Income Tax Appellate Tribunal - Hyderabad
M/S. Sahasra Educational Society, ... vs Assessee on 18 July, 2013
IN THE INCOME TAX APPELLATE TRIBUNAL
HYDERABAD BENCH 'A', HYDERABAD
BEFORE SHRI CHANDRA POOJARI, ACCOUNTANT MEMBER and
SHRI SAKTIJIT DEY, JUDICIAL MEMBER
ITA No. 1676/Hyd/2012
Assessment year 2012-13
M/s. Sahasra Educational vs. The Director of Income-tax
Society, Warangal (Exemptions)
PAN: AAGTS7230L Hyderabad
Appellant Respondent
Appellant by: Sri A.V. Raghuram
Respondent by: Sri R. Laxman
Date of hearing: 18.07.2013
Date of pronouncement: 18.07.2013
ORDER
PER CHANDRA POOJARI, AM:
This appeal by the assessee is directed against the order of the Director of Income-tax (Exemptions) [DIT(E)], Hyderabad dated 30.08.2012.
2. The assessee's grievance in this appeal is with regard to non-granting of registration u/s. 12AA of Income-tax Act, 1961.
3. The assessee applied for registration u/s. 12AA of the Act vide form No. 10A on 29.2.2012. The DIT(E) called for details to satisfy himself regarding genuineness of the activities carried on by the assessee. It was submitted by the assessee society that the assessee society after its incorporation, has established two colleges viz., Sahasra Institute of Pharmaceutical Sciences in the year 2006 and Sahasra Engineering College for Women in the year 20.09. It was stated that these colleges have been established in Warangal District of Andhra Pradesh and are run with non-profit motive. As per the Income & Expenditure Account for the year ended 31.3.2011 i.e., for the period 1.4.2010 to 2 ITA No. 1676/Hyd/2012 M/s. Sahasra Educational Society ========================== 31.3.2011, the assessee society has shown excess of income over expenditure at Rs. 37,48,715. In that account, the assessee has shown income from Bus Fee, Hostel Fee, College Fee, Tuition Fee, Examination Fee, in addition to interest on savings bank account and Pharmacy Remuneration Fee. The income from college fee and tuition fee from both the engineering and pharmacy colleges as shown by the assessee society in that income and expenditure account for the year ended 31-3-2011, are as under:
By College Fee Amount (Rs.)
Engg. College 26,31,300
Pharmacy College 11,81,250
By Tuition Fee
Engg. College 1,01,49,400
Pharmacy College 49,75,950
4. During the course of proceedings, the assessee was requested to clarify about the rules and regulations issued by the concerned university authorities relating to the fee structure in respect of both the colleges. It was also asked to produce the receipt books prepared at the time of admission of students to both the colleges i.e., engineering college and pharmacy college. It was also asked to furnish the income and expenditure account for the accounting year ended 31-3-2012. As regards fee structure for the engineering and pharmacy courses are concerned, the assessee furnished a statement showing the tuition fee, special fee and other fee per annum for both type of courses and referring to the GOs in that regard, as under:
Tuition fee per annum for the Special fee Other fees students of private unaided Course other fee per per annum Related GOs colleges (Rs.) annum (Rs.) (Rs.) Category 'A' Category 'B' B.E./ 31,000 95,000 Rs. 5,500 Rs. 3,000 AFRC Lr. No. B.Tech. $ 5000 special fee at for 13/AFRC/FF/ (for NRI the time of accredited 2010-378 dt.
