M/S Venkatesha Education Society, Bangalore v. ACIT, Bangalore

ITA 74/BANG/2010 | 1997-1998
Pronouncement Date: 19-03-2010 | Result: Allowed

Appeal Details

RSA Number 7421114 RSA 2010
Assessee PAN AAATV1990J
Bench Bangalore
Appeal Number ITA 74/BANG/2010
Duration Of Justice 1 month(s) 25 day(s)
Appellant M/S Venkatesha Education Society, Bangalore
Respondent ACIT, Bangalore
Appeal Type Income Tax Appeal
Pronouncement Date 19-03-2010
Appeal Filed By Assessee
Order Result Allowed
Bench Allotted C
Tribunal Order Date 19-03-2010
Date Of Final Hearing 23-03-2017
Next Hearing Date 23-03-2017
Assessment Year 1997-1998
Appeal Filed On 25-01-2010
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL C BENCH : BANGALORE BEFORE SHRI SUNIL KUMAR YADAV JUDICIAL MEMBER AND SHRI JASON P. BOAZ ACCOUNTANT MEMBER ITA NOS.72 TO 77/BANG/2010 ASSESSMENT YEARS : 1995-96 TO 1997-98 & 1999-2000 TO 2001-02 M/S. VENKATESHA EDUCATION SOCIETY NO.19 ASHOKA ROAD ST. THOMAS TOWN POST HUTCHINS ROAD CROSS BANGALORE 560 084. PAN: AAATV 1990J VS. THE ASSISTANT COMMISSIONER OF INCOME TAX CENTRAL CIRCLE 1(2) BANGALORE. APPELLANT RESPONDENT APPELLANT BY : SHRI S. PARTHASARATHI ADVOCATE RESPONDENT BY : SHRI M.K. BIJU JT.CIT(DR)(ITAT)-3 BENGALURU DATE OF HEARING : 02.08.2017 DATE OF PRONOUNCEMENT : 31.08.2017 O R D E R PER SUNIL KUMAR YADAV JUDICIAL MEMBER THESE APPEALS ARE PREFERRED BY THE ASSESSEE AGAIN ST THE RESPECTIVE ORDER OF CIT(APPEALS). THESE APPEALS WERE DISPOSED OF BY THE TRIBUNAL VIDE ITS ORDER DATED 19.03.2010 GRANTING RELIEF TO THE ASSESSEE AGAINST WHICH APPEALS WERE FILED BY THE REVENUE BEFORE THE HONBLE HIGH COURT OF KARNATAKA AND THE APPEALS WERE DISPOSED OF BY THE H ONBLE HIGH COURT VIDE ITS JUDGMENT DATED 19.02.2014 SETTING ASIDE TH E ORDER OF TRIBUNAL DATED 19.03.2010 AND REMANDING THE MATTER BACK TO T HE TRIBUNAL WITH A ITA NOS. 72 TO 77/BANG/2010 PAGE 2 OF 23 DIRECTION TO CONSIDER THESE APPEALS AFRESH AND RECO RD ITS FINDING ON THE GROUND WHETHER RESPONDENT-ASSESSEE (THE APPELLANT I N THE PRESENT APPEAL) IS ENTITLED TO BENEFIT OF EXEMPTION U/S. 10(22) AND 11 OF THE INCOME-TAX ACT 1961 [HEREINAFTER CALLED AS THE ACT]. WHILE ISS UING SUCH DIRECTIONS THE HONBLE HIGH COURT HAS OBSERVED THAT THE TRIBUNAL W HILE HOLDING THAT THE RESPONDENT-ASSESSEE (SOCIETY) IS ENTITLED FOR BENEF IT OF EXEMPTION U/S. 10(22) AND 11 OF THE ACT ADOPTED THE REASONS RECOR DED IN ITA NO.1209/BANG/2002 FOR AY 1997-98 WHICH WAS PERTAINI NG TO REGISTRATION U/S. 12A OF THE ACT. IN OTHER WORDS THE TRIBUNAL HAS NOT INDEPENDENTLY CONSIDERED THE QUESTION WHETHER THE RESPONDENT-ASSE SSEE WAS ENTITLED FOR BENEFIT OF EXEMPTION U/S. 10(22) AND 11 OF THE ACT. 2. CONSEQUENT TO THE DIRECTIONS OF THE HONBLE HIGH COURT THESE APPEALS WERE HEARD ON THE POINT WHETHER THE ASSESSE E IS ENTITLED FOR BENEFIT OF EXEMPTION U/S. 10(22) & 11 OF THE ACT. 3. BEFORE PROCEEDING TO DEAL WITH THE ISSUES ON MER IT WE WOULD LIKE TO RECORD THE BRIEF FACTS OF THE CASE. THESE APPEALS HAVE ITS CHECKERED HISTORY. THESE ARE A BUNCH OF APPEALS PERTAINING T O AYS 1994-95 TO 1997- 98 AND 1999-2000 TO 2001-02 AGAINST THE RESPECTIVE ORDER OF CIT(APPEALS). THE APPEALS IN ITA NOS.72 TO 74/BANG/2010 RELATING TO AYS 1995-96 TO 1997-98 ARISE OUT OF ASSESSMENT ORDER PASSED U/S. 1 43(3) R.W.S. 147 OF THE ACT. THE REMAINING APPEALS IN ITA NOS.75 TO 77/BAN G/2010 RELATING TO AYS ITA NOS. 72 TO 77/BANG/2010 PAGE 3 OF 23 1999-2000 TO 2001-02 ARISE OUT OF ASSESSMENT COMPLE TED U/S. 143(3) R.W.S. 254 OF THE ACT. 4. THE ASSESSEE IS A SOCIETY REGISTERED UNDER MYSOR E REGISTRATION OF SOCIETIES ACT WITH THE MAIN OBJECT OF ESTABLISHING EDUCATIONAL INSTITUTION IN MYSORE. THE ASSESSEE-SOCIETY AS OF NOW RUNS INSTIT UTIONS LIKE MEDICAL COLLEGE ENGINEERING COLLEGE NURSING COLLEGE POLY TECHNIC TEACHERS TRAINING INSTITUTE ETC. SINCE REGISTRATION ASSES SEE HAS BEEN ENJOYING THE BENEFIT OF EXEMPTION U/S. SECTION 10(22) OF THE ACT IN THE STATUS OF AN EDUCATIONAL INSTITUTION EXISTING SOLELY FOR EDUCATI ONAL PURPOSE AND NOT FOR THE PURPOSE OF PROFIT. SECTION 10(22) OF THE ACT W AS OMITTED BY THE FINANCE ACT 1998 W.E.F. 1.4.1999. 