Commissioner Of Income Taxchennai v. M/S. Mac Public Charitable Trustmac/Ich Building, Vhs Campustiti Post, Chennai - 600 113(

TCA No. 303 of 2021 etc., batch IN THE HIGH COURT OF JUDICATURE AT MADRAS DATED : 31.10.2022 CORAM THE HONOURABLE MR. JUSTICE R. MAHADEVANandTHE HONOURABLE MR. JUSTICE MOHAMMED SHAFFIQ Tax Case Appeal Nos. 303, 304, 305, 306, 307, 308, 309 and 310 of 2021and 59, 60, 62 and 63 of 2022 and CMP.Nos.8729, 8730, 8731, 8733, 8734, 8740 and 8755 of 2021 --- T.C.A. No. 303 of 2021 Commissioner of Income TaxChennai .. Appellant Versus M/s. MAC Public Charitable TrustMAC/ICH Building, VHS CampusTITI Post, Chennai - 600 113(PAN AAATM 0484C).. Respondent T.C.A. No. 304 of 2021 Commissioner of Income TaxChennai .. Appellant Versus M/s. Sri Venkateswara Educational and Health TrustNo.1/3A, River View RoadKotturpuramChennai - 600 085(PAN AAATS 2327L) https://www.mhc.tn.gov.in/judis .. Respondent T.C.A. No. 305 of 2021Commissioner of Income TaxChennai .. Appellant VersusM/s. United Educational FoundationMAC/ICH Building, VHS CampusTITI Post, Chennai - 600 113(PAN AAATU 3411D) .. RespondentT.C.A. No. 306 of 2021Commissioner of Income TaxChennai .. Appellant VersusM/s. United Educational FoundationMAC/ICH BuildingMAC/ICH Building, VHS CampusTITI Post, Chennai - 600 113(PAN AAATU 3411D) .. RespondentT.C.A. No. 307 of 2021Commissioner of Income TaxChennai .. Appellant VersusM/s. Sri Venkateswara Educational and Health TrustNo.1/3A, River View RoadKotturpuramChennai - 600 085(PAN AAATS 2327L).. RespondentT.C.A. No. 308 of 2021Commissioner of Income TaxChennai .. Appellant https://www.mhc.tn.gov.in/judis TCA No. 303 of 2021 etc., batch VersusM/s. Sri Venkateswara Educational and Health TrustNo.1/3A, River View RoadKotturpuram, Chennai - 600 085(PAN AAATS 2327L).. RespondentT.C.A. No. 309 of 2021Commissioner of Income TaxChennai .. Appellant VersusM/s. MAC CharitiesMAC/ICH Building, VHS CampusTITI Post, Chennai - 600 113(PAN AAATM 0483F).. RespondentT.C.A. No. 310 of 2021Commissioner of Income TaxChennai .. Appellant VersusM/s. MAC CharitiesMAC/ICH Building, VHS CampusTITI Post, Chennai - 600 113(PAN AAATM 0483F).. RespondentT.C.A. No. 59 of 2022Director of Income Tax (Exemptions)Exemptions - IVChennai - 600 034 .. Appellant VersusM/s. United Educational FoundationMAC/ICH BuildingVHS CampusChennai - 600 113PAN AAATU3411D.. Respondenthttps://www.mhc.tn.gov.in/judis TCA No. 303 of 2021 etc., batch T.C.A. No. 60 of 2022 Director of Income Tax (Exemptions)Exemptions - IVChennai - 600 034 .. Appellant Versus M/s. Sri Venkateshwara Educational & Health TrustNo.1/3A, River View RoadKotturpuramChennai - 600 085PAN AAATS2327L.. Respondent T.C.A. No. 62 of 2022 Director of Income Tax (Exemptions)Exemptions - IVChennai - 600 034 .. Appellant Versus M/s. MAC Public Charitable TrustMAC/ICH Block 2VHS Campus, Adyar TTTI PostTaramaniChennai - 600 113PAN AAATM0484C.. RespondentT.C.A. No. 63 of 2022Director of Income Tax (Exemptions)Exemptions - IVChennai - 600 034 .. Appellant Versus M/s. MAC Charities MAC/ICH Block 2VHS Campus, Adyar TTTI PostTaramaniChennai - 600 113PAN AAATM0483F.. Respondent https://www.mhc.tn.gov.in/judis TCA No. 303 of 2021:-Appeal filed under Section 260A of The Income Tax Act, 1961 against the order dated 13.11.2019 passed in ITA No. 616/Chny/2019 on the file of the Income Tax Appellate Tribunal, "A" Bench, Chennai. TCA No. 304 of 2021:- Appeal filed under Section 260A of The Income Tax Act, 1961 against the order dated 13.11.2019 passed in ITA No. 620/Chny/2019 on the file of the Income Tax Appellate Tribunal, "A" Bench, Chennai. TCA No. 305 of 2021:- Appeal filed under Section 260A of The Income Tax Act, 1961 against the order dated 13.11.2019 passed in ITA No. 617/Chny/2019 on the file of the Income Tax Appellate Tribunal, "A" Bench, Chennai. TCA No. 306 of 2021:- Appeal filed under Section 260A of The Income Tax Act, 1961 against the order dated 13.11.2019 passed in ITA No. 1497/Chny/2019 on the file of the Income Tax Appellate Tribunal, "A" Bench, Chennai. TCA No. 304 of 2021:- Appeal filed under Section 260A of The Income Tax Act, 1961 against the order dated 13.11.2019 passed in ITA No. 620/Chny/2019 on the file of the Income Tax Appellate Tribunal, "A" Bench, Chennai. TCA No. 305 of 2021:- Appeal filed under Section 260A of The Income Tax Act, 1961 against the order dated 13.11.2019 passed in ITA No. 617/Chny/2019 on the file of the Income Tax Appellate Tribunal, "A" Bench, Chennai. TCA No. 306 of 2021:- Appeal filed under Section 260A of The Income Tax Act, 1961 against the order dated 13.11.2019 passed in ITA No. 1497/Chny/2019 on the file of the Income Tax Appellate Tribunal, "A" Bench, Chennai. TCA No. 307 of 2021:- Appeal filed under Section 260A of The Income Tax Act, 1961 against the order dated 13.11.2019 passed in ITA No. 622/Chny/2019 on the file of the Income Tax Appellate Tribunal, "A" Bench, Chennai. TCA No. 308 of 2021:- Appeal filed under Section 260A of The Income Tax Act, 1961 against the order dated 13.11.2019 passed in ITA No. 621/Chny/2019 on the file of the Income Tax Appellate Tribunal, "A" Bench, Chennai. TCA No. 309 of 2021:- Appeal filed under Section 260A of The Income Tax Act, 1961 against the order dated 13.11.2019 passed in ITA No. 618/Chny/2019 on the file of the Income Tax Appellate Tribunal, "A" Bench, Chennai. TCA No. 310 of 2021:- Appeal filed under Section 260A of The Income Tax Act, 1961 against the order dated 13.11.2019 passed in ITA No. 619/Chny/2019 on the file of the Income Tax Appellate Tribunal, "A" Bench, Chennai. https://www.mhc.tn.gov.in/judis