TMI Blog2014 (2) TMI 670X X X X Extracts X X X X X X X X Extracts X X X X ..... tory on the part of the assessee in terms of section 11(4A) of the Act to maintain separate set of books of account for letting out of function hall - The assessee taken a plea that the assessee has maintained separate books of account - if the assessee maintained separate books of account for letting out the function hall it has to be produced before the Assessing Officer - assessee had collected money over and above prescribed by concerned authority for admission of student, such an amount was to be classified as capitation fee and it could be said that assessee's case was a clear case of sale of education by assessee – thus, it could not be considered as charitable institution under section 2(15) of the Act because the purpose of the organisation as a whole was to make profit - The issue remitted back to the AO to consider the entire facts and verify the records whether the assessee collected capitation fees from students for the purpose of giving admission – Decided partly in favour of Revenue. - ITA No. 440/Hyd/2012 - - - Dated:- 22-3-2013 - CHANDRA POOJARI AND SMT. ASHA VIJAYARAGHAVAN, JJ. For the Appellant : Smt. Amisha S. Gupt For the Respondent : Sri C. Suresh ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 01.2012 in the case of Hyderabad Public School Society. Hyderabad 8. The ld. CIT(A) has not appreciated the fact that a certificate from the Registrar of Societies is required to be obtained which shall be conclusive evidence with regard to the alteration as per sec 8(a) of the AP Societies Registration Act. 9. The Id. CIT(A) has also erred in not considering the fact that there is no mention of letting out function hall even in the amendment proposal also. 10. The Id. CIT(A) ought to have appreciated the fact that the dominant and primary object of the assessee Society/Trust is education' which has no connection with that of the activity i.e., letting out the Auditorium/Function Hall for the purpose of functions in a school premises. 3. Brief facts of the issue are that the assessee is a society registered u/s. 12A of the Act on 9.11.1992. The assessee runs an educational institution in the name and style of Chaitanya Vidyalaya. The main objects of the assessee are as below: (a) The founding of institutions to impart education of all levels and of diverse type, both residential and non- residential. (b) The establishment of reading rooms, libra ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... IT(A) placed reliance on the judgement of Punjab Haryana High Court in the case of CIT vs. Mahasabha Gurukul Vidyapeeth (326 ITR 25) and on the order of the Tribunal in the case of Al-Farook Education Centre vs. ITO (123 ITD 523) and allowed the claim of the assessee. Further he observed that payment of remuneration to Smt. Jyoti Rao and Smt. Aparna Rao was paid for the services rendered by them and it cannot be considered as they have derived any benefit from the trust and the remuneration paid to them commensurate with the services rendered by them and by placing reliance on the judgement of Madras High Court in the case of CIT vs. 21 st Society of Inaccurate Conception (241 ITR 193), he decided the issue in favour of the assessee. Regarding registration under the AP Societies Registration Act, he observed that registration is not a conclusive evidence with regard to alteration or amendment to Memorandum of Association or Rules and Regulations of the society. 6. Further regarding carrying out of letting out business of function hall, he observed that letting out of the function hall was carried out in terms of the conditions in the lease agreement which itself had been enter ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Institute of Aeronautical Engineering Education Society in Income Tax Appeal No. 40 of 2006 (2009-TIOL-314-HC-Uttaranchal). 9. On the other hand, the learned AR submitted that the assessee claim is u/s. 11 of the Act and the assessee has not claimed exemption u/s. 10(23C)(vi) of the Act. When the assessee claims exemption u/s. 11 of the Act, the Assessing Officer cannot say that the assessee must claim exemption u/s. 10(23C)(vi) of the Act. He submitted that exemption u/s.10(23C)(vi) is not a bar to claim exemption u/s. 11 of the Act. According to the AR, exemption u/s. 11 is equally applicable even if the approval u/s. 10(23C)(vi) of the Act was not obtained. He also submitted that approval under AP Societies Registration Act is not mandatory. If the assessee is duly registered/s. 12A of the Income-tax Act, it is entitled for exemption u/s. 11 of the Act in accordance with the provisions of the Income -tax Act. 10. Regarding payment of salary to Smt. Jyoti Rao and Smt. Aparna Rao, the AR submitted that this was paid for the services rendered by them and it is not unreasonable or excessive and they have not derived any undue benef it from the trust. Regarding letting out of fun ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in the Apex Court held that once the purpose of the organisation is essentially charitable, then it is not necessary to rigorously exclude any activity of the profit. If the activity itself is relevant to attainment of the objective of the organisation, then profit can be incidental and exemption cannot be denied. It was also held that the scope of section 11(4A) is wide enough to include business activities. 12. We have heard both the parties and perused the material on record. The first objection in this case by the Department is with regard to non obtaining of approval u/s. 10(23C)(vi) of the Act. In our opinion, obtaining approval u/s. 10(23C)(vi) is not mandatory. This Tribunal again and again held in various cases that assessee could claim exemption either u/s. 10(23C)(vi) or u/s. 11 of the Act. It is left to the assessee to opt either 10(23C)(vi) or section 11 of the Act. The Assessing Officer cannot force the assessee to opt for particular deduction or exemption. In the present case, the assessee opted for exemption u/s. 11 of the Act. Being so, it is not necessary to the assessee to obtain approval u/s. 10(23C)(vi) of the Act. For this purpose we place reliance on the ju ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cts. It is mandatory on the part of the assessee in terms of section 11(4A) of the Act to maintain separate set of books of account for letting out of function hall. The assessee taken aplea that the assessee has maintained separate books of account. However, the Assessing Officer observed in his Remand Report that the assessee has not produced the same. In our opinion, if the assessee maintained separate books of account for letting out the function hall it has to be produced before the Assessing Officer. We, therefore, remit this issue to the file of the Assessing Officer for fresh adjudication after giving reasonable opportunity of hearing to the assessee. The Assessing Officer is directed to decide the issue in accordance with law. 15. The next objection of the Department is with regard to collection of fees from students in excess of prescribed limit by the State authorities. In our opinion, this issue is squarely covered by the order of the Tribunal co-ordinate Bench in the case of Vodithala Education Society (supra) wherein held that assessee had collected money over and above prescri bed by concerned authority for admission of student, such an amount was to be classified ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ) or u/s 11 of the IT Act. Since the lower authorities were not examined the collection of capitation fees in this case, in our opinion, the matter requires to be examined by the assessing officer whether the assessee is collecting the capitation fees from students or not and it is necessary for bringing the actual facts on record for deciding the issue effectively. Similar view was taken by us in the case of M/s. Jamia Nizamia in ITA No.763/Hyd/2007 dated 30.6.2008, in the case of International Educational Academy, Hyderabad in ITA No.494/Hyd/2007 and 518/Hyd/2008 for the assessment years 2002- 2003 and 2004-05 and Sri Sai Sudhir Educational Society, Hyderabad in ITA No.999/Hyd/20-06 for the assessment year 2003-04. Therefore, we set aside the orders of the lower authorities and remit back the matter to the file of assessing officer with a direction to assessing officer that he shall reconsider the entire issue in the light of judgement of Supreme Court in the case of M/s Islamic Academy of Education Another Vs. State of Karnataka and Another (supra), and in the cased of T.M.A. Pai Foundation and Others Vs. State of Karnataka and Others (Supra), and find out whether the assessee ..... X X X X Extracts X X X X X X X X Extracts X X X X
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