TMI Blog2015 (6) TMI 3X X X X Extracts X X X X X X X X Extracts X X X X ..... - 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. Though, the assessee has raised as many as eight grounds, as per the revised grounds of appeal, the core issue is with regard to the denial of exemption u/s 11 of the I.T. Act. 3. Briefly, the facts are the assessee a society is sponsored and managed by the International Crops Research Institute for the Semi-Arid Tropics ( ICRISAT ). The assessee claiming itself to be a non profit educational institution applied for registration u/s 12A of the Act and registration was also granted to the assessee 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... see in the matter of construction of school building and acquiring of property of the institution has violated the terms and conditions of approval. Further on verification of the accounts of the assessee, AO noted that the assessee has collected capital fee of ₹ 1.75 lakhs per student and the total capital fee collected during 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 note strongly objecting to the proposed disallowance of exemption u/s 11 of the I.T. Act, but the AO refused to accept the contentions of the assessee stating the following reasons: a) The assessee, International School of Hyderabad has not been granted any immunity or privileges extended as in the case of ICRISAT. b) It has to abide by the law of the land. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s 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 exemption u/s 11 of the Act and accordingly treated the income over expenditure of ₹ 1,22,98,693 as per the income and expenditure account as income of the assessee during the relevant year. Further AO also disallowed the depreciation claimed of ₹ 18,25,570. In addition to the above, the AO also treated the entire capital fee collected during the year amounting to ₹ 1,56,87,500 as income of the assessee. Thus the total income was determined at ₹ 4,52,87,684. 5. Being aggrieved 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 obj ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... es as well. Thus, it was submitted by the assessee, since there is neither any regulatory authority prescribing fee for assessee institution, nor there being any 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 prescribed for the assessee school to come to a conclusion that the assessee has collected fees over and above the prescribed fee. He submitted that even the assessee was never called upon to explain these aspects. 8. The ld AR referring to the decision of the TMA Pai Foundation (Supra) relied upon by the AO submitted before us that even in the said judgment the Hon'ble Supreme Court observed that in case of professional colleges the fee chargeable should be subject to such a ceiling as may be prescribed by the authority or ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sions of the parties and perused the materials on record as well as the orders of the Revenue authorities. We have also carefully applied our mind to the decisions placed before us. As can be seen, though, the AO denied exemption u/s 11 to the assessee on various reasons including the charging of capitation fee, the ld CIT (A) has not found any of the reasons sustainable except the one relating to collection of capitation fee. As the Department is not in appeal, we are not required to go into other reasons mentioned by the AO for denying benefit u/s 11. Thus, the only 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 assessee either by DARE/MEA or any of the bodies to which it is affiliated. In this context a sworn affidavit of the Principal of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... iliated to. It is further submission of the assessee that the one time admission/capital fee of ₹ 1.75 lakhs from each of the student is part of the fee structure approved by the school management, hence it cannot be said that the assessee has charged any fees over and above the prescribed fee for applying the ratio of the decision of the ITAT for denying exemption u/s 11 of the I.T. Act to the assessee. 13. Having considered the specific contention of the ld AR and assertions made in the affidavit, we are of the view that the aforesaid issue requires examination by the AO. On a perusal of the assessment order as well as order of the first appellate authority, it is not clear whether they have examined this aspect while coming to the conclusion that the assessee has charged fees over and above the prescribed fee. As the Departmental authorities have not made any inquiry for ascertaining the fact, whether there is any fees prescribed for the assessee, we are inclined to remit the matter back to the file of the AO for examining afresh. The AO must consider the assertion made in the affidavit as well as other materials on record and decide the issue accordingly and in accorda ..... X X X X Extracts X X X X X X X X Extracts X X X X
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