Income Tax Appellate Tribunal - Hyderabad
Andhra Mahila Sabha, Hyderabad vs Department Of Income Tax on 3 July, 2012
IN THE INCOME TAX APPELLATE TRIBUNAL
HYDERABAD BENCH 'A', HYDERABAD
BEFORE SHRI CHANDRA POOJARI, ACCOUNTANT MEMBER and
SHRI SAKTIJIT DEY, JUDICIAL MEMBER
ITA No. 437/Hyd/2012
Assessment year 2007-08
Asst. Director of Income-tax Vs. M/s. Andhra Mahila Sabha
(Exemptions)-I, Hyderabad
Hyderabad PAN: AAATA4287B
Appellant Respondent
Appellant by: Shri V. Srinivas
Respondent by: Shri M.V. Anil Kumar
Date of hearing: 03.07.2012
Date of pronouncement: 18.07.2012
ORDER
PER CHANDRA POOJARI, AM:
This appeal by the Revenue is directed against the order of the CIT(A)-IV, Hyderabad dated 19.12.2011 for assessment year 2007-08.
2. The Revenue raised the following grounds of appeal:
1. The order of the learned CIT (Appeals) is not acceptable as it is erroneous both in law and facts.
2. The Id. CIT(A) ought to have appreciated the fact that obtaining approval of the prescribed authority is mandatory as per the plain meaning of the provisions of Sec. 10(23C)(vi) of the IT Act.
3. Under Rule 2CA of the IT Rules and sub-clause (vi) of the 23C of Sec. 10 of the IT Act, any University or Educational Institution whose aggregate annual receipts exceed one crore, approval has to be obtained from the prescribed authority for claiming exemption.
4. Though the alternative claim u/s. 11 was allowed by the Hon'ble ITAT, Hyderabad in the case of St. Theresa's Convent Society, followed by in many cases including the recent decision in ITA No. 2 ITA No. 437/Hyd/2012 M/s. Andhra Mahila Sbha =================== 1289/Hyd/l0 to 15, Others in Ravi Rishi Educational Society group of cases with due respect to the decision of the Hon'ble ITAT. Hyderabad and the Department has not accepted the decision of the Hon'ble ITAT and preferred appeal before the Hon'ble AP High Court.
5. The Id. CIT(A) erred in holding that the assessee is entitled to the exemption u/s 11 of the IT Act, whereas there is clear violation of the provision of 13(l)(c) r.w.s. 13(3)(a) of the IT Act.
6. In a similar issue in the case of Villages in Partnership for the AY 2002-03, the salary paid to the members was disallowed u/s. 13(2) of the IT Act. The decision of the learned CIT(A) to allow relief to the assessee was not accepted and the Department contested before the Hon'ble ITAT. The Hon'ble' ITAT, Hyderabad confirmed the said order of the Id.
CIT(A). With due respect to the decision of the Hon'ble ITAT, the Department has filed an appeal before the Hon'ble High Court of AP, which is pending.
7. The Id. CIT(A) failed to appreciate that the assessee-
society is not registered as required u/s. 43(1) of the AP Charitable & Hindu Religious Institutions & Endowments Act, and as such, not entitled for exemption in view of the ratio laid down by the Hon'ble Supreme Court in the case of Biharilal Jaiswal & Others (217 ITR 746 SC).
8. From the observations of the Ld. CIT(A) made in para 10 of his order that the Assessing Officer is directed to consider the appellant eligible for exemption u/s. 11, subject to the fulfilment of the conditions laid down in Sec. 11 to 13 of the Act, it shows the Ld. CIT(A) has set aside the assessment on that issue to the file of the Assessing Officer, when he has no power to set aside an assessment order under provisions of the Act.
