DDIT, Hyderabad v. Madhira Educational Society, Hyderabad

IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD BENCH A'(SMC) HYDERABAD BEFORE SHRI CHANDRA POOJARI ACCOUNTANT MEMEBR ITA NO.387/HYD/10 : ASSTT . YEAR 2003-04 DY. DIRECTOR OF INCOME-TAX (EXEMPTION)-2 HYDERABAD. V/S. M/S. MADHIRA EDUCATIONAL SOCIETY HYDERABAD. (PAN/GIR - M-88) (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI K.V.N.CHARYA RESPONDENT BY : NONE O R D E R THIS APPEAL BY THE DEPARTMENT FOR THE ASSESSMENT YEAR 2003-04 IS DIRECTED AGAINST THE ORDER OF THE COMMISSI ONER OF INCOME- TAX(APPEALS)-IV HYDERABAD DATED 18.11.2009. 2. GROUNDS OF APPEAL RAISED BY THE REVENUE IN THIS A PPEAL READ AS FOLLOWS- '1. THE LEARNED CIT(A) ERRED BOTH ON FACTS AND IN LAW. 2. THE LEARNED CIT(A) FAILED TO APPRECIATE THE LEGAL POSITION THAT ALL EDUCATIONAL INSTITUTIONS MUST OBTAIN APPROVAL U /S. 10(23C)(VI) IRRESPECTIVE OF REGISTRATION U/S. 12A. 3. ANY OTHER GROUND THAT MAY BE URGED AT THE TIME OF H EARING.' 3. AT THE OUTSET THE LEARNED DEPARTMENTAL REPRESE NTATIVE SUBMITTED THAT THE ISSUE INVOLVED IN THE ABOVE GROUNDS OF APPEAL IS COVERED BY THE RECENT DECISION OF THIS TRIBUNAL IN THE C ASE OF M/S. VASAVI ACADEMY OF EDUCATION HYDERABAD (ITA NO.1749/HYD/ 08 FOR ASSESSMENT YEAR 2004-05 DATED 4.2.2010 WHEREIN STILL EA RLIER DECISION ITA NO.387/HYD/10 M/S. MADHIRA EDUCATIONAL SOCIETY HYDERABAD. 2 OF THE TRIBUNAL IN THE CASE OF THAT VERY ASSESSEE FOR ASSESSM ENT YEAR 2005-06 IN ITA NO.1120/HYD/2009 DATED 29.1.2009 WAS F OLLOWED AND THE MATTER WAS RESTORED TO THE FILE OF THE ASSESSING OFFI CER WITH CERTAIN DIRECTIONS FOR A FRESH DECISION. 4. ON THE OTHER HAND DESPITE NOTICE APPEARED ON BEHALF OF THE ASSESSEE AT THE TIME OF HEARING. THERE IS NOT EVEN A PETITION SEEKING ADJOURNMENT. HENCE I PROCEED TO DISPOSE OFF THI S APPEAL EX- PARTE ON THE BASIS OF MATERIAL AVAILABLE ON RECORD. 5. ON CAREFUL CONSIDERATION OF THE D.R SUBMISSIONS I FI ND 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. APEX 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 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. TAKING NOTE OF THIS LEGAL POSITION THIS TRI BUNAL IN THE CASES OF M/S. VASAVI ACADEMY OF EDUCATION HYDERABAD NOTED ABOV E ITA NO.387/HYD/10 M/S. MADHIRA EDUCATIONAL SOCIETY HYDERABAD. 3 OBSERVING THAT THE LOWER AUTHORITIES HAVE NOT EXAMINE D THE ISSUE OF COLLECTION OF CAPITATION FEES IN THOSE CASES HELD THE VIEW THAT THE MATTER REQUIRES TO BE EXAMINED BY THE ASSESSING OFFICER W HETHER THE ASSESSEE IS COLLECTING THE CAPITATION FEES FROM STUDENTS OR NO T AND IT IS NECESSARY FOR BRINGING THE ACTUAL FACTS ON RECORD FOR DE CIDING THE ISSUE EFFECTIVELY. CONSISTENT WITH THE VIEW TAKEN BY THE HYDERABAD BENCHES OF THIS TRIBUNAL IN SIMILAR MATTERS I SET ASIDE THE ORDERS OF THE LOWER AUTHORITIES IN THIS CASE ALSO AND RESTORE THE MATTER TO THE FILE OF THE ASSESSING OFFICER WITH A DIRECTION TO RECONSIDER THE ISSUES I NVOLVED IN THE GROUNDS OF APPEAL OF THE REVENUE IN THE LIGHT OF JUDGEMENT OF SUPREME COURT IN THE CASE OF M/S ISLAMIC ACADEMY OF EDU CATION & ANOTHER V/S. STATE OF KARNATAKA AND ANOTHER (SUPRA) AND IN THE CASED OF T.M.A. PAI FOUNDATION AND OTHERS VS. STATE OF KAR NATAKA AND OTHERS (SUPRA) AND FIND OUT WHETHER THE ASSESSEE HAS RECEIVED AN Y MONEY OVER AND ABOVE THE FEES PRESCRIBED AND TO DECIDE THE ISSUE AFRESH AFTER ALLOWING REASONABLE OPPORTUNITY OF HEARING TO THE ASSESSEE. IT IS MADE CLEAR THAT THE ASSESSEE SHALL BE ENTITLED TO EXEMPT ION 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. 6. IN THE RESULT DEPARTMENT'S APPEAL IS ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE COURT AT THE CONCLUSION OF HE ARING OF THE APPEALS ON 13 APRIL 2010 SD/- SD/- (CHANDRA POOJARI) ACCOUNTANT MEMBER DT/- 13TH APRIL 2010 ITA NO.387/HYD/10 M/S. MADHIRA EDUCATIONAL SOCIETY HYDERABAD. 4 COPY FORWARDED TO: 1. M/S. MADHIRA EDUCATIONAL SOCIETY 202 PANCOM BUSINESS CENTRE AMEERPET HYDERABAD 2. DY. DIRECTOR OF INCOME-TAX(EXEMPTION)-II HYDERABAD 3. COMMISSIONER OF INCOME-TAX(APPEALS)-IV HYDERABAD 4. ADDITIONAL DIT(E)-I HYDERABAD. 5. DEPARTMENTAL REPRESENTATIVE ITAT HYDERABAD. B.V.S. 1. 13.4.2010 2. 3. 4. 13.4.2010 5. 6. 7. 8. ITA NO.387/HYD/10 M/S. MADHIRA EDUCATIONAL SOCIETY HYDERABAD. 5 9.