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2015 (6) TMI 3 - ITAT HYDERABAD

2015 (6) TMI 3 - ITAT HYDERABAD - [2015] 44 ITR (Trib) 256 (ITAT [Hyd]) - Denial of exemption u/s 11 - large amount of capital fee as collection of money for admission of students in the school - Held that:- As can be seen from the content of the sworn affidavit, it is the contention of the assessee that neither there is a regulating authority/prescribed body in India, as far as the assessee is concerned, nor there is any fee prescribed for the assessee either by DARE/MEA or by any of the bodies .....

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pect while coming to the conclusion that the assessee has charged fees over and above the prescribed fee.- Decided in favour of assesse for statistical purposes. - ITA No. 1715/Hyd/2014 - Dated:- 8-5-2015 - Shri P.M. Jagtap And Shri Saktijit Dey,JJ. For the Petitioner : Shri S. Raghunathan For the Respondent : Shri Ramakrishna Bandi, DR ORDER Per Saktijit Dey, J.M. This is an appeal by the assessee against the order dated 27.08.2014 passed by the ld CIT (A)-IV Hyderabad for the A.Y 2011-12. 2. T .....

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u/s 12AA of the Act w.e.f. 1.4.2004. For the A.Y under consideration the assessee filed its return of income on 29.09.2011 declaring total income at Nil after claiming exemption u/s 11 of the Act. In the course of the assessment proceedings, the AO while verifying assessee s claim of exemption u/s 11 of the Act, called upon the assessee to furnish various informations including the books of accounts. In response to query raised by the AO, it was submitted by the assessee that the Department of .....

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l to ICRISAT wherein it has amended certain conditions specifically declaring that the students admitted by the school should have come from an International/British system of education and has to return to the International/British system of education. AO on going through the approval granted by the DARE and MEA noted that the initial admission to the assessee s international school is restricted to the children of non Indian members of the ICRISAT. In other words, even the staff of the ICRISAT .....

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to 5 students per class per academic year. On verifying the details submitted by the assessee the AO noted that the assessee has admitted more than 5 students of Indian nationality in each class. Even, the students are not the wards of internationally recruited staff of Indian nationality of the ICRISAT. He observed that even the other foreign students who are admitted in various classes of assessee s school are not children of internationaly recruited staff of ICRISAT. Thus, the AO was of the v .....

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ring the financial year 2010-11 amounted to ₹ 1,56,87,500. From the aforesaid facts, the AO opined that the collection of large sums of money for admission of students in the school proves that the Institution does not exist solely for educational purposes, but instead for the purpose of profit. Accordingly the AO called upon the assessee to explain why the amount of capital fee should not be brought to tax by denying exemption u/s 11 of the I.T. Act. Though the assessee submited a written .....

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ds of internationally recruited staff is subject to certain terms and conditions. d) The admission to the school will be only to the children of non-Indian Members of the ICRISAT. The school shall not carry on its rolls students of Indian Nationality. However, on behalf of International School of Hyderabad the ICRISAT appealed to the Govt. of India to allow the admission of children of Indian Nationals of the ICRISAT to the School. The same is accorded subject to fulfilling of certain conditions .....

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ool. f) The assessee society has obtained Registration U/s. 12AA of the I.T.Act. g) Granting of Registration u/s 12A does not grant the society a blanket exemption to the assessees. h) It is clear from the act and also from the various judicial decisions that it is the Assessing Officer who will examine the affairs of the society year after year and to find out that whether the assessee has violated any provisions of section 11 to 13 of the I.T.Act or not. i) Following the judgment of Supreme Co .....

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Thus on the basis of the aforesaid reasoning the AO concluded that in view of the ratio laid down by the Hon'ble Supreme Court in the cae of TMA Pai Foundation & Others vs. State of Karnataka and Others, exemption u/s 10(23C) and u/s 11 is available to those colleges/institutions who are solely run for educational/philanthropic purposes and not for the purpose of profit. He concluded that as the assessee has charged capitation fee of ₹ 1.75 lakhs per student, it is not entitled for .....