5. IN THE ABOVE SCENARIO THE FIRST 3 APPEALS RELAT ED TO THE PERIOD DURING WHICH SECTION 10(22) OF THE ACT WAS IN THE STATUTE BOOK BUT IT WAS DENIED BY THE AO FOR VARIOUS REASONS AGAINST WHICH AN APPE AL WAS FILED BEFORE THE CIT(APPEALS) BUT THE ASSESSEE DID NOT FIND FAVOUR WITH HIM. AGGRIEVED THE ASSESSEE IS IN SECOND APPEAL BEFORE THE TRIBUNA L WITH RESPECT TO THESE 3 ASSESSMENT YEARS IN THE CONTEXT OF EXEMPTION AVAI LABLE UNDER THE ERSTWHILE SECTION 10(22) OF THE ACT. 6. SECTION 10(22) HAS BEEN OMITTED W.E.F. 1.4.1999 AND THEREAFTER THE ASSESSEE SOUGHT THE BENEFIT OF EXEMPTION AVAILABLE TO CHARITABLE INSTITUTION U/S. 11 OF THE ACT FOR THE SECOND SET OF APPEALS FO R AYS 1999-2000 TO 2001- 02 BUT THE SAME WAS ALSO DENIED BY THE LOWER AUTHOR ITIES AND THEREAFTER ITA NOS. 72 TO 77/BANG/2010 PAGE 4 OF 23 SECOND APPEAL WAS FILED BEFORE THE TRIBUNAL IN THE CONTEXT OF BENEFIT OF EXEMPTION U/S. 11 OF THE ACT. 7. THE CLAIM OF EXEMPTION U/S. 10(22) OF THE ACT FO R THE ABOVE 3 ASSESSMENT YEARS WAS DENIED BY THE AO ON THE GROUND THAT THE TRUSTEES/MEMBERS OF THE ASSESSEE SOCIETY ARE AVAILI NG UNDUE BENEFITS OUT OF THE ACTIVITIES CARRIED ON BY THE SAID SOCIETY AN D THEREBY SOCIETY HAS VIOLATED THE CONDITION LAID DOWN IN SECTION 10(22) AND THEREFORE IT COULD NOT BE HELD AS AN EDUCATIONAL INSTITUTION EXISTING SOLE LY FOR EDUCATIONAL PURPOSE AND NOT FOR THE PURPOSE OF PROFIT. THE AO FURTHER OBSERVED THAT TRUSTEES ARE AVAILING HUGE AMOUNT OF LOAN FROM THE SAID SOCIETY AND THOSE LOANS WERE USED FOR CONSTRUCTING BUILDINGS IN THE NAME OF THOS E TRUSTEES AND THEREAFTER LET OUT THE VERY SAME BUILDING TO THE SOCIETY TO RU N ITS EDUCATIONAL INSTITUTION FOR EXORBITANT RENTS AND THESE ACTIVITIES PUT TOGE THER MAKE OUT A CASE OF UNDUE ENRICHMENT OF THE TRUSTEES AT THE COST OF THE SAID SOCIETY. 8. WHEN THE MATTER FOR THESE 3 ASSESSMENT YEARS I.E . 1995-96 TO 1997-98 WERE TAKEN IN FIRST ROUND OF APPEAL THE CI T(APPEALS) ALLOWED THE APPEAL AND DIRECTED THE AO TO GRANT THE BENEFIT OF SECTION 10(22) TO THE SAID SOCIETY. REVENUE FILED APPEALS AGAINST THE SAID OR DER OF CIT(APPEALS) BEFORE THE TRIBUNAL AND THE TRIBUNAL VIDE ITS CONSO LIDATED ORDER PASSED ON 31.10.2007 SET ASIDE THE MATTER TO THE FILE OF AO T O REDO THE ASSESSMENT AFTER EXAMINING THE ENTIRE FACTS AND CIRCUMSTANCES OF THE CASE AFRESH. THE TRIBUNAL DIRECTED THE AO TO EXAMINE WHETHER THE INS TITUTIONS PROMOTED BY ITA NOS. 72 TO 77/BANG/2010 PAGE 5 OF 23 THE SAID SOCIETY ARE WORKING SOLELY FOR EDUCATIONAL PURPOSE AND NOT FOR THE PURPOSE OF PROFIT. THE TRIBUNAL ALSO DIRECTED THE AO TO EXAMINE THE COMPLAINT THAT THE ASSESSEE-SOCIETY HAS VIOLATED TH E RULES & REGULATIONS FRAMED BY THE COMPETENT AUTHORITIES OF STATE GOVERN MENT IN ADMITTING THE STUDENTS TO THE VARIOUS INSTITUTIONS AND COLLECTING FEES FROM THEM. THE TRIBUNAL FURTHER DIRECTED THE AO TO EXAMINE WHETHER THE FUNDS OF SOCIETY WERE UTILIZED BY THE TRUSTEES OF SOCIETY TO BUILD U P ASSETS IN THEIR PERSONAL NAME AND ALSO WHETHER THE RENT P AID BY THE ASSESSE E-SOCIETY TO THE TRUSTEES WAS FAIR AND REASONABLE. 9. IN COMPLIANCE OF THE DIRECTIONS OF THE TRIBUNAL THE AO PROCEEDED TO REDO THE ASSESSMENT BUT IN THESE PROCEEDINGS ALSO THE AO HAS DENIED THE BENEFIT OF SECTION 10(22) OF THE ACT. 10. APPEALS WERE FILED BEFORE THE CIT(APPEALS) AND THE CIT(A) HAS HELD THAT THERE IS NO EVIDENCE ON RECORD TO PROVE THAT T HE SAID SOCIETY HAS COLLECTED CAPITATION FEES FROM THE STUDENTS WHO WER E ADMITTED TO THE VARIOUS PROFESSIONAL COURSES. BUT THE CIT(APPEALS) HOWEVER AGREED WITH THE ASSESSING AUTHORITY THAT TRUSTEES WERE DIVERTIN G FUNDS OF THE SAID SOCIETY TO BUILD UP THEIR OWN ASSETS AND THOSE ASSE TS WERE IN TURN LET OUT TO THE SAID SOCIETY FOR EXORBITANT RENT AND THEREFORE THE MOTIVE OF THE TRUSTEES WAS TO MAKE PROFIT OUT OF EDUCATIONAL INSTITUTIONS RUN BY THE ASSESSEE- SOCIETY. ON THE BASIS OF THESE FINDINGS THE CIT(A PPEALS) HAS CONFIRMED ITA NOS. 72 TO 77/BANG/2010 PAGE 6 OF 23 THE ORDER OF AO DECLINING EXEMPTION CLAIMED U/S. 10 (22) OF THE ACT TO THE ASSESSEE-SOCIETY. 11. AGGRIEVED THE ASSESSEE HAS FILED THE PRESENT A PPEALS AND IN THE FIRST SET OF 3 ASSESSMENT YEARS I.E. AYS 1995-96 T O 1997-98 THE GROUNDS ARE COMMON. FOR THE SAKE OF REFERENCE GROUNDS RAI SED IN ITA NO.72/BANG/2010 ARE EXTRACTED HEREUNDER:- 1. THE LEARNED COMMISSIONER (A) ERRED IN UPHOLDIN G THE DENIAL OF EXEMPTION U/S.10(22) OF THE ACT. 2. ON THE FACTS THE EVIDENCE AND MATERIALS ON RECO RD THE LEARNED COMMISSIONER (A) OUGHT TO HAVE APPRECIATED THAT THE APPELLANT WAS EXCLUSIVELY FOR EDUCATIONAL PURPOSE W ITH NO MOTIVE OF PROFIT AND ACCORDINGLY IT IS ELIGIBLE FOR EXEMPT ION U/S.10(22) OF THE ACT AS CLAIMED BY IT. 3. ON THE FACTS THE LEARNED COMMISSIONER (A) OUGHT TO HAVE APPRECIATED THAT THE ASSESSING AUTHORITY INSTEAD OF LOOKING INTO THE EVIDENCE FURNISHED BY THE APPELLANT WHICH WERE REQ UIRED TO BE EXAMINED BY HIM AS PER THE DIRECTIONS OF THE HON 'B LE APPELLATE TRIBUNAL HAD WITHOUT APPLICATION OF MIND REPEATED T HE FINDINGS GIVEN IN THE ORIGINAL ASSESSMENT ORDER AND SUCH ORD ER WAS UNSUSTAINABLE AND REQUIRED TO BE CANCELLED. 