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2012 (12) TMI 1022 - ITAT BANGALOREEntitled to the benefits of section 11 - Whether Extra Tuition Fee[ETF] has to be assessed in the hands of the Society or in the hands of Mr. MJB? What is the quantum of EFT that has to be taxed, whether the entire receipt in the form of ETF or whether any deduction has to be allowed on account of refund of ETF? - Held that:- AO having accepted that ETF is refundable and going by the prevailing practice that when a student does not avail of admission to the college, the same has to be refunded, it would be just and fair to resort to an estimate. No doubt the CIT(Appeals) has no basis for estimating the ETF refunded at 40%. Thus, we are of the view that it would be just and fair, if 45% of ETF collected has been refunded. Thus, this ground of appeal of the assessee is partly allowed. The claim of the revenue that the entire ETF has to be brought to tax cannot be accepted for the reason that ETF by its nature is refundable and it is common practice that students who do not get admission, seek refund of ETF. We therefore reject the grounds of appeal of the revenue in this regard and partly allow the grounds of appeal raised by the assessee. We also find that the AO assessing the Society has denied exemption u/s. 12 on the ground that the Society was collecting capitation fee. Since we have found that the Society was not collecting ETF, the benefit of section 11 of the Act should not be denied to the assessee Society. We therefore hold that the Society would be entitled to benefit of section 11. In conclusion on the issues, we hold that it is only MJB who was collecting ETF and not the Society. We also hold that ETF to the extent of 55% of the total collections of ETF as evidenced by the seized documents should be brought to tax in the hands of MJB on a substantive basis. The additions made in the hands of Society is directed to be deleted. It is also held that the benefit of section 11 of the Act cannot be denied to the Society as there are no circumstances justifying the denial of benefits of section 11 of the Act to the Society. Accordingly, the grounds of appeal of the revenue in the case of the Society and MJB are dismissed, while the grounds of appeal of the assessee in the case of MJB are partly accepted. Depreciation - Income derived from properties held under trust should be arrived at in the normal commercial manner and that a charitable institution running a school should be allowed depreciation
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