Income Tax Appellate Tribunal - Hyderabad
St.Martin'S Educational Society, ... vs Department Of Income Tax
IN THE INCOME TAX APPELLATE TRIBUNAL
HYDERABAD "A " BENCH, HYDERABAD
BEFORE CHANDRA POOJARI, ACCOUNTANT MEMBER AND
SMT. ASHA VIJAYARAGHAVAN, JUDICIAL MEMBER
ITA No. Asst. Appellant Respondent
Year
1440/Hyd/2011 2003-04 Astt Commissioner of M/s. Sri Venkata Sai
1441/Hyd/2011 2004-05 Income-tax Central Educational Society,
1442/Hyd/2011 2006-07 Circle-I, Hyderabad . Hyderabad
(PAN AABTS 9158 K)
1418/Hyd/2011 2009-10 Astt Commissioner of M/s. KMR Educational
Income-tax Central Society, Hyderabad
Circle-I, Hyderabad .
(PAN AABIK 3012 F)
1595/Hyd/2011 2006-07 Astt Commissioner of M/s. Malla Reddy
1596/Hyd/2011 2007-08 Income-tax Central Educational Society,
1597/Hyd/2011 2008-09 Circle-I, Hyderabad . Secunderabad
1598/Hyd/2011 2009-10 (PAN AABTM 7610 H)
1586/Hyd/2011 2006-07 M/s. Malla Reddy Astt Commissioner of
Educational Society, Income-tax Central
Secunderabad Circle-I, Hyderabad .
(PAN AABTM 7610 H)
1587/Hyd/2011 2007-08 M/s. Chandramma Astt Commissioner of
1588/Hyd/2011 2008-09 Educational Society, Income-tax Central
1589/Hyd/2011 2009-10 Secunderabad. Circle-I, Hyderabad .
(PAN AAATC 8090 J)
1599/Hyd/2011 2006-07 Astt Commissioner of M/s. Chandramma
1600/Hyd/2011 2007-08 Income-tax Central Educational Society,
1601/Hyd/2011 2008-09 Circle-I, Hyderabad . Secunderabad
1602/Hyd/2011 2009-10
(PAN AAATC 8090 J)
1583/Hyd/2011 2003-04 St. Martin's Education- Astt Commissioner of
1584/Hyd/2011 2004-05 al Society, Hyderabad Income-tax Central
Circle-I, Hyderabad
(PAN AADTS 0176 N)
2 ITA No.1440/Hyd/2011 & Others
Sri Venkata Sai Educational
Society, Hyderabad and Others.
1603/Hyd/2011 2003-04 Astt Commissioner of St. Martin's Education-
1604/Hyd/2011 2004-05 Income-tax Central al Society, Hyderabad
1605/Hyd/2011 2006-07 Circle-I, Hyderabad
1606/Hyd/2011 2007-08
1607/Hyd/2011 2008-09 (PAN AADTS 0176 N)
1608/Hyd/2011 2009-10
1657/Hyd/2011 2005-06
1585/Hyd/2011 2004-05 M/s. CMR Educational Astt Commissioner of
Society, Hyderabad Income-tax Central
Circle-I, Hyderabad
(PAN AAATC 4041 P)
1609/Hyd/2011 2004-05
1610/Hyd/2011 2005-06 Astt Commissioner of M/s. CMR Educational
1611/Hyd/2011 2006-07 Income-tax Central Society, Hyderabad
1612/Hyd/2011 2007-08 Circle-I, Hyderabad
1613/Hyd/2011 2008-09 (PAN AAATC 4041 P)
1614/Hyd/2011 2009-10
1615/Hyd/2011 2003-04
Assessees by : S/Shri V.Raghavendra Rao &
S.Rama Rao
Department by : Shri V.Srinivas
Date of Hearing 8 .2.2012
Date of Pronouncement 09.04.2012
ORDER
Per Asha Vijayaraghavan, Judicial Member:
This a bunch of 33 appeals concerning six educational institutions. Since common issues are involved, all these appeals are being disposed off with this consolidated order for the same of convenience.
REVENUE'S APPEALS CONCERNING SRI VENKATA SAI EDUCATIONAL SOCIETY, HYDERABAD:
ITA No.1440/Hyd/201 1 Assessment year 2003-04 ITA No.1441/Hyd/2011 Assessment year 2003-04 ITA No.1442/Hyd/2011 Assessment year 2003-042. Let us first take up for consideration the appeals concerning Sri Venkata Sai Educational Society, which are directed against common order 3 ITA No.1440/Hyd/2011 & Others Sri Venkata Sai Educational Society, Hyderabad and Others.
of the CIT(A)-I, Hyderabad dated 8.6.2011 for the assessment years 2003- 04, 2004-05 and 2006-07.