3. After hearing both the parties, we are of the opinion that similar issue came before this Tribunal in assessee's own case for A.Y. 2005-06 3 ITA No. 437/Hyd/2012 M/s. Andhra Mahila Sbha =================== in ITA No. 1729/Hyd/2008. The Tribunal vide order dated 23rd August, 2010 set aside the entire issue to the file of the Assessing Officer for fresh consideration by holding in paras 3 and 4 as follows:
3. Similar issue has been considered by this Tribunal in the case of M/s Vasavi Academy & Education, Hyderabad in ITA No.1120/Hyd/2009, the Tribunal vide its order dated 29.1.2010 set aside the issue to the file of assessing officer for fresh consideration with the following directions:
"We have heard both the parties and perused the material on record. The learned Authorized Representative for the assessee submitted that this issue covered in favour of the assessee by the order of the Hyderabad Bench 'A' of the Tribunal dated 15.4.2009 in assessee's own cases in ITA No.1133/Hyd/2006 for the assessment years 2003-04 and order dated 17.4.2009 in ITA No.1206/Hyd/2007 for the assessment year 2004-05. However, we find that the Constitutional Bench of Apex Court in the case of T.M.A. Pai Foundations and others Vs. State of Karnataka & Others (2002) 8 SCC 481 examined the issue of collection of capitation fees for the admission of students over and above fees prescribed by the private institution and held that the institution which are collecting capitation fees for admission of students over and above the fees prescribed 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 capitation fee. The Apex Court, further observed that the concerned university and regulated body has to take action for withdrawal of the recognition in case it is found that the educational institution received any money over and above the fees prescribed fo the courses. Same view was taken by Apex Court in the case of Islamic Academy of Education and another Vs. State of Karnataka & another (2003) 6 SCC 697. If the donations were received compulsorily for admission of students, the assessee is not entitled for exemption either u/s 10(23C) or u/s 11 of the IT Act. Since the lower authorities were not examined the collection of capitation fees in this case, in our opinion, the matter requires to be examined by the assessing officer ITA No.1729/Hyd/2008 Andhra Mahila Sabha Trust Board, Hyderabad whether the assessee is collecting the capitation fees from students or not and it is necessary for bringing the actual facts on record for deciding the issue effectively. Similar view was taken by us in the case of M/s. Jamia Nizamia in ITA No.763/Hyd/2007 dated 30.6.2008, in the case of 4 ITA No. 437/Hyd/2012 M/s. Andhra Mahila Sbha =================== International Educational Academy, Hyderabad in ITA No.494/Hyd/2007 and 518/Hyd/2008 for the assessment years 2002- 2003 and 2004-05 and Sri Sai Sudhir Educational Society, Hyderabad in ITA No.999/Hyd/20-06 for the assessment year 2003-04. Therefore, we set aside the orders of the lower authorities and remit back the matter to the file of assessing officer with a direction to assessing officer that he shall reconsider the entire issue in the light of judgement of Supreme Court in the case of M/s Islamic Academy of Education & Another Vs. State of Karnataka and Another (supra), and in the cased of T.M.A. Pai Foundation and Others Vs. State of Karnataka and Others (Supra), and find out whether the assessee has received any money over and above the fees prescribed and thereafter decide the issue afresh in accordance with law after giving reasonable opportunity of hearing to the assessee . We make it clear that the assessee is not entitled for exemption either u/s 11 or u/s 10(23C) in case it collected any money by whatever name it is called i.e., donation, building fund, auditorium fund etc. etc., over and above the prescribed fee for admission of students.
4. Later, the above assessee filed a Miscellaneous petition in MA No. 58/Hyd/2010 and the same was disposed off by this Tribunal vide its order dated 4th June, 2010 by holding as follows:
The assessee has filed the present Miscellaneous Application under proviso to Rule 24 of the Income Tax Appellate Tribunal Rules, 1963 to recall the order of this Tribunal dated 29.01.2010 in ITA No. 1120/Hyd/2009.
2. The authorised representative for the assessee submitted that the issue dealt with by the Tribunal does not flow from grounds of appeal. There was no ground raised by the department relating to collection of Capitation Fee. There are no facts on record relating to the issue dealt with by the Tribunal. He submitted that as per the judgement in the case of Jeypore Timber & Veneer Mills (P) Ltd., (137 ITR 415) (Gauhati HC), the provisions of Sec. 254(1) is both enabling and disabling provision. He drew our attention to the said case law wherein it was observed that:
"The power of the Tribunal to remand a case has been put beyond any shadow of doubt in r. 28 of the IT Act (Appellate Tribunal) Rules, 1963. The Tribunal must form an opinion judiciously and thereafter it can exercise the power of remand. A detailed reason may not be given in 5 ITA No. 437/Hyd/2012 M/s. Andhra Mahila Sbha =================== the decision. The exact nature of the remand order to be passed in a given case is a matter within the absolute discretion of the Tribunal, but the power being judicial, it must be exercised judiciously, according to rule and not according to humour, the order must be legal and regular, disciplined as opposed to capricious. A capricious or impetuous order of remand is an abuse of the discretionary power conferred on the ITA No. 1729/Hyd/2008 Andhra Mahila Sabha Trust Board, Hyderabad Tribunal. When such a discretionary order is made by a Tribunal, a high powered authority, the presumption is that it was a disciplined and responsible exercise of power. The grounds of such exercise of power may appeal either from the order or the reasoning of the Tribunal in the decision rendered by it or, in an appropriate case, implicitly from the decision rendered by it in the background of the contentions raised before it."