TCA No. 303 of 2021 etc., batch TCA No. 59 of 2022:-Appeal filed under Section 260A of The Income Tax Act, 1961 against the order dated 12.04.2017 passed in ITA No. 2890/Mds/2014 on the file of the Income Tax Appellate Tribunal, "C" Bench, Chennai. TCA No. 60 of 2022:-Appeal filed under Section 260A of The Income Tax Act, 1961 against the order dated 12.04.2017 passed in ITA No. 2889/Mds/2019 on the file of the Income Tax Appellate Tribunal, "C" Bench, Chennai. TCA No. 62 of 2022:-Appeal filed under Section 260A of The Income Tax Act, 1961 against the order dated 12.04.2017 passed in ITA No. 2885/Mds/2014 on the file of the Income Tax Appellate Tribunal, "C" Bench, Chennai. TCA No. 63 of 2022:-Appeal filed under Section 260A of The Income Tax Act, 1961 against the order dated 12.04.2017 passed in ITA No. 2887/Mds/2014 on the file of the Income Tax Appellate Tribunal, "C" Bench, Chennai. COMMON JUDGMENT R. MAHADEVAN, J. INTRODUCTION 1.'Education' is a means to cognitively enlighten the bonded soul by empirical methods, which not only transcends beyond the mystical cycle of https://www.mhc.tn.gov.in/judis TCA No. 303 of 2021 etc., batch birth, but also to achieve terrestrial satisfaction and then mundane goals. It is a tool to eradicate social injustice. Globalization in every field has resulted in creation of more opportunities. Every rational parent, not privileged by affluence, strives to get their children educated beyond their means. Their quest to fulfil their dreams through their children has envisioned certain educational institutions to metamorphose the service, once known and worshipped to be a noble occupation, into an opportunity to make money. Our Constitution, under various Articles has enunciated the principles for equality and equal opportunity, the requirement to protect women, children and the youth of this nation and to prevent them from exploitation. 2.Education has been dealt with in the Constitution, in the following manner: “Article 14.Equality before law.—The State shall not deny to any person equality before the law or the equal protection of the laws within the territory of India. Article 15. Prohibition of discrimination on grounds of religion, race, caste, sex or place of birth.— and equal opportunity, the requirement to protect women, children and the youth of this nation and to prevent them from exploitation. 2.Education has been dealt with in the Constitution, in the following manner: “Article 14.Equality before law.—The State shall not deny to any person equality before the law or the equal protection of the laws within the territory of India. Article 15. Prohibition of discrimination on grounds of religion, race, caste, sex or place of birth.— (1) The State shall not discriminate against any citizen on grounds only of religion, race, caste, sex, place of birth or any of them. (2) No citizen shall, on grounds only of religion, race, caste, sex, place of birth or any of them, be subject to any disability, liability, restriction or condition with regard to— (a) access to shops, public restaurants, hotels and places of public entertainment; or (b) the use of wells, tanks, bathing ghats, roads and places of public resort maintained wholly or partly out of State funds or dedicated to the use of the general public. (3) Nothing in this article shall prevent the State from making any special provision for women and children. https://www.mhc.tn.gov.in/judis (4) Nothing in this article or in clause (2) of article 29 shall prevent the State from making any special provision for the advancement of any socially and educationally backward classes of citizens or for the Scheduled Castes and the Scheduled Tribes. (5) Nothing in this article or in sub-clause (g) of clause (1) of article 19 shall prevent the State from making any special provision, by law, for the advancement of any socially and educationally backward classes of citizens or for the Scheduled Castes or the Scheduled Tribes in so far as such special provisions relate to their admission to educational institutions including private educational institutions, whether aided or unaided by the State, other than the minority educational institutions referred to in clause (1) of article 30. (6) Nothing in this article or sub-clause (g) of clause (1) of article 19 or clause (2) of article 29 shall prevent the State from making,— (a) any special provision for the advancement of any economically weaker sections of citizens other than the classes mentioned in clauses (4) and (5); and (b) any special provision for the advancement of any economically weaker sections of citizens other than the classes mentioned in clauses (4) and (5) in so far as such special provisions relate to their admission to educational institutions including private educational institutions, whether aided or unaided by the State, other than the minority educational institutions referred to in clause (1) of article 30, which in the case of reservation would be in addition to the existing reservations and subject to a maximum of ten per cent. of the total seats in each category. Explanation.—For the purposes of this article and article 16, "economically weaker sections" shall be such as may be notified by the State from time to time on the basis of family income and other indicators of economic disadvantage. ..... Article 19. Protection of certain rights regarding freedom of speech, etc.