TMI Blog2021 (8) TMI 30X X X X Extracts X X X X X X X X Extracts X X X X ..... has correctly held that once the assessee is registered under section 12AA of the Act, the Assessing Officer has to examine applicability of section 11, 12 and 13 of the Act. No such violation has been pointed out by the learned Assessing Officer of section 11, 12 and 13 of the Act. The Section 11 prescribe application of the income toward charitable purposes, which in the case of the assessee is for education and the assessee has duly applied its income for said purposes as per the rules specified in the Act. In view of the above facts and circumstances, we do not find any error in the order of the Ld. CIT(A) on the issue in dispute and, accordingly, we uphold the same. The ground of the appeal of the Revenue is accordingly dismissed. - ITA No.5849/Del/2017 - - - Dated:- 29-7-2021 - Shri Kul Bharat, Judicial Member And Shri O.P. Kant, Accountant Member For the Appellant : Ms. Pramita M. Biswas, CIT(DR) For the Respondent : Sh. Abhinav Malhotra, Adv. ORDER PER O.P. KANT, AM: This appeal by the Revenue is directed against order dated 19/06/2017 passed by the learned Commissioner of Income Tax (Appeals)-Aligarh [in short the Ld. CIT(A) ] for ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 000 3000000 II year 75000 50 3750000 15000 750000 ' 3000000 111 year 150000 50 7500000 15000 750000 6750000 IV year 150000 50 7500000 15000 750000 6750000 V year 200000 50 10000000 15000 750000 9250000 Peramedical 37500 27 1012500 28000 756000 256500 Total 103213500 2.1 In view of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 16,70,40,848.23 15% of Above (C ) 2,50,56,127.23 To be Utilised B-C=D 14,19,84,721.00 Utilised 28,59,66,154.00 Less: Depreciation added back as disallowed as discussed above 0.00 Total Utilised (E ) 28,59,66,154.00 Short Utilisation (1)- E) 0.00 (F) Total Taxable Under MMR (no set to be allowed)= (A)+(F) 10,32,13,500.00 2.4 The Ld. CIT(A) after considering detailed submission of the assessee, deleted the addition mainly on the ground that there was no violation of section 11, 12 and 13 of the Act and Assessing Officer is concerned with the application of the income only. The relevant finding of the leaned CIT(A) has reproduced as under: In the assessment order, the AO has alleged that the appellant society has charged fees in excess of the fees fixed by the fixat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of fees from the students the action would lie with the Regulatory Authority which may have been empowered in this regard by the law. Under the IT Act, no adverse view can be taken with regard to the quantum of fees charged from the students. Under the IT Act, we are concerned only with the application of income and it is not significant how hat income was earned. As no violation of IT Act has been indicated by the AO, o adverse view can be taken in the assessment of the society s income. 3. Before us, the parties appeared through Video conferencing facility. The assessee filed an affidavit by the trustee declaring that no fee was fixed by the Fee fixation committee for the academic year relevant to the assessment year 2014-15. 4. Before us, the learned DR relied on the order of the Assessing Officer and submitted that in view of the capitation fee received, the assessee was engaged in the business and not charity. The learned DR also relied on the decisions cited by the Assessing Officer. 5. On the contrary, the learned counsel of the assessee relied on the order of the Ld. CIT(A) and decision of the Hon ble Supreme Court in the case of Queens Education Soci ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ase. In this case, this Court considered the conditions and regulations, if any, which the state could impose in the running of private unaided/aided recognized or affiliated educational institutions conducting professional courses such a medicine, engineering, etc. The extent to which the fee could be charged by such an institution, and the manner in which admissions could be granted was also considered. This Court held that private unaided recognized/affiliated educational institutions running professional courses were entitled to charge a fee higher than that charged by government institutions for similar courses, but that such a fee could not exceed the maximum limit fixed by the state. It held that commercialization of eduction was not permissible, and was opposed to public policy and Indian tradition and therefore charging capitation fee was illegal. With regard to private aided recognized/affiliated educational institutions, the Court upheld the power of the government to frame rules and regulations in matter of admission and fees, as well as in matters such a recruitment and conditions of service of teachers and staff. Though a question was raised as to whether the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssional college should be established and/or administered only by a Society registered under the Societies Registration Act, 1860, or the corresponding Act of a State, or by a Public Trust registered under the Trusts Act, or under the Wakfs Act, and that no individual, firm, company or other body of individuals would be permitted to establish and/or administer a professional college (b) that 50% of the seats in every professional college should be filed by the nominees of the Government or University, selected on the basis of merit determined by a common entrance examination, which will be referred to as free seats ; the remaining 50% seats ( payment seats ) should be filled by those candidates who pay the fee prescribed therefore, and the allotment of students against payment seats should be done on the basis of inter se merit determined on the same basis as in the case of free seats (c) that there should be no quota reserved for the management or for any family, caste or community, which may have established such a college (d) that it should be open to the professional college to provide for reservation of sets for constitutionally permissible classes with the approval of the af ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nts who because of their lower position in the merit list, could secure only payment seats . It was also submitted by the counsel for the minority institutions that Unni Krishnan's case was not applicable to the minority institutions, but that notwithstanding this, the scheme to evolved had been made applicable to them as well. 31. Counsel for the institutions, as well as the Solicitor General, submitted that the decision in Unni Krishnan's case, insofar as it had framed the scheme relating to the grant of admission and the fixing of the fee, was unreasonable and invalid. However, its conclusion that children below the age of 14 had a fundamental right to free education did not call for any interference. 