2012 (9) TMI 87 - AT - Income Tax

Educational Institution - exemption u/s 11 provided in absence of approval under sub-clause (vi) to the section 10(23C) Revenue contesting the same and contended that approval under sub-clause (vi) to the section 10(23C) is distinct from registration u/s. 12A Held that - Assessee s argument that the benefit of S.11 should be granted in the alternative, without verification of conditions specified in S.11 of the Act, cannot be accepted on its face. Following consistent view taken by the coordinated benches of Tribunal, in similar matters, including in assessee s own cases for earlier years, we set aside the impugned order of the CIT(A) and restore the matter to the file of the AO with a direction to verify the aspect of donation, capitation fee etc. if any collected by the assessee, and further direct that if it is found that besides fulfilling other prerequisites for exemption under S.11, the assessee has not charged any money by whatever name it is called, i.e. donation, building fund, auditorium fee etc, over and above the prescribed fee for the admission of students, the assessee would be entitled for exemption under S.11, even though the notification under S.10(23C)(vi) have not been received by it. We direct accordingly Decided partly in favor of Revenue for statistical purposes

Issues Involved:
1. Eligibility for claim under Section 11 in the absence of approval under sub-clause (vi) to Section 10(23C).
2. Distinction between approval under sub-clause (vi) to Section 10(23C) and registration under Section 12A.
3. Legislative intent regarding approval under sub-clause (vi) to Section 10(23C).
4. Relevance of the Supreme Court decision in CIT vs. Bar Council of Maharashtra.
5. Implications of the Supreme Court decision in American Hotel and Lodging Assn./Educational Institute vs. CBDT.
6. Verification of conditions for exemption under Section 11, including the collection of donations or capitation fees.

Detailed Analysis:

1. Eligibility for Claim under Section 11:
The Revenue contested that the assessee is not eligible for benefits under Section 11 without approval under sub-clause (vi) to Section 10(23C). However, the Tribunal referenced its previous decisions, notably in the cases of M/s. Lincoln's Education Society and Vasavi Academy of Education, stating that an educational institution could be entitled to exemption under Section 11 even without notification under Section 10(23C)(vi), provided no donations or capitation fees were collected.

2. Distinction Between Approvals:
The Revenue argued that approval under sub-clause (vi) to Section 10(23C) is distinct from registration under Section 12A. The Tribunal affirmed that while these provisions are distinct, the eligibility for exemption under Section 11 does not necessarily require approval under Section 10(23C)(vi), as long as the conditions under Section 11 are met.

3. Legislative Intent:
The Revenue emphasized the clear legislative intent that educational institutions must be approved by the prescribed authority under sub-clause (vi) to Section 10(23C). The Tribunal acknowledged this but reiterated its stance that the conditions for exemption under Section 11 could be independently verified.

4. Relevance of CIT vs. Bar Council of Maharashtra:
The Revenue noted that the Supreme Court decision in CIT vs. Bar Council of Maharashtra was prior to the introduction of sub-clause (vi) to Section 10(23C). The Tribunal did not find this argument compelling enough to alter its previous consistent rulings.

5. Implications of American Hotel and Lodging Assn./Educational Institute vs. CBDT:
The Revenue cited this case to argue that approval under Section 10(23C)(vi) is a prerequisite for exemption. The Tribunal, however, interpreted that the Supreme Court's decision did not negate the possibility of exemption under Section 11 without such approval, provided other conditions were met.

6. Verification of Conditions for Exemption:
The Tribunal directed the assessing officer to verify whether the assessee collected any donations or capitation fees. The Tribunal emphasized that if it is found that no such fees were collected, the assessee should be entitled to exemption under Section 11, even without notification under Section 10(23C)(vi). This directive aligns with the Tribunal's consistent approach in similar cases.

Conclusion:
The Tribunal set aside the CIT(A)'s order and remanded the matter to the assessing officer for verification. The Tribunal directed that if the assessee did not collect any donations or capitation fees, they would be entitled to exemption under Section 11. The appeal was partly allowed for statistical purposes.

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