4. ON THE FACTS THE LEARNED COMMISSIONER (A) OUGHT TO HAVE CONSIDERED THE MATERIALS AND EVIDENCE PLACED BEFORE HIM AND SUBMISSIONS MADE THEREON AND OUGHT TO HAVE REFRAINE D FROM UPHOLDING THE ORDER OF THE ASSESSING AUTHORITY AND ON THE OTHER HAND DIRECTING THE ASSESSING AUTHORITY TO ALLOW THE EXEMPTION U/S.12 OF THE ACT AS CLAIMED BY THE APPELLANT. 5. THE LEARNED COMMISSIONER (A) ERRED IN UPHOLDIN G THE ORDER OF THE ASSESSING AUTHORITY ON MERE CONJECTURE AND SURMISES WITHOUT APPRECIATING THE EVIDENCE CONSIDERED BY THE FIRST APPELLATE AUTHORITY IN THE ORIGINAL PROCEEDINGS AND ALSO THE CATEGORICAL FINDING GIVEN BY THE HON 'BLE APPELLATE TRIBUNAL IN THE APPELLANT'S OWN CASE. ITA NOS. 72 TO 77/BANG/2010 PAGE 7 OF 23 6. THE LEARNED COMMISSIONER (A) ERRED IN HOLDING THAT THE TRUST WAS A FAMILY CONCERN AND FOR THE BENEFIT OF T HE FAMILY MEMBERS TO JUSTIFY THE DENIAL OF EXEMPTION U/S.10(2 2) OF THE ACT. 7. THE LEARNED COMMISSIONER (A) OUGHT TO HAVE APP RECIATED THAT THE TRIBUNAL WHILE SETTING ASIDE THE ASSESSMEN T HAD ONLY DIRECTED THE ASSESSING AUTHORITY TO VERIFY THE EVID ENCE AND TO GRANT EXEMPTION U/S.10(22) OF THE ACT WHEREAS THE A SSESSING AUTHORITY HAD DEVIATED FROM THE DIRECTIONS OF THE A PPELLATE TRIBUNAL AND HAD PROCEEDED ON THOSE MATERIALS CONSI DERED IN THE ORIGINAL PROCEEDINGS ON WHICH THE APPELLATE AUTHORI TY HAD ALREADY ADJUDICATED AND ACCORDINGLY THE DENIAL OF E XEMPTION U/S.10(22) OF THE ACT BY THE ASSESSING AUTHORITY AN D AS UPHELD BY THE FIRST APPELLATE AUTHORITY WERE BAD IN LAW AND T HE ORDERS OF THE AUTHORITIES BELOW ARE REQUIRED TO BE SET ASIDE AND THE APPELLANT HAD TO BE GRANTED EXEMPTION U/S.10(22) OF THE ACT A S CLAIMED. 8. THE LEARNED COMMISSIONER (A) OUGHT TO HAVE APPR ECIATED THAT THERE WAS NO BENEFIT CONFERRED ON THE PERSONS UNDER SUSCEPTIBLE CATEGORY TO JUSTIFY THE DENIAL OF EXEMP TION U/S.10(22) OF THE ACT. 9. `THE LEARNED COMMISSIONER (A) OUGHT TO HAVE APP RECIATED THAT THE PAYMENTS OF RENT AND OTHER CHARGES TO THE FAMIL Y MEMBERS OF THE TRUSTEES WERE IN ACCORDANCE WITH THE PREVAILING MARKET RATE AND THERE WAS NO BENEFICIAL INTEREST CONFERRED ON A NY OF THEM TO JUSTIFY THE DENIAL OF EXEMPTION U/S.10(22) OF THE A CT. 10. THE LEARNED COMMISSIONER (A) ERRED IN HOLDING THAT THE APPELLANT MADE SURPLUS AND THIS MOTIVE OF PROFIT W ITHOUT APPRECIATING THAT THE AMOUNT OF SURPLUS WAS UTILIZE D ONLY FOR THE EDUCATIONAL PURPOSES AND NO BENEFIT HAD BEEN CONFER RED TO THE PERSONS OF SUSCEPTIBLE CATEGORY. 11. THE LEARNED COMMISSIONER (A) OUGHT TO HAVE R EFRAINED FROM UPHOLDING THE DISALLOWANCE OUT OF RENT BY APPL YING THE PROVISIONS OF SEC.40A(2) OF THE ACT. 12. THE LEARNED COMMISSIONER (A) OUGHT TO HAVE REFR AINED FROM DISALLOWING THE MESS EXPENSES. ITA NOS. 72 TO 77/BANG/2010 PAGE 8 OF 23 13. THE LEARNED COMMISSIONER (A) ERRED IN UPHOLDI NG THE DISALLOWANCE OF DEPRECIATION. 14. THE LEARNED COMMISSIONER (A) ERRED IN UPHOLDIN G THE LEVY OF INTEREST U/S.234A AND 234B OF THE ACT. 15. FOR THESE AND OTHER GROUNDS THAT MAY BE URGED A T THE TIME OF HEARING OF THE APPEAL THE APPELLANT PRAYS THAT T HE APPEAL MAY BE ALLOWED. 12. THE NEXT 3 APPEALS IN ITA NOS. 75 TO 77/BANG/20 10 ARISE FROM THE SAME FACTS AND CIRCUMSTANCES BUT TECHNICALLY RELAT ED TO APPLICATION OF SECTION 11 OF THE ACT. IN ALL THESE 3 APPEALS THE GROUNDS ARE COMMON THEREFORE FOR THE SAKE OF REFERENCE WE EXTRACT TH E GROUNDS IN ITA NO.75/BANG/2010 AS UNDER:- 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE C ASE THE LEARNED COMMISSIONER OF INCOME-TAX (A) ERRED IN UPH OLDING THE ORDER OF THE ASSESSING AUTHORITY DENYING THE EXEMPT ION U/S. 11 OF THE ACT TO THE APPELLANT. 2. ON THE FACTS THE LEARNED COMMISSIONER (A) OUGHT TO HAVE APPRECIATED THAT THE ASSESSING AUTHORITY INSTEAD OF LOOKING INTO THE EVIDENCE FURNISHED BY THE APPELLANT WHICH WERE REQ UIRED TO BE EXAMINED BY HIM AS PER THE DIRECTIONS OF THE HON'BL E APPELLATE TRIBUNAL HAD WITHOUT APPLICATION OF MIND REPEATED T HE FINDINGS GIVEN IN THE ORIGINAL ASSESSMENT ORDER AND SUCH ORD ER WAS UNSUSTAINABLE AND REQUIRED TO BE CANCELLED. 3. ON THE FACTS THE LEARNED COMMISSIONER (A) OUGHT TO HAVE CONSIDERED THE MATERIALS AND EVIDENCE PLACED BEFORE HIM AND SUBMISSIONS MADE THEREON AND OUGHT TO HAVE REFRAINE D FROM UPHOLDING THE ORDER OF THE ASSESSING AUTHORITY AND ON THE OTHER HAND DIRECTING THE ASSESSING AUTHORITY TO ALLOW THE EXEMPTION U/S.11 OF THE ACT AS CLAIMED BY THE APPELLANT. 