TMI Blog2020 (10) TMI 713X X X X Extracts X X X X X X X X Extracts X X X X ..... said writes, then also, excess or extra charged fees has to be adjusted towards the fees of the respective students from whom it has been collected during completion of their courses. We refrain from making any observations regarding allegation of the AO about charging of extra fees from prescribed limit as the issue is pending for adjudication before the Hon ble High Court of Orissa in the respective writ petitions filed by the assessee. Therefore, benefit of section 11 of the Act cannot be denied to the assessee only on the allegation of charging of extra fees from prescribed limit by taking respectful cognizance of the interim orders of Hon ble High Court of Orissa. Denial of benefit of section 11 is not correct and sustainable. Consequential disallowance of salary paid to Mrs Sujata cannot be held as justified and sustainable. - Decided in favour of assessee. - ITA No.19/CTK/2020 - - - Dated:- 14-10-2020 - Shri Chandra Mohan Garg, Judicial Member For the Assessee : Shri Niranjan Panda, CA For the Revenue : Shri Subhendu Dutta, DR ORDER This is an appeal filed by the assessee against the order of the CIT(A),1, Bhubaneswar dated 18.9.2019 for the ass ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... filed return of income for the assessment year under consideration declaring total income at Rs.Nil. During the course of assessment proceedings, the Assessing Officer noticed that the assessee in the income and expenditure, has shown gross income of ₹ 7,41,83,588/- comprises of annual tuition fees of ₹ 7,30,58,043/- and interest other income of ₹ 11,25,545/-. Thus, the collection from academic sources i.e. collection under different heads is as under: Sl.No. Academic income Amount in (Rs.) 1. Tuition fees (B.Tech) 4,54,11,000 2. Tuition fee (diploma) 18,12,100 3. Books and study materials 34,65,500 4. Transportation fees 68,02,050 5. Dress material fees 5,82,500 6. Misc. income 2,89,793 7. Hostel fees 51,85,844 8. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 930/- due to violation of collection of fee structure from the students over and above the fees prescribed by the State Government fixed for students. Besides, the above addition, the AO denied expenditure claimed u/s.13(1)(c) of I.T.Act being salary paid to the trustee for gross violation of section 11 of I.T.Act by the assessee. During the course of assessment proceedings the AO observed that for the relevant assessment year 2010-11 the assessee has disclosed gross income to the tune of ₹ 7,41,83,588/-, which includes interest income of ₹ 11,25,545/-. Thus income from' academic sources i.e., collection under different heads which is as under :- SI. No. Academic Income Amount in (Rs.) 01. Tuition fee(B.Tech) 4,54,11,000/- 02. Tuition fee(Diploma) 18,12,1000/- 03. Books and study materials 34,66,500/- 04. Transportation fees 68,02,050/- 0 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 2,500 4,900 10,000 - 3,750 4,800 33,000. 123450 B.Tech 2009 64,500 2,500 4,900 10,000 - 3,750 4,800 33,000 123450 Diploma 2009 23,700 10,000 - 3,750 31,000 68,450 All Govt. Engineering colleges/Polytechnics/Engineering Schools are. under the administrative control of the Director of Technical Education -- Training, Industries Department of Govt, of Odisha, whereas the private Engineering colleges/poly techniques are unaided institutions affiliated to BPUT/state council for Technical Education Vocational Trainings Odisha and approved by AICTE/State Government A reference to Government notification dated 17.12.2007 ( No. I-IT-141/2007 (pt.) 18488 which spe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... u/s 11 for which surplus of income over expenditure amounting to ₹ 26,06,930/- was disallowed and added back to the total income 'NIL' as disclosed by the appellant. Also the AO treated the status of the assessee as 'AOP' instead of its claim as 'Trust' 6. The ld CIT(A) provided copy of the remand report to the assessee for giving rejoinder. The reply/rejoinder to remand report of the AO by the assessee is as under: Withdrawal of the exemption u/s.11 of the I.T.Act, 1961 and taxing ₹ 26,06,930/- being excess of income over and expenditure: That the AO has completely misread the notification and recommendation of the Govt. and concluded as under: a) The assessee has collected fees over and above the prescribed fees like course fees, hostel fees, and employability training fees etc which are not as per the norms of AICTE Act 1987. b) The assessee trust though is running educational activities, the actual generation of surplus year after year spent in expansion of infrastructure I facilities proved that the activities are in realistic sense meant to earn profit and no charity is genuinely involved. 6.1 That to unders ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... fees structure committees (F.S.C). It is pertinent to mention here that the said civil appeal is still pending before Hon'ble Supreme Court Thus the Fee structure committee came into existence. 6.8 That as per the mandate the fees structure committee before recommending any fees schedule should discuss with the institution and evaluate the cost of education and infrastructure available which have paramount bearing on the component of the fees. 6.9 That the fees committee without due consideration without giving opportunity to the appellant, arbitrarily unilaterally had finalised the fees from time to time. The appellant had agitated this matter before appropriate authority vide its letter dated 14.07.2008, 15.04.2010 25.06.2010 the copies of which are enclosed herewith marked as Annexure-C,D E respectively for your honour's kind perusal. 