3. Though common issues are involved in these three appeals, assessee raised elaborate grounds in the appeal for assessment year 2003- 04, whereas common concise grounds in the appeals for the assessment years 2004-05 and 2006-07, and as such, we prefer to reproduce hereunder, the grounds taken in the appeal for the assessment year 2004- 05, which read as under-
"1. Whether the CIT(A) erred in appreciating the fact that obtaining approval of the prescribed authority is mandatory as per the plain meaning of the provisions of S.210(23C)(vi) fo the I.T. Act and it does not call for any interpretation.
2. Whether the CIT(A) erred in appreciating the fact that when gross receipts exceed Rs.1 crore, approval u/s. 10(23C)(vi) is mandatory and the assessee is not entitled for exemption u/s. 11 of the I.T. Act.
3. Whether the CIT(A) erred in appreciating the fact that section 10(23c) as such is not a replacement of section 10(22) and S.10(22A) but only sub-clauses (iiiad) and (iiiac) of the erstwhile Section 10(22) and 10(22A) respectively.
4. Whether the CIT(A) erred in appreciating the fact that is was section 10(22) that provided for exemption of the educational income of the trusts, societies etc., and not section 11.
5. Whether the CIT(A) erred in appreciating the fact that the purchase of capital asset that could be used to promote the objectives of the systems run by the trust is allowed as application of income. Therefore the depreciation is not allowable on the capital asset where entire cost of acquisition is either written off in the first year itself or the cost of acquisition is treated as application of income as has been held in ruling of H'ble Supreme Court of India in the case of Escorts Ltd., and another V/s. Union of India (199 ITR 44)."
4. We have heard both the parties and perused the material on record. We have gone through the written submissions filed by the Learned Departmental Representative, besides the decisions of the Tribunal in similar matters filed before us. The main issue involved in this appeal relates to assessee's claim for exemption of its income under S.11 of the Act. We find that this main issue involved in the above grounds is covered by the order of the Hyderabad Bench 'A' of the Tribunal dated 15.4.2009 in the cases of 4 ITA No.1440/Hyd/2011 & Others Sri Venkata Sai Educational Society, Hyderabad and Others.
Vasavi Academy of Education, Hyderabad in ITA No.1133/Hyd/2006 for the assessment year 2003-04 and order dated 17.4.2009 in ITA No.1206/Hyd/2007 for the assessment year 2004-05, wherein it was held that if donations are received compulsorily for the admission of students, by whatever name it may be called, i.e. donation, building fund, auditorium fund, etc. over and above the prescribed fee, from the students, the assessee would not be entitled for exemption either under S.10(23C) or under S.11 of the Act. Further, 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 for 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 have not examined the collection of capitation fees in this case, in our opinion, the matter requires to be examined by the assessing officer 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 International 5 ITA No.1440/Hyd/2011 & Others Sri Venkata Sai Educational Society, Hyderabad and Others.
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 judgment 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 u/s 11 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.
5. Before parting we may note that the learned counsel for the assessee submitted before us that only for quantification of the exemption under S.11, the issue may be set aside and not otherwise. On this issue, we find it appropriate to mention herein that the Hon'ble jurisdictional High Court in the case of S.A. Rahim and Others V/s. CIT(333 ITR 379), held placing reliance on the earlier judgment of jurisdictional High Court in the case of CIT V/s. Krishna Mining Co. (107 ITR 702), that the Tribunal can go into the only issue raised before it and not on other issues. It was observed by the Hon'ble High Court that the expression 'such order as it thinks fit' in S.254(1) was wide enough to include the power of remand to the authority, competent to make the requisite order in accordance with law, even though the Tribunal could not have made an order enhancing the assessment. However, the Tribunal is not supposed to make out a third case arbitrarily.
6 ITA No.1440/Hyd/2011 & OthersSri Venkata Sai Educational Society, Hyderabad and Others.
We have carefully gone through this judgment. This judgment is delivered in the context, wherein the issue is whether the sale transactions were genuine or not and not relating to the quantum of sale price. However, the Tribunal on appeal reduced the sale price to half of the amount claimed by the assessee, instead of deciding on the genuineness of the transaction, without any documentary evidence. In that circumstance, the Hon'ble High Court has held as above. In the present case, the issue is relating to allowability of exemption under S.11 or under S.10(23C), and while adjudicating on this issue one has to see the eligibility of claiming of deduction under S.11. This aspect has not been proper addressed by the CIT(A) while granting the alternative claim of the assessee for exemption under S.11. Since the Assessing Officer has no occasion to examine the claim of the assessee under S.11, we have given suitable directions, in the preceding para, to the Assessing Officer for verification. That being so, the ratio laid down by the jurisdictional High Court in the case noted above, has no application to the facts of the present case.
