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TMI Blog2018 (7) TMI 370X X X X Extracts X X X X X X X X Extracts X X X X ..... f the learned A.O. in denying the benefit of exemption on the ground that, section 11(4),11(4A) and 13(1)(c) have been violated, particularly when, there is no such violation of any of the provisions and the claim of the Assessee are within the four corners of the Law. 3. For that, the allegation of the Authorities below that the Assessee has Collected exorbitant fees over and above the fee structure is not only wrong but also without any basis and contrary to facts on record, as such denial of exemption on this ground is liable to be rejected and is liable to be quashed in the interest of justice. 4. For that, the learned C.I.T(A) has committed gross error of law in following the findings of his predecessors and in denying the exemption U/s.11 of the Act to the Assessee/Appellant, particularly when, the Assessee has fulfilled all the required conditions of the Law and is lawfully entitled to claim exemption. The denial of exemption by the learned C.I.T.(A) being unjustified in the eye of law is liable to be quashed in the interest of justice. 5. For that, the denial of Exemption U/s.11 and 12 of the Act by the Authorities below being illegal and since the claim of the App ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ce. 5. For that, the learned C.I.T(A) has committed gross error of law in following the findings of his predecessors and in denying the exemption U/S.12A of the Act to the Assessee/Appellant, particularly when, the Assessee/Appellant has fulfilled all the required conditions of the Law and is lawfully entitled to claim exemption. The denial of exemption by the learned C.I.T(A) being unjustified in the eye of law is liable to be quashed in the interest of justice. 6. For that, since Smt. Sarmistha Rath has been working for the Society for the whole day and is not a Housewife, the disallowance of Honorarium of Rs. 6,00,000.00 paid to Smt. Sarmistha Rath relying on one statement recorded in 2005 is illegal and contrary to the facts on record, as such the impugned addition is liable to be deleted in the interest of justice. 7. For that, the learned C.I.T(A) should not have blindly confirmed the disallowance of Honorarium paid to Smt. Sarmistha Rath of Rs. 6,00,000.00. without examining the facts on record, as such the impugned disallowance being unsustainable in the eye of law is liable to be deleted in the interest of justice. 8. For that, the learned A.O. as well as the l ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the appellant is correct in the eye of law, the same needs to be allowed and the excess of income over expenditure is liable to be declared as exempted from tax in the interest of justice." 3. At the outset, ld A.R. of the assessee submitted that the facts and issues involved in all the appeals are identical and, therefore, he will be arguing the appeal of the assessee for assessment year 2010-2011 and same should also be taken as the arguments of the assessee for the assessment years 2011-12 & 2012-13 also. 4. Ld D.R. also agreed with the above submissions of ld A.R. of the assessee. As all the three appeals were heard together, they are being disposed of by this common order as under: 5. The brief facts of the case are that the Assessing officer observed that the main source of income of the assessee was from fees from students since out of total receipts of Rs. 27,69,01,889.67, the amount received as student fees was Rs. 27,30,88,254/- and the assessee institution is running profitably, it has been charging exorbitant fees from the students and it has all the ingredients of a business undertaking. The Assessing Officer further observed that the assessee is charging fees o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... incidental to the fulfilment of the objectives of the assessee society. Hence, income from such institutions are taxable even when section 11 is valid. 8. The Assessing Officer further found that the assessee society runs five colleges. It collects life member fees of Rs. 5,000/- and ordinary member fees of Rs. 500/- per year. Balance sheets of educational institutions do not reflect collection of such amounts or any such corpus funds created. No separate books of account have been maintained for the society. The accounts of the society are maintained alongwith educational institution which violates provisions of section 11(4A). Since no separate books of account are being maintained, the restrictive provisions of section 11(4A) is attracted. Hence, the benefit of exemption u/s.11 is not available. 