4. THE LEARNED COMMISSIONER (A) ERRED IN UPHOLDING THE ORDER OF THE ASSESSING AUTHORITY ON MERE CONJECTURE AND SURMISES ITA NOS. 72 TO 77/BANG/2010 PAGE 9 OF 23 WITHOUT APPRECIATING THE EVIDENCE CONSIDERED BY THE FIRST APPELLATE AUTHORITY IN THE ORIGINAL PROCEEDINGS AND ALSO THE CATEGORICAL FINDING GIVEN BY THE HON'BLE APPELLATE TRIBUNAL IN THE APPELLANT'S OWN CASE. 5. THE LEARNED COMMISSIONER (A) ERRED IN HOLDING TH AT THE TRUST WAS A FAMILY CONCERN AND FOR THE BENEFIT OF T HE FAMILY MEMBERS TO JUSTIFY THE DENIAL OF EXEMPTION U/S.11 O F THE ACT. 6. THE LEARNED COMMISSIONER (A) OUGHT TO HAVE APPR ECIATED THAT THE TRIBUNAL WHILE SETTING ASIDE THE ASSESSMEN T HAD ONLY DIRECTED THE ASSESSING AUTHORITY TO VERIFY THE EVID ENCE AND TO GRANT EXEMPTION U/S.11 OF THE ACT WHEREAS THE ASSES SING AUTHORITY HAD DEVIATED FROM THE DIRECTIONS OF THE A PPELLATE TRIBUNAL AND HAD PROCEEDED ON THOSE MATERIALS CONSI DERED IN THE ORIGINAL PROCEEDINGS ON WHICH THE APPELLATE AUTHORI TY HAD ALREADY ADJUDICATED AND ACCORDINGLY THE DENIAL OF E XEMPTION U/S.11 OF THE ACT BY THE ASSESSING AUTHORITY AND AS UPHELD BY THE FIRST APPELLATE AUTHORITY WERE BAD IN LAW AND THE O RDERS OF THE AUTHORITIES BELOW ARE REQUIRED TO BE SET ASIDE AND THE APPELLANT HAD TO BE GRANTED EXEMPTION U/S.11 OF THE ACT AS CL AIMED. 7. THE LEARNED COMMISSIONER (A) OUGHT TO HAVE APPR ECIATED THAT THERE WAS NO VIOLATION OF THE PROVISIONS OF SE C. 13(1)(C) OF THE ACT TO JUSTIFY THE DENIAL OF EXEMPTION U/S.11 O F THE ACT. 8. THE LEARNED COMMISSIONER (A) OUGHT TO HAVE APPR ECIATED THAT THE PAYMENTS OF RENT AND OTHER CHARGES TO THE FAMILY MEMBERS OF THE TRUSTEES WERE IN ACCORDANCE WITH THE PREVAILING MARKET RATE AND THERE WAS NO BENEFICIAL INTEREST CO NFERRED ON ANY OF THEM TO JUSTIFY THE DENIAL OF EXEMPTION U/S.11 O F THE ACT. 9. THE LEARNED COMMISSIONER (A) ERRED IN HOLDING T HAT THE INTEREST INCOME ON BANK FIXED DEPOSITS WOULD NOT BE HELD TO BE PROFIT DERIVED FROM THE PROPERTY HELD UNDER TRUST A S REQUIRED U/S.11(L) TO JUSTIFY THE DENIAL OF EXEMPTION. 10. THE LEARNED COMMISSIONER (A) OUGHT TO HAVE REF RAINED FROM UPHOLDING THE DISALLOWANCE OUT OF RENT BY APPL YING THE PROVISIONS OF SEC.40A(2) OF THE ACT. 11. THE LEARNED COMMISSIONER (A) OUGHT TO HAVE REF RAINED FROM DISALLOWING THE MESS EXPENSES. ITA NOS. 72 TO 77/BANG/2010 PAGE 10 OF 23 12. THE LEARNED COMMISSIONER (A) ERRED IN UPHOLDI NG THE DISALLOWANCE OF DEPRECIATION. 13. THE LEARNED COMMISSIONER (A) ERRED IN UPHOLDIN G THE LEVY OF INTEREST U/S.234A AND 234B OF THE ACT. 14. FOR THESE AND OTHER GROUNDS THAT MAY BE URGED A T THE TIME OF HEARING OF THE APPEAL THE APPELLANT PRAYS THAT T HE APPEAL MAY BE ALLOWED. 13. THE AO HAD DENIED THE BENEFIT OF SECTION 11 FOR THESE 3 ASSESSMENT YEARS I.E. 1999-2000 TO 2001-02 FOR THE VERY SAME R EASONS STATED FOR THE EARLIER AYS 1995-96 TO 1997-98. BUT FOR THE DIFFE RENCE IN STATUTORY PROVISIONS THE PITH AND SUBSTANCE OF THE FACTS AND CIRCUMSTANCES AND GROUNDS FOR ALL THE SIX YEARS ARE IDENTICAL. BENEF IT OF SECTION 11 HAS BEEN DENIED TO THE ASSESSEE FOR EXACTLY THE SAME REASONS STATED IN THE CONTEXT OF DENIAL OF EXEMPTION U/S. 10(22) OF THE ACT. 14. THE TRIBUNAL WHILE ADJUDICATING THE ISSUE OF BE NEFIT OF EXEMPTION U/S. 10(22) AND SECTION 11 OF THE ACT IN THE IMPUGNED AS SESSMENT YEARS HAS TAKEN NOTE OF THE ORDER OF TRIBUNAL IN ITA NOS.1209 /BANG/2002 DIRECTING THE REVENUE TO GRANT REGISTRATION U/S. 12A OF THE ACT. THE TRIBUNAL HAS ALSO TAKEN COGNIZANCE OF ITS ORDER IN ITA NO.1778 OF 200 4 SETTING ASIDE THE ORDER OF CIT PASSED U/S. 263 OF THE ACT FOR THE AY 1998-99 HOLDING THAT LOOKING INTO THE ENTIRE CIRCUMSTANCES OF THE CASE A ND FURTHER SIMILAR EXEMPTION WAS ALLOWED IN EARLIER AND SUBSEQUENT YEA RS THE AO WAS DIRECTED TO ALLOW EXEMPTION U/S. 10(22) TO THE ASSE SSEE. THE RELEVANT ITA NOS. 72 TO 77/BANG/2010 PAGE 11 OF 23 OBSERVATIONS IN PARA 8 OF PAGE 13 OF THE ORDER OF T RIBUNAL IN ITA NO.1778/BANG/2004 IS EXTRACTED HEREUNDER FOR THE SA KE OF REFERENCE:- . ON EXAMINATION OF THE MATERIALS CALLED FOR BY HIMSELF FOR THE PURPOSE OF COMING TO A CONCLUSION WHETHER T HE EXISTENCE OF THE ASSOCIATION IS FOR IMPARTING EDUCATION AND T HE ACTIVITIES ARE GENUINE AFTER BEING SATISFIED WITH THE MATERIALS B EFORE HIM THE ASSESSING OFFICER HELD THAT THE ASSESSEE IS ENTITLE D TO EXEMPTION U/S. 10(22) OF THE INCOME TAX ACT. FURTHER THE TR IBUNAL CONSIDERED SIMILAR GROUND AS RAISED BY THE COMMISSI ONER HERE HELD THAT IT IS A GENUINE INSTITUTION AND ITS ACTIV ITIES ARE GENUINE AND ACCORDINGLY ALLOWED REGISTRATION U/S. 12A OF TH E ACT. LOOKING TO THE ENTIRE CIRCUMSTANCES OF THE CASE AND FURTHER SIMILAR EXEMPTION WAS BEING ALLOWED TO THE ASSESSEE IN EARLIER AND SUBSEQUENT YEARS WE DIRECT THE ASSESSING OFFI CER TO ALLOW EXEMPTION U/S. 10(22) TO THE ASSESSEE. 15. THE TRIBUNAL HAS ALSO TAKEN NOTE OF DIFFERENT A SSESSMENT YEARS IN RESPECT OF SAME ASSESSEE AND NOTICED THAT ISSUE HAS ALREADY BEEN CONCLUDED IN A CONCLUSIVE MANNER IN FAVOUR OF ASSES SEE. NOW THE ISSUE HAS BEEN REMANDED BACK BY THE HONBLE HIGH COURT OF KARNATAKA TO THE TRIBUNAL TO READJUDICATE THE ISSUE AFRESH WITHOUT B EING INFLUENCED BY THE ORDER OF TRIBUNAL PASSED IN ITA NO.1209/B/2002. TH EREFORE WE ARE REQUIRED TO EXAMINE THE EVIDENCE AND MATERIAL PLACE D ON RECORD BY THE RESPECTIVE PARTIES. 