TMI Blog2021 (10) TMI 297X X X X Extracts X X X X X X X X Extracts X X X X ..... ring the cancellation of registration by the Pr. CIT(Exemptions). Accordingly we find that the assessee trust was restored with the registration u/s 12A of the Act by the Hon ble Tribunal and the decision was duly considered by the CIT(A) and directed the A.O to grant exemption u/s 11 of the Act. We are of the opinion that the CIT(A) has passed a reasoned and logical order considering the facts, circumstances, provisions of law and the decision of the Hon ble Tribunal. - Decided against revenue. - ITA No.1789/Mum/2020 - - - Dated:- 22-9-2021 - Shri S Rifaur Rahman, Accountant Member And Pavan Kumar Gadale, Judicial Member For the Appellant : Shri Anil Thakkar. DR For the Respondent : Shri B. Bagchi. AR ORDER PER PAVAN KUMAR GADALE JM: The revenue has filed the appeal against the order of the Commissioner of Income Tax (Appeals)- 1, Mumbai passed u/s 143(3) r.w.s 147 and 250 of the Income Tax Act, 1961. The revenue has raised the following grounds of appeal: 1. Whether, on the facts and in circumstances of the case and in law the Ld.CIT(A) 1, Mumbai has erred in allowing that the exemption u/s. 11 of the Income tax Act, 1961 to the Appe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ce, the assessee has filed a letter dated 24.04.2015 along with a copy of acknowledgment of return of income filed on 22.09.2008 for the A.Y 2008-09 as due compliance to notice u/s 148 of the Act. Subsequently, notice u/s 143(2) and 142(1) of the Act are issued and the assessee was provided the reasons for reopening of assessment. In compliance to the notices, the Ld. AR of the assessee appeared from time to time and furnished the details and the case was discussed. 4. The A.O. in the course of assessment proceedings found that the assessee has received donations from the students, which is prohibited under probation of capitation fee Act, 1987, Govt of Maharashtra. The A.O. has dealt on the facts and required the assessee to justify the claim of exemption u/s 11 of the Act in view of cancellation of order u/s 12AA(3) dated 17.12.2014 by the Pr. CIT(Exemptions) Mumbai. The assessee in response to the query raised by the A.O. has filed a letter dated 23.10.2015 explaining the justification for claim of exemption u/s 11 referred at Para 3.3 of the order. Further, the assessee is in full time educational activites since 1984 and the exemption was granted and the trust has not vio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Act. Further the objects of the trust are charitable in nature and cannot carry the activities of profit motive and has violated the provisions of Maharashtra Prohibition of Capitation Fee Act, 1987 and prayed for set aside of the order of the CIT(A) and supported the order of the A.O. 7. Contra, the Ld. AR submitted that the assessee trust has been existance from the year 1984 and has not violated any provisions of the Act. The CIT(A) has considered the provisions of law, submissions of the assessee and the decision of the Hon ble Tribunal were the order of Pr.CIT(Exemptions) cancelling the registration u/sec12A of the Act was set aside, vide ITAT order in ITA Nos. 1778/M/2015 2612/M/2016 dated 31.07.2019 and supported the order of the CIT(A). 8. We heard the rival submissions and perused the material available on record. The sole crux of the disputed issue as envisaged by the Ld. DR that the CIT(A) has erred in directing the A.O to grant exemption u/s 11 of the Act. At this juncture, we considered it appropriate to refer to the observations of the CIT(A) on the facts and the provisions of law dealt at Para 8.2 to 8.7 of the order, read as under: 8.2 In the writ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... observations with regard to the activities of the trust, if any as referred to in section 11 or 13 of the IT Act, 1961. Unless, the Ld. DIT('E) brings on record any evidences to prove that the objects of the trust are not charitable in nature and its activities are not carried out in accordance with objects, then merely for the reason of collection of donations from students, that too when such donations are within the limit at prescribed fees fixed by the competent authority registration granted under Sec. 12A cannot be cancelled by invoking his powers under 12AA(3) of the Act, 1961. Hence we set aside the order of the Ld. DIT(E) and the restored registration granted under Sec. 12A of the Act, 1961. 8.4 On the quantum appeal for AY 2011-12, the ITAT held that that the AO had assessed surplus for the year under the head income from business or profession for the reason that exemption granted under section 12A had been withdrawn for the impugned assessment year for the reasons stated in the order of the Ld. CIT(E) as per which the assessee has violated provisions of Prohibition of Capitation Fee Act (Government of Maharashtra), 1987 by collecting building fund from paren ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ny law for the time being in force, no capitation fee shall be demanded or collected by or on behalf of any educational institution from or in relation to, any student in the consideration of his admission to, and prosecution of any course of study, or of his promotion to a higher standard or class in, such institution. Thus, the above definitions and sections categorically hold that any amount received in excess of the prescribed rate of Fee is to be held as capitation fee if it is for admission or promotion purposes. 