6. The next issue involved in these appeal relates to the addition made on account of depreciation claimed by the assessee. The Assessing Officer has observed that the trust had claimed expenditure on account of depreciation. He was of the view that since the purchase of capital asset used to promote the objective of the trust is allowed as application of income, depreciation is not allowable on capital asset where the entire cost of acquisition is either written off in the first year itself or the cost of acquisition is treated as application of income. The Assessing Officer has drawn support from the decision of the Apex Court in the case of Escorts Ltd. (199 ITR 44). The CIT(A), on appeal, has allowed the claim of the assessee. Against the order of the CIT(A), Revenue is in appeal before us for all the years under consideration.
7 ITA No.1440/Hyd/2011 & OthersSri Venkata Sai Educational Society, Hyderabad and Others.
7. We heard both the parties on this issue. Similar issue came up for consideration before the Jaipur Bench of this Tribunal in the case of Jaipur Stock Exchange (108 TTJ 393)(Jp), wherein it was held that depreciation on fixed assets is an allowable deduction, which is necessary to arrive at the income available for application to charitable purpose. Further, in the case of Mahila Sidh Nirman Yojna V/s. IAC (50 ITD 472), it has been held by the Delhi Bench of the Tribunal that merely because entire value of asset is allowable as expenditure under S.11, it is not sufficient to deny claim for depreciation unless the value of asset has been actually allowed as expenditure. If not so allowed in the year of acquisition, assessee will be entitled to depreciation. Further, it was held by the Cochin Bench of the Tribunal in the case of Dy. CIT V/s. Adi Sankara Trust (46 SOT 230) that where an assessee trust is claiming depreciation on assets where cost of the relevant assets stood claimed as an application of income for a preceding and/or the current year under S.11(1), its claim under S.32(1)is eligible only in respect of business assets and where entire cost of the asset stands allowed by way of application of income under S.11(1), the depreciation claimed by the assessee under S.32(1) is not allowable as the trust is not undertaking any business activity. In view of the above, the Assessing Officer is directed to verify in respect of each asset on which depreciation claimed, whether the value of such asset was in fact allowed under S.11, and if it was so allowed, the depreciation would not be allowed in respect of such asset. Only if the value of the asset was not allowed as expenditure under S.11, the Assessing Officer is required to allow depreciation thereon, as per the rate applicable to those assets, as held in the case of Mahila Sidh Nirman Yojna, cited supra. This issue raised by the Revenue is set aside to the file of the Assessing Officer for fresh consideration, in the light of the above observations. The Assessing Officer shall accordingly redecide the issue in accordance with law and after giving reasonable opportunity of hearing to the assessee.
8 ITA No.1440/Hyd/2011 & OthersSri Venkata Sai Educational Society, Hyderabad and Others.
8. In the result, Revenue's appeals are allowed for statistical purposes.
Revenue's appeal concerning KMR Educational Society:
ITA No.1418/Hyd/2011 Assessment year 2009-109. Now, we may take up the Revenue's appeal, ITA No.1418/Hyd/2011, concerning KMR Educational Society, which is directed against the order fo the CIT(A)-I, Hyderabad dated 16.5.2011 for the assessment year 2009-10.
10. First issue involved in this appeal is whether recognition under S.10(23C) (vi) is mandatory when receipts exceed Rs.1 crore or whether alternative relief u/s. 11 is automatically available to assessee registered under S.12AA of the Act. We have dealt with this issue hereinabove, while dealing with the corresponding grounds of the Revenue in the appeals ITA Nos.1440 to1442/Hyd/2011 concerning Sri Venkata Sai Educational Society. For the detailed reasons discussed in that context, in paras 4 and 5 hereinabove, we set aside the impugned orders of the lower authorities in this case also 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 judgment 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 u/s 11 in case it collected any money by whatever name it is called i.e., 9 ITA No.1440/Hyd/2011 & Others Sri Venkata Sai Educational Society, Hyderabad and Others.
donation, building fund, auditorium fund etc. etc., over and above the prescribed fee for admission of students.
11. The next issue involved in this appeal relates to the addition made on account of depreciation claimed by the assessee. We have dealt with this issue hereinabove, while dealing with the corresponding grounds of the Revenue in the appeals ITA Nos.1440 to1442/Hyd/2011 concerning Sri Venkata Sai Educational Society. For the detailed reasons discussed in that context, in para 7 hereinabove, we set aside the impugned orders of the lower authorities on this issue and restore the matter to the file of the assessing officer for fresh consideration. The Assessing Officer is directed to verify in respect of each asset on which depreciation claimed, whether the value of such asset was in fact allowed under S.11, and if it was so allowed, the depreciation would not be allowed in respect of such asset. Only if the value of the asset was not allowed as expenditure under S.11, the Assessing Officer is required to allow depreciation thereon, as per the rate applicable to those assets, as held in the case of Mahila Sidh Nirman Yojna, cited supra. This issue raised by the Revenue is set aside to the file of the Assessing Officer for fresh consideration, in the light of the above observations. The Assessing Officer shall accordingly redecide the issue in accordance with law and after giving reasonable opportunity of hearing to the assessee.