16. THE ALLEGATIONS OF THE DEPARTMENT WHILE DENYING THE EXEMPTION ARE TWO-FOLD. THE FIRST OBJECTION IS THAT THE TRUSTEES /MEMBERS OF THE SOCIETY ARE AVAILING HUGE AMOUNTS OF LOAN FROM THE SAID SOCIETY AND THOSE LOANS WERE USED FOR CONSTRUCTING BUILDINGS IN THE NAME OF THEM SELVES AND THEREAFTER ITA NOS. 72 TO 77/BANG/2010 PAGE 12 OF 23 LETTING OUT THE VERY SAME BUILDING TO THE SAME SOCI ETY TO RUN ITS EDUCATIONAL INSTITUTION FOR EXORBITANT RENTS. THE SECOND OBJEC TION IS THAT THE ASSESSEE- SOCIETY WAS COLLECTING THE CAPITATION FEES FROM THE STUDENTS. THEREFORE THE ASSESSEE-SOCIETY IS NOT EXISTING SOLELY FOR EDUCATI ONAL PURPOSE BUT FOR THE PURPOSE OF PROFIT. 17. ACCORDINGLY ON THESE TWO ISSUES ARGUMENTS OF B OTH THE PARTIES WERE HEARD. DURING THE COURSE OF HEARING THE LD. COUN SEL FOR THE ASSESSEE HAS INVITED OUR ATTENTION THAT THESE ISSUES WERE CONSID ERED BY THE TRIBUNAL WHILE ADJUDICATING THE ISSUE OF REGISTRATION U/S. 1 2A OF THE ACT. A COPY OF THE ORDER OF TRIBUNAL IS PLACED ON RECORD. THE LD. COUNSEL FOR THE ASSESSEE FURTHER CONTENDED THAT FOR DENYING THE EXEMPTION U/ S. 10(22) OR 11 OF THE ACT THE REVENUE HAS TRIED TO ESTABLISH THAT THERE WAS DIVERSION OF FUNDS TO THE MEMBERS OF ASSESSEE SOCIETY FOR THEIR BENEFIT U NDER THE GARB OF ADVANCE RENT IN ORDER TO CONSTRUCT THE PROPERTIES T O BE LET OUT IN FUTURE TO THE ASSESSEE SOCIETY. BESIDES LEVELLING THIS ALLEG ATION THE AO OR THE REVENUE AUTHORITIES HAVE NOT MADE ANY EFFORTS TO FI ND OUT THE FAIR MARKET RENT OF THE PROPERTY LET OUT TO THE ASSESSEE. THE LD. COUNSEL HAS FURTHER CONTENDED THAT WHATEVER AMOUNT IS GIVEN TO THE SO-C ALLED MEMBERS FOR CONSTRUCTION OF PROPERTIES WHICH WERE TO BE LET OUT TO THE ASSESSEE IT WAS ONLY ADVANCE RENT ON ACCOUNT OF WHICH THE MONTHLY R ENT WAS FIXED AT LESSER RATE THAN THE RENT PREVAILING IN THE MARKET. THE A O HAS SIMPLY TAKEN NOTE THAT ASSESSEE HAD DIVERTED ITS FUNDS TO THE MEMBERS OF SOCIETY FOR THEIR ITA NOS. 72 TO 77/BANG/2010 PAGE 13 OF 23 BENEFIT WITHOUT APPRECIATING THE FACTS THAT PROPER TIES WERE TAKEN ON LESSER RENT BY THE ASSESSEE THAN THE PREVAILING MARKET RAT E. 18. THE LD. COUNSEL FOR THE ASSESSEE FURTHER CONTEN DED THAT DUE TO CERTAIN RESTRICTIONS THE ASSESSEE SOCIETY CANNOT A CQUIRE LAND AND CONSTRUCT THE PROPERTY THEREFORE IT WAS DECIDED TO CONSTRUCT THE PROPERTY BY ITS MEMBERS AND THE SAME WOULD BE TAKEN ON RENT BY THE ASSESSEE. THERE IS NO DISPUTE BY THE REVENUE THAT ALL THE PROPERTIES T AKEN ON RENT WERE USED FOR EDUCATIONAL INSTITUTION PURPOSE. THERE IS NO I OTA OF EVIDENCE WHEREBY IT CAN BE ESTABLISHED THAT ASSESSEE WAS ENGAGED IN ANY ACTIVITIES OTHER THAN THE EDUCATIONAL INSTITUTION. MOREOVER THE AO HIMS ELF HAS ACCEPTED THAT APPELLANT SOCIETY WAS EXISTING SOLELY FOR EDUCATION AL PURPOSES. THE REASONABLENESS OF RENTAL PAYMENTS AND ALSO RENT ADV ANCED ON THE BASIS OF MATERIAL FURNISHED BY THE ASSESSEE WAS EXAMINED BY THE CIT(APPEALS) AND HE WAS ALSO SATISFIED AS TO THE CORRECTNESS OF THE CLAIM OF ASSESSEE THAT THE RENT RECEIVED BY THE MEMBERS/EXECUTIVES OF THE ASSE SSEE-SOCIETY WAS LESSER THAN THE MARKET VALUE AND THERE WAS NO BENEF IT CONFERRED UPON THE MEMBERS/EXECUTIVES TO SURMISE PROFIT MOTIVE OF THE SOCIETY FOR DENIAL OF EXEMPTION U/S. 10(22) OF THE ACT. THE ORDER OF CIT (APPEALS) IS AVAILABLE AT PAGES 103-141 OF PAPERBOOK. 19. THE LD. COUNSEL FOR THE ASSESSEE FURTHER CONTEN DED THAT IF THE AO WAS NOT CONVINCED WITH THE RENTAL PAID BY THE ASSES SEE FOR THE USE OF PROPERTIES TO THE MEMBERS OF THE SOCIETY THE MATTE R SHOULD HAVE BEEN ITA NOS. 72 TO 77/BANG/2010 PAGE 14 OF 23 REFERRED TO THE DVO TO FIND OUT THE FAIR MARKET REN T OF THESE PROPERTIES. WITHOUT MAKING SUCH EFFORTS THE AO SUO MOTU HAS CONCLUDED THAT ASSESSEE WAS PAYING HIGHER RATE OF RENT TO THE MEMB ERS/EXECUTIVES OF THE SOCIETY. 