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2018 (2) TMI 1692 - AT - Income TaxEligibility for exemption u/s 11 and 12 - Educational institution - charging fees from the students - CIT(A) observed that assessee is not eligible for exemption u/ss.11 and 12, once the provision of Section 10(23C)(iv) and (v) are applicable - According to CIT(A), since sources of income are students, therefore, students cannot be reckoned as ‘property held under the trust’ and activity of imparting education also cannot be reckoned as property. - Held that:- Legislature did not intend to Rule out Section 11 when exemption was claimable under specific provision of Section 10. See CIT vs. Bar Council of Maharashtra, (1981 (4) TMI 8 - SUPREME Court). Section 11(1)(d) refers to voluntary contribution received by the charitable trust which forms part of the corpus which legislature has considered to be capital receipt not chargeable to tax. Section 11 refers to voluntary contribution other than the ones falling u/s. 11(1)(d) thereby treating it as property held under the trust. Further, Section 11 envisages that revenue consideration shall be deemed to be income derived from property held under the Trust. CIT (A) was incorrect in law in holding that contribution received by way of fees from the beneficiaries is not an income from the property held under the trust. The assessee school has been charging fees only from its students and there is no capitation fee at all. Such fees have been charged from the students for the running of the school and has been applied for its dominant purpose/object of carrying out educational activity. In this case one of the main objection raised on behalf of the department was that said Board was not entitled for the benefit of Section 11 as it was not a trust under the ‘Public Trust Act’ and therefore, it was not entitled to claim registration u/s. 12A. Since it was not held under the trust therefore, it is not entitled for exemption u/s. 11(1)(a). The assessee society which has been registered under ‘Registration of Societies Act, 1860’ with the sole object of providing education and has a legal obligation for applying its income for such charitable purpose, then for the purpose of Section 11 it has to be treated as trust and income derived from carrying out such obligation has to be reckoned as income derived from property under the trust and therefore, on the ground also as raked by the CIT (A), exemption u/s.11 cannot be denied. Accordingly, we hold that none of the observations and the finding of the CIT(A) are sustainable and the grounds taken and the reasoning given by him to deny the benefit/exemption u/s.11 to the assessee cannot be upheld either in law or on facts. Accordingly the entire receipts which has been taxed under the head ‘income from other sources’ is set aside and we direct the AO to grant exemption u/s.11 as per the income and expenditure account submitted by the assessee. - Decided in favour of assessee.
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