seat per admission and courses 5.8.2010 GO
annum Rs. 2,500 from extra Ms. No. 76 HE
B. 31,000 95,000 2nd year amount Dept. Dt.
Pharmacy onwards 13.8.2010
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5. The assessee also furnished a copy of GO Ms. No. 76 dated 13-8-2010 issued by Government of Andhra Pradesh, Higher Education Department, as per which the tuition fee for under-
graduate engineering courses including pharmacy courses in private un-aided institutes in the state for the academic years 2010-11 and 2011-12 were fixed at Rs. 31,000/- per annum per each student for 'A' .category seats and Rs. 95,000/- per each student other than NRI students in 'B' category seats. Clarifying about both types of seats, vide letter dated 17-8-2012, it was submitted by the assessee that, in 'A' category the respective seats of the college shall be filled by conducting counselling and in 'B' category the respective seats of the college (30% of the sanctioned intake) shall be filled by the management. In that letter, it was further stated that there is no fee structure issued by Kakatiya University and JNTU and both these universities will follow the fee structure issued by the Andhra Pradesh Higher Education. Further stating that the college fee, bus fee, hostel fee, library fee and tuition fee per student in respect of the engineering college during the financial year 2010-11 were at Rs. 5,500/-, Rs. 7,500/- Rs. 22,500/-, Rs. 7,500/- and Rs. 30,200/- respectively, the amount of fees collected by the assessee society from such sources from the students of the engineering college during that year, were furnished as under:
No. of Total Received Dues S. students & Particulars amount amount Amount No. Amount (Rs.) (Rs.) (Rs.) (Rs.)
1. Bus fee 131 * 7500 982500 977700 4800
2. Hostel fee 50 * 22500 1125000 1091500 33500
3. Tuition fee 340 * 30200 10268000 10149400 118600
4. College fee 340 * 5500 1870000 1858500 11500
5. Library fee 129 * 7500 967500 7772800 194700
6. As may be seen from the above statement, the assessee has admitted about admission of 340 students during financial year 2010-11. It may be further mentioned here that as per the letter 4 ITA No. 1676/Hyd/2012 M/s. Sahasra Educational Society ========================== dated 1-9-2011 issue by the All India Council of Technical Education, New Delhi to the Principal Secretary, Govt of Andhra Pradesh, the intake of students approved for five different engineering courses offered by the said engineering college for the academic year 2010-11 were at 390. and for the academic year 2011-12 were at 420. As may be seen, the total tuition fee collected by the assessee from the students during the year 2011- 12 is shown at Rs. 1,01,49,400/-, which amount is also shown in the income & expenditure account for that year referred to in para 2 above. Such amount has been arrived, after taking into account a uniform fee rate of Rs. 30,200/- per student. However, as stipulated in the said GO. Ms. No. 76, the tuition fee per annum per student was fixed at Rs. 31,000/- in respect of category 'A' seat and at Rs. 95,000/- in respect of category 'B' seat, the latter type being the management Quota seats at 30% of the sanctioned intake of the institution, also admitted by the assessee vide their letter dated 17-8.2012. Under these circumstances. thus, it shows that the assessee has not disclosed the correct amount of tuition fee collected from the students admitted to the said engineering college during the academic year 2010-11. Further, the tuition fee in respect of management quota seat being at higher amount of Rs. 95,000/- per annum per student, it clearly shows that the assesses has actually collected more than the amount of Rs. 1,01,49,400/-, as shown in that statement furnished during the proceedings and also in the income and expenditure account for the year ended 31-3-2011.