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rieved by the assessment order so passed, assessee preferred an appeal before the ld CIT (A). In course of hearing of appeal before the first appellate authority assessee advanced elaborate arguments contesting reasonings of the AO on which he denied exemption to the assessee u/s 11 of the I.T. Act. The ld CIT (A) after considering the submissions of the assessee in the light of the material available on record, did not find any of the objections of the AO for denial of exemption u/s 11 of the A .....

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isallowance of exemption claimed by the assessee u/s 11 of the Act. 6. The ld AR before this forum apart from making oral submissions has also filed a detailed written submission. The sum and substance of the argument of the ld AR is to the effect that there being no fee prescribed by any competent authority as far as the assessee institution is concerned, the departmental authorities could not have come to a conclusion that the assessee has collected capitation fee over and above the prescribed .....

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ucational institutions in respect of each class of student. Further as per the said provisions, no educational institution shall collect any fee in excess of the fee notified by the Govt. It was submitted by the assessee that the charter of the institution prescribes that it is not bound by the Indian Education Syllabus. Further, it it not governed by any authority of India such as the CBSE, CISCE, State Board etc. Hence, as such, no fee has been prescribed by any such authority for unaided scho .....

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y prescribed fee, departmental authorities were not correct in denying exemption u/s 11 to the assessee on the reasoning that the assessee has collected money over and above the prescribed fee. He submitted,the capital fee of ₹ 1.75 lakhs collected from each student is part of assessee s fee structure. 7. The ld AR submitted that at no stage either during the assessment proceedings or before the first appellate authority, any inquiry is made to ascertain the facts whether there is any fee .....

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be prescribed by the authority or by a competent Court. However,the ld AR drawing our attention to the observations made by the Hon'ble Supreme Court in this judgment, subsequently in paragraph 61 of the judgment submitted that however, in respect of private school, maximum autonomy has to be with the management with regard to administration including the right of appointment, disciplinary powers, admission of students and the fees to be charged. Thus, it was submitted by the ld AR that with .....

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the last so many years and until the impugned A.Y, the Department has never denied exemption to the assessee for the aforestated reasons, though the assessee is following the same method of charging fees. Thus there is a legitimate expectation on the part of assessee that it is eligible for exemption u/s 11 of the Act. In this context, he relied on the decision of the Hon'ble Delhi High Court in DDIT vs. Shanti Devi Progressive Education Society (2012) (340 ITR 320). 10. The ld DR on the ot .....

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essee never took the plea that there is neither any regulatory authority in India as far as the assessee is concerned, nor there is any prescribed fee for the assessee. As the submissions have been made by the assessee for the first time before this forum and also since an affidavit has been filed on the aforesaid basis, the same may be remitted back to the file of the AO for examination. 11. We have considered the submissions of the parties and perused the materials on record as well as the ord .....

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issue which requires consideration is whether the denial of exemption u/s 11 of the Act to the assessee on the allegation of charging capitation fee over and above the fees prescribed under the Act is sustainable. Submissions of ld AR in this regard before us, in pith and substance, is as far as the assessee institution is concerned, it is not affiliated to any Indian curriculum bodies like CBSE, CSICE or State Boards. It is further submission of ld AR that there is no fee prescribed to the asse .....

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approval given by the Department of Agricultural Research and Education (DARE) vide its letter in D.O No.12-35/80-IC-I dated 13 February, 1981 along with terms and conditions for operation. 3. That subsequently, the Ministry of External Affairs (MEA) vide its letter No.DII/451/80(16/38) dated 13-3-2003 has given approval to ICRISAT wherein it has amended certain conditions. 4. That the deponent is the Principal of the above named assessee school and hence is fully conversant of the facts depose .....

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iliated only to international bodies (viz., International Baccalaureate Organization and the University of Cambridge and is not affiliated to any Indian curriculum prescribing body like CBSE, CISCE or any of the State Boards. 9. That there is no fee prescribed to the Appellant either by DARE/MEA or by any of the bodies to which it is affiliated to. 10. That the one-time admission/capital fee of INR 1,75,000 charged by the Appellant for the financial year 2010-11 (corresponding to A.Y 2011-12) is .....

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