20. THE LD. COUNSEL FOR THE ASSESSEE FURTHER CONTEN DED THAT ON ACCOUNT OF ADVANCES GIVEN TO MEMBERS/EXECUTIVES OF THE SOCI ETY FOR CONSTRUCTION OF PROPERTY WHICH WAS LATER ON LET OUT TO THE ASSESSEE ASSESSEE WAS PAYING LESSER RENT THAN THE RATE PREVAILING IN THE MARKET. THE LOWER AUTHORITIES DID NOT APPRECIATE THAT HAD THE SOCIETY GONE TO THE OUT SIDER THE PAYMENT OF RENT OR THE OUTGO WOULD HAVE BEEN SUBSTANTIALLY HI GH. THUS THERE WAS NO BENEFIT CONFERRED ON THE MEMBERS OF THE SOCIETY ON ACCOUNT OF ADVANCE PAYMENT OF RENT FOR CONSTRUCTION OF PROPERTY WHICH WILL BE USED BY THE SOCIETY FOR ITS EDUCATIONAL PURPOSES. IT WAS FURTH ER CONTENDED THAT THE PROPERTIES WERE UNDER THE CUSTODY OF THE SOCIETY WH ICH ARE BEING USED TO RUN ITS EDUCATIONAL INSTITUTION AND MEMBERS HAVE NO RIGHT TO RECOVER THE PROPERTY FROM THE ASSESSEE AS LONG AS IT CONTINUES TO RUN ITS EDUCATIONAL INSTITUTION. IT IS ALSO UNDISPUTED FACT THAT COMME RCIAL RENT OF PROPERTIES WAS MUCH MORE THAN RENT PAID BY THE ASSESSEE-SOCIETY. THE LD. CIT(APPEALS) WITHOUT MAKING ANY EXERCISE ON THE PREVAILING MARKE T RENT HAD SURMISED THAT THE BENEFIT HAD BEEN CONFERRED ON THE APPELLAN T TO SUGGEST THAT THERE WAS MOTIVE OF PROFIT. ITA NOS. 72 TO 77/BANG/2010 PAGE 15 OF 23 21. THE LD. COUNSEL FOR THE ASSESSEE FURTHER CONTEN DED THAT ALL THESE ASPECTS WERE ALREADY EXAMINED BY THE TRIBUNAL WHILE ADJUDICATING THE ISSUE OF REGISTRATION U/S. 12A OF THE ACT WHICH WAS LATER ON CONFIRMED BY THE HONBLE HIGH COURT. IN SUPPORT OF HIS CONTENTION THE LD. COUNSEL FURNISHED THE DETAILS TO ESTABLISH THAT THE RENT PAID BY THE ASSESSEE SOCIETY WAS LESSER THAN THE FAIR MARKET RENT. HE ALSO PLACED R ELIANCE UPON THE CIRCULAR OF THE BOARD VIDE REF.NO.4-P DATED 21.07.1996 WHICH WOULD SHOW THAT THERE WAS NO BENEFIT CONFERRED ON THE MEMBERS/EXECU TIVES OF SOCIETY. THE BOARD HAS FURTHER CLARIFIED THAT WHEN FAIR RENT IS PAID AND FAIR REMUNERATION IS GIVEN FOR THE SERVICES RENDERED NO BENEFIT CAN BE INFERRED TO APPLY THE PROVISIONS OF SECTION 13(1)(C) OF THE ACT TO DENY T HE BENEFIT U/S. 11 OF THE ACT. IT WAS FURTHER CONTENDED THAT THOUGH FOR THE PURPOSE OF SECTION 10(22) PROVISIONS OF SECTION 13(1)(C) OF THE ACT ARE NOT A PPLICABLE STILL IN ORDER TO INFER PROFIT MOTIVE RELIANCE HAS BEEN PLACED ON TH E BENEFIT IF ANY CONFERRED ON THE MEMBERS/EXECUTIVES. THE SOCIETY HAD SATISFIE D ALL THE CONDITIONS PROVIDED U/S. 10(22) OF THE ACT FOR AVAILING THE BE NEFIT OF EXEMPTION. THE RENT ADVANCES WERE GIVEN FOR RAISING CONSTRUCTION O N THE ASSURANCE THAT THE SUPERSTRUCTURE ALONG WITH THE LAND WILL BE GIVEN ON LEASE EXCLUSIVELY TO THE APPELLANT SOCIETY FOR RUNNING ITS EDUCATIONAL INSTI TUTIONS. THEREFORE THE BENEFIT OF EXEMPTION U/S. 10(22) OF THE ACT CANNOT BE DENIED ON THE GROUND THAT APPELLANT SOCIETY WAS DIVERTING FUNDS TO MEMBE RS/EXECUTIVES OF SOCIETY FOR THEIR BENEFIT. THE ASSESSEE-SOCIETY IS RUNNING 9 EDUCATIONAL INSTITUTIONS ITA NOS. 72 TO 77/BANG/2010 PAGE 16 OF 23 AND FOR THAT IT REQUIRES HUGE PROPERTY WHICH CAN ON LY BE TAKEN ON RENT FROM DIFFERENT PERSONS. 22. THE LD. COUNSEL FOR THE ASSESSEE HAS FURTHER IN VITED OUR ATTENTION THAT CIT(APPEALS) WAS OF THE OPINION THAT ASSESSEE HAS R ECEIVED MESS RECEIPTS AND ALSO THERE WAS EXCESS OF INCOME OVER EXPENDITUR E. THE CIT(A) FURTHER MADE A REFERENCE TO THE JUDGMENT OF HONBLE APEX CO URT IN THE CASE OF STATE OF PUNJAB V. BRITISH INDIA CORPORATION INDIA LTD. WHICH SUGGESTED THAT THE REFRESHMENT PLACE WAS SOLELY USED FOR SOME PURP OSE AND NOT FOR EDUCATIONAL PURPOSE WITHOUT REALIZING THE FACT THAT APPELLANT HAVING COLLECTED MESS RECEIPTS FROM THE INMATES OF THE HOS TEL WHO WERE STUDYING IN THE COLLEGES AND NO PART OF SUCH RECEIPTS WAS US ED FOR ANY PURPOSE OTHER THAN THE EDUCATIONAL PURPOSE. IN SUPPORT OF HIS CO NTENTION THE LD. COUNSEL HAS PLACED RELIANCE UPON THE JUDGMENT OF HONBLE SU PREME COURT IN THE CASE OF ADITANAR EDUCATIONAL INSTITUTION ETC. V. CIT (1997) 224 ITR 310 (SC) COPY OF WHICH IS PLACED ON RECORD AT PAGES 365 TO 372. RELIANCE WAS ALSO PLACED UPON THE JUDGMENT OF AMERICAN HOTEL & LODGING ASSOCIATION EDUCATIONAL INSTITUTE V. CBDT & ORS (2008) 301 ITR 382 THIAGARAJAR CHARITIES V. ADDL. CIT & ANR. (1997) 225 ITR 1010 APPEARING AT PAGES 433 TO 448 OF THE COMPILATION CHIEF CIT V. ST. PETERS EDUCATIONAL SOCIETY 385 ITR 66 APPEARING AT PAGES 533 TO 548 OF PB QUEENS EDUCATIONAL SOCIETY V. CIT (2015) 372 ITR 699 (SC) AND JUDGMENT OF HON'BLE JURISDICTIONAL HIGH COURT IN THE CASE OF CIT V. KLE SOCIETY 371 ITR 249 APPEARING AT PAGE NOS.518 TO 525 OF COMPILATION OF ASSESSEE. ITA NOS. 72 TO 77/BANG/2010 PAGE 17 OF 23 23. THE LD. COUNSEL FOR THE ASSESSEE FURTHER CONTEN DED THAT REVENUE HAS ALSO DENIED EXEMPTION ON THE GROUND THAT ASSESSEE H AS RECEIVED CAPITATION FEES ON ADMISSION OF STUDENTS BUT NO EVIDENCE IN T HIS REGARD HAS BEEN BROUGHT ON RECORD ASSESSEE HAS CHARGED TUITION FEE S ETC. AS PER GUIDELINES LAID DOWN BY THE STATE GOVT. THOUGH SURVEY AND SEA RCH WAS ALSO CONDUCTED UPON THE ASSESSEE BUT NO CONCRETE EVIDEN CE HAS BEEN BROUGHT ON RECORD TO ESTABLISH THAT ASSESSEE HAS CHARGED CA PITATION FEES FROM THE STUDENTS. THESE ALLEGATIONS WERE MADE ON THE BASIS OF PRESUMPTIONS AND SURMISES THEREFORE EXEMPTION U/S. 10(22) OR 11 CAN NOT BE DENIED. 