7. As regards, the pharmacy college is concerned, the collection made under hostel fee, tuition fee, college fee and library fee during the year 2010-11 as furnished by the assessee society during the proceedings, are as under:5 ITA No. 1676/Hyd/2012
M/s. Sahasra Educational Society ========================== No. of Total Received Dues S. students & Particulars amount amount Amount No. Amount (Rs.) (Rs.) (Rs.) (Rs.) 1. Hostel fee 5 * 22500 112500 111500 0
2. Tuition fee 167 * 30200 5043400 5035150 8250
3. College fee 167 * 5000 835000 832150 2850
4. Library fee 51 * 8000 408000 349100 58900
8. As may be seen, the tuition fee received from 167 students is shown at Rs. 50,35,150/-, which has been arrived at, after taking into account uniform fee rate of Rs. 30,200 per student. However, it may be mentioned here that, in that G.O. Ms. No. 76 dated 13.8.2010 the tuition fee for under-graduate pharmacy courses is shown at Rs. 31,000/- per annum per student for 'A' category seat and at Rs 95,000/- per annum per student in respect of 'B' category seat. Since the assessee society, apart from 'A' category seat, has also admitted students under 'B' category seat i.e., under management quota, for which the tuition fee rate was Rs. 95,000/-
per student per annum, it clearly shows that the assessee has received more amount than such amount of Rs 50,35,150/- shown in that statement. It may be further mentioned here that in the income and expenditure account for the year ended 31.3.2011 the assessee has shown tuition fee from pharmacy college at Rs. 49,75,950. But from the above discussions, it clearly shows that the assessee society has actually received more amount under that head from the Pharmacy college during, the accounting year 2010-
11. From the above discussions, establishing receipt of more amount from tuition fee from both the engineering college and pharmacy college during the accounting year 2010-11, it clearly shows that the assessee society has earned more profit than the amount of Rs. 37,48,715/- shown in the income and expenditure account for that accounting year. Further, in that statement furnished during the proceedings, the fees collection made by the assessee in respect of that engineering college during the 6 ITA No. 1676/Hyd/2012 M/s. Sahasra Educational Society ========================== accounting year 2011-12, as shown in that statement are as under:
No. of Total Received Dues S. students & Particulars amount amount Amount No. Amount (Rs.) (Rs.) (Rs.) (Rs.)
1. Bus fee 160 * 8000 1280000 1206921 77879
2. Hostel fee 75 * 25000 1875000 1685920 222580
3. Tuition fee 390 * 31000 12090000 10066975 2141625
4. College fee 390 * 5500 2145000 2152350 4150
5. Library fee 50 * 7500 375000 205500 364200
9. As may be seen from the above statement, 390 students are shown as admitted to the said engineering college during the academic year 2011-12, and towards tuition fee from them the assessee has shown receipt of total amount of Rs. 1,00,66,975/-
during the accounting year 2011-12. However, when the tuition fee in respect of students admitted under management quota i.e., category 'B' seat, was Rs. 95,000/- per annum, as per such GO Ms. No. 76 dated 13-8-2010, the actual receipts from those number of students admitted during that year would be more. Further, when there were students in that engineering college, pursuing engineering courses from earlier years i.e., prior to the year 2011-12, after taking into account the tuition fees collection made from them, the total tuition fee received from all the students of different years i.e., first year, second year, third year etc., in respect of that college would be much more than the amount of Rs. 1,00,66,975/- as shown in that statement. For example, it may be pointed out that after taking into account the tuition fee collection from the second year students i.e., those who got admitted during the academic year 2010-11 the total receipt would exceed Rs. 2,00,66,975/-. Similarly, as regards the pharmacy college is concerned, the fee collections made under different heads during the academic year 2011-12, as furnished by the assessee society, are as under:
7 ITA No. 1676/Hyd/2012M/s. Sahasra Educational Society ========================== No. of students Total Received Dues S. Particulars & Amount amount amount Amount No. (Rs.) (Rs.) (Rs.) (Rs.)
1. Hostel fee 7 * 25000 175000 164000 11000
2. Tuition fee 150 * 31000 4650000 4628275 29975
3. College fee 150 * 5000 750000 690000 62850
4. Library fee 33 * 7500 247500 255000 51400
10. As per such statement, the tuition fee received from 150 number of students are shown at Rs, 46,28,275/-. The same has been arrived after taking into account uniform fee rate of Rs.
31,000/-. However, the tuition fee in case of students admitted under management quota i.e., 'B' category seat, being Rs.95,000/- per annum, the actual collection made from those students during that year would be more than that amount. Further, after taking into account the tuition fee collections made from students of the pharmacy course for different years i.e., taking into account such fee received from students admitted during earlier academic years, the actual total tuition fee collection would be much more than the said amount. It may be mentioned here that during the course of proceedings, the assessee society was asked to furnish income & expenditure account and Balance Sheet etc., for the accounting year ended 31-3-2012. In response to same, the assessee furnished income & expenditure statement for the period from 1.4.2011 to 31.3.2012, wherein, Direct Incomes, comprising different fees from both the colleges, are shown as under:
Direct incomes Amount (Rs.)
