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2019 (1) TMI 1829 - HC - Income TaxExemption u/s. 11 12 - as recorded by AO that the donations received from parents/students being provided with professional seats was not voluntary contributions - Whether the Appellate Authorities were correct in not taking into consideration the finding recorded by the AO that the donations collected from 'Mediation Centre Fund' was contrary to sections 11(1)(a) and 11(1)(d) of the act and consequently recorded a perverse finding? - HELD THAT - Questions No.2 and 3 are covered by the judgment of this Court in case of SRI. BELIMATHA MAHASAMSTHANA SOCIO CULTURAL EDUCATIONAL TRUST 2010 (3) TMI 854 - KARNATAKA HIGH COURT - Decided in favour of the Assessee
Issues involved:
1. Whether the Appellate Authorities correctly assessed the charitable trust status of the assessee. 2. Whether the Appellate Authorities correctly considered donations received for professional seats. 3. Whether the Appellate Authorities correctly assessed donations collected for the 'Mediation Centre Fund.' Issue 1: Charitable Trust Status Assessment The appeal raised concerns regarding the correctness of the Appellate Authorities' failure to determine whether the assessee was operating a charitable trust for the current assessment year. The Assessing Officer had previously concluded that the assessee was not running a charitable organization. The appellant argued that this issue was crucial, citing the decision in Aditanar Educational Institutions Vs. Addl. Commissioner of Income Tax 224 ITR 310. However, the judgment in DIRECTOR OF INCOME TAX (EXEMPTIONS) & ANOTHER VS. SRI. BELIMATHA MAHASAMSTHANA SOCIO CULTURAL & EDUCATIONAL TRUST (2011) 336 ITR 694 covered questions 2 and 3, leading to a resolution in favor of the Assessee against the revenue. Consequently, the first issue was deemed irrelevant for consideration. Issue 2: Donations for Professional Seats The second issue revolved around whether the Appellate Authorities appropriately addressed the donations received from parents/students for professional seats. The Assessing Officer had determined that these donations were not voluntary contributions as per sections 11 & 12 of the Act. The appellant contended that this decision contradicted the judgment in Islamic Academy of Education Vs. State of Karnataka, (2003) 6 SCC 697 and the Karnataka Capitation Fees Act. The judgment in DIRECTOR OF INCOME TAX (EXEMPTIONS) & ANOTHER VS. SRI. BELIMATHA MAHASAMSTHANA SOCIO CULTURAL & EDUCATIONAL TRUST (2011) 336 ITR 694 favored the Assessee, leading to a resolution in their favor against the revenue. Issue 3: Donations for 'Mediation Centre Fund' The final issue centered on whether the Appellate Authorities correctly considered the donations collected for the 'Mediation Centre Fund.' The Assessing Officer found these donations to be contrary to sections 11(1)(a) and 11(1)(d) of the Act, resulting in a perceived perverse finding. However, the judgment in DIRECTOR OF INCOME TAX (EXEMPTIONS) & ANOTHER VS. SRI. BELIMATHA MAHASAMSTHANA SOCIO CULTURAL & EDUCATIONAL TRUST (2011) 336 ITR 694 favored the Assessee, leading to a resolution in their favor against the revenue. In conclusion, the High Court of Karnataka disposed of the appeal after resolving the issues in favor of the Assessee based on the precedent set by the judgment in DIRECTOR OF INCOME TAX (EXEMPTIONS) & ANOTHER VS. SRI. BELIMATHA MAHASAMSTHANA SOCIO CULTURAL & EDUCATIONAL TRUST (2011) 336 ITR 694.
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