24. THE LD. DR STRONGLY PLACED RELIANCE UPON THE OR DERS OF CIT(APPEALS). BESIDES HE HAS CONTENDED THAT REVENUE HAS MADE OUT A STRONG CASE THAT ASSESSEE HAS GIVEN SUBSTANTIAL AMOUNT AS ADVANCES T O THE MEMBERS/EXECUTIVES OF SOCIETY FOR CONSTRUCTION OF T HEIR PROPERTY WHICH WERE SUBSEQUENTLY LET OUT TO THE ASSESSEE AT EXORBITANT RENT. THEREFORE FUNDS WERE DIVERTED FOR THE BENEFIT OF MEMBERS. 25. HAVING CAREFULLY EXAMINED THE ORDERS OF AUTHORI TIES BELOW ON THE IMPUGNED ISSUES WE FIND THAT IN THE FIRST ROUND OF APPEAL THE TRIBUNAL HAS DECIDED THE ISSUE OF EXEMPTION U/S. 10(22) OR 11 OF THE ACT ON THE BASIS OF THE TRIBUNALS ORDER PASSED ON THE ISSUE OF GRANT O F REGISTRATION U/S. 12A OF THE ACT. BUT WHILE SETTING ASIDE THE ORDER OF TRIB UNAL THE HONBLE HIGH COURT OF KARNATAKA HAS RESTORED THE MATTER TO THE T RIBUNAL WITH A DIRECTION TO READJUDICATE THE ISSUE OF EXEMPTION U/S. 10(22) & 11 OF THE ACT WITHOUT ITA NOS. 72 TO 77/BANG/2010 PAGE 18 OF 23 BEING INFLUENCED BY THE DECISION TAKEN BY THE TRIBU NAL WHILE DISPOSING OF THE APPEAL ON THE ISSUE OF GRANT OF REGISTRATION U/ S. 12A OF THE ACT. THEREFORE WE HAVE CAREFULLY EXAMINED THE OTHER EVI DENCE PLACED BEFORE THE TRIBUNAL WHICH WERE CONSIDERED BY THE LOWER AUT HORITIES WHILE DENYING THE EXEMPTION U/S. 10(22) & 11 OF THE ACT. THOUGH FOR ALLOWING THE BENEFIT OF SECTION 10(22) THE PROVISIONS OF SECTION 13(1) CANNOT BE EXAMINED AND BENEFIT OF SECTION 10(22) CAN ONLY BE ALLOWED IF TH E ASSESSEE EXISTS SOLELY FOR EDUCATIONAL PURPOSES AND NOT FOR THE PURPOSE OF PROFIT. IN THIS REGARD THE REVENUE HAS NOT MADE OUT A CASE ANYWHERE THAT A SSESSEE WAS RUNNING EDUCATIONAL INSTITUTION FOR THE PURPOSE OF PROFIT. UNDISPUTEDLY WHILE GRANTING EXEMPTION U/S. 11 OF THE ACT THE REVENUE AUTHORITIES CAN EXAMINE AS TO WHETHER THERE IS A VIOLATION OF PROVISIONS OF SECTION 13(1) OF THE ACT BUT VIOLATION OF PROVISIONS OF SECTION 13(1) CANNOT BE EXAMINED WHILE GRANTING EXEMPTION U/S. 10(22) OF THE ACT. IN ANY CASE WE HAVE TO EXAMINE WHETHER ASSESSEE WAS EXISTING SOLELY FOR ED UCATIONAL PURPOSES AND NOT FOR THE PURPOSE OF PROFIT. IN THIS REGARD THE REVENUE HAS TRIED TO MAKE OUT A CASE THAT THERE WAS DIVERSION OF FUNDS OF THE SOCIETY TO ITS MEMBERS/EXECUTIVES FOR THEIR BENEFIT. BUT WHILE H OLDING SO THE REVENUE AUTHORITIES HAVE NOT EXAMINED THE ASPECT THAT THE P ROPERTIES CONSTRUCTED OUT OF THE ADVANCES GIVEN TO THE MEMBERS/EXECUTIVES OF SOCIETY WERE TAKEN ON RENT BY ASSESSEE SOCIETY TO RUN ITS EDUCATIONAL INSTITUTION AT A RENT LOWER THAN THE MARKET RENT. IT IS ALSO WORTHWHILE TO MEN TION HERE THAT ASSESSEE HAS BEEN RUNNING 9 EDUCATIONAL INSTITUTIONS WHICH C ANNOT BE RUN WITHOUT ITA NOS. 72 TO 77/BANG/2010 PAGE 19 OF 23 ACQUIRING PROPERTIES AT DIFFERENT PLACES. THE DETA ILS OF EDUCATIONAL INSTITUTIONS BEING RUN BY THE ASSESSEE ARE AS UNDER :- 1) M/S.VENKATESHA TEACHING COLLEGE SINCE 1970-71 ( 2 YEAR COURSE APPROVED BY KSEE BOARD GOVERNMENT OF KARNAT AKA). 2) BALACHANDER TEACHING COLLEGE SINCE 1974-75 (2 Y EAR COURSE CERTIFICATE BY KSEE BOARD GOVT. OF KARNATAKA). 3) JAYENDRA TEACHING COLLEGE 1978-79 (2 YEAR COURS E APPROVED BY GOVT. OF KARNATAKA). 4) M.V.JAYARAM COLLEGE OF EDUCATION 1980-81 (1 YEA R B.ED. COURSE). 5) M.V.JAYARAM ENGINEERING COLLEGE 1982-83 (4 YEARS BE DEGREE COURSE VTV BELGAUM). 6) M.V.JAYARAM INSTITUTE OF POLYTECHNIC 1985-86 (3 YEARS DIP. D.T.E.). 7) M.V.JAYARAM INSTITUTE OF NURSING 1993-94 (3 YEA RS DIPLOMA IN NURSING). 8) RAJALAKSHMI COLLEGE OF POST GRADUATE 1999-2000 ( 2 YEAR COURSE BANGALORE UNIVERSITY) . 9) M.V.RAJALAKSHMI COLLEGE 2000-01. 26. THE LOWER AUTHORITIES HAVE HELD THAT ASSESSEE H AS BEEN PAYING EXORBITANT RENT TO THE MEMBERS/EXECUTIVES OF SOCIET Y BUT WHILE HOLDING SO THEY HAVE NOT PLACED ANY MATERIAL ON RECORD. IN TH IS REGARD WE ARE OF THE VIEW THAT IF THE AO WAS NOT CONVINCED OR AGREED WIT H THE CLAIM OF PAYMENT OF RENT TO THE MEMBERS/EXECUTIVES OF SOCIETY WITH R EGARD TO PROPERTIES WHICH WERE CONSTRUCTED OUT OF ADVANCES GIVEN BY THE SOCIETY FOR THOSE PROPERTIES HE SHOULD HAVE MADE A REFERENCE TO THE DVO TO DETERMINE THE ITA NOS. 72 TO 77/BANG/2010 PAGE 20 OF 23 FAIR MARKET RENT. THEREAFTER HE MAY ARRIVE AT A C ONCLUSION THAT ASSESSEE HAS PAID EXORBITANT RENT TO THE MEMBERS/EXECUTIVES OF THE SOCIETY. BUT WITHOUT DOING SO THE AO CANNOT COME TO THE CONCLUS ION THAT THE RENT PAID BY THE ASSESSEE SOCIETY TO ITS MEMBERS/EXECUTIVES A RE EXORBITANT AS HE IS NOT AN EXPERT IN THIS FIELD. 