Scholarships for tuition fee 14155925
Engg. Bus fee 1223229
Engg. College fee 2152350
Engg. Hostel fee 1699920
Engg. Library fee 205500
Engg. Management fee 771400
Engg. Tuition fee 1574600
M. Pharm tuition fee 165000
M. Pharm College fee 90000
Pharmacy college fee 690700
Pharmacy Hostel fee 164000
Pharmacy Management fee 260900
Pharmacy tuition fee 281600
23435124
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11. From the above, It may be seen that the assessee has not shown any single amount towards total tuition fee received from the engineering college during that year. Excluding the amounts shown as college fee, hostel fee and library fee, if the three other receipts from scholar-ships for tuition fee, Engg. Management Fee and Engg. Tuition Fee are considered as towards tuition fee during that year, the total of those amounts i.e., aggregate of those three receipts, which comes to Rs. 1,65,01,925/-, cannot be considered as the actual total receipt from tuition fee collection from that engineering college during that year, in view of the detailed discussions made in para 6.1 above. To put it differently, the assessee society has not disclosed the actual receipt from tuition fee collection made from students during the financial year 2011- 12 in that income & expenditure account.
12. Further, it may be mentioned that, during the course proceedings before the DIT(E), the assessee society was asked to produce the fee receipt books prepared by them at the time of admission of students to both the colleges during the financial year 2011-12. In response to same, the assessee produced a few receipt books in respect of both the colleges. In respect of the said Engineering College, Sahasra College of Engineering for Women, the assessee has produced College Fee Receipt Book No. 36. Each fee receipt as per such book, contains about 11 items viz., tuition fee, college admission fee, university fee, games & sports fee, Parents-Teachers Association Fee, caution deposit fee, ISTE membership fee/Annual subscription, library fee, Internet charges, syllabus book & other fee, if any. On verifying the receipt bearing serial No. 3504, issued in the name of one P. Ramaya, CSE first year, it is noticed that the assessee has mentioned only a sum of Rs. 5,500/- against university fee in that receipt. The other items are left blank in that receipt. In other words, there is no 9 ITA No. 1676/Hyd/2012 M/s. Sahasra Educational Society ========================== mention about collection made under the remaining heads including tuition fee, in that receipt. Under this circumstance, it shows that the assessee is not recording the actual collection made from the students on different accounts including the tuition fee of that college during different years.
13. As regards the pharmacy college i.e., Sahasra Institute of Pharmaceutical Science is concerned, the assessee has produced four receipt books bearing serial No. 1001, 1002, 1003 & 1004. Each printed receipt as per those books, contains seven items viz., application fee, college admission / registration, annual tuition fee (category 'A' & 'B'), Kakatiya university fee, laboratory, library and special service fee, caution deposits & other fee if any. On verifying such receipt books, it was noticed that in the receipt No. 1011 dt. 11-11-2011, a sum of Rs. 30,200/- only is shown as towards tuition fee from certain 3rd year student bearing roll No. 33. In the receipt No. 1012 only a sum of Rs. 5,000/- is shown. Further, it was noticed in many of those receipts only a sum of Rs. 5,000/- has been shown. The actual collections made under different heads including tuition fee from the students, are not shown in all those receipts. Under these circumstances, it clearly shows that the assessee is not recording the actual collections made from different fees including the tuition fee from students of the said pharmacy college during different accounting years. According to the DIT(E), the assessee is not disclosing the actual collection made under different fees including the tuition fee, from the students of both the colleges during different years in the income & expenditure accounts filed by it for different accounting years.
