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TMI Blog2017 (9) TMI 1461X X X X Extracts X X X X X X X X Extracts X X X X ..... he exemption u/s 11 of the Act cannot be denied in toto to the assessee with regard to the voluntary donations received by the assessee. Only such donations, which are admittedly not voluntary can be disallowed. AO is directed accordingly. Revenue’s appeals are partly allowed. - ITA Nos.1803 & 1804/Hyd/2014, ITA Nos.1752 & 1753/Hyd/2014 - - - Dated:- 22-9-2017 - Smt. P. Madhavi Devi, Judicial Member And Shri S.Rifaur Rahman, Accountant Member For the Revenue: Shri S. Moharana, CIT (DR) For the Assessee: Shri V. Siva Kumar ORDER Per Smt. P. Madhavi Devi, J. M. All the above are cross appeals of the assessee as well as the Revenue for the A.Ys 2010-11 and 2011-12 respectively against separate orders of the CIT(A)-IV Hyderabad dated 12.09.2014. 2. Brief facts of the case are that the assessee is a society which is engaged in running of educational institutions. For the A.Ys 2010-11 and 2011-12, the assessee filed its return of income claiming exemption u/s 11 of the I.T. Act. 3. During the assessment proceedings u/s 143(3) of the Act, the AO observed that the assessee had collected donations from various persons which included donations from the parents ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... owable depreciation at ₹ 13,74,670 and the balance of the claim of application of income towards fixed assets of ₹ 3,63,46,513 was disallowed and added to the total income of the assessee. 5. Aggrieved, the assessee preferred an appeal before the CIT (A) who granted partial relief to the assessee. The CIT (A) observed that in the assessee s own case for the A.Ys 2005-06 to 2006-07 in ITA No.378/Hyd/2009 Others dated 19.10.2012, his predecessors has taken note of various decisions on the issue and also the decision of the Hon'ble Supreme Court in the case of TMA Pai Foundation (cited Supra) and has held that if the donations were received compulsorily for admission of students, then the assessee is not entitled for exemption either u/s 10(23C) or u/s 11 of the Act. The CIT (A) observed that in the case of the assessee, the nexus between the donations and the admissions has not been established and therefore, it is not possible to hold that the donations were received compulsorily for admission of the students. She, therefore, allowed the exemption u/s 11 of the Act. 6. As regards the issue of disallowance of depreciation on assets which have been allowed as a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... decisions in support of his contentions that exemption u/s 11 is allowable to the assessee: i) ACIT vs. Balaji Educational Charitable Public Trust, 15 Taxmann.com 63 (Mad.) ii) DCIT vs. Vellore Institute of Technology, 12 Taxmann.com 272 (Chennai). 9. The learned DR, on the other hand, placed reliance upon the decision of the Coordinate Bench of this Tribunal in the case of Voditala Educational Society Vs. ADIT [20 SOT 353]. 10. Having regard to the rival contentions and the material on record, we find that the assessee was initially granted registration u/s 12A of the Act which was cancelled by the DIT (Exemption) on the ground that the assessee is collecting donations from the parents or relatives of the students for admission into its educational institutions. We find that the cancellation of registration was challenged before the ITAT and the ITAT in ITA No.1751/Hyd/2014 vide orders dated 26.04.2017 has examined the issue at length and at Paras 11.15 to 12 has observed as under: 11.15. We have already brought out above, the observations of the Apex Court that in view of the majority judgment in the case of TMA Pai, different institutions may notify dif ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... profits. In the State of Andhra Pradesh, during the relevant period, there were a number of engineering colleges and there was no scarcity of seats for the aspirant students. In fact, there were newspaper reports that many colleges could not get the permitted number of students. The reasons for not getting the students may be many such lack infrastructure, or faculty or standard of education. The assessee institution may be commanding good reputation and may also be a sought after institution due to which the parents and the students may be willing to contribute to the development of the institution but that would not amount to profiteering by the institution. 12. That leads us to the question whether the assessee has violated the rules and regulations of the government of Andhra Pradesh framed for the purpose of prohibiting the collection of Capitation fees? One of the grounds on which the revenue has relied is that the assessee has violated the provisions of the Andhra Pradesh Educational Institutions (Regulation of Admission and Prohibition of Capitation Fee) Act, 1983 which prohibited collection of any fee other than the fee fixed by the Govt. The ld DR has placed before ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ons by way of D.Ds/ cheques which are duly accounted for in its books of account and has also been applied for the purposes of the education only. Therefore, in our opinion, there is no violation of the provisions of Andhra Pradesh Educational Institutions (Regulation of Admission and Prohibition of Capitation Fee) Act, 1983 . 11. Thus, the Tribunal has clearly held that there is no violation of the provisions of the A.P. Educational Institutions (Regulation of Admission and Prohibition of Capitation Fees Act of 1983). It is also mentioned that the assessee has received the donations by way of DDs/Cheques which are duly accounted for in its books of account and has also been applied for the purpose of education only. Having held that the activities of the assessee trust are charitable in nature and the donations are permitted by the memorandum and there is no complaint that the assessee was collecting any fees more than what was prescribed, it cannot be said that the assessee has violated any of the conditions for claiming exemption u/s 11 of the Act. We also find that the Coordinate Bench of this Tribunal in the case of Voditala Educational Society Vs. ADIT (cited Supra) was ..... X X X X Extracts X X X X X X X X Extracts X X X X
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