9. The CIT(A) after considering the submissions of the assessee held as under: "3. I have considered the matter. It has been submitted by the appellant that facts of the case are similar to that of the assessment year 2009-2010 wherein, relief has been allowed partly. However, no elaborate submissions have been made and it is not stated in what manner the issues are similar. It is w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tate Governments to provide education to all the citizens of the country. Despite various cultural and linguistic differences, India is united because of tolerance and piousness of the people. Education is considered to be pious in this country. Ancient days 'Gurukulams' were established to impart knowledge to people. Due to efflux of time and civilization, the earlier "Gurukulams' are now called as Schools, Colleges. In other words, it is known as educational institutions. However, the Indian civilization continue to recognize education as one of the pious obligation of the human society. When the people of this country considered education as a pious one, it cannot be made as a saleable commodity in the guise of encouraging private institution to support the State in the process of establishing educational institutions. To establish and administer educational institutions, are considered to be a charitable object. The way in which the exorbitant amounts are collected by the assessee-society for admission under the management quota, shows that they are not administering the educational institutions for pious and charitable purpose, but, with a profit motive. When the a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d to generate funds to run the institution and to provide facilities necessary for the benefit of the students. The educational institutions must also be able to generate surplus which must be used for the betterment and growth of that educational institution. It was further observed that the surplus funds cannot be diverted for any other use or purpose and cannot be used for personal gain or for any other business or enterprise. The Apex Court further directed all the State Governments and concerned authorities to set up committee headed by a Hon'ble Retired High Court Judge who shall be nominated by the Hon'ble Chief Justice of the High Court. For the purpose of convenience, we reproduce the direction of the Apex Court as reported in pages 720-722 of Islamic Academy of Education's case (supra)." It is also seen that the registration u/s.1O(23C) has been denied to the appellant by the CCIT, Bhubaneswar for the exemption of income from the educational institutions run by the appellant. The AO has also applied the restrictive provisions of section 11(4) and 11(4A) to deny benefits of section 11 to the appellant. The AO observes that the accounts of the society and e ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sions of the Act as narrated." 10. Ld A.R. of the assessee argued and submitted that in the assessment year 2009-2010, the CIT(A) has allowed deduction u/s.11 of the Act to the assessee on the very same set of facts. The revenue challenged the order of the CIT(A) before the Tribunal and the Tribunal dismissed the appeal of the Revenue vide order dated 11.1.2013 in IT(SS) No.71,72 and 73/CTK/2012 for the assessment years 2005-06, 2007-08 and 2009-2010 and ITA No.575/CTK/2012 for the assessment year 2006-07 by observing as under: "As the ld CIT DR was not able to point out any controverting material insofar as the ld CIT(A) has in his well reasoned order considered the issues in its totality to delete the addition so made by the Ao when the crux of the issue related to expenditure have been incurred under the provisions of Section was claimed on those years incomes which has been deleted by the ld CIT(A) on the fact finding as noted by the AO. In other words, compliance to section 11 succeeds the justification holding exemptions u/s.12A which has not been established otherwise by the revenue as of now. In this view of the matter, we do not find any infirmity in the impugned orders ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... view in the three assessment years under appeal. 17. Ld D.R. could not point any distinguishable facts which were existing in these three years and not existed in the earlier years or in the assessment year 2015-16. We, therefore, following the above order of the Tribunal passed in the case of the assessee itself in the assessment years 2000-2001 to 2009-2010 direct the Assessing Officer to allow exemption u/s.11 & 12 of the Act to the assessee in accordance with law. 18. Further, be it stated that the Assessing Officer observed in the assessment years under appeal, that certain payments were made to the relatives of founder members without rendering of any service by them in violation of provisions of section 13 of the Act. The amounts which have been paid in violation of the provisions of section 13 of the Act are to be charged to tax at maximum marginal rate. From the orders of the lower authorities, it is not clear that how much payment was made in violation of provisions of section 13 of the Act. We, therefore, for this limited purpose, restore the matter back to the file of the Assessing Officer to determine the amount which was paid by the assessee in violation to provisi ..... X X X X Extracts X X X X X X X X Extracts X X X X
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