8.6.3 From the above, it is seen that the Prohibition of Capitation Fee Act gets invoked where capitation fee is taken in connection with admission to, and prosecution of , any course of study, or for promotion to a higher standard or class of any student. It is seen from the facts of the present case at hand that the AO has not made any such allegation. The AO has only held that the registration of the trust has been cancelled and that the assessee has not been able to show that collecting donation is permissible under the Provision of Capitation Fee Act. 8.6.4 In this correction, it is seen that section 3(2) of the Prohibition of Capitation Fee Act pe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Building fund from parents/students, thereby, violated provisions of Prohibition of Capitation Fee Act (Government of Maharashtra), 1987. Except this, there is no iota of any evidence in the order of the Ld. CIT(E) that either the assessee has violated any of provisions of section 11 13 of IT Act, 1961 or objects of the trust are not charitable in nature and also its activities are not carried out in accordance with its objects. In order to invoke provisions of section 12AA(3), the Ld. CIT(E) shall make a clear case of violations of any of the provisions of section 11 13 and also the activities of the trust are not genuine. In this case, the Ld. CIT(E) never disputed the fact that the objects of the trust are charitable in nature. Once an institution/trust came within the phrase existence slowly for education purpose and not for prof it no other conditions like application of income were required to be complied with. If you go through the order of the Ld. CIT(E), it is very clear that the sole reason given by Ld. CIT(E) for cancellation of registration is collection of donations in violations of Prohibition of Capitation Fee Act (Government of Maharashtra), 1987. Whether co ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... only for the reason of receipt of donations from students/parents without appreciating the fact that such donations are voluntary and also within the limit prescribed limit fixed by the competent authority. 7. Coming to the case laws relied upon by the Ld. A.R. for the assessee. The Ld. A.R. relied upon the decision of ITAT, Mumbai in the case of South Indian Educational Society vs. CIT-Central in ITA No.3288/M/2013. We find that the coordinate bench of the Tribunal has considered an identical issue in light of collection of capitation fee from students and held that once the objects of the trust are charitable in nature and its activities are carried out in accordance with objects of the trust, merely for the reason of collection of donations, registration granted under section 12A of the IT Act, 1961 cannot be cancelled. We further noted that ITAT, Pune Bench in the case of Maharashtra Academy of Engineering and Educational Research vs. CIT (2010) 133 TTJ 706 held that if the CIT had an information of some wrongful means of earning fees in the form of a donation or the information tells about excessive charging of fees; then the CIT in his rights can pass on the informatio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is collecting huge amount of capitation fee from students for admission to medical colleges, withdrawal of exemption under section 10(23C)(b) did not require any interference. 9. In this case, on perusal of facts available on record, we find that the Ld. DIT(E) in his order except stating that the trust is collecting donations being 'Building Fund from students/parents has not made any observations with regard to activities of the trust, if any, as referred to in section 11 or 13 of the IT Act, 1961. Unless, the Ld. DIT(E) brings on record any evidences to prove that the objects of the trust are not charitable in nature and its activities are not carried out in accordance with objects, then merely for the reason of collection of donations from students, that too when such donations are within the limit at prescribed fees fixed by the competent authority, registration granted under section 12A cannot be cancelled by invoking his powers under section 12AA(3) of the IT Act,1961. Hence, we set aside the order of the Ld. DIT(E) and restored registration granted under section 12A of the IT Act, 1961. ITA No.2612/M/2016 10. The issue involved in this appeal is co ..... X X X X Extracts X X X X X X X X Extracts X X X X
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