12. In the result, this appeal of the Revenue, is allowed for statistical purposes.
APPEALS CONCERNING MALLAREDDY EDUCATIONAL SOCIETY Revenue's Appeals:
ITA No.1595/Hyd/201 1 Assessment year 2006-07 ITA No.1596/Hyd/2011 Assessment year 2007-08 ITA No.1597/Hyd/2011 Assessment year 2008-09 ITA No.1598/Hyd/2011 Assessment year 2009-10AND 10 ITA No.1440/Hyd/2011 & Others Sri Venkata Sai Educational Society, Hyderabad and Others.
Assessee's Appeal:ITA No.1586/Hyd/2011 Assessment year 2006-07
13. Now, we may take up the five appeals concerning Mallareddy Educational Society. Out of them, four are by the Revenue and one is by the assessee, there being cross-appeals for assessment year 2006-07. All these appeals are directed against similar but separate orders of the CIT(A)-I, Hyderabad, all dated 4.7.2011 Revenue's appeals:
14. The only first issue involved in appeals ITA No.1595/Hyd/2011 for assessment year 2006-07 and ITA No.1596/Hyd/2011 for assessment year 2007-08 of the Revenue is whether recognition under S.10(23C) (vi) is mandatory when receipts exceed Rs.1 crore or whether alternative relief u/s. 11 is automatically available to assessee registered under S.12AA of the Act. We have dealt with this issue hereinabove, while dealing with the corresponding grounds of the Revenue in the appeals ITA Nos.1440 to1442/Hyd/2011 concerning Sri Venkata Sai Educational Society. For the detailed reasons discussed in that context, in paras 4 and 5 hereinabove, we set aside the impugned orders of the lower authorities in this case also for all the years under appeal 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 judgment 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 u/s 11 in case it collected any money by 11 ITA No.1440/Hyd/2011 & Others Sri Venkata Sai Educational Society, Hyderabad and Others.
whatever name it is called i.e., donation, building fund, auditorium fund etc. etc., over and above the prescribed fee for admission of students.
15. The next issue involved in the appeals for the assessment year 2006-07 and 2007-08, and the only issue involved in the appeals ITA Nos.1508 and 1598/Hyd/2011 for assessment years 2008-09 and 2009-10, relates to the additions made on account of depreciation claimed by the assessee. We have dealt with this issue hereinabove, while dealing with the corresponding grounds of the Revenue in the appeals ITA Nos.1440 to1442/Hyd/2011 concerning Sri Venkata Sai Educational Society. For the detailed reasons discussed in that context, in para 7 hereinabove, we set aside the orders of the lower authorities on this issue impugned in these appeals also and restore the matter to the file of the assessing officer for fresh consideration. The Assessing Officer is directed to verify in respect of each asset on which depreciation claimed, whether the value of such asset was in fact allowed under S.11, and if it was so allowed, the depreciation would not be allowed in respect of such asset. Only if the value of the asset was not allowed as expenditure under S.11, the Assessing Officer is required to allow depreciation thereon, as per the rate applicable to those assets, as held in the case of Mahila Sidh Nirman Yojna, cited supra. This issue raised by the Revenue in all these appeals, is set aside to the file of the Assessing Officer for fresh consideration, in the light of the above observations. The Assessing Officer shall accordingly redecide the issue in accordance with law and after giving reasonable opportunity of hearing to the assessee.
16. In the result, these appeal of the Revenue, are allowed for statistical purposes.
Assessee's Appeal: ITA No.1586/Hyd/2011 12 ITA No.1440/Hyd/2011 & Others Sri Venkata Sai Educational Society, Hyderabad and Others.
17. The only issue involved in this appeal relates to assessment of contributions received by the society towards corpus of the trust, and effective ground taken by the assessee in this behalf reads as follows-.
"1. The order of the Commissioner of Income-tax (Appeals) is erroneous to the extent it is prejudicial to the appellant.
2. The learned Commissioner of Income-tax (Appeals) erred in confirming the action of the Assessing Officer in treating the corpus received of Rs.2,40,000/- as the income of the appellant. The learned Commissioner of Income-tax (Appeals) ought to have considered the fact that the said amount was utilized for the purpose of objective of the society and therefore, the receipt is exempt from tax."