— (1) All citizens shall have the right— ...... (g) to practise any profession, or to carry on any occupation, trade or business ..... (6) Nothing in sub-clause (g) of the said clause shall affect the operation of any existing law in so far as it imposes, or prevent the State from making any law imposing, in the interests of the general public, reasonable restrictions on the exercise of the right conferred by the said sub-clause, and, in particular, nothing in the said sub-clause shall affect the operation of any existing law in so far as it relates to, or prevent the State from making any law relating to,—(i) the professional or technical qualifications necessary for practising any profession or carrying on any occupation, trade or business, or ...... (g) to practise any profession, or to carry on any occupation, trade or business ..... (6) Nothing in sub-clause (g) of the said clause shall affect the operation of any existing law in so far as it imposes, or prevent the State from making any law imposing, in the interests of the general public, reasonable restrictions on the exercise of the right conferred by the said sub-clause, and, in particular, nothing in the said sub-clause shall affect the operation of any existing law in so far as it relates to, or prevent the State from making any law relating to,—(i) the professional or technical qualifications necessary for practising any profession or carrying on any occupation, trade or business, or (ii) the carrying on by the State, or by a corporation owned or controlled by the State, of any trade, business, industry or service, whether to the exclusion, complete or partial, of citizens or otherwise. https://www.mhc.tn.gov.in/judis ...... Article 21A. Right to education.—The State shall provide free and compulsory education to all children of the age of six to fourteen years in such manner as the State may, by law, determine. .............. Article 28.Freedom as to attendance at religious instruction or religious worship in certain educational institutions.—(1) No religious instruction shall be provided in any educational institution wholly maintained out of State funds. (2) Nothing in clause (1) shall apply to an educational institution which is administered by the State but has been established under any endowment or trust which requires that religious instruction shall be imparted in such institution. (3) No person attending any educational institution recognised by the State or receiving aid out of State funds shall be required to take part in any religious instruction that may be imparted in such institution or to attend any religious worship that may be conducted in such institution or in any premises attached thereto unless such person or, if such person is a minor, his guardian has given his consent thereto. Cultural and Educational Rights Article 29.Protection of interests of minorities.— (1) Any section of the citizens residing in the territory of India or any part thereof having a distinct language, script or culture of its own shall have the right to conserve the same. (2) No citizen shall be denied admission into any educational institution maintained by the State or receiving aid out of State funds on grounds only of religion, race, caste, language or any of them. Article 30. Right of minorities to establish and administer educational institutions.—(1) All minorities, whether based on religion or language, shall have the right to establish and administer educational institutions of their choice. (1A) In making any law providing for the compulsory acquisition of any property of an educational institution established and administered by a minority, referred to in clause (1), the State shall ensure that the amount fixed by or determined under such law for the acquisition of such property is such as would not restrict or abrogate the right guaranteed under that clause. (2) The State shall not, in granting aid to educational institutions, discriminate against any educational institution on the ground that it is under the management of a minority, whether based on religion or language. Directive Principles of State Policy .... Article 37.Application of the principles contained in this Part.—The provisions contained in this Part shall not be enforceable by any court, but the https://www.mhc.tn.gov.in/judis principles therein laid down are nevertheless fundamental in the governance of the country and it shall be the duty of the State to apply these principles in making laws. (2) The State shall not, in granting aid to educational institutions, discriminate against any educational institution on the ground that it is under the management of a minority, whether based on religion or language. Directive Principles of State Policy .... Article 37.Application of the principles contained in this Part.—The provisions contained in this Part shall not be enforceable by any court, but the https://www.mhc.tn.gov.in/judis principles therein laid down are nevertheless fundamental in the governance of the country and it shall be the duty of the State to apply these principles in making laws. Article 38.State to secure a social order for the promotion of welfare of the people.—(1) The State shall strive to promote the welfare of the people by securing and protecting as effectively as it may a social order in which justice, social, economic and political, shall inform all the institutions of the national life. (2) The State shall, in particular, strive to minimise the inequalities in income, and endeavour to eliminate inequalities in status, facilities and opportunities, not only amongst individuals but also amongst groups of people residing in different areas or engaged in different vocations. Article 39.Certain principles of policy to be followed by the State.