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TMI Blog2016 (7) TMI 170X X X X Extracts X X X X X X X X Extracts X X X X ..... voluntary contribution. It is undisputed fact that the assessee has been collecting amounts over and above the fee prescribed by the Government. Assessee-society had not led any evidence on record in support of the proposition that contributions are voluntary and made forming part of corpus of the society. Even before us, the assessee-society made no efforts to prove that the contributions are voluntary in nature. Therefore, the said capitation fees is not exempt u/s 11 - Decided against the assessee. - ITA Nos. 1492 & 1493/Bang/2010, ITA No.675/Bang/2014 - - - Dated:- 24-6-2016 - Shri Vijay Pal Rao, Judicial Member And Shri Inturi Rama Rao, Accountant Member For the Assessee : Shri Veerabhadraiah, Advocate For the Revenue : Shri Pramod Kumar Singh, CIT(DR), P.Chandrashekar, CIT(DR) Dr. P.K.Srihari, Addl. CIT(DR) ORDER Per Inturi Rama Rao, AM The appeals bearing ITA Nos.1492 1493/Bang/2010 are filed by the assessee and are directed against the common order of the ld.CIT(A), Mysore, dated 25/10/2010 for the assessment year 2006-07 and 2007-08. Appeal bearing ITA No.675/Bang/2014 is filed by the revenue directed against the order of the ld.CIT(A), My ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... education was not a saleable commodity and the collection of capitation fee is contrary to the constitutional framework of India. The Hon ble Supreme Court categorically held that collection of any such fee by the educational institution cannot be recognized as a charitable activity within the meaning of sec.2(15) of the Act. Respectfully following the decision of the Hon ble Supreme Court, the AO brought to tax the amount collected over and above fees prescribed by the Government as capitation fee under the head income from other sources . Accordingly, for the assessment year 2006-07 an amount of ₹ 83,73,000/-, for the assessment year 2007-08, an amount ₹ 1,18,10,485/- and for the assessment year 2010-11 an amount of ₹ 87,03,560/- was brought to tax. 4. Being aggrieved, the assessee-society filed an appeal before the CIT(A). The assessee-society contended that donations collected are in the nature of voluntary contributions and therefore, exempt from tax by the provisions of section 11(1)(a) of the Act. The CIT(A) held that donations collected are in the nature of capitation fee as it was found by the CIT(A) that excess money collected in the form of donatio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Representative vehemently argued that in terms of provisions of Karnataka Educational Institutions (Prohibition of Capitation Fee) Act, 1984 any amount collected over and above fees prescribed by the Government amounts to capitation fee. Collection of capitation fee has been held to be against public policy and the Constitution of India. Therefore, learned Departmental Representative prayed that amount collected in form of capitation fee, even though accounted in the books of account, cannot be exempted u/s 11(1) in as much as they are not voluntary contributions and quid pro quo is clearly established by the AO. 8. We heard rival submissions and perused material on record. The only issue in the present appeal is whether the amount collected by the management of the society over and above the prescribed fees charged by the Government is in the nature of capitation fees or voluntary contribution. It is undisputed fact that the assessee has been collecting amounts over and above the fee prescribed by the Government. The contention of the assessee is that such amount is nothing but voluntary contribution by the donors whereas the AO had categorically given a finding that there was ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in order to gain advantage or benefit cannot be called a voluntary contribution. The Hon ble Supreme Court held as follows: Where a person gives money to another without material returns, he donates that sum. An act by which the owner of a thing voluntarily transfers the title and possession of the same from himself to another, without any consideration, is a donation. A gift or gratuitous payment is in simple English a donation. We do not require lexicographic learning or precedential erudition to understand the meaning of what many people do every day, viz., giving donation to some fund or other, or to some person or other. Furthermore, assessee-society had not led any evidence on record in support of the proposition that contributions are voluntary and made forming part of corpus of the society. No piece of evidence was produced against the finding of the AO that no record of receipt of donations as to the names and address of the donors and no receipt were issued for donations collected. This finding of the AO remains uncontroverted. Even before us, the assessee-society made no efforts to prove that the contributions are voluntary in nature. Therefore, the provision ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 12 is exempt u/s 11 of the Act. Therefore, the ratio laid down by the jurisdictional High Court in the cases of CMR Janadhara Trust (supra) Bharatiya Samskriti Vidyapith Trust (supra) and the decisions of the co-ordinate bench of Tribunal in the cases of ACIT vs. JSS Mahavidyapeetha in ITA No.735/Bang/2012 dated 19/04/2013. and Sree Adichunchanagiri Shikshana Trust vs. Add.CIT in ITA Nos.1258 1259/Bang/2008 dated 31/12/2008 is not applicable to facts of present case. The Hon ble jurisdictional High Court in the case of Sri Bellimatha Mahasamsthana Socio Cultural and Educational Trust (supra) held that in absence of evidence that donations were received for consideration of allotment of seats in an educational institution, the donations are held to be voluntary contributions which ar exempt under sec.11(1)(a) of the Act whereas in the present case, as we have held that donations are not voluntary contributions, the ratio laid down in that case is also not applicable to the facts of the present case. The decision of the Hon ble jurisdictional High Court in the case of Director of Income-tax vs. Garden City Educational Trust (330 ITR 480) relied on by the CIT(A) for the assessment y ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pted, as the word capitation fee has not been defined in the Income-tax Act. The Revenue has also established that donation/voluntary contribution was collected from the parents of the students admitted during the year and more so the parents were not financially sound to part with substantial amount of donation in Lakhs to the educational institution. Therefore, we are of the view that the receipts of the assessee from the parents of students is nothing but capitation fees and once capitation fee is charged for admission of the students by the educational institution, the educational institution can be held that it is not engaged in charitable activities, but selling the education in the light of the judgment of the Hon ble Supreme Court in the case of Ms. Mohini Jain v. State of Karnataka Ors. (1992) 3 SCC 666 wherein the Hon ble Supreme Court has held that capitation fees was nothing but price of selling education and such teaching shops were contrary to the Constitutional scheme and abhorrent to our Indian culture. We have also carefully examined the judgments referred to by the parties and in the case of P.S. Govindaswamy Naidu Sons v. ACIT, 324 ITR 44 (Mad), the Hon b ..... X X X X Extracts X X X X X X X X Extracts X X X X
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