14. The DIT(E) observed that though imparting of education is a charitable purpose, from discussions made above, it is clear that the assessee society is not disclosing the actual fee collections 10 ITA No. 1676/Hyd/2012 M/s. Sahasra Educational Society ========================== made from students and the actual profit earned from the same, by running the said two colleges, in its books of accounts. In fact, the assessee society had increased collections and more profit from the same, not disclosed in the books of accounts. Since the assessee society is running those colleges with the sole intention of earning profit, it cannot be Considered as a charitable institution and hence cannot be allowed registration u/s. 12AA of the Act. Thus, registration sought for u/s. 12AA of the Act, is refused to the above society by the DIT(E). Consequently, the other application filed by the above society in Form No. 10G, seeking approval u/s. 80G(5)(vi) of the Act is also rejected by the DIT(E). Against this, the assessee is in appeal before us.
15. The learned AR before us submitted that the order of the learned Director of Income-tax (Exemptions) rejecting registration u/s. 12AA of Income-tax Act, 1961 is erroneous both on facts and in law. The DIT(E) instead of examining the objects of the society and genuineness of the Society which are only required to be examined while granting registration u/s. 12AA erred in virtually making an assessment on presumptions and surmises and thereby erred in rejecting the application u/s. 12A on conclusions arrived on such presumptions and surmises. The AR submitted that the DIT(E) erred in coming to the conclusion that the assessee would have actually collected more than the amount of Rs. 1,01,49,400 from engineering students on the basis of calculations he made relying on GO MS No. 76 fixing the fee at Rs. 31,000 for Government admissions and Rs. 95,000 for management quota, ignoring the actual fact that the assessee has second year students also, and further that as per GO Ms. No. 63, the fee for such students who got admitted in 2009-10 will continue to be Rs. 30,200 till they complete the course and that management quota 11 ITA No. 1676/Hyd/2012 M/s. Sahasra Educational Society ========================== the fee is outer limit and the assessee in fact collected less amount in view of competition.
16. The AR submitted that the DIT(E) erred in coming to conclusion that the assessee would have actually collected more than the amount of Rs. 50,35,150 from pharmacy students on the basis of calculations he made relying on GO MS No. 76 fixing the fee at Rs. 31,000 for Government admissions and Rs. 95,000 for management quota, ignoring the actual fact that the assessee has second year students also and further that as per GO Ms. No. 63, the fee for such students who got admitted in 2009-10 will continue to be Rs. 30,200 till the complete the course, and that the management quota the fee is outer limit and the assessee in fact collected less amount in view of competition and thereby erred in relying on such conclusion based on presumption to reject application u/s. 12 A. The learned DI(Exemptions) erred in giving a finding that the fee collections from 390 students will be more than Rs. 2,00,66,975 and not Rs. 1,00,66,975 though there is no material with him to support such presumption except fee fixed by the Government.
17. The AR further submitted that the DIT(E) failed to appreciate the fact that fee for student of each year depend on the GO issued in the academic year in which he got admitted and further that for management quota the assessee has not collected as prescribed but collected less due to competition, and there by erred in rejecting the registration u/s. 12A on such conclusion based on presumption. The DIT(E) erred in giving a finding that the assessee has not shown any single amount towards total tuition fee received from Engineering college during F.Y. 2011-12 in the Income & Expenditure statement though there is an amount of Rs. 15,74,600 against Engg. Tuition fee and further sum of Rs.
12 ITA No. 1676/Hyd/2012M/s. Sahasra Educational Society ========================== 141,55,925 against Scholarships for Tuition fee which includes engineering tuition fee received as Scholarship from Government and thereby erred in rejecting the registration u/s. 12A on such erroneous conclusion contrary' to facts.