—The State shall, in particular, direct its policy towards securing—(a)that the citizens, men and women equally, have the right to an adequate means of livelihood; ...... (e) that the health and strength of workers, men and women, and the tender age of children are not abused and that citizens are not forced by economic necessity to enter avocations unsuited to their age or strength; [(f) that children are given opportunities and facilities to develop in a healthy manner and in conditions of freedom and dignity and that childhood and youth are protected against exploitation and against moral and material abandonment. .............. Article 41.Right to work, to education and to public assistance in certain cases.—The State shall, within the limits of its economic capacity and development, make effective provision for securing the right to work, to education and to public assistance in cases of unemployment, old age, sickness and disablement, and in other cases of undeserved want. Article 45.Provision for early childhood care and education to children below the age of six years.—The State shall endeavour to provide early childhood care and education for all children until they complete the age of six years. Prior to the Constitution 86th Amendment Act, 2002, Article 45 read as under. Provision for free and compulsory education for children. “The State shall endeavour to provide, within a period of ten years from the commencement of this Constitution, for free and compulsory education for all children until they complete the age of fourteen years” Article 46.Promotion of educational and economic interests of Scheduled Castes, Scheduled Tribes and other weaker sections.—The State shall promote with special care the educational and economic interests of the weaker https://www.mhc.tn.gov.in/judis sections of the people, and, in particular, of the Scheduled Castes and the Scheduled Tribes, and shall protect them from social injustice and all forms of exploitation. ..... Fundamental Duties Article 51A. Fundamental duties.—It shall be the duty of every citizen of India..... (k) who is a parent or guardian to provide opportunities for education to his child or, as the case may be, ward between the age of six and fourteen years. Article 46.Promotion of educational and economic interests of Scheduled Castes, Scheduled Tribes and other weaker sections.—The State shall promote with special care the educational and economic interests of the weaker https://www.mhc.tn.gov.in/judis sections of the people, and, in particular, of the Scheduled Castes and the Scheduled Tribes, and shall protect them from social injustice and all forms of exploitation. ..... Fundamental Duties Article 51A. Fundamental duties.—It shall be the duty of every citizen of India..... (k) who is a parent or guardian to provide opportunities for education to his child or, as the case may be, ward between the age of six and fourteen years. Article 243G. Powers, authority and responsibilities of Panchayats.— Subject to the provisions of this Constitution, the Legislature of a State may, by law, endow the Panchayats with such powers and authority as may be necessary to enable them to function as institutions of self-government and such law may contain provisions for the devolution of powers and responsibilities upon Panchayats at the appropriate level, subject to such conditions as may be specified therein, with respect to— (a) the preparation of plans for economic development and social justice; (b) the implementation of schemes for economic development and social justice as may be entrusted to them including those in relation to the matters listed in the Eleventh Schedule Extract of Eleventh Schedule. .... 17. Education, including primary and secondary schools. 18. Technical training and vocational education. 19. Adult and non-formal education. 20. Libraries Article 243W. Powers, authority and responsibilities of Municipalities, etc.—Subject to the provisions of this Constitution, the Legislature of a State may, by law, endow— (a) the Municipalities with such powers and authority as may be necessary to enable them to function as institutions of self-government and such law may contain provisions for the devolution of powers and responsibilities upon Municipalities, subject to such conditions as may be specified therein, with respect to— (i) the preparation of plans for economic development and social justice; (ii) the performance of functions and the implementation of schemes as may be entrusted to them including those in relation to the matters listed in the Twelfth Schedule; (b) the Committees with such powers and authority as may be necessary to enable them to carry out the responsibilities conferred upon them including those in relation to the matters listed in the Twelfth Schedule. Extract of the Twelfth Schedule. ..... https://www.mhc.tn.gov.in/judis3. Planning for economic and social development. .... 13. Promotion of cultural, educational and aesthetic aspects. Seventh Schedule List III - Concurrent List. ...... 25. Education, including technical education, medical education and universities, subject to the provisions of entries 63, 64, 65 and 66 of List I; vocational and technical training of labour.” Extract of the Twelfth Schedule. ..... https://www.mhc.tn.gov.in/judis3. Planning for economic and social development. .... 13. Promotion of cultural, educational and aesthetic aspects. Seventh Schedule List III - Concurrent List. ...... 