3. According to the learned counsel for the assessee, the Tribunal exceeds the jurisdiction vested with it. He submitted that the Revenue has not raised any ground with regard to collection of Capitation Fee or any such other matte. Nor was any evidence collected in this regard by the Revenue and consequently there was no scope even to raise additional ground in this regard. He submitted that the order of the Tribunal indirectly resulted in giving the direction for enhancement of assessment which shall ought have been avoided.
4. On the other hand, the departmental representative submitted that the issue before us in the assessment year under consideration is whether the assessee entitled for exemption u/s 11 & 12 or 10(23C) or not. The issue of collection of capitation fee is very vital issue as per the judgement of the Hon'ble Supreme Court which was relied by the Tribunal while deciding the appeal. He submitted that as per judgement of the Hon'ble Supreme Court as relied by the Tribunal, if assessee collected the capital fee, then does not entitle for any exemptions. He submitted that when the CIT(A) decide the case without bringing the proper facts on record, the Tribunal is not precluded from set aside the issue to the file of assessing officer for fresh consideration after bringing the entire facts on record. He relied on the judgements:
1. Kapurchand Shrimal Vs. CIT (AP) (131 ITR 451) wherein it was held that the facts required for examining the claim were before the Tribunal. The absence of an appeal by the assessee against the order of the Commissioner, who had remanded the 6 ITA No. 437/Hyd/2012 M/s. Andhra Mahila Sbha =================== matter to the Income Tax Officer, did not in any way preclude the Tribunal from holding that the capital gain in the instant case was a long term capital gain, since such relief had in fact been sought by the assessee before the assessing officer.
2. CIT Vs. Smt. S. Vijayalakshmi (242 ITR 46) wherein it was held that an Appellate Authority has the jurisdiction as well as the duty to correct all errors in the proceedings under appeal and to issue, if necessary, appropriate directions to the authority against who decision the appeal is preferred to dispose of the whole or any part of the matter afresh, unless forbidden from doing so by statute.
5. Further, he submitted that Tribunal has taken conscious decision. It cannot be rectified according to the liking and disliking of the assessee's counsel. The Tribunal has no review power. He relied on the following judgement
1. CIT v. Ramesh Electric & Trading Co. (203 ITR 497) (Bom)
2. ITO Vs. ITAT & Other (229 ITR 651)
3. Salgaocar Mining Industries Ltd. Vs. DCIT (61 ITD 105)
4. Arun Kumar Srivastava Vs. ITO (63 ITD 50) (3rd Member) (Pune)
6. We have heard both the parties and perused the material available on record. The main grievance of the assessee's counsel is that the Tribunal gone beyond the jurisdiction vested with it. The Tribunal should not have set aside the order of the assessing officer by remand back the issue to the file of assessing officer for fresh consideration since there is no material on record so suggest the collection of capitation fee. The Tribunal by remand the issue back to the file of assessing officer caused injury to the assessee and the Tribunal should not have disturbed the order of the CIT(A). In our opinion, the power of the Tribunal u/s 254(1) are of widest amplitude. The word used in this section 254(1) 'thereon' of course, restrict the jurisdiction of the Tribunal to the subject matter of the appeal. The words 'pass such orders thereon as the Tribunal thinks fit' include all the powers (except possibly the power of enhancement' which are conferred upon the CIT(A). The only thing is that the Tribunal cannot assume powers which are inconsistent with the expressed provisions of the Act. However, it cannot be inferred that the Tribunal cannot interfere with order of the lower authorities which is defective or has not brought on record relevant facts, 7 ITA No. 437/Hyd/2012 M/s. Andhra Mahila Sbha =================== when there is an appeal or cross objections against that order. It should be noted that the power of the Tribunal must be confined to the issue arise in the appeal and it cannot travel outside the ambit of its jurisdiction. If the assessing officer made an error in not bringing facts on record and the judgement cannot be without examining the facts on record, then to rectify that error, the Tribunal cannot shut its eyes and deliver the judgements. If the Tribunal decides to remand taking a particular view of the case, but an alternative view or other views might exist for not remanding the case, the exercise of