TMI Blog2014 (4) TMI 941X X X X Extracts X X X X X X X X Extracts X X X X ..... suspicions and surmises, and the CIT(A) simply confirmed the action of the Assessing Officer, ignoring the findings and observations of the Assessing Officer in the remand reports and other material available on record. The GOMs. No.33 by the Government of Andhra Pradesh in respect of formulation of rules for admission into the Under Graduate Professional Courses in Engineering in Unaided Non-Minority Professional Institutions was issued on 20.6.2003, which is after the closure of the academic year under consideration, viz. 2002-03 - those Government orders are of no application to the year under appeal, viz. assessment year 2003-04, in the case of the present assessee - In any event, there were no violation of the rules –also, in the absence of any clinching material brought on record by the Revenue, to indicate that there were, in fact, violations warranting denial of exemption under S.11 of the Act - the assessee is entitled to exemption under S.11 of the Act - the additions made by the AO in the have no legs to stand – the order of the CIT(A) set aside - Decided in favour of Assessee. - ITA No.707/Hyd/09 - - - Dated:- 7-3-2014 - Shri Chandra Poojari And Smt. Asha Vijay ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... was apparent that the same were not contributed voluntarily but were paid by the parents, guardians of students seeking to gain admission in the Management Quota is of the Engineering Course of CBIT and MGIT and the school. It was found that on the receipts issued for the same, the names of the depositors and addresses were written alongwith various amounts paid by different Demand Drafts, which totaled to the amount reflected as donations in Annexure A enclosed to the assessment order. The Assessing Officer found that there were also certain obvious over writings of the term 'Corpus Fund' above the amount of deposit on the receipt. He further found that eh so called deposits appeared to be conditional as it was mentioned thereon that I offer the above deposit and will take back the same if not accepted by the management subject to the rules and regulations of Chaitanya Bharati Educational Society. The Assessing Officer therefore, proceeded to make further enquiries into the real nature of these transactions. The Assessing Officer issued summons to some of the donors appearing in the Annexure A to the assessment orders. On the basis of letters and the sworn statements of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... was also pleaded that the decision of the Apex court in Adinantar Educational Institution be applied to the assessee's case and since the primary purpose of the trust was philanthropic, the inclusion of some objects for earning profits would not alter the character of the primary object. 4. During the assessment proceedings, the Assessing Officer also recorded the statement of D.Kamlakar Reddy, Secretary and Governing Body Member of the assessee society. It was stated by him that the deposits represented amounts received from well wishers for development and infrastructure. Though it was submitted initially that the deposits were received from the donors, who walked into the office and that such donations were termed as 'deposits' as they were conditional and subject to the approval of the committee, he later pleaded that they were not aware of the provisions of law and that the noting Corpus Fund , above the typed amount of Deposit , was made by an advocate on the receipts book without their knowledge. He admitted that the deposits mentioned in the statements recorded on oath and mentioned in the letters received from the parents and were linked to admission. He h ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hat the conditions prescribed under S.10(23C)(iiiad) had been fulfilled and the conditions under clause (vi) is also fulfilled as an application made by the assessee was pending before the prescribed authority. It was also pleaded that since the assessee society also holds registration under S.12A and consequently any income, if at all taxable, is to be exempted under S.11 of the Act. It was further contended that list of donors towards capital fund and development fee had been furnished by the assessee itself, however no opportunity was given to the assessee in the matter of obtaining statements and letters from donors, and the Assessing Officer has worked behind the back of the assessee without its knowledge. It was further contended that reasonable opportunity for establishing/proving the claim regarding donations was not given and as such, the findings of the Assessing Officer cannot be made binding and cannot be considered as a basis for deciding eligibility for exemption. In view of the decisions of the Apex Court in the case of Adinatar Educational Institution(224 ITR 310); which was followed by the Madras High Court also in CIT V/s. Ann Arunachalam Educational Society(243 I ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e evidence gathered during the course of assessment proceedings. Considering the proceedings before the Assessing Officer and the statements recorded from various persons and other material on record, the CIT(A) observed in para 7.5 and 7.6 of the impugned order as follows- 7.5 The facts emerging from the confirmations/statements establish that the donations cannot be considered voluntary. It is beyond the human probabilities that any persons would give donations by borrowing funds from friends and relatives and even from bank, at interest. Even Shri C.V.Subramanyam in his subsequent statement also admitted that he found it reasonable to give a donation of Rs.6 lakhs to the society after verifying the amount by others at that point of time . His statement therefore establishes that this was a normal practice for the appellant society to take donation/capitation fee for granting admissions. Though he contended that he found it reasonable to give such donation as the appellant had good infrastructure, such assertion does not bring out the philanthropic intention behind such payment. In fact had the intention been really philanthropic, the donation would have been given to any go ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s, precise grounds/additional grounds of appeal have been raised. We proceed to dispose of this appeal on the basis of these precise grounds/additional grounds, which read as follows- 1. The Ld. CIT(A)-IV has erred in confirming the order of the AO regarding the Deposits of Rs.2,88,51,943/- 2. The Ld. CIT(A)-IV has erred in confirming the order of the AO wherein the Donation of Rs.17,000/- has been added. 3. The Ld. CIT(A)-IV has erred in confirming the order of the AO wherein the addition to the income of Rs.62,49,000/- was made. 4. The Ld. CIT(A)-IV ought to have appreciated that the fees has been collected as per the G.O. and hence the same cannot be disallowed and added to income. 5. The Ld. CIT(A)-IV ought to have appreciated that the appellant is running/existing solely for Educational purposes and not for the purposes of profit. \ 6. The Ld. CIT(A)-IV ought to have appreciated that there is no question of Quid Pro Quo as the amount has been received by the society voluntarily from the parents of the students. 7. The Ld. CIT(A)-IV ought to have appreciated that the society is not running for the purpose of profit and hat amounts received have been util ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e, and reiterating the contentions urged before the Revenue authorities submitted that during the year under consideration, assessee society was in receipt of some voluntary donations towards corpus fund which were credited directly to the Balance Sheet. According to him, the Assessing Officer has opined that the donations are nothing but capitation fee charged form the students and their guardians and that the assessee has done profiteering activities which cannot be termed as charitable. He denied the assessee exemption of its income from tax on this count, and brought to tax. The learned counsel also drew our attention to the objects of the society as appearing in the Memorandum of Association and submitted that the society runs various educational institutions, including Chaitanya Bharathi Institute of Technology, which is one of the premier Engineering Colleges in the self-financing category in Andhra Pradesh. Learned counsel has brought to our notice that the assessee society received several voluntary contributions from different persons towards corpus fund of the society, and the assessee has credited the same in the Balance Sheet. During the assessment proceedings, the ass ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... received donations from the parents of the prospective students seeking admissions into the assessee's educational institutions. A list of such donations together with the particulars of the donors has also been furnished before the Revenue authorities. Affidavits of some of the donors were also furnished before the Assessing Officer. It is the case of the Revenue that such donations are not voluntary and they are linked to the admission of the students to the educational institutions of the assessee, and thus, the assessee has collected higher fee over and above the prescribed fee limit and also camouflaged these amounts under other heads, which established the intent of defraud the Revenue. Such a society, according to the Revenue cannot be said to be genuinely charitable, and as such, it is not entitled to exemption under S.11 of the Act. It is the case of the assessee that the donations are purely voluntary and have nothing to do with the admission of the students. 15. On careful consideration of the material on record, we find merit in the submissions of the assessee that the donations are voluntary and there was no violation whatsoever by the assessee, so as to warrant ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the submissions to some extent in favour of the assessee. Hence, I request your honour to decide the matter as per law. 16. The CIT(A) has also taken note that in the remand report submitted by the Assessing Officer on 18.2.2008, after discussion of the earlier reports, it was submitted that the donations made to the society were voluntary and therefore, there is merit in the contention of the assessee, but still proceeded to uphold the view taken by the Assessing Officer without proper reasoning. We find that the Assessing Officer has proceeded to decide the issue of assessee's claim for exemption, merely on the basis of suspicions and surmises, and the CIT(A) simply confirmed the action of the Assessing Officer, ignoring the findings and observations of the Assessing Officer in the remand reports and other material available on record. 17. The decision of the coordinate bench of the Tribunal in the case of Voditala Educational Society (supra) is distinguishable on facts. In that case, there was a survey action in the premises of one of the colleges run by it, whereas in the case of the assessee, no such thing has happened. Further, in that case, the contributions/rece ..... X X X X Extracts X X X X X X X X Extracts X X X X
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