25. Education, including technical education, medical education and universities, subject to the provisions of entries 63, 64, 65 and 66 of List I; vocational and technical training of labour.” 3.The educational system in our country is unique. Our country is diverse with beliefs, castes and languages. The above provisions of the Constitution make it clear that our forefathers were of the initial opinion that every citizen must be provided with atleast basic education upto the age of 14 years and hence the States were directed to take steps within 10 years to ensure the same under Article 45. Article 41 casts a duty on the State to make effective provision for right to education, of-course depending upon their economic viability and development. Later, the provisions were amended and ultimately, after the declaration of the Apex Court in Mohini Jain v. State of Karnataka [(1992) 3 SCC 666] that right to education is concomitant to fundamental right and the Judgment of the Apex Court in Unnikrishnan J.P. and Ors. v. State of Andhra Pradesh and Ors. [(1993) 1 SCC 645], wherein, the right to education was held to be a fundamental right encompassed by right to life under Article 21 of the Constitution, right to free education until the age of 14 years was held to be absolute and education thereafter,though was still the https://www.mhc.tn.gov.in/judis TCA No. 303 of 2021 etc., batch responsibility of the State, was subject to economic capacity and development thof the State, by the the 86 Amendment Act,passed in 2002, the Right to education was made a fundamental right upto the age of 14 by inserting Article 21A to the Constitution with effect from 01.04.2010. The States were also required to promote and protect the educational and economic interest of the weaker section of the people and protect them from social injustice and exploitation. Therefore, by the very First Amendment to the Constitution in 1951, Article 15 was amended to save the challenge to any action taken by the State to protect the interest of the weaker sections. The minorities are guaranteed a right to establish and maintain educational institutions. The local bodies have been entrusted with duties to promote education under the Constitution as found in the eleventh and twelfth schedule. By the Constitution nd42 Amendment Act, 1976, the subject of education was moved from State list to Concurrent list. The primary responsibility of education, though was reposed with the State, the Constitution also by Article 19 (1)(g) facilitated private players in the field of education. Still, such private institutions can be treated only as supplementing the efforts of the State and the responsibility of the State is never shed away. Equality and equal opportunity in our system is achieved through the policy of reservation. Though the reservation was initially only contemplated for seats in House of the People and Legislative https://www.mhc.tn.gov.in/judis TCA No. 303 of 2021 etc., batch TCA No. 303 of 2021 etc., batch Assemblies, it was later extended to employment and then, to the field of education. The Constitution, though directed the States to endeavour protection of weaker section of the society, such protection was made available only on socio communal lines and only recently, the economic aspect of the social justice has been considered and Article 15 (6) has been inserted by One Hundred and Third Amendment with effect from 14.01.2019. The Constitution as it imposes a duty upon the State to provide education to its citizens, at the same time imposes a duty on the parents to provide education to their children. It is the duty of the State to take steps to remove the inequalities prevailing in the society. Our Constitution postulates four types of backwardness, namely, social, educational, economical and political backwardness. On a closer look, 'education' acts as a common tool to assuage the inequalities and eradicate other backwardness. The inequalities in the system have been abridged through reservation policies, which are an exemption to right to equality propounded under Article 15 of the Constitution. At the same time, the policies have impacted some meritorious students, because all meritorious candidates cannot be accommodated in the system, designed to eradicate the inequalities and promote social justice.The endeavour of the parents, combined with the aspirations of the students, who cannot be blamed, and the failure of the States to fulfil the duties enshrined https://www.mhc.tn.gov.in/judis TCA No. 303 of 2021 etc., batch upon them by the Constitution, has fed the private educational institutions, to further their greed and device methods to collect monies contrary to prescribed fee, by circumventing law. Such amount, termed as “Capitation Fee” by the Revenue, whereas termed as “Voluntary Contributions” or “Donations” by the assessees, is the subject matter of the dispute before this Court. The Appeals 4.All these tax case appeals are filed by the Revenue assailing the orders dated 12.04.2017 and 13.11.2019 passed by the Income Tax Appellate Tribunal, Chennai, in favour of the respondents/Assessees. 