18. We heard both the parties and perused the material on record. It is evident from the impugned orders of the lower authorities that no details about the nature of contributions/donations or the details of the donors were filed alongwith the return of before the assessing officer or during the appellate proceedings. The assessee has failed to file any evidence to indicate that the donations were received with a specific direction from the donors that the donations should form part of the corpus of the assessee trust. When the assessee claimed a particular receipt as non-taxable, as observed by the CIT(A), onus is on the assessee to prove that the same is not taxable as per the provisions of the Act. Assessee in the instant case has not been able to prove that the contributions received by it are not in the nature of capitation fee collected from students/prospective students or their relatives in the guise of donations. In the absence of any evidence filed by the assessee in that behalf, the assessing officer treated the same as the income of the assessee, and the CIT(A) too confirmed the addition made by the assessing officer in that behalf. However, considering the totality of facts and circumstances of the case, we set aside the orders of the lower authorities on this issue, and restore the matter to the file of the assessing officer, with a direction to the assessing officer to give one more opportunity to the assessee to file necessary evidence before the assessing officer, to prove that the donations received by the assessee were 13 ITA No.1440/Hyd/2011 & Others Sri Venkata Sai Educational Society, Hyderabad and Others.
with a direction to form corpus of the assessee trust or that they are not in the nature of capitation fee received from students/prospective students or their relatives. The assessing officer shall thereafter decide this issue afresh in accordance with law and after giving reasonable opportunity of hearing to the assessee.
19. In the result, this appeal of the assessee is allowed for statistical purposes.
APPEALS CONCERNING CHANDRAMMA EDUCATIONAL SOCIETY, HYDERABAD.
Revenue's Appeals:
ITA No.1599/Hyd/201 1 Assessment year 2006-07 ITA No.1600/Hyd/2011 Assessment year 2007-08 ITA No.1601/Hyd/2011 Assessment year 2008-09 ITA No.1602/Hyd/2011 Assessment year 2009-10& Assessee's Appeal:ITA No.1587/Hyd/2011 Assessment year 2007-08 ITA No.1588/Hyd/2011 Assessment year 2008-09 ITA No.1589/Hyd/2011 Assessment year 2009-10
20. Now, we may take up the seven appeals concerning Chandramma Educational Society, Hyderabad. Out of them, four are by the Revenue and three are by the assessee, there being cross-appeals for assessment years 2007-08 to 2009-10. All these appeals are directed against a common order of the CIT(A)-I, Hyderabad dated 5.7.2011 Revenue's appeals:
21. The first issue involved in the appeals for assessment years 2007-08 to 2009-10, being ITA Nos. 1600 to 1602/Hyd/2011 respectively, is whether recognition under S.10(23C) (vi) is mandatory when receipts exceed Rs.1 crore or whether alternative relief u/s. 11 is automatically available to assessee registered under S.12AA of the Act. We have dealt 14 ITA No.1440/Hyd/2011 & Others Sri Venkata Sai Educational Society, Hyderabad and Others.
with this issue hereinabove, while dealing with the corresponding grounds of the Revenue in the appeals ITA Nos.1440 to1442/Hyd/2011 concerning Sri Venkata Sai Educational Society. For the detailed reasons discussed in that context, in paras 4 and 5 hereinabove, we set aside the impugned orders of the lower authorities in this case also for all the years under appeal 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 judgment 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 u/s 11 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.
22. The next issue involved in the appeals for the assessment year 2007-08 to 2009-10, and the only issue involved in the appeal ITA Nos.1599/Hyd/2011 for assessment year 2006-07 and 2009-10, relates to the additions made on account of depreciation claimed by the assessee. We have dealt with this issue hereinabove, while dealing with the corresponding grounds of the Revenue in the appeals ITA Nos.1440 to1442/Hyd/2011 concerning Sri Venkata Sai Educational Society. For the detailed reasons discussed in that context, in para 7 hereinabove, we set aside the orders of the lower authorities on this issue impugned in these appeals also and restore the matter to the file of the assessing officer for fresh consideration. The Assessing Officer is directed to verify in respect of each asset on which depreciation claimed, whether the value of such asset was in fact allowed 15 ITA No.1440/Hyd/2011 & Others Sri Venkata Sai Educational Society, Hyderabad and Others.
under S.11, and if it was so allowed, the depreciation would not be allowed in respect of such asset. Only if the value of the asset was not allowed as expenditure under S.11, the Assessing Officer is required to allow depreciation thereon, as per the rate applicable to those assets, as held in the case of Mahila Sidh Nirman Yojna, cited supra. This issue raised by the Revenue in all these appeals, is set aside to the file of the Assessing Officer for fresh consideration, in the light of the above observations. The Assessing Officer shall accordingly redecide the issue in accordance with law and after giving reasonable opportunity of hearing to the assessee.
23. In the result, these appeal of the Revenue, are allowed for statistical purposes.
Assessee's Appeals ITA No.1587 to 1589/Hyd/2011:
24. The only issue involved in these appeal relates to assessment of contributions received by the society towards corpus of the trust, and effective ground taken by the assessee in this behalf, as taken from appeal, ITA No.1587/Hyd/2011 for assessment year 2007-08 reads as follows- .
