Iapl/45/2022 Of Commissioner Of Income Tax Exemptions Lucknow And Another v. Major Shiv Dayal Singh Chikitsa Trust

Case :- INCOME TAX APPEAL No. - 45 of 2022 Appellant :- Commissioner Of Income Tax Exemptions Lucknow And AnotherRespondent :- Major Shiv Dayal Singh Chikitsa TrustCounsel for Appellant :- Ashish Agrawal Hon'ble Surya Prakash Kesarwani,J.Hon'ble Jayant Banerji,J. Heard Sri Ashish Agrawal, learned counsel for the appellant-Income TaxDepartment. The respondent/assessee is a Charitable Trust and runs a Medical Institution. Thesociety was granted Registration under Section 12AA of the Income Tax Act,1961 by the competent authority. Return of the income was filed by therespondent-assessee on 30.09.2014 for the Assessment Year 2014-15 declaringtotal income of Rs."Nil". The case was selected for scrutiny and assessment wascompleted under Section 143(3) of the Income Tax Act on 26.12.2016, assessingthe income of respondent-assessee of Rs. 10,32,13,500/- on account of somealleged excess fee charged by the respondent-assessee for various coursesoffered by the medical college. Aggrieved with the assessment order, the respondents-assessee preferred appealbefore CIT(A) who vide order dated 19.06.2017 allowed the appeal of theassessee and deleted the additions made by the Assessing Officer. Aggrieved with the order of the CIT(A), the appellant herein preferred appealbefore the Income Tax Appellate Tribunal on the following grounds:- "1. The Ld. CIT(A) has erred in law and facts in deleting addition of Rs.10,32,13,500/- made by the AO on the plea that Income Tax Department concernsonly with the application of income and it is not significant how that income wasearned. 2. The order of Ld. CIT(A) be cancelled and the order of the AO be restored. 3. Appellant craves leave to modify/amend or add any one or more grounds ofappeal" Departmental appeal filed by the appellant herein before the Income TaxAppellate Tribunal, has been dismissed by the impugned order dated 29.07.2021.In the impugned order, while affirming the order of CIT(A), the Income TaxAppellate Tribunal has recorded the following findings of fact- (Relevant paranos. 6, 6.1.1, 6.1.2, 6.1.3, 6.2, 6.3, 6.4) "6. We have heard rival submission of the parties on the issue in dispute andperused the relevant material on record. We find that the society is registered underSection 12AA of the Act by the Competent Authority for Charitable activity of"Education" and said registration is in operation during the financial year relevantto the assessment year under consideration. In terms of section 2(15) of the Act, theactivity of "Education" has been included in charitable activity. We find that thelearned Assessing Officer has alleged the assessee of collecting capitation fee,however, no order or finding of any regulatory authority dealing with medical colleges of charges of collection of capital fee has been pointed out by the AssessingOfficer. perused the relevant material on record. We find that the society is registered underSection 12AA of the Act by the Competent Authority for Charitable activity of"Education" and said registration is in operation during the financial year relevantto the assessment year under consideration. In terms of section 2(15) of the Act, theactivity of "Education" has been included in charitable activity. We find that thelearned Assessing Officer has alleged the assessee of collecting capitation fee,however, no order or finding of any regulatory authority dealing with medical colleges of charges of collection of capital fee has been pointed out by the AssessingOfficer. 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 doesnot, however, amounted to profiteering. 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 doesnot, however, amounted to profiteering. 6.1.2 In the case of Islamic Academy (supra) also held that each institute must havethe freedom to fix its own fee structure taking into consideration the needs togenerate funds to run the institution and to provide facilities necessary for thebenefit of the students, however, there can be no profiteering and charging ofcapitation fees. 6.1.3 In P.A. Inamdar (supra), the Supreme Court while answering question no. 3held that every institution is free to devise its own fee structure but the same can beregulated in the interest of preventing profiteering. No capitation fee can becharged. Leverage was allowed to educational institutions to generate reasonablesurplus to meet cost of expansion and augmentation of facilities which would notamount to profiteering. The Court upheld the two Committees for monitoringadmission procedure and determining fee structure as held in Islamic Academy waspermissible as regulatory measures aimed at protecting the interest of the studentcommunity as a whole as also the minorities 6.2 Before the learned CIT(A), the assessee has submitted that pursuant to SupremeCourt decision's