUND COLLECTED BY THE ASSESSEE DOES NOT ARISE FOR CONSIDERATION B Y THIS ITA NO.258/HYD/06 AND FIVE OTHERS M/S. OASIS EDUCATIONAL SOCIETY WARANGAL 6 TRIBUNAL AS THE REVENUE HAS NOT PREFERRED ANY APPEAL AGAINST THE FINDING OF THE OF THE CIT(A) ON THAT ASPECT THAT THE AMOUNT COLLECTED IN THE NAME OF BUILDING FUND BY THE ASSESSEE IS NOTHING BU T ADMISSION FEES ONLY AND CONSEQUENTLY THE FINDING OF THE CIT(A) IN THAT BEHALF HAS BECOME FINAL. 7. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS CAREFULLY WE FIND THAT THERE IS NO DISPUTE IN THIS CASE REGARDING THE OBJECTS OF THE ASSESSEE SOCIETY BEING CHARITABLE IN NATURE. THE ASSESSEE SOCI ETY WAS REGISTERED UNDER THE SOCIETIES REGISTRATION ACT ON 15.6 .1986 AND WAS RUNNING A SCHOOL SINCE THEN. SURVEY ACTION UNDER S.133A WAS CONDUCTED ON THE PREMISES OF THE ASSESSEE ON 7.11.2002 AND THEREAFTER A NOTICE UNDER S.148 WAS ISSUED TO THE SOCIET Y IN RESPONSE TO WHICH ASSESSEE HAS FILED ITS RETURN OF INCOME DECLARING AN INCOME OF RS.28 189. THE ONLY DISPUTE BEFORE US IS REGARDING THE DENIAL OF THE ASSESSEE' S CLAIM FOR EXEMPTION UNDER S.10(23C)(IIIAD) OF THE ACT. THE CASE OF THE ASSESSEE IS THAT SURPLUS OF INCOME WAS LESS THAN RS.1 CRORE AND THEREFORE THERE WAS NO NECESSITY FOR THE ASSESSEE TO M AKE ANY APPLICATION FOR EXEMPTION UNDER S.10(23C)(IIIAD) OF THE ACT WITH THE DEPARTMENT. WE FIND THAT THE MAIN OBJECTION OF THE ASSESSING OFFICER FOR DENYING EXEMPTION TO THE ASSESSEE IS THAT THE LAND O N WHICH THE SCHOOL BUILDING WAS CONSTRUCTED DOES NOT BELONG TO THE ASSESSE E SOCIETY AND IT BELONGS TO THE SONS AND WIFE OF THE PRIN CIPAL OF THE SCHOOL WHO ALSO HAPPENS TO BE THE SECRETARY OF THE SOCIET Y. SOCIETY IS PAYING LEASE RENT TO THE OWNERS OF THE LAND. THERE IS NO LEASE DEED FOR THE LAND TAKEN ON LEASE. ASSESSEE SOCIETY HAS CONSTRUCTE D BUILDING ON THE LEASE HOLD LAND BY INVESTING AN AMOUNT FOR RS.2 5 LAKHS. WE FIND THAT THE ASSESSEE SOCIETY AND THE OWNERS OF THE LAND HAVE ENTERED INTO A WRITTEN AGREEMENT OF LEASE ON 11.7.2005 ALTHOUGH THIS AGREEMENT OF LEASE WAS NOT REGISTERED. FURTHER THE OWNERS OF THE LAND ON WHICH ITA NO.258/HYD/06 AND FIVE OTHERS M/S. OASIS EDUCATIONAL SOCIETY WARANGAL 7 THE SCHOOL BUILDING WAS CONSTRUCTED HAVE GIFTED THE LAND TO THE ASSESSEE SOCIETY VIDE REGISTERED GIFT DEED DATED 8.10.200 8 A COPY OF WHICH HAS BEEN FILED IN THE COMPILATION BEFORE US. WE F IND THAT THE GENUINENESS OF THE REGISTERED GIFT DEED WHEREBY THE L AND WAS GIFTED TO THE ASSESSEE SOCIETY BY ITS OWNERS