"1. The order of the Commissioner of Income-tax (Appeals) is erroneous to the extent it is prejudicial to the appellant.
2. The learned Commissioner of Income-tax (Appeals) erred in confirming the action of the Assessing Officer in treating the contributions received of Rs.55,58,000/- as the income of the appellant. The learned Commissioner of Income-tax (Appeals) ought to have considered the fact that the said amount was utilized for the purpose of objective of the society and therefore, the receipt is exempt from tax."
But for the amount mentioned in ground No.2 above, grounds of appeal are identical in the appeals for the other years as well, and the amounts mentioned in that ground are Rs.92,49,650 for assessment year 2008-09 and Rs.64,93,000 for assessment year 2009-10.
16 ITA No.1440/Hyd/2011 & OthersSri Venkata Sai Educational Society, Hyderabad and Others.
25. We heard both the parties and perused the material on record. We have dealt with identical issue while dealing with the appeal of the assessee in the case of Malla Reddy Educational Society, viz. ITA No.1586/Hyd/2011, in para 18 hereinabove. The circumstances leading to the additions made by the assessing officer, contested in these appeals, and also the observations of the CIT(A) in the impugned order are similar to those noted in para 18 hereinabove. In this view of the matter, for the detailed reasons discussed in para 18 hereinabove, we set aside the impugned orders of the lower authorities on this issue, and restore the mater to the file of the assessing officer with a direction to give one more opportunity to the assessee to file necessary evidence before him, to prove that the donations received were with a direction to form corpus of the assessee trust and that they are not in the nature of capitation fee received from students/prospective students or their relatives. The assessing officer shall thereafter decide this issue afresh in accordance with law and after giving reasonable opportunity of hearing to the assessee.
26. In the result, all the three appeals of the assessee are allowed for statistical purposes.
APPEALS CONCERNING ST. MARTIN'S EDUCATIONAL SOCIETY, HYDERABAD.
Revenue's Appeals:
ITA No.1603/Hyd/201 1 Assessment year 2003-04 ITA No.1604/Hyd/2011 Assessment year 2004-05 ITA No.1605/Hyd/2011 Assessment year 2006-07 ITA No.1606/Hyd/2011 Assessment year 2007-08 ITA No.1607/Hyd/2011 Assessment year 2008-09 ITA No.1608/Hyd/2011 Assessment year 2009-10 ITA No.1657/Hyd/2011 Assessment year 2005-06AND 17 ITA No.1440/Hyd/2011 & Others Sri Venkata Sai Educational Society, Hyderabad and Others.
Assessee's Appeal:ITA No.1583/Hyd/2011 Assessment year 2003-04 ITA No.1584/Hyd/2011 Assessment year 2004-05
27. Now, we may take up the nine appeals concerning St. Martin Educational Society, Hyderabad. Out of them, seven are by the Revenue and two are by the assessee, there being cross-appeals for assessment years 2003-04 and 2004-05. These appeals are directed against two common orders of the CIT(A)-I, Hyderabad both dated 1.7.2011 for the assessment year 2003-04 and 2004-05 and 2006-07 to 2009-10; and one order of that very date for the assessment year 2005-06.
Revenue's appeals:
28. The first issue involved in all the appeals of the Revenue, except ITA No.1657/Hyd/2011 for assessment year 2005-06, is whether recognition under S.10(23C) (vi) is mandatory when receipts exceed Rs.1 crore or whether alternative relief u/s. 11 is automatically available to assessee registered under S.12AA of the Act. We have dealt with this issue hereinabove, while dealing with the corresponding grounds of the Revenue in the appeals ITA Nos.1440 to1442/Hyd/2011 concerning Sri Venkata Sai Educational Society. For the detailed reasons discussed in that context, in paras 4 and 5 hereinabove, we set aside the impugned orders of the lower authorities in this case also for all the years under appeal 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 judgment 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 18 ITA No.1440/Hyd/2011 & Others Sri Venkata Sai Educational Society, Hyderabad and Others.
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 u/s 11 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.
29. The only issue involved in ITA No.1657/Hyd/2011 for assessment year 2005-06 and the other issue involved in the remaining appeals of the Revenue, relates to the additions made on account of depreciation claimed by the assessee. We have dealt with this issue hereinabove, while dealing with the corresponding grounds of the Revenue in the appeals ITA Nos.1440 to1442/Hyd/2011 concerning Sri Venkata Sai Educational Society. For the detailed reasons discussed in that context, in para 7 hereinabove, we set aside the orders of the lower authorities on this issue impugned in these appeals also and restore the matter to the file of the assessing officer for fresh consideration. The Assessing Officer is directed to verify in respect of each asset on which depreciation claimed, whether the value of such asset was in fact allowed under S.11, and if it was so allowed, the depreciation would not be allowed in respect of such asset. Only if the value of the asset was not allowed as expenditure under S.11, the Assessing Officer is required to allow depreciation thereon, as per the rate applicable to those assets, as held in the case of Mahila Sidh Nirman Yojna, cited supra. This issue raised by the Revenue in all these appeals, is set aside to the file of the Assessing Officer for fresh consideration, in the light of the above observations. The Assessing Officer shall accordingly redecide the issue in accordance with law and after giving reasonable opportunity of hearing to the assessee.