5.On 15.06.2021, this Court admitted the Tax Case Appeal Nos. 303, 304, 305, 306, 307, 308, 309 and 310 of 2021 by framing the following substantial questions of law: "(1)Whether on facts and in the circumstances of the case, the Tribunal was right in holding that the Assessee is entitled for benefit of Section 11 with respect to the receipts of the capitation fees/monies under the head donation from its sister trusts. (2)Whether on facts and in the circumstances of the case, the Tribunal was right in not appreciating that the said monies are the capitation fee received by the trusts in a quid pro quo manner for allotment of seats to the students in the college run by the sister trusts having common controlling trustee and the same was illegally passed on as voluntary donation. (3)Whether on facts and in the circumstances of the case, the Tribunal was right in not appreciating the Assessees’ aiding of illegal action of receipt of capitation fee is against the public policy and the provisions of Tamil Nadu Educational Institution (Prohibition of Collection of Capitation Fee) Act, 1992 and no benefit under Section 11 of Income Tax Act is warranted." https://www.mhc.tn.gov.in/judis 6. Subsequently, on 22.02.2022, TCA Nos. 59, 60, 62 and 63 of 2022 were admitted by raising the following questions of law: (1)Whether on the facts and in the circumstances of the case and in law, the ITAT was right in holding that the Assessees are eligible for exemption under Section 11 of the Income Tax Act without taking cognizance of the fact that quid-pro-quo element was involved in the trust accepting donations from donors? https://www.mhc.tn.gov.in/judis 6. Subsequently, on 22.02.2022, TCA Nos. 59, 60, 62 and 63 of 2022 were admitted by raising the following questions of law: (1)Whether on the facts and in the circumstances of the case and in law, the ITAT was right in holding that the Assessees are eligible for exemption under Section 11 of the Income Tax Act without taking cognizance of the fact that quid-pro-quo element was involved in the trust accepting donations from donors? (2)Whether on the facts and in the circumstances of the case, the ITAT was legally 'justified' in deciding the case on the ground that the AO has not enquired into the source of the donors without appreciating that the jurisdictional High Court in the case of CIT vs. Taj Borewells (291 ITR 232) and the Honourable Supreme Court in the case of CIT vs. Hariprasad & Sons (99 ITR 118) have held that the source of source cannot be enquired into? 7.As the issues involved in all these appeals are common, they were taken up for hearing together and were disposed of by this common judgment. Brief facts of the case 8.1.The respondent in TCA Nos.60/2022 and 304, 307 and 308/2021 relating to the assessment years 2011-12, 2012-13, 2013-14 and 2014-15 respectively / Sri Venkateswara Educational and Health Trust is an Assessee on the file of the Deputy Commissioner of Income Tax (Exemption), Chennai. They had registered themselves as Charitable Trust under Section 12A (a) of The Income Tax Act, 1961 (in short, “the Act”) vide order bearing C.No.1146- III (58)/84 dated 02.08.1984. They had filed their return of income admitting 'nil' income for the assessment year 2011-12 on 28.09.2011. https://www.mhc.tn.gov.in/judis8.2.The assessing officer had taken up the return of income filed by the TCA No. 303 of 2021 etc., batchassessee for scrutiny under Section 143 (1) of the Act and issued notice under Section 143 (2) of the Act. In response, the representative of the Assessee appeared and submitted details called for from time to time. On verification of return of income and other details during scrutiny, it unfolded that Rs.9,90,50,000/- was received by the Assessee as corpus donation from M/s. MAC Charities, M/s. MAC Public Charitable Trust and M/s. Spic Educational Foundation etc. This amount was received by the Assessee as donations from number of persons. In order to verify the same, elaborate exercise was undertaken by the Assessing Officer by issuing summons to various persons and their sworn statements were recorded. 8.3.During the enquiry, it revealed that the said amount was paid to M/s.United Educational Foundation, in lieu of procuring seats in Sri Venkateswara College of Engineering located at Sriperumbudur, Kancheepuram District, which is a unit of the Assessee - Sri Venkateswara Educational and Health Trust. On further analysis, the Assessing Officer concluded that there was a nexus between M/s. United Educational Foundation, M/s. MAC Charities, M/s. MAC Public Charitable Trust and Sri Venkateswara College of Engineering. The Assessing Officer also concluded that the Assessee utilised M/s.United Educational Foundation, M/s. MAC Charities, M/s.MAC Public Charitable Trust as a tool for transfer of capitation https://www.mhc.tn.gov.in/judis TCA No. 303 of 2021 etc., batch TCA No. 303 of 2021 etc., batch fees received from the students and thereby virtually sold education for a price. Such practice of receiving donation and/or capitation fee as a condition precedent for admitting a student is opposed to the provisions of the Tamil Nadu Educational Institutions (Prohibition of Collection of Capitation Fee) Act, 1992. The enquiry also unfolded that the Assessee demanded and insisted the parents of the students, who wish to get admission for their children, to pay capitation fee to the other trust in the name of their relatives or friends of the parents, but not in their name. The parents also, in the interest of admitting their children in the said College, were forced to pay capitation fee in the name of their relatives or friends. According to the Assessing Officer, the analysis of the fund transactions confirms that the Assessee made to appear that the contributors voluntarily paid the capitation fee, which was channelised through M/s. United Educational Foundation. Thus, the Assessee had purposefully and intentionally channelised