HAS NOT BEEN DOUBTED BY THE REVENUE. UNDER THE PROVISIONS OF THE ACT THE ASSESSEE SO CIETY WAS NOT OBLIGED TO APPLY FOR EXEMPTION WITH THE DEPARTM ENT WHERE THE AGGREGATE ANNUAL RECEIPTS OF AN EDUCATIONAL SOCIETY DO NOT EXCEED AN AMOUNT OF RS.1 CRORE PRESCRIBED UNDER THE RULES. AS FOR T HE OTHER OBJECTION OF THE ASSESSING OFFICER THAT THE ASSESSEE WAS NOT THE OWNER OF THE LAND ON WHICH SCHOOL BUILDING WAS CONSTRUCTED BU T ASSESSEE MERELY HELD THE LAND UNDER AN ORAL LEASE FROM ITS OWN ERS WE FIND THAT MERELY BECAUSE THE LAND ON WHICH THE SCHOOL BUILDING WAS CONSTRUCTED BELONGS TO THE SONS AND WIFE OF THE PRINCIPAL/SECRETARY OF THE SOCIETY IT COULD NOT BE SAID THAT THE ASSESSEE SOCIETY IS RUNNING THE EDUCATIONAL SOCIETY FOR EARNING PROFIT AND NOT FOR CHARITABLE PURP OSES. THE ASSESSEE HAS PAID LEASE RENT TO THE OWNERS OF THE LAND AND THE AMOUNT OF LEASE RENT PAID TO THE LAND OWNERS COULD NOT BE SAID TO BE EXCESSIVE. WE HAVE PERUSED COPY OF THE STATEMENT OF AMOUNT OF LEA SE RENTAL FOR THE RELEVANT PERIOD FILED IN THE COMPILATION BEFORE US. WE FIND THAT A PERUSAL OF THE SAME CLEARLY SHOWS THAT THE ASSESSEE SOCIETY HA S SHOWN A REASONABLE AMOUNT AS LEASE RENTAL OF THE LAND AND TH ERE IS NO FINDING OF THE TAX AUTHORITY THAT THE SAME IS NOT GENUINE. ACCORDINGLY THIS OBJECTION OF THE ASSESSING OFFICER REGARDING NON-OWNERSHI P OF THE LAND BY THE ASSESSEE AND THE LAND BELONGING TO THE RELATIV ES OF THE PRINCIPAL/SECRETARY OF THE SOCIETY IS NOT SUSTAINABLE. AS FOR THE OTHER OBJECTION OF THE DEPARTMENT BASED ON THE FACT THAT TH E PRINCIPAL/SECRETARY WAS PAID MONTHLY SALARY OF RS.10 000 FOR HIS SERVICES WE FIND THAT THE DEPARTMENT HAS NOT DOUBTED THE FACT THAT THE PERSON CONCERNED HAS RENDERED HIS SERVICES AS PRINCIPAL OF THE ITA NO.258/HYD/06 AND FIVE OTHERS M/S. OASIS EDUCATIONAL SOCIETY WARANGAL 8 EDUCATIONAL INSTITUTION. THE AMOUNT OF SALARY PAID AT RS.10 000 PER MONTH COULD NOT BE SAID TO BE EXCESSIVE CONSIDERING THE A CTIVITIES OF THE SCHOOL RUN BY THE ASSESSEE SOCIETY. IN THESE FACTS OF TH E CASE WE HOLD THAT THE REASONING GIVEN BY THE DEPARTMENT FOR REJECTING THE ASSESSEE'S CLAIM FOR EXEMPTION UNDER S.10(23C)(IIIAD) IS N OT SUSTAINABLE. ACCORDINGLY WE HOLD THAT THE ASSESSEE SOCIETY IS ENTITLED TO EXEMPTION UNDER THE PROVISIONS OF S.10(23C)(IIIAD ) OF THE ACT AS THE OTHER CONDITIONS ADMITTEDLY ARE FULFILLED BY T HE ASSESSEE SOCIETY. 8. AS FOR THE ARGUMENT OF THE LEARNED DEPARTMENTAL REPRESENTATIVE THAT THE ASSESSEE HAS COLLECTED BUILDING F UND AND THEREFORE THE ASSESSEE IS NOT ENTITLED TO EXEMPTION FRO M TAX WE FIND THAT THE CIT(A) HAS IN PARA 3.5 OF HIS APPELLATE ORDE R RECORDED THAT THE FEE COLLECTED IN THE NAME OF BUILDING FUND IS NOTHING BUT ADMISSION FEE COLLECTED AT THE TIME OF ADMISSION AND THEREFORE THE ASSESSING OFFICER WAS RIGHT IN ASSESSING THE SAME AS INCOME OF THE ASSESSEE SOCIET Y. WE FIND THAT THIS FINDING OF FACT BY THE CIT(A) WAS N OT CHALLENGED BY THE REVENUE BY PREFERRING ANY APPEAL BEFORE THIS TRI BUNAL AND THEREFORE HAS BECOME FINAL. THIS ISSUE IS COVERED IN FA VOUR OF THE ASSESSEE WITH THE DECISION OF THE HON'BLE PUNJAB AND HARYA NA HIGH COURT IN THE CASE OF CIT V/S. KHALSA RURAL HOSPITAL AND NURSING TRAINING INSTITUTE (304 ITR 20) WHEREIN IT WAS HELD THAT IN THE ABSENCE OF EVIDENCE TO SUGGEST CHARGING OF CAPITATION FEE ASSESSEE HAS TO BE HELD TO BE ELIGIBLE FOR EXEMPTION UNDER S. 10(22) OF THE ACT. 9. MOREOVER WE FIND THAT EVEN ON MERITS THE ASSESSE E HAS COLLECTED A SUM OF RS.3 25 000 IN THE NAME OF BUILDING FUND DURING THE WHOLE YEAR AND THE GROUND OF APPEAL TAKEN BY THE ASSE SSEE AGAINST THE ORDER OF THE CIT(A) HOLDING THE SAME AS INCOME WA S NOT PRESSED BY THE LEARNED COUNSEL FOR THE ASSESSEE BEFORE US. FROM A PERUSAL OF ITA NO.258/HYD/06 AND FIVE OTHERS M/S. OASIS EDUCATIONAL SOCIETY WARANGAL 9 THE BREAK UP OF THE AMOUNT OF RS.3.25 LAKHS COLLECTED I N THE WHOLE YEAR BY THE ASSESSEE WE FIND THAT THE ASSESSEE HAS SUBMITTED DETAILS OF AMOUNT RECEIVED UNDER THE HEAD 'BUILDING FUND' DURING THE RELEVANT PERIODS. A PERUSAL OF THE SAME SHOWS THAT THE ASSESSEE HA S CHARGED AMOUNTS UNDER THIS HEAD AT THE TIME OF ADMISSION FROM NEW STUDENTS OF CLASSES RIGHT FROM MONTESSORI TO CLASS X AT RS.1 000 PER STUDENT IN THE FINANCIAL YEAR 1998-99; AT THE RATE OF RS.2 000 IN THE FINANCIAL YEAR 1999-2000; AT THE RATE OF RS.2 500 IN THE FINANCIAL Y EARS 2000-01 AND 2001-02 AND HAS NOT CHARGED ANY AMOUNT IN THE FINANCIA L YEARS 2002- 03 AND 2003-04. CHARGING OF AMOUNTS RANGING FROM RS.1 000 TO RS.2 5000 AS ONE TIME FEE FROM NEW STUDENTS ONLY ON A UNIFORM BASIS COULD NOT BE DEEMED AS CAPITATION FEE IN THE HANDS OF T HE ASSESSEE SOCIETY. WHETHER AN AMOUNT CHARGED UNDER SOME HEAD OR OTHER AT THE TIME OF ADMISSION AMOUNTS TO CHARGING OF CAPITATION FEE OR NOT DEPENDS ON CONSIDERATION OF TOTALITY OF THE FACTS AND CIRCUMSTANCES OF EACH CASE AND ONE IMPORTANT TEST TO DETERMINE WHETHER AN AMOUNT CHARGED AT THE TIME OF NEW ADMISSION TANTAMOUNTS TO CAPI TATION FEES IS THE QUANTUM OF AMOUNT CHARGED. IN THE FACTS OF THE P RESENT CASE WE HOLD THAT ON MERITS ALSO ASSESSEE DESERVES TO SUCCEED AS CH ARGING OF A SMALL AMOUNT RANGING FROM RS.1 000 TO RS.2 500 CO ULD NOT BE TERMED AS CAPITATION FEE. IN THE FACTS AND CIRCUMSTANCES O F THIS CASE THE RATIO OF THE DECISION OF THE HYDERABAD BENCH OF THE TRIBUNAL IN THE CASE OF VASAVI ACADEMY OF EDUCATION HYDERABAD (SUPRA) RELIED UPON BY THE LEARNED DEPARTMENTAL REPRESENTATIVE IS NOT A PPLICABLE TO THE FACTS OF THE PRESENT CASE. 10. IN THE LIGHT OF THE ABOVE DISCUSSION WE HOLD TH AT THE ASSESSEE IS ENTITLED FOR EXEMPTION UNDER S.10(23C)(IIIAD ) OF THE ACT AND ACCORDINGLY ALLOW THE GROUNDS OF THE ASSESSEE ON THIS A SPECT. IN VIEW OF OUR FINDING ON THE ISSUE OF ASSESSEE'S ENTITLEMENT FOR ITA NO.258/HYD/06 AND FIVE OTHERS M/S. OASIS EDUCATIONAL SOCIETY WARANGAL 10 EXEMPTION UNDER S.10(23C)(IIIAD) OF THE ACT WE ARE NOT INCLINED TO GO INTO THE CONTENTIONS OF THE ASSESSEE WITH REGARD TO ALLOW ABILITY OF ASSESSEE'S CLAIM FOR DEPRECIATION ON SCHOOL BUILDING. 11. GROUND OF APPEAL NO.5 OF THE ASSESSEE S AS UNDER- '5. THE ORDER OF THE LEARNED CIT(A)-IV HYDERABAD IN HOLDING THE FEES COLLECTED BY THE APPELLANT SOCIETY IN THE NAME OF BUILDING FUND AT RS.3 25 000/- IS NOTHING BUT ADMIS SION FEES TAXABLE AS INCOME IS UNSUSTAINABLE IN LAW.' LEARNED COUNSEL FOR THE ASSESSEE HAS NOT PRESSED THIS GROU ND. IT IS ACCORDINGLY REJECTED. 12. GROUNDS OF APPEAL NO.11 TO 13 ARE AS UNDER. '11. THE LEARNED CIT(A) IV HYDERABAD FAILED TO NOTE TH AT THE ENTIRE PROCEEDINGS INITIATED U/S. 148 OF THE I.T. A CT 1961 ARE BAD IN LAW AS PROCEEDINGS COMMENCED PRIOR TO IS SUES OF NOTICES U/S. 148 AND THEREFORE THE ASSESSMENTS M ADE IN PURSUANT THERETO ARE INVALID AND MUST BEE ANNULL ED. 12. THE LEARNED CIT(A)-IV H YDERABAD FAILED TO NOTE THAT THE NON-COMMUNICATION OF REASONS FOR RE-OPENING OF ASSESSMENTS WAS FATAL TO IT'S COMPLETION AND THEREF ORE OUGHT TO HAVE ANNULLED THE ASSESSMENTS AS BAD IN LA W. 13. THE LEARNED CIT(A)-IV HYDERABAD FAILED TO NOTE THAT THE NOTICES U/S. 148 OF I.T. ACT 1961 WAS ISSUED BY I.T .O. WARANGAL WHILE THE ASSESSMENTS WERE COMPLETED BY A.D.I.T.(EXEMPTION)-I HYDERABAD WITHOUT ISSUE OF A FRESH NOTICE U/S. 148 AND THEREFORE OUGHT TO HAVE H ELD THAT THE ENTIRE ASSESSMENT S MADE ARE BAD IN LAW.' LEARNED COUNSEL FOR THE ASSESSEE HAS NOT PRESSED THESE GROU NDS OF APPEAL WHICH ARE ACCORDINGLY REJECTED. 13. GROUND OF APPEAL NO.14 IS WITH REGARD TO LEVY O F INTEREST UNDER S.234A 234B AND 234C OF THE ACT. WE FIND THA T THE SAME ARE CONSEQUENTIAL IN NATURE AND DIRECT ACCORDINGLY. ITA NO.258/HYD/06 AND FIVE OTHERS M/S. OASIS EDUCATIONAL SOCIETY WARANGAL 11 14. IN THE RESULT APPEAL OF THE ASSESSEE IS PARTLY ALLO WED. ITA NO.284/HYD/07 : ASSTT . YEAR 2003-04 ITA NO.258/HYD/06 : ASSTT. Y EAR 1999-2000 ITA NO.259/HYD/06 : ASSTT . YEAR 2000-01 ITA NO.260/HYD/06 : ASSTT . YEAR 2001-02 ITA NO.1261/HYD/08 : ASST T. YEAR 2004-05 15. AT THE OUTSET IT HAS BEEN STATED BY THE LEARNED COUNSEL FOR THE ASSESSEE THAT THE GROUNDS RAISED IN THESE APPEALS A RE SIMILAR TO THE ONES RAISED IN THE APPEAL ITA NO.261/HYD/06 FOR ASS ESSMENT YEAR 2002-03 AND THE MAIN ISSUE ARISING FOR CONSIDERATION OU T OF THE GROUNDS RAISED BY THE ASSESSEE IN THESE APPEALS ALSO CENTR ES AROUND THE CLAIM OF THE ASSESSEE FOR EXEMPTION UNDER S.10(23C) (IIIAD) OF THE ACT AND CONSEQUENTLY THE DECISIONS RENDERED IN THE CONTE XT OF THE GROUNDS RAISED IN THE APPEAL FOR THE ASSESSMENT YEAR 2002 -03 WOULD HOLD GOOD EVEN IN THE CONTEXT OF THESE FIVE APPEALS. L EARNED DEPARTMENTAL REPRESENTATIVE ON THE OTHER HAND DID NOT DISPUTE THIS POSITION. IN VIEW OF THIS MUTUALLY AGREED POSITION F OR THE DETAILED REASONS DISCUSSED IN PARAS 7 TO 10 HEREINABOVE IN THE CO NTEXT OF ASSESSEE'S APPEAL ITA NO.261/HYD/06 FOR THE ASSESSMENT YEAR 2 002- 03 WE HOLD FOR THESE YEARS ALSO THAT THE ASSESSEE IS ENTIT LED TO SUCCEED WITH REGARD TO ITS CLAIM FOR EXEMPTION UNDER S.1 0(23C)(IIIAD) ACT AND DIRECT THE ASSESSING OFFICER ACCORDINGLY. SIMILAR LY WHILE GROUNDS TAKEN BY THE ASSESSEE IN THESE APPEALS WITH REGARD TO LEVY OF INTEREST UNDER S.234A 234B AND 234C BEING CONSEQUENT IAL ARE DISPOSED OFF ACCORDINGLY OTHER GROUNDS NOT PRESSED BY TH E LEARNED COUNSEL FOR THE ASSESSEE ARE REJECTED AS SUCH. CONSEQUENTL Y THESE FIVE APPEALS OF THE ASSESSEE ARE ALSO PARTLY ALLOWED. ITA NO.258/HYD/06 AND FIVE OTHERS M/S. OASIS EDUCATIONAL SOCIETY WARANGAL 12 16. TO SUM UP ALL THE SIX APPEALS OF THE ASSESSEE ARE PA RTLY ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 5.3.2010 SD/- SD/- (CHANDRA POOJARI) (G.C.GUPTA) ACCOUNTANT MEMBER VICE PRESIDENT DT/- 5TH MARCH 2010 COPY FORWARDED TO: 1. M/S. OASIS EDUCATIONAL SOCIETY (WARANGAL) M/S. SEK HAR & CO. CHARTERED ACCOUNTANTS 133/4 R.P.ROAD SECUNDERAB AD.. 2. DY./ASSISTANT DIRECTOR OF INCOME-TAX(EXEMPTION)-II HYDERABAD. 3. COMMISSIONER OF INCOME-TAX(APPEALS) IV HYDERABAD. 4. DIRECTOR OF INCOME-TAX (EXEMPTION) HYDERABAD 5. DEPARTMENTAL REPRESENTATIVE ITAT HYDERABAD. B.V.S.