2012 (10) TMI 750 - AT - Income Tax

Capitation fees - recalling of the Order of ITAT - exemption u/s 10(23C) - CIT(A) has set aside the assessment on that issue to the file of the Assessing Officer, when he has no power to set aside an assessment order under provisions of the Act. - Held that - order of CIT(A) set aside - matter remanded back to AO for fresh decision.

Summary

Issues Involved:
1. Approval from the prescribed authority under Sec. 10(23C)(vi) of the IT Act.
2. Entitlement to exemption under Sec. 11 of the IT Act.
3. Registration under Sec. 43(1) of the AP Charitable & Hindu Religious Institutions & Endowments Act.
4. Jurisdiction of CIT(A) to set aside an assessment order.

Detailed Analysis:

1. Approval from the Prescribed Authority under Sec. 10(23C)(vi) of the IT Act:
The Revenue contended that the CIT(A) erred in not appreciating the mandatory requirement of obtaining approval from the prescribed authority as per Sec. 10(23C)(vi) of the IT Act. According to Rule 2CA of the IT Rules, any University or Educational Institution with annual receipts exceeding one crore must obtain such approval to claim exemption. The Tribunal referenced previous cases, including St. Theresa's Convent Society, where similar issues were addressed, and noted that the Department had not accepted these decisions and had appealed to the Hon'ble AP High Court.

2. Entitlement to Exemption under Sec. 11 of the IT Act:
The Revenue argued that the CIT(A) was incorrect in holding that the assessee was entitled to exemption under Sec. 11 of the IT Act, citing a violation of Sec. 13(1)(c) read with Sec. 13(3)(a). The Tribunal referred to its own previous orders, where it had set aside similar issues for fresh consideration by the Assessing Officer to determine whether the institution collected capitation fees, which would disqualify it from exemptions under Sec. 10(23C) or Sec. 11.

3. Registration under Sec. 43(1) of the AP Charitable & Hindu Religious Institutions & Endowments Act:
The Revenue noted that the assessee society was not registered as required under Sec. 43(1) of the AP Charitable & Hindu Religious Institutions & Endowments Act, referencing the Supreme Court's decision in Biharilal Jaiswal & Others (217 ITR 746 SC). The Tribunal did not provide a specific resolution to this issue but implied that it would be part of the Assessing Officer's fresh examination.

4. Jurisdiction of CIT(A) to Set Aside an Assessment Order:
The Revenue contended that the CIT(A) overstepped its authority by setting aside the assessment order, as it does not have the power to do so under the provisions of the Act. The Tribunal acknowledged this contention and referenced its previous decision to remand the issue back to the Assessing Officer for fresh consideration, emphasizing the necessity of examining the collection of capitation fees and other relevant facts.

Conclusion:
The Tribunal set aside the order of the CIT(A) and remanded the matter back to the Assessing Officer for fresh consideration. The Assessing Officer is directed to re-examine the issue, particularly focusing on whether the assessee collected capitation fees, which would affect its eligibility for exemptions under Sec. 10(23C) or Sec. 11. The Tribunal emphasized that the Assessing Officer must bring all relevant facts on record and provide a reasonable opportunity for hearing to the assessee. The appeal of the Revenue was allowed for statistical purposes.