the capitation fee in the name of donations back to themselves, thereby exempting the receipt of amount at both ends. 8.4.In the case of M/s. United Educational Foundation, the Assessing Officer was of the view that donations were received purportedly under capitation fee from the students for getting admission and it was ineligible for exemption under Section 11 of the Act. The amount so received was https://www.mhc.tn.gov.in/judis TCA No. 303 of 2021 etc., batch transferred through M/s. MAC Charities and M/s. MAC Public Charitable Trust as corpus donation and the date of receipt of the amount in the hands of M/s. MAC charities, M/s. MAC Public Charitable Trust and Sri Venkateswara College of Engineering confirms that the Assessee had systematically adopted the same manner of channelising the amount to evade tax.8.5.The Assessing Officer also noticed that as per the Trust Deed dated 01.08.1984, the founder of the Trust was Mr. L.V. Ramaiah, but on examination of the supplementary deed dated 13.06.1995, it was executed by Dr. A.C. Muthiah. An amendment deed dated 17.12.2011 was also perused which indicates that it was executed by Mr. M.H. Avadhani. Therefore, the Assessee was called upon to submit evidence for change in trustees and to explain, whether it was intimated to the Director of Income Tax (Exemptions), but the Assessee failed to respond to the same. 8.6.During the course of hearing, it was informed that M/s. MAC charities had received donations from M/s. United Educational Foundation, out of which, donations were given to the Assessee trust. But, it was not informed as to when some of the donors to M/s. United Educational Foundation, were summoned, examined on oath and stated that the donations were paid in lieu of admission of some students known to them in the college run by the Assessee. Thus, it is clear that the Assessee is running a college and for admitting the https://www.mhc.tn.gov.in/judis TCA No. 303 of 2021 etc., batch 8.6.During the course of hearing, it was informed that M/s. MAC charities had received donations from M/s. United Educational Foundation, out of which, donations were given to the Assessee trust. But, it was not informed as to when some of the donors to M/s. United Educational Foundation, were summoned, examined on oath and stated that the donations were paid in lieu of admission of some students known to them in the college run by the Assessee. Thus, it is clear that the Assessee is running a college and for admitting the https://www.mhc.tn.gov.in/judis TCA No. 303 of 2021 etc., batch students in the same, they have collected fees from the students in accordance with the AICTE norms; apart from the applicable fees, they have also collected various other amounts towards tuition fees, campus recruitment, transport etc., in the form of donation with specific direction that these donations shall form part of the corpus; and no donations have been collected from any of the students. However, the reply of the assessee was not accepted by the assessing officer. According to the assessing officer, the Assessee trust and other trusts are connected with each other. The capitation fee has been received in lieu of procuring seats in Sri Venkateswara College of Engineering as donation by M/s. United Educational Foundation and it was systematically routed through the other "pass-through" trusts belonging to Mr. A.C. Muthiah and ultimately it reached Sri Venkateswara College of Engineering operating under the name and style of M/s.Sri Venkateswara Educational and Health Trust as corpus donation. Therefore, the Assessing Officer after having held that the capitation fee received was treated as income not eligible for exemption under section 11 of the Act, determined the taxable income of the Assessee at Rs.9,90,50,000/- and the tax payable at Rs.4,13,59,162/- for the assessment year 2011-2012 by the assessment order dated 31.03.2014. Similarly, the assessing officer passed the assessment orders on 30.03.2015, 30.03.2016, 31.12.2016, determining the taxable income and tax payable by the assessee, in respect of the assessment https://www.mhc.tn.gov.in/judis TCA No. 303 of 2021 etc., batch years 2012-13, 2013-14 and 2014-15 as well. 9.1.The Assessee viz., M/s.MAC Public Charitable Trust / respondent in TCA Nos.62/2022 and 303/2021 relating to the assessment year 2011-12 and 2014-15 respectively, is a trust registered under Section 12A(a) of the Act as per the proceedings of the Commissioner of Income Tax, Tamilnadu-III vide C.No.1146-III(136)/84 dated 19.12.1984. For the assessment year 2011-12, they had filed their return of income on 26.09.2011 admitting 'nil' income. On scrutiny of same, notice under section 143(2) was issued on 03.08.2012, to which, the Assessee produced the documents called for. On verification of the records, it was noticed that the Assessee trust received a sum of Rs.4 crores as donations and paid a sum of Rs.3.98 crores as donations. The donations were received from M/s. United Educational Foundation (Rs.3.60 crores), M/s. MAC Charities (Rs.20 lakhs) and M/s. First Leasing Company of India Ltd and the same was paid to M/s.Sri Venkateswara Educational & Health Trust (Rs.3.60 crores) and other donations to the tune of Rs.0.38 lakhs. 9.2.After a detailed analysis, the assessing officer issued a show cause notice on 07.03.2014 calling upon the assessee to explain as to why the exemption under section 11 should not be denied for the income of Rs.3.60 crores as the said receipt was not a voluntary contribution. On receipt of the https://www.mhc.tn.gov.in/judis TCA No. 303 of 2021 etc., batch TCA No. 303 of 2021 etc., batch same, the assessee replied on 24.03.2014 stating inter alia that the donations are voluntary only and the trust has not in any way secured admissions in Sri Venkateswara College of Engineering for the donors, who happen to be trusts only. Being dissatisfied with the reply filed by the assessee, the assessing officer concluded that the assessee trust was used as tool to transfer the fund from one trust to other trust under the guise of charity. While so, the assessing officer held that the amount of non-voluntary contribution i.e., capitation fees received of Rs.3,60,00,000/- was treated as income not eligible for exemption under section 11 and taxed protectively in the hands of the assessee at the rate applicable to an Association of Persons (AOP) and accordingly, passed the assessment order on 31.03.2014, determining the taxable income at Rs.3,60,00,000/- and tax payable at Rs.1,65,27.680/- for the assessment year 2011-12. On the same reasoning, by order dated 27.12.2016, the Assessing Officer completed the assessment for the assessment year 2014-2015, determining the taxable income at Rs.8,00,00,000/- by treating the same as not eligible for exemption under section 11 of the Act. It was further observed that penalty proceedings against the Assessee under Section 27 (1) (c) of the Act will be initiated separately. 10.1.The Assessee viz., M/s. United Educational Foundation / respondent in https://www.mhc.tn.gov.in/judis TCA No. 303 of 2021 etc., batch TCA Nos.59/2022, 305 and 306/2021 relating to the AY 2011-12, 2013-14 and 2014-15 respectively, is a registered trust under Section 12AA of the Act, vide order passed in DIT (E) No.2(1359)/08-09 dated 24.09.2009. For the Assessment year 2011-2012, the Assessee filed its return of income on 30.09.2011 admitting 'Nil' income. After processing the same, the assessing officer issued a notice dated 03.08.2012 under Section 143 (2) of the Act. In response, the representative of the Assessee appeared before the assessing officer and produced documentary evidence, including a letter dated 12.08.2013 furnishing the details of the donors, their address, Pan Number and the manner in which the donation was paid viz., demand draft/pay order. On perusal of the same, the assessing officer noticed that the Assessee received a sum of Rs.22,03,77,500/- as donation from 1206 persons on various dates and claimed exemption under section 11 of the Act. It was also noticed that out of the sum of Rs.22,03,77,500/- the Assessee had donated Rs.18,74,67,000/- as donations to various trusts/institutions. The assessing officer, in order to verify the claim for exemption, had undertaken an elaborate exercise, issued summons to all the donors in exercise of his powers conferred under Section 131 (1) (b) of the Act and recorded their statements without any coercion, force or threat. Some of the donors had feigned ignorance as they were not aware of the Assessee trust or its activity and without any knowledge, their https://www.mhc.tn.gov.in/judis TCA No. 303 of 2021 etc., batch TCA No. 303 of 2021 etc., batch names were misused and their signatures were obtained as donor by their relatives/friends. During such enquiry, it also came to light that Sri Venkateswara Engineering College, Sriperumbudur, Kancheepuram District had demanded payments for allotment of seats in their college and the payments were made towards capitation fee. The Assessing Officer also, in the order of assessment dated 31.03.2014, referred to the statement obtained from some of the donors and concluded that the persons who wanted to get admission for their wards in Sri Venkateswara Engineering College were forced to pay capitation fee, but the capitation fee was recorded in the books of the Assessee trust as "voluntary contribution". The assessing officer also concluded that the said contribution in the hands of Assessee has been routed through various other trusts viz., MAC Charities and MAC Public Charitable Trust on various dates and ultimately it reached Sri Venkateswara College of Engineering. 10.2. On the basis of the above materials collected during the assessment proceedings, the assessing officer issued a show cause notice dated 07.03.2014 calling upon the Assessee to explain as to why exemption under section 11 should not be denied for the income of Rs.22,03,77,500/-. An explanation was offered by the Assessee on 18.03.2014 stating that the donations received from the donors are voluntary. It was also stated that the Assessee trust is an https://www.mhc.tn.gov.in/judis TCA No. 303 of 2021 etc., batch independent trust and it is in no way connected with Sri Venkateswara Engineering College. It was also stated that donations to other trust is proper application of funds and there is nothing wrong in the donations given to MAC Charities etc. The Assessing Officer, after considering the explanation of the Assessee, was of the opinion that the amount of non-voluntary contribution i.e., capitation fee received at Rs.22,03,77,500/- has to be treated as income and the Assessee was not eligible for exemption under section 11 of the Act, for the assessment year 2011-12. 10.3. On the above said reasoning, the assessing officer passed the orders of assessment dated 31.03.2016 and 31.12.2016, relating to the assessment years 2013-14 and 2014-15, determining the tax payable by the assessee at Rs.16,22,60,670/- and Rs.16,33,99,970/-, respectively. 11.1. The Assessee namely M/s. MAC Charities / respondent in TCA Nos