27. WHEREAS THE ASSESSEE HAS TAKEN A CATEGORICAL ST AND THAT IT HAS TAKEN THE PROPERTIES WHICH WERE CONSTRUCTED OUT OF THE ADVANCE RENT GIVEN TO MEMBERS/EXECUTIVES OF SOCIETY FOR RUNNING THE ED UCATIONAL INSTITUTIONS AT A LESSER RATE OF RENT THAN THE RENT PREVAILING IN T HE MARKET. IN SUPPORT OF HIS CONTENTION THE LD. COUNSEL FOR THE ASSESSEE HAS FI LED A CERTIFICATE OF GRAM PANCHAYAT AND THE CHART SHOWING DIFFERENT RATES OF RENT PAID BY THE ASSESSEE WHICH ARE AVAILABLE AT PAGES 342 TO 356 O F THE COMPILATION. THIS CONTENTION/STAND OF ASSESSEE WAS NOT CROSS-CHE CKED OR VERIFIED BY THE REVENUE AUTHORITIES. THEREFORE IN THE ABSENCE OF ANY REFERENCE TO EXPERT/DVO IN THIS REGARD IT WILL BE DIFFICULT FOR US TO ACCEPT THE CONTENTION OF REVENUE THAT ASSESSEE HAS BEEN PAYING EXORBITANT RENT TO THE MEMBERS/EXECUTIVES OF THE SOCIETY. MOREOVER FROM T HE DETAILS OF RENT PAID AND CERTIFICATE OF GRAM PANCHAYAT FOR MARKET RENT IT APPEARS THAT ASSESSEE HAS BEEN PAYING LESSER RATE OF RENT THAN THE PREVAI LING RENT. 28. SO FAR AS ADVANCES GIVEN TO THE MEMBERS/EXECUTI VES OF THE SOCIETY THE REVENUE HAS NOT MADE OUT A CASE THAT ASSESSEE H AS GIVEN SUBSTANTIAL AMOUNT TO THE MEMBERS/EXECUTIVES OF THE SOCIETY FOR CONSTRUCTION OF ITA NOS. 72 TO 77/BANG/2010 PAGE 21 OF 23 PROPERTY WHICH WERE FINALLY GIVEN ON RENT TO ASSESS EE SOCIETY AND THAT AMOUNT REMAINED UNRECOVERED OR UNADJUSTED AGAINST T HE RENTS TO BE PAID BY THE SOCIETY. IN THE ABSENCE OF THESE SPECIFIC F INDINGS THE CONTENTION OF ASSESSEE THAT THE ADVANCE RENT WAS GIVEN BY THE SOC IETY TO ITS MEMBERS/EXECUTIVES OF THE SOCIETY FOR CONSTRUCTION OF PROPERTY AND THE SAME WAS ADJUSTED AGAINST FUTURE RENT OF THE PROPER TIES FROM THE MEMBERS/EXECUTIVES OF THE SOCIETY CANNOT BE DISBEL IEVED. THE OTHER CONTENTION OF ASSESSEE THAT IT HAS TAKEN THE PROPE RTY ALONG WITH OPEN LAND FOR RUNNING ITS EDUCATIONAL INSTITUTION AND MEMBERS /EXECUTIVES OF THE SOCIETY HAVE NO RIGHT TO RECOVER THE SAME FROM THE ASSESSEE-SOCIETY TILL IT RUNS ITS EDUCATIONAL INSTITUTIONS CANNOT BE DISCARD ED IN THE ABSENCE OF ANY EVIDENCE BROUGHT BY THE REVENUE CONTRARY TO IT. HA D IT BEEN PROVED THAT ASSESSEE HAD GIVEN SUBSTANTIAL AMOUNT TO ITS MEMBER S/EXECUTIVES OF SOCIETY FOR CONSTRUCTION OF BUILDING AND THAT BUILD ING WAS NOT TAKEN BY ASSESSEE-SOCIETY OR TAKEN ON RENT AT EXORBITANT RAT E ONE CAN UNDERSTAND THAT THERE IS DIVERSION OF FUNDS OF THE SOCIETY TO ITS MEMBERS/EXECUTIVES OF THE SOCIETY FOR THEIR BENEFIT. BUT WHEN THE PROPER TY WAS TAKEN ON RENT LESSER THAN PREVAILING RENT BY THE SOCIETY FOR RUNN ING EDUCATIONAL INSTITUTIONS FOR A LONGER PERIOD AND THE MEMBERS/EXECUTIVES HAVE NO RIGHT TO TAKE IT BACK IT CANNOT BE SAID THAT THERE WAS DIVERSION OF FUNDS BECAUSE ULTIMATE USE OF PROPERTY WAS FOR EDUCATIONAL PURPOSES. ITA NOS. 72 TO 77/BANG/2010 PAGE 22 OF 23 29. SO FAR AS MESS RECEIPTS ARE CONCERNED NOTHING HAS BEEN BROUGHT ON RECORD THAT MESS WAS SET UP FOR PUBLIC USE. ASSESS EE IS RUNNING VARIOUS EDUCATIONAL INSTITUTIONS WHERE HOSTELS HAVE BEEN PR OVIDED FOR STUDENTS AND HOSTEL CANNOT RUN WITHOUT PROVIDING MESS. THEREFOR E RECEIPT OF MESS FEES CANNOT DISENTITLE THE ASSESSEE FOR CLAIMING EXEMPTI ON U/S. 10(22) OR 11 OF THE ACT. 30. SO FAR AS CAPITATION FEES ARE CONCERNED WE FIN D NO EVIDENCE ON RECORD WHICH CAN SUGGEST THAT ASSESSEE HAS RECEIVED CAPITATION FEES OVER AND ABOVE THE FEES PRESCRIBED BY THE STATE OF KARNA TAKA OR OTHER AGENCIES. IT WAS SIMPLY A BALD ALLEGATION THAT ASSESSEE HAS B EEN RECEIVING CAPITATION FEES FROM THE STUDENTS ON ADMISSION BUT NO EVIDENC E WAS BROUGHT ON RECORD. THEREFORE WE ARE UNABLE TO ACCEPT THE CO NTENTION OF REVENUE THAT EXEMPTION U/S. 10(22) & 11 CAN BE DENIED AS THE ASS ESSEE HAS RECEIVED CAPITATION FEES IN VIOLATION OF PROVISIONS OF KARNA TAKA EDUCATIONAL INSTITUTIONS (PROHIBITION OF CAPITATION FEES) ACT 1984. THOUGH THESE ASPECTS WERE ALREADY EXAMINED BY THE TRIBUNAL ON VA RIOUS OCCASIONS BUT WE HAVE AGAIN EXAMINED THESE ASPECTS IN THE LIGHT O F EVIDENCE PLACED BEFORE THE LOWER AUTHORITIES AND BEFORE US AND WE F IND THAT REVENUE HAS FAILED TO BRING ANY EVIDENCE ON RECORD TO ESTABLISH THAT THERE IS DIVERSION OF FUNDS OF THE SOCIETY TO ITS MEMBERS FOR THEIR BENEF IT OR ANY CAPITATION FEES HAS BEEN RECEIVED BY THE ASSESSEE. THEREFORE WE D O NOT FIND OURSELVES IN AGREEMENT WITH THE ORDER OF CIT(APPEALS) AND WE ACC ORDINGLY SET ASIDE HIS ITA NOS. 72 TO 77/BANG/2010 PAGE 23 OF 23 ORDER AND DIRECT THE AO TO ALLOW BENEFIT OF SECTION 10(22) AND 11 OF THE ACT TO THE ASSESSEE-SOCIETY. 31. IN THE RESULT ALL THE APPEALS OF ASSESSEE ARE ALLOWED. PRONOUNCED IN THE OPEN COURT ON THIS 31 ST DAY OF AUGUST 2017. SD/- SD/- ( JASON P. BOAZ ) (SUNIL KUMAR Y ADAV ) ACCOUNTANT MEMBER JUDIC IAL MEMBER BANGALORE DATED THE 31 ST AUGUST 2017. / D ESAI S MURTHY / COPY TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(A) 5. DR ITAT BANGALORE. 6. GUARD FILE BY ORDER SENIOR PRIVATE SECRETARY ITAT BANGALORE.