2015 (11) TMI 1832 - AT - Income Tax

Exemption u/s 11 denied - AO treated the society maintenance fees receipts as business income and not incidental to the attainment of the objects of the assessee society - No separate books of accounts have not been maintained which is violative of provisions of s.11 and 12 -society maintenance fee, being in the name of franchisee income earned by the assessee was taxable - CIT-A deleted the addition - HELD THAT - The issue is covered in favour of the assessee and against the Revenue by a series of decisions of the Tribunal in the assessee s own case. The Ld. CIT(A) has followed the binding decisions of the ITAT in the assessee s own case for the A.Y. 1998-99, 1999-2000, 2001-02, 2003-04 and ITAT orders for the A.Y. 2004-05. We find no infirmity in the order of the Ld. CIT(A) and we dismiss both the appeals of the Revenue.

Summary

Issues:
Revenue's appeal against CIT (Appeals) order for A.Ys 2006-07 and 2007-08.

Detailed Analysis:
The appeals were filed by the Revenue against the consolidated order of the Ld. CIT (Appeals)-XXI, New Delhi for the assessment years 2006-07 and 2007-08. The assessee, a Society, earned income from running schools under the name Delhi Public School (DPS) and also allowed other Societies/Trusts in India and abroad to open schools under the DPS name. These schools, called Satellite Schools, paid service charges to the assessee for using the DPS name, mottos, and logos. The service charges were reflected as Society maintenance receipts in the assessee's accounts. The assessee was registered under section 12A of the Act and was initially granted exemption under section 10(23)(C)(vi) but later lost it. The Assessing Officer treated the society maintenance fees as business income and taxable, as the exemption under section 10(23C)(vi) was no longer available. The AO held that the fees were in the nature of franchise income. The First Appellate Authority, considering past ITAT decisions, ruled in favor of the assessee.

The Revenue appealed, challenging the deletion of addition made by the AO regarding franchise fees received by the DPS Society from Satellite Schools. The issue had been consistently decided in favor of the assessee in previous ITAT orders for different assessment years. The ITAT upheld the CIT(A)'s decision based on past rulings in the assessee's case for various assessment years. Consequently, the ITAT found no fault in the CIT(A)'s order and dismissed the Revenue's appeals. Both ITA Nos. 4177/Del/10 and 4178/Del/10 were dismissed, upholding the CIT(A)'s decision.

In conclusion, the ITAT upheld the CIT(A)'s order in favor of the assessee, citing consistent decisions in the assessee's own case across multiple assessment years. The appeals by the Revenue were dismissed, confirming the deletion of the addition related to franchise fees received by the DPS Society from Satellite Schools.