6.10 That this matter was also brought to the notice of Hon'ble Odisha High Court vide Writ Petition No.3824 of 2009 by Orissa Private Engineering College Association (OPECA). Hon'ble Odisha High Court vide its order dated 15.04.2009 directed as under: The representation shall be disposed of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o coercive action shall be taken. It is further clarified that in case the petitioner-institution does not succeed in the writ extra fees collected over above the prescribed fees will be adjusted towards the fees of the respective students. Hon'ble Odisha High Court has given clear cut clarification to appropriate the extra fees collected in case the appellant failed to succeed in the writ. As a token of evidence the copies of both the orders of Hon ble Orissa High court are enclosed herewith marked as Annexure- G, H I respectively for your honour's kind perusal. 6.12 That Hon ble Odisha High Court vide it's above said orders clearly allowed the appellant trust to collect and retain fees till the finalization of the writ which is still awaiting disposal. 6.13 That from above sequel of the facts it is quite evident that no just proper fees structure has been decided by Fee structure Committee which is entangled with many litigations pending before Hon ble Odisha High Court. Thus learned A.O's observation of charging fees in excess of prescribed is against the materials available on record. 6.14 That without prejudice to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... GOVT. Each institution will be entitled to have its own fee structure. The fee structure for each institute must be fixed keeping in mind the infrastructure and facility available, the investments made, salaries paid to the teachers and staff, future plans for expansion and /or betterment of the institution etc . In view of the clear-cut mandate of the Apex Court the conclusion of learned A.O regarding collection of fees in excess of the prescribed limit has no leg to stand. 6. 16 That the appellant is providing education which is coming as a charitable object under the definition of Sec-2(15) of the LT. Act, 1961. The appellant enjoys the status of a valid charitable Trust by virtue of registration U/S 12AA of the Act. As long as the charitable status is intact the A.O does not have authority to withdraw the benefit available to a charitable organization U/s. 11 of the Act except for violation as provided in Sec 11 to 13 of the Act. No such violation has been established. The Hon'ble ITAT, Cuttack Bench, Cuttack has observed that even the administrative CIT does not have unbridle powers to withdraw the registration of a charitable organization U/s-12AA(3) of the Act ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... institution does not succeed in the writ, the extra fees collected over and above the prescribed fees will be adjusted towards the fees of respective students. Therefore, the action of the AO is not correct and sustainable and the ld CIT(A) was also not justified in confirming and upholding the same. 10. Replying to the contention of ld A.R. of the assessee, ld DR strongly supported the orders of the lower authorities. However, he did not controvert the factum that the writs filed by the assessee are pending before the Hon ble High Court of Orissa and interim stay orders have been passed therein that in case the assessee/petitioner institution does not succeed in the writs, extra fees collected over and above prescribed fees will be adjusted towards the fees of respective students. 11. On careful consideration of above submissions, I am of the view that from the relevant operative paras of assessment order, it is discernible that the AO firstly held that the assessee is found to be collecting from students extra amount of course fees and fee in other categories such as employability of training, hostel, etc and such other fees is considered as capitation fees. The AO fur ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he petitioner institution over and above the fees prescribed by the Fee Structure Committee will be adjusted towards the fees of the respective students from whom it has been collected during completion of their course. Urgent certified copy of this order be granted on proper application. 13. I am cautious and refrain from making any observations regarding allegation of the AO about charging of extra fees from prescribed limit as the issue is pending for adjudication before the Hon ble High Court of Orissa in the respective writ petitions filed by the assessee. Therefore, in the totality of facts and circumstances of the case, the benefit of section 11 of the Act cannot be denied to the assessee only on the allegation of charging of extra fees from prescribed limit by taking respectful cognizance of the interim orders of Hon ble High Court of Orissa (supra). Accordingly, Ground Nos.2 3 of the assessee are allowed. 14. Apropos Ground Nos. 4 5 of appeal, ld A.R. submitted that the benefit of section 11 of the Act was denied to the assessee without any reasonable cause, thus consequent disallowance of salary paid to Smt. Sujata of ₹ 5,61,504/- should be deleted. ..... X X X X Extracts X X X X X X X X Extracts X X X X
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