18. The AR submitted that the DIT(E) erred in concluding that every receipt given by the assessee institute should have collections against all heads without appreciating the fact that the students pay the fee in instalments and such payments are adjusted against different heads and it is not necessary that every receipt should have collection against every head and thereby erred in relying on such finding to reject the application for registration u/s. 12A. The DIT(E) erred in giving finding that the assessee is not recording the actual collections made from different fees including the tuition fee from students though the collection of tuition fee and other fee compared with the student tally and the receipts are for instalments and do not contain payment at a time and thereby erred in relying on such erroneous finding to reject the application u/s. 12 A. The DIT(E) erred in giving a finding that the assessee society is running those colleges with the sole intention of earning profit and hence cannot be considered as charitable institution without any material with him to come to such conclusion and thereby erred in rejecting the application for registration u/s. 12A.
19. The learned DR relied on the order of the DIT(E).
20. We have heard both the parties and perused the material on record. The first question arising for our consideration in this appeal relates to the scope of enquiry by the DIT(E) u/s. 12AA of the Act. We are in agreement with the DR that after insertion of section 12AA w.e.f. 1.4.1997, the DIT(E) is empowered to enquire about the activities of the assessee before passing the order. There 13 ITA No. 1676/Hyd/2012 M/s. Sahasra Educational Society ========================== may be cases where application is made after the commencement of activities by the assessee trust. In such cases the DIT(E) is justified to enquire about the activities. However, where no activity is commenced, the question of making any enquiry regarding any activity by the DIT(E) would not arise. The nature of enquiry would depend on the facts of each case. Hence the contention of the AR that scope of the DIT(E) is limited to ascertaining only whether the objects are charitable or not cannot be accepted.
21. The next question for our consideration is whether on the facts and in law, the registration u/s. 12AA of the Act can be refused to the assessee. For the purpose of sections 11 and 12, the word "charitable purpose" has been defined in section 2(15) of the Act which reads as follows: .
"Charitable purpose" includes relief of the poor, education, medical relief, [preservation of environment (including watersheds, forests and wildlife) and preservation of monuments or places or objects of artistic or historic interest,] and the advancement of any other object of general public utility:
Provided that the advancement of any other object of general public utility shall not be a charitable purpose, if it involves the carrying on of any activity in the nature of trade, commerce or business, or any activity of rendering any service in relation to any trade, commerce or business, for a cess or fee or any other consideration, irrespective of the nature of use or application, or retention, of the income from such activity:] [Provided further that the first proviso shall not apply if the aggregate value of the receipts from the activities referred to therein is [twenty-five lakh rupees] or less in the previous year;]"
22. So, the object of the education has been declared as of charitable purpose by the Legislature. It was held by the Supreme Court in the case of Surat Art Silk & Cloth Mfrs. Association (121 ITR 1) as under:
"It is now well settled as a result of the decision of this Court in Dharmadeepti vs. CIT 1978 CTR (SC) 120 : (1978) 114 ITR 454 14 ITA No. 1676/Hyd/2012 M/s. Sahasra Educational Society ========================== (SC), that the words 'not involving the carrying on of any activity for profit' qualify or govern only the last head of charitable purpose and not the earlier three heads. Where, therefore, the purpose of a trust or institution is relief of the poor, education or medical relief, the requirement of the definition of 'charitable purpose' would be fully satisfied, even if an activity for profit is carried on in the course of the actual carrying out of the primary purpose of the trust or institution."
23. At this stage it is also pertinent to note that the clause "not involving carrying any activities of profit" were omitted from this definition by the Legislature by Finance Act, 1983 w.e.f. 1st April, 1983. Therefore, after such omission, the element of profit cannot be excluded from the definition "charitable purposes". u/s. 2(15) of the Act.
