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TMI Blog2017 (11) TMI 1614X X X X Extracts X X X X X X X X Extracts X X X X ..... escribed in ITAT Rules; f) In case of breach of any of the above conditions, the stay granted shall automatically get vacated and matter would be heard in ordinary course. - SA Nos.82 to 87/PUN/2017 Arising out of ITA Nos.45 to 50/PUN/2017 - - - Dated:- 10-11-2017 - MS. SUSHMA CHOWLA, JM AND SHRI ANIL CHATURVEDI, AM Applicant by : Shri S.N. Doshi Respondent by : Shri Rajeev Kumar, CIT and Dr. Vivek Agarwal ORDER PER SUSHMA CHOWLA, JM: The bunch of Stay Applications are filed by the applicant against stay of recovery of outstanding demand relating to assessment years 2009-10 to 2014-15. 2. The present Stay Applications are moved by the applicant which is an educational institution to which recognition under section 12A of the Act had been granted. The applicant is running various educational institutions in and around Pune. It also runs General Hospital and Dental Hospital. The applicant claims that both these hospitals are running on charitable basis, where few services are charged at concessional rates and other services are provided free of cost. The applicant has around 55 units / institutions and around 65,000 students taking education in all th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the balance tax demand outstanding excluding interest charged under section 234B of the Act i.e. ₹ 97.44 crores. The issue involved in the appeals is against addition made in the hands of applicant on account of accepting capitation fees / donations from the students who were admitted to various courses. Further, the allegation of authorities below is that capitation fees so collected by the Trust had been siphoned by the Trustees for their personal use. In view of the applicant Trust having violated the provisions of section 13(1)(c) of the Act, the Assessing Officer denied the benefit of section 11 of the Act to the assessee Trust. The surplus arising in the hands of applicant from year to year was taxed in the hands of applicant resulting in the demand being created against applicant. The CIT(A) upheld the order of Assessing Officer. It was opined by the CIT(A) that the assessee Trust had indulged into illegally accepting capitation fees and had thus, dishonoured its charitable purpose. The CIT(A) also looked into the aspect the denial of exemption under sections 11 and 12 of the Act to the assessee. The learned Authorized Representative for the applicant in this regard p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on of balance of ₹ 32.60 crores. So, there was no question of the said addition to be made in the hands of applicant for the alleged violation under section 13(1)(c) of the Act. He reiterated that as far as sum of ₹ 24.10 crores was concerned, if the same had been added on substantive basis in the hands of Mr. M.N. Navle and in view of the conflicting position, the balance of convenience was in favour of applicant vis- -vis the said amount. He stressed that as per the version of Assessing Officer, if the donation was for the purpose of admission, then the same was receipt entitled to exemption under section 11 of the Act. 6. Before referring to the comments made by the learned Departmental Representative for the Revenue, it was pointed out that on the first date of hearing certain submissions were made by the learned Authorized Representative for the applicant. However, as he was not able to prove its case of financial difficulty, in the absence of any Balance Sheet, the matter was adjourned and on that date of hearing, the CIT-DR did start arguing the case of Revenue and also furnished written submissions which we will refer in the paras hereinafter. But the hearing ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... se. Accordingly, the CIT(A) confirmed the assessments vis- -vis demands. The learned Departmental Representative for the Revenue in the first instance stressed that the applicant be directed to pay the said demand in entirety. In the second plea, the learned Departmental Representative for the Revenue however, considering the financial constrains of the applicant trust, stressed that in the alternate, he be directed to pay atleast 25% of the total demand of ₹ 140 crores. The contention of applicant that there could not be wholesale denial of exemption under section 11 of the Act was held to be incorrect, in view of the observations of the CIT(A) in this regard vis- -vis taxation of the amount relating to violation under section 13(1)(c) / 13(3) of the Act. It was further pointed out by the learned Departmental Representative for the Revenue that there was no merit in the contention of applicant and reference was made to the detailed working of total tax liability which works to ₹ 17.58 crores in the hands of applicant. Vis- -vis assessment of ₹ 24.10 crores in the hands of Mr. M.N. Navale, it was pointed out by the learned Departmental Representative for the Reven ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t the balance FDRs were available with the applicant but the applicant was not willing to pay the taxes. He further referred to other discrepancies in the statements filed by the applicant. Another aspect which was pointed out by the learned Departmental Representative for the Revenue was that the applicant had liquid funds of ₹ 103 crores which is grant from the State Government. The learned Authorized Representative for the applicant stressed that the same would go for running of institution but what happens to the statutory liability, was the question put up by the learned Departmental Representative for the Revenue. 9. With respect to the merits of case, the learned Departmental Representative for the Revenue pointed out that denial of exemption under section 11 of the Act was on account of two charges i.e. acceptance of capitation fees and also violation of provisions of section 13 of the Act. He further pointed out that capitation fees was harming education and the CIT(A) at pages 85 to 90 has referred to various propositions on this issue and the question which arises was whether the institution was working for charitable purpose. He stressed that the facts of the c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on under sections 11 and 12 of the Act. It has been pleaded by the learned Authorized Representative for the applicant at stretch that even if capitation fees is accepted but the same is for the purpose of giving education to the students and hence, is part of activity carried on by the applicant trust and there is no merit in the denial of exemption under section 11 of the Act. On the other hand, the case of Revenue is that in view of incriminating documents found, the applicant trust is not entitled to the said exemption under section 11 of the Act. The total income other than violation under section 13 of the Act which is assessed in the hands of applicant for the captioned assessment years is ₹ 266.23 crores. Further, the income attracting violation under section 13 of the Act for the respective years totals to ₹ 57.43 crores. The same is based on the incriminating documents found during search. The total tax on ₹ 57.43 crores is ₹ 17.23 crores and including the surcharge and interest, the outstanding demand is ₹ 24.13 crores. The applicant claims the benefit of TDS of ₹ 1.27 crores and regular payment of ₹ 5.25 crores against the same, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 89,49,872 1,34,04,278 1,96,25,574 16,83,138 - 1,79,42,436 8,69,51,477 12,10,43,493 21,05,930 - 11,89,37,563 6,24,07,757 8,72,36,865 18,37,666 1,45,00,000 7,08,99,200 17,23,00,512 24,13,02,780 1,29,31,124 5,25,00,000 17,58,71,656 12. The learned Authorized Representative for the applicant has not controverted the working of the demand on income attracting the violation under section 13 of the Act. It was the case of applicant before us that the said income totaled ₹ 57.43 crores, which is mentioned in his written submissions also. However, against the same, he has time and again pleaded that sum of ₹ 24.10 crores has been alleged to be siphoned by Mr.M.N. Navale by the authorities below and for the balance amount, there were no equivalent assets. However, we find no merit in the plea of learned Authorized Repres ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ee installments i.e. ₹ 6 crores by 30.11.2017; ₹ 6 crores by 30.12.2017 and ₹ 6 crores by 15.01.2018. b) The applicant shall furnish the proof of payment of taxes on payment to the Registry; c) In case he fails to deposit the taxes as stated in (a) above, then the case would come for hearing in normal course and not be considered as stay granted matter. d) That out of turn hearing is granted on 18.01.2018 subject to payment of ₹ 18 crores; no separate notice of hearing would be issued by the Registry; e) That the applicant shall not seek frivolous adjournments. If Paper Book is desired to be filed by the applicant, then the same should be submitted well in advance as prescribed in ITAT Rules; f) In case of breach of any of the above conditions, the stay granted shall automatically get vacated and matter would be heard in ordinary course. 16. Subject to the fulfillment of the above conditions, the balance outstanding demand is stayed for a period of 180 days from the date of this order or till disposal of the appeal, whichever is earlier. 17. In the result, all the stay applications filed by the applicant are allowed as indicated above. ..... X X X X Extracts X X X X X X X X Extracts X X X X
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