30. In the result, these appeal of the Revenue, are allowed for statistical purposes.
19 ITA No.1440/Hyd/2011 & OthersSri Venkata Sai Educational Society, Hyderabad and Others.
Assessee's Appeals
31. The only issue involved in the two appeals of the assessee relating to assessment years 2003-04 and 2004-05, being ITA Nos.1583 and 1584/Hyd/2011, relates to assessment of contributions received by the assessee society towards corpus of the trust, and effective grounds taken by the assessee in this behalf, as taken from appeal, ITA No.1583/Hyd/2011 for assessment year 2003-04 reads as follows-.
"1. The order of the Commissioner of Income-tax (Appeals) is erroneous to the extent it is prejudicial to the appellant.
2. The learned Commissioner of Income-tax (Appeals) erred in confirming the action of the Assessing Officer in treating the contributions received of Rs.28,00,000/- as the income of the appellant. The learned Commissioner of Income-tax (Appeals) ought to have considered the fact that the said amount was utilized for the purpose of objective of the society and therefore, the receipt is exempt from tax."
But for the amount mentioned in ground No.2 above, grounds of appeal are identical in the appeal for the assessment year 2004-05 as well, and the amount mentioned for that year is Rs.4,50,000.
32. We heard both the parties and perused the material on record. We have dealt with identical issue while dealing with the appeal of the assessee in the case of Malla Reddy Educational Society, viz. ITA No.1586/Hyd/2011, in para 18 hereinabove. The circumstances leading to the additions made by the assessing officer, contested in these appeals, and also the observations of the CIT(A) in the impugned order are similar to those noted in para 18 hereinabove. In this view of the matter, for the detailed reasons discussed in para 18 hereinabove, we set aside the impugned orders of the lower authorities on this issue, and restore the mater to the file of the assessing officer with a direction to give one more opportunity to the assessee to file necessary evidence before him, to prove 20 ITA No.1440/Hyd/2011 & Others Sri Venkata Sai Educational Society, Hyderabad and Others.
that the donations received were with a direction to form corpus of the assessee trust and that they are not in the nature of capitation fee received from students/prospective students or their relatives. The assessing officer shall thereafter decide this issue afresh in accordance with law and after giving reasonable opportunity of hearing to the assessee.
33. In the result, both the appeals of the assessee are allowed for statistical purposes.
APPEALS CONCERNING CMR EDUCATIONAL SOCIETY, HYDERABAD.
Revenue's Appeals:
ITA No.1609/Hyd/201 1 Assessment year 2004-05 ITA No.1610/Hyd/2011 Assessment year 2005-06 ITA No.1611/Hyd/2011 Assessment year 2006-07 ITA No.1612/Hyd/2011 Assessment year 2007-08 ITA No.1613/Hyd/2011 Assessment year 2008-09 ITA No.1614/Hyd/2011 Assessment year 2009-10 ITA No.1621/Hyd/2011 Assessment year 2003-04& Assessee's Appeal:ITA No.1585/Hyd/2011 Assessment year 2004-05
34. Now, we may take up the eight appeals concerning CMR Educational Society, Hyderabad. Out of them, seven are by the Revenue and one is by the assessee, there being cross-appeals for assessment year 2004-05. These appeals are directed against two orders of the CIT(A)-I, Hyderabad both dated 1.7.2011, being a separate order for the assessment year 2003-04 and a common order for the assessment years 2004-05 to 2009-10.
Revenue's appeals:
35. The first common issue involved in all these appeals is whether recognition under S.10(23C) (vi) is mandatory when receipts exceed Rs.1 crore or whether alternative relief u/s. 11 is automatically available to 21 ITA No.1440/Hyd/2011 & Others Sri Venkata Sai Educational Society, Hyderabad and Others.
assessee registered under S.12AA of the Act. We have dealt with this issue hereinabove, while dealing with the corresponding grounds of the Revenue in the appeals ITA Nos.1440 to1442/Hyd/2011 concerning Sri Venkata Sai Educational Society. For the detailed reasons discussed in that context, in paras 4 and 5 hereinabove, we set aside the impugned orders of the lower authorities in this case also for all the years under appeal 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 judgment 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 u/s 11 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.
36. The next issue involved in all these appeals of the Revenue relates to the additions made on account of depreciation claimed by the assessee. We have dealt with this issue hereinabove, while dealing with the corresponding grounds of the Revenue in the appeals ITA Nos.1440 to1442/Hyd/2011 concerning Sri Venkata Sai Educational Society. For the detailed reasons discussed in that context, in para 7 hereinabove, we set aside the orders of the lower authorities on this issue impugned in these appeals also and restore the matter to the file of the assessing officer for fresh consideration. The Assessing Officer is directed to verify in respect of each asset on which depreciation claimed, whether the value of such asset was in fact allowed under S.11, and if it was so allowed, the depreciation would not be allowed in respect of such asset. Only if the value of the asset 22 ITA No.1440/Hyd/2011 & Others Sri Venkata Sai Educational Society, Hyderabad and Others.
was not allowed as expenditure under S.11, the Assessing Officer is required to allow depreciation thereon, as per the rate applicable to those assets, as held in the case of Mahila Sidh Nirman Yojna, cited supra. This issue raised by the Revenue in all these appeals, is set aside to the file of the Assessing Officer for fresh consideration, in the light of the above observations. The Assessing Officer shall accordingly redecide the issue in accordance with law and after giving reasonable opportunity of hearing to the assessee.
37. In the result, these appeal of the Revenue, are allowed for statistical purposes.
Assessee's Appeals
38. The only issue involved in the appeal of the assessee relates to assessment of contributions received by the assessee society towards corpus of the trust, and effective grounds raised in this behalf read as follows-.
"1. The order of the Commissioner of Income-tax (Appeals) is erroneous to the extent it is prejudicial to the appellant.
2. The learned Commissioner of Income-tax (Appeals) erred in confirming the action of the Assessing Officer in treating the contributions received of Rs.3,46,000/- as the income of the appellant. The learned Commissioner of Income-tax (Appeals) ought to have considered the fact that the said amount was utilized for the purpose of objective of the society and therefore, the receipt is exempt from tax."
39. We heard both the parties and perused the material on record. We have dealt with identical issue while dealing with the appeal of the assessee in the case of Malla Reddy Educational Society, viz. ITA No.1586/Hyd/2011, in para 18 hereinabove. The circumstances leading to the additions made by the assessing officer, contested in these appeals, and also the observations of the CIT(A) in the impugned order are similar to those noted in para 18 hereinabove. In this view of the matter, for the 23 ITA No.1440/Hyd/2011 & Others Sri Venkata Sai Educational Society, Hyderabad and Others.
detailed reasons discussed in para 18 hereinabove, we set aside the impugned orders of the lower authorities on this issue, and restore the mater to the file of the assessing officer with a direction to give one more opportunity to the assessee to file necessary evidence before him, to prove that the donations received were with a direction to form corpus of the assessee trust and that they are not in the nature of capitation fee received from students/prospective students or their relatives. The assessing officer shall thereafter decide this issue afresh in accordance with law and after giving reasonable opportunity of hearing to the assessee.
40. In the result, this appeal of the assessee is also allowed for statistical purposes.
41. To sum up, all the 33 appeals of the Revenue as well as assessee are allowed for statistical purposes.
Order pronounced in the Court on 9.4.2012
Sd/- Sd/-
(CHANDRA POOJARI) (ASHA VIJAYARAGHAVAN)
ACCOUNTANT MEMBER JUDICIAL MEMBER
Dated the 09th April, 2012
Copy forwarded to:
1. M/s. Sri Venkata Sai Educational Society, 16-2-740/51, Kalyan Nagar, Hyderabad
2. M/s. KMR Educational Society, Laxman Reddy Avenue, Dundigul, Qutubullapur Mandal, R.R. District. Hyderabad
3. M/s. Malla Reddy Educational Society, Survey No.59, Jayanagar, Bowenpally, Secunderabad.
4. M/s. Chandramma Educational Society, Survey No.59, Jayanagar, Bowenpally, Secunderabad.
24 ITA No.1440/Hyd/2011 & OthersSri Venkata Sai Educational Society, Hyderabad and Others.
5. St. Martin's Education- al Society, C/o., Shri S.Rama Rao, Advocate, 3-65-643, Shriya's Elegance, Flat No.102, St. No.9, Himayatnagar, Hyderabad.
6. CMR Educational Society, C/o., Shri S.Rama Rao, Advocate, 3-65-643, Shriya's Elegance, Flat No.102, St. No.9, Himayatnagar, Hyderabad.
7. Asst. Commissioner of Income-tax, Central Circle-1, Hyderabad
8. Commissioner of Income-tax(Appeals) I, Hyderabad
9. Commissioner of Income-tax Central Hyderabad
10. Departmental Representative ITAT, Hyderabad B.V.S.