24. The above view is also supported by the Legislative intent disclosed in section 10(22) wherein it has been clearly provided that income of any educational institute cannot be exempted unconditionally if such institution also exists for deriving of profit. According to this provision, if any educational institution is running on commercial basis then income of such educational institution cannot be exempted from taxation. However, such institution can claim exemption u/ss. 11 and 12 as element of profit is not excluded by the Legislature. The reason is obvious because of financial affairs of such institution are well controlled by the provisions of sections 11 and 13 of the Act. Section 11 clearly provides that in order to claim exemption such institution must apply 75% of its income for charitable purposes. The surplus if any has to be invested in specified bonds. Further, exemption can be denied if the provisions of section 13 are violated. Therefore, if there is any violation of either section 11 or section 13, then, the profits of such institution would be taxable. Further the fact that, only 75% of the income is to be applied for charitable purposes itself shows that element of profit is not 15 ITA No. 1676/Hyd/2012 M/s. Sahasra Educational Society ========================== excluded from the definition of charitable purpose for the purpose of sections 11 and 12. Because some profit has been earned by an educational institution registration u/s. 12AA cannot be denied so long as provisions of sections 11, 12 and 12AA are complied with. So long as it is established that income of the assessee society has been applied for the purpose of education in terms of section 11(2) and there is no violation of section 13, the assessee would be entitled to enjoy the benefit of registration u/s. 12AA of the Act.
25. Under both the categories mentioned above, the societies/trusts are created with the sole object to advance the cause of education but if such objects coupled with the motive to earn profits, then such institution will not be entitled to exemption under section 10(22), since in such cases cannot be said to exist solely for the purpose of education. Therefore, registration under section 12A/12AA would not be relevant by itself for claiming exemption under section 10(22) though the same would be relevant for claiming exemption under sections 11 and 12. Therefore, where education is imparted by an institution with the purpose of profit i.e., by running the schools/colleges purely on commercial basis, the assessee would not be entitled to exemption under section 10(22) but such case may be considered for exemption under section 11 if the conditions imposed by the Legislature are satisfied since the profit element has been omitted from the definition of the words 'charitable purpose' with effect from 1-4-1984.
26. Even the private institutions should charge reasonable fees not involving the element of profit. Therefore, in order to discourage the institutions earning with profit motive, the Legislature can always provide disincentives. Considering the aspects of the matter, the Legislature has not allowed the income 16 ITA No. 1676/Hyd/2012 M/s. Sahasra Educational Society ========================== of private institutions to be exempt under section 10(22) where such institution being run purely on commercial basis. Therefore, the exemption u/s. 10(22) can be allowed only in the situations mentioned in the first category but such exemption cannot be allowed where education is imparted through running of schools and colleges on purely commercial basis. Being so, we direct the DIT(E) to re-consider the application filed by the assessee in the light of our above observations.
27. In the present case, the DIT(E) doubted that the assessee has collected excess fees than recorded and also earned profit from educational activities. Further he has observed that the assessee has not given the breakup of the fees collected by it in the receipt issued to the students. In our opinion, the reason given by the DIT(E) for denying registration u/s. 12AA of the Act is improper. As we have discussed in the earlier paras, once the assessee is considered as carrying on the educational activities and that activities fall under the purview of section 2(15) of the Act, the DIT(E) cannot deny registration u/s. 12AA of the Act. He is duty bound to grant the registration. If any violation is found after granting registration u/s. 12AA, exemption u/s. 11 can be denied by the Assessing Officer while framing assessment for the relevant assessment year. In view of this discussion, we are inclined to remit the entire issue back to the file of the DIT(E) for reconsideration in the light of our above observations.
28. In the result, appeal of the assessee is partly allowed.
Order pronounced in the open court on 18th July, 2013.
Sd/- Sd/-
(SAKTIJIT DEY) (CHANDRA POOJARI)
JUDICIAL MEMBER ACCOUNTANT MEMBER
Hyderabad, dated 18th July, 2013
tprao
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Copy forwarded to:
1. M/s. Sahasra Educational Society, c/o. M/s. K. Vasantkumar and A.V. Raghuram, Advocates, 610, 6th Floor, Babukhan Estate, Basheerbagh, Hyderabad-1.
2. The DIT(E), Aayakar Bhavan, Hyderabad.
3. The ADIT(E) concerned, Hyderabad
4. The DR - 'A' Bench, ITAT, Hyderabad