TaxTMI 
TaxTMI 
2012 (10) TMI 14
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.... objections filed by the assessee, six in numbers, also relate to the same six assessment years from 2002-03 to 2007-08 and arise out of the same assessment orders passed under section 143(3), read with section 153A of the Act. 4. The appeal filed by the Revenue for the assessment year 2008-09 in ITA No.1772(Mds)/2011 arises out of the assessment completed under section 143(3) of the Income-tax Act, 1961. No cross objection is filed by the assessee for this assessment year. 5. The assessee is a public charitable trust registered for the purpose of carrying on educational activities. The assessee is running medical, dental and nursing colleges. 6. As the activities carried on by the assessee trust related to its objects concerning education, the Revenue accepted its claim for registration as well as the consequential benefits of registration. 7. A search was carried out in the case of the assessee on 4-5-2007. Consequent on the search, the Revenue came to a conclusion that the assessee was not carrying on any charitable activity and all its activities are directed towards earning profit and, therefore, the assessee is not entitled for registration under section 12AA of the Act. ....
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....have been raised before the Hon'ble jurisdictional High Court in appeal filed under section 260A of the Income-tax Act, 1961. 11. As the Commissioner of Income-tax(Appeals) has passed orders in these cases, following the order of the Tribunal mentioned earlier, it is not necessary for us to consider the issues in detail and it would be sufficient to make a useful reference to the findings recorded in the earlier order of the Tribunal mentioned above. In the above background, we are proceeding to dispose of the appeals and cross objections in the following paragraphs. 12. The facts and circumstances being similar and the issues are identical, the grounds raised by the Revenue in all its appeals are common, but for certain additional issues raised for certain assessment years, most of the issues are repeated in almost all the assessment years. Therefore, we are proceeding to dispose of the appeals on issue-wise, rather than assessment year-wise. 13. The first issue raised by the Revenue is that the Commissioner of Income-tax(Appeals) has erred in granting relief relating to the addition made by the assessing authority towards capitation fees. It is the case of the Revenue that cap....
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.... the status of the assessee vulnerable for the purpose of income-tax law. The Tribunal held that there is no apparent distinction between legal and illegal income under the provisions of the Income-tax Act. If the income is taxable, it should be taxed. If the assessee has not applied the capitation fees collected even in violation of the Prohibition Act for the purposes for which the trust was established, there is a case for Revenue. If the assessee has applied its entire income including capitation fees exclusively for the purposes for which it is established, the Revenue has no case. 15. While discussing the above crucial issue of capitation fee in assessee's own case, the Tribunal has made a finding that the assessee has spent its entire receipts for the purpose of creating infrastructure facilities to run its educational institutions. The assessee has spent its entire collection of donations for construction of buildings and other facilities. The Tribunal observed that as such expenditure incurred by the assessee has exceeded the collections made by the assessee trust by way of the alleged capitation fees, donations, corpus donations and also fees collected from the students,....
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.... entire amount received by the assessee including capitation fees was applied only for the purpose of building infrastructural facilities to run the educational institutions of the assessee. Building fund is used only for the purpose of constructing buildings. Therefore, there is no justification in treating the receipts towards building fund in a different way, as they are applied for educational purposes which is to be treated as application for charitable purposes and as such not taxable in the hands of the assessee. It is also a fact that the assessee trust has spent much more than the funds collected for the purpose of building infrastructure facilities. Therefore, in fact there is no question of deficiency in application of funds towards charitable activities. 20. This issue of building fund is raised by the Revenue for all the seven assessment years from 2002-03 to 2008-09. The issue is decided in favour of the assessee. 21. The next common issue raised by the Revenue is that the Commissioner of Income-tax(Appeals) has erred in deleting the addition made by the assessing authority towards sundry creditors. It is the case of the Revenue that no opportunity was given by th....
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....the infrastructural facilities of the institutions run by the trust. It is relying on the above finding of the Tribunal that the Commissioner of Income-tax(Appeals) has deleted the additions. We uphold the finding of the Commissioner of Income-tax(Appeals) on this point. 24. The Revenue has raised this issue for three assessment years 2002-03, 2003-04 and 2004-05. This issue is decided in favour of the assessee. 25. The fifth issue raised by the Revenue is that the Commissioner of Income-tax(Appeals) has erred in deleting the disallowance of expenses made by the assessing authority. It is the case of the Revenue that the assessee has not produced the relevant materials for verification of the assessing authority and the exemption cannot be granted under section 11 only on the basis of the audit report filed by the assessee. We considered this issue. It is seen that all these impugned assessments have been initiated in the light of the search carried out by the department. Books of account were available at the time of search and they were examined and verified and the other materials found in the course of search were also examined. No materials were found in the course of search....
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....he Revenue. 31. The eighth common issue is that the Commissioner of Income-tax(Appeals) has erred in granting relief towards the fine collected by the assessee from its students merely on the basis of the submission made by the assessee before him. The assessee has clearly explained before the Commissioner of Income-tax(Appeals) that the fine collected by the assessee from the students has already been included in the total fee collection accounted by it. The above position has been explained by the assessee before the Commissioner of Income-tax(Appeals) on the basis of the books of account maintained by the assessee. We find that the Commissioner of Income-tax(Appeals) has arrived at a correct finding after verifying the books of account and the supporting materials. Therefore, there is no need to treat the fine collection under a separate head. The Commissioner of Income-tax(Appeals) is justified in his finding. 32. This issue is raised by the Revenue for the assessment years 2002-03, 2004-05, 2005-06 and 2006-07. This issue is decided against the Revenue. 33. The ninth ground raised by the Revenue is that the Commissioner of Income-tax(Appeals) has erred in granting relief to....
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....r of Income-tax(Appeals) has erred in deleting the addition made against cash found in the course of search at Rs. 18,84,730/-. This issue is raised only for the assessment year 2008-09. This issue was considered by the Tribunal in the order mentioned above. The total cash balance available on the date of search was more than Rs. 90 lakhs. An amount of Rs. 10 lakhs alone was found in the registered office of the trust. The registered office of the trust is the residence of the trustee. In one way or the other way, the entire cash has been kept in the same premises identified as the residence of the trustee and registered office of the trust. The trustee was otherwise liable for accounting and safe custody of cash. Therefore, the Tribunal held that it was very premature to hold that the cash found in the registered office/residential house amounted to diversion of funds. The Tribunal held that the assessee trust was only holding funds properly accounted and it was not an application or diversion of funds. All the balance cash remained with different educational institutions. In those circumstances the Tribunal held that the cash found and seized in the course of search is not a gro....