32. It has been submitted by the learned counsel for the parties that the implementation of the scheme by the States, which have amended their rules and regulations, has shown a number of anomalies. As already noticed, 50% of the seats are to be given on the basis of merit determined after the conduct of a common entrance test, the rate of fee being minimal. The payment seats which represent the balance number, therefore, cross- subsidize the free seats . ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rictions. 36. The private unaided educational institutions impart education, and that cannot be the reason to take away their choice in matters, inter alia, of selection of students and fixation of fees. Affiliation and recognition has to be available to every institution that fulfills the conditions for grant of such affiliation and recognition. The private institutions are right in submitting that it is not open to the Court to insist that statutory authorities should impose the terms of the scheme as a condition for grant of affiliation or recognition; this completely destroys the institutional autonomy and the very objective of establishment of the institution. 37. The Unni Krishnan judgment has created certain problems, and raised thorny issues. In its anxiety to check the commercialization of education, a scheme of free and payment seats was evolved on the assumption that the economic capacity of first 50% of admitted students would be greater than the remaining 50%, whereas the converse has proved to be the reality. In this scheme, the payment seat student would not only pay for his own seat, but also finance the cost of a free seat classmate. When one ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y indicate the important role played by private unaided educational institutions, both minority and nonminority, which cater to the needs of students seeking professional education. 40. Any system of student selection would be unreasonable if it deprives the private unaided institution of the right of rational selection, which it devised for itself, subject to the minimum qualification that may be prescribed and to some system of computing the equivalence between different kinds of qualifications, like a common entrance test. Such a system of selection can involve both written and oral tests for selection, based on principle of fairness. 41. Surrendering the total process of selection to the state is unreasonable, as was sought to be done in the Unni Krishnan scheme. Apart from the decision in St. Stephen's College v. University of Delhi, which recognized and upheld the right of a minority aided institution to have a rational admission procedure of its own, earlier Constitution Bench decision of this Court have, in effect, upheld such a right of an institution devising a rational manner of selecting and admitting students. 42. In R. Chitralekha and Anr. v. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... State Government, etc., are overruled. 6.1.1 The Hon ble Supreme Court framed 11 questions and majority of judges answered the Question No. 9 that there should not be capitation fee or profiteering, but reasonable surplus to meet cost of expansion and augmentation of facilities does not, however, amounted to profiteering. 6.1.2 In the case of Islamic Academy (supra) also held that each institute must have the freedom to fix its own fee structure taking into consideration the needs to generate funds to run the institution and to provide facilities necessary for the benefit of the students, however, there can be no profiteering and charging of capitation fees. 6.1.3 In P.A. Inamdar (supra), the Supreme Court while answering question no. 3 held that every institution is free to devise its own fee structure but the same can be regulated in the interest of preventing profiteering. No capitation fee can be charged. Leverage was allowed to educational institutions to generate reasonable surplus to meet cost of expansion and augmentation of facilities which would not amount to profiteering. The Court upheld the two Committees for monitoring admission procedure a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ioned in para-3, has been fixed by Govt./DGME. It means no fee has been fixed by the competent authority for academic session 2013-14 relevant to A.Y.2014-15 under consideration. As regards fee for BAMS course, the Govt./DGME/Fee Fixation Committee has fixed fee for Govt. Unani, Aurvedic and Homeopathic Medical Colleges only which is clearly mentioned in the order and has no application on the private ayurvedic medical colleges. As regards fee for paramedical courses, it is submitted that Uttar Pradesh State Medical Faculty, U.P. had granted permission to start the paramedical courses vide letter no. 3461/12 dated 23.05.2012. As per point 3 of the aforesaid letter the college is permitted to charge tution fee of ₹ 36000/- per student. The assessee college has charged the total fee of ₹ 37500/- which includes tution fee ₹ 36000/- and examination fee ₹ 1500/-. Thus the assessee has not charged any excess fee than fixed by the authorities. Ld. AO has taken the fee fixed at ₹ 28000/- as per own imagination. The copy of letter of U.P. State Medical Faculty is enclosed and Marked as ANNEXURE-G. In view of the discussion and facts ..... X X X X Extracts X X X X X X X X Extracts X X X X
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