the power of the Tribunal should not be disturbed. If the effect of the order of remand is to be resulted in fair play of justice, the order should not be disturbed. Even in that event, the view expressed by the Tribunal is not correct, the assessee would always have its remedy as provided in the Act. The Tribunal cannot over look its own responsible position while delivering justice. It is incumbent on the part of the Tribunal to deliver justice in the best interest of both the parties. The Tribunal while deciding any appeal cannot treat the findings of the fact made by the CIT(A) as final while examining the issue, the Tribunal has to see both the questions on facts and in law. Merely because the ground of appeal starts with phrase 'whether on the facts and in the circumstances of the case' the Tribunal cannot decline to investigate the facts and come to the conclusions as to the correctness of the findings of the CIT(A). Further, even assuming that the ground in appeal was of limited nature, the question still remains as to whether on the basis of the findings made by the CIT(A), the claim of assessee could be allowed u/s 11 & 12 or 10(23C). In this case, of the assessee, the only requirement is that the Tribunal should not act on any information without putting the same to the party and for the purpose, in view of the judgement of the Hon'ble Supreme Court in the case of T M A Pai Foundations and Others Vs. State of Karnataka & Others (2002) 8 SCC 481 and in the case of Islamic Academy of Education Vs. State of Karnataka & another (2003) 6 SCC 697, the Tribunal set aside the issue to the file of assessing officer for fresh consideration. By this act of the Tribunal, we cannot say that the Tribunal travel beyond the power vested in the Tribunal, by the statute in respect of the appeal preferred before it. In our opinion it is open to the tribunal to interfere with the jurisdictional discretion by the lower authorities and substitute the same by its own discretion. When it does so, in proper exercise of its power u/s 254 by taking into consideration all the relevant facts into consideration, and in deferring from the authorities below and exercising its own discretion, the 8 ITA No. 437/Hyd/2012 M/s. Andhra Mahila Sbha =================== Tribunal cannot be held to act arbitrary or capriciously. In our opinion, the Tribunal has not committed any error in remanding the issue back to the file of assessing officer and the Tribunal is the final fact finding body and the decision of the Tribunal has not to be scrutinized sentence by sentence merely to find out whether all the facts have been set out in detail by the Tribunal or whether some incidental fact which appears on the record has not been noticed by the Tribunal in its judgement. If the court, on a fair reading of the judgement of the Tribunal, finds that it has taken into account all relevant material and has not taken into account any irrelevant material in basing its conclusions, the decision of the Tribunal is not liable to be interfered with, unless, of course, the conclusions arrived at by the Tribunal are perverse.
6.1. It is not necessary for he Tribunal to state in its judgement specifically or in express words that it has taken into account the cumulative effect of the circumstances or has considered the totality of the facts as if that were a magic formula; if the judgement of the Tribunal shows that it has in fact done so there is no reason to interfere with the decision of the Tribunal.
7. Accordingly we do not find any necessity to recall the order of the Tribunal. The miscellaneous petition filed by the assessee stands dismissed."
4. The facts and circumstances in the assessment year under consideration are similar to that of the assessment year considered by the Tribunal on earlier occasion. Respectfully following the order of co- ordinate Bench of the Tribunal (cited supra), we are inclined to set aside the issue involved in this appeal to the file of the Assessing Officer on similar direction.
5. In the result, appeal of the Revenue is allowed for statistical purposes.
Order pronounced in the open court on 18th July, 2012.
Sd/- Sd/-
(SAKTIJIT DEY) (CHANDRA POOJARI)
JUDICIAL MEMBER ACCOUNTANT MEMBER
Hyderabad, dated the 18th July, 2012
9 ITA No. 437/Hyd/2012
M/s. Andhra Mahila Sbha
===================
Copy forwarded to:
1. Asst. Director of Income-tax (Exemptions)-I, 3rd Floor, Aayakar Bhavan, Basheerbagh, Hyderabad-500 004.
2. M/s. Andhra Mahila Sabha, 2-1-577, AMS Building, Vidyanagar, Hyderabad.
3. The CIT(A)-IV, Hyderabad
4. The Director of Income-tax (Exemptions), Hyderabad.
5. The DR - A Bench, ITAT, Hyderabad.
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