mentioned above, the State Government of Uttar Pradesh enactedthe Uttar Pradesh Private professional Educational Institution (Regulation ofAdmission and Fixation of Fees) Act, 2006 and fee fixation committee wasconstituted on 27.06.2008. As regard to fees, the assessee submitted beore the Id.CIT(A) as under:- 13, Pursuant to Supreme Court/ Govt. of U.P. order, the committeefixed provisional fee for Academic Year 2011-12 at Rs. 4.07 lacs videG.O. no. 3392/71-2-11-W- 64/2007 dated 14.09.2011. Committee alsodecided to fix final fee and also fee for academic year 2012-13 and2013-14 later on. Consequently, the Committee was required to fix thefinal fee for session 2011-12 and thereafter. This has not been done inthe instant case, in fact the assessee has gone on record to make arequest to this effect. In the G.O. it is also mentioned that final fee willbe fixed later on and if the college has taken excess fee, the same willbe refunded to students or adjusted against future dues. If fee paid bystudent is less than fixed, the college will collect the difference fromstudent. 14. The fee fixation order came on 14.09.201, till then the admissionsfor academic year 2011-12 were almost completed and fee, as decidedby the college committee, was deposited by students. Since the finalfee was never fixed by the Government, there was no question ofrefund/ collection of different of fee. 15. The facts of the instant case would reveal that there is no surplusat all, that is earned by the assessee. Ld. Assessing Officer has herselfaccepted that total utilization of income was Rs. 28,59,66,154/- andtotal receipts was RS. 27,02,54,348.23 as per para 13 of assessmentorder. 16 That Ld. Assessing Officer have not referred to any fee fixationorder in the assessement order but merely mentioned that the feefixation committee order has been brought on records by the assesseeor the fee fixation order is available in public domain. There after neither final fee for academic year 2011-12 nor fee fornext academic years, as mentioned in para-3, been fixed by GovlDGME. It means no fee has been fixed by the competent authority foracademic session 2013-14 relevant to A.Y. 2014-15 underconsideration. As regards fee for BAMS course, the Govt./ DGME/ Fee FixationCommittee has fixed fee for Govt. Unani, Aurvedic and HomeopathicMedical Colleges only which is clearly mentioned in the order and 16 That Ld. Assessing Officer have not referred to any fee fixationorder in the assessement order but merely mentioned that the feefixation committee order has been brought on records by the assesseeor the fee fixation order is available in public domain. There after neither final fee for academic year 2011-12 nor fee fornext academic years, as mentioned in para-3, been fixed by GovlDGME. It means no fee has been fixed by the competent authority foracademic session 2013-14 relevant to A.Y. 2014-15 underconsideration. As regards fee for BAMS course, the Govt./ DGME/ Fee FixationCommittee has fixed fee for Govt. Unani, Aurvedic and HomeopathicMedical Colleges only which is clearly mentioned in the order and As regards fee for paramedical courses, it is submitted that UttarPradesh State Medical Faculty, U.P., had granted permission to startthe paramedical courses vide letter no. 3461/12 dated 23.05.2012. Asper point 3 of the aforesaid letter the college is permitted to chargetution fee of Rs. 36000/- per student. The assessee college hascharged the total fee of Rs. 37500/- which includes tution fee Rs.36000/- and examination fee Rs. 1500/-. Thus the assessee has notcharged any excess fee than fixed by the authorities. Ld. AO has takenthe fee fixed of Rs.28000/- as per own imagination. The copy of letterof U.P. State Medical Faculty is enclosed and marked as Annexure-G. In view of the discussion and facts stated above it is very clear that nofee has been fixed by the Government, or and other competentauthority for MBBS and BAMS courses run by the assessee, for theacademic session 2013-14 (relevant to A. Y. 2014-15). 19. That with regards to question no 2 as to whether assessee hascharged fee in excess of fee fixed by the Fee Fixation Authority, thequestion has no relevancy for MBBS and BAMS courses because, asdiscussed in para 18 above, no fee has been fixed by the Authority forF.Y. 2013-14 (relevant to A.Y. 2014-15) for these courses, hence thereis no question of charging/ collecting fee in excess of fee fixed. Asregards paramedical courses the assessee has charged the fee aspermitted by Uttar Pradesh State Medical Faculty and no excess feehas been charged. 6.3 On perusal of submission of the assessee, it is clear that only extra fee ofRs.1,500/- was charged and that too was for examination fee. In suchcircumstances, it cannot be said that any capitation fee has been charged from thestudents. Moreover, there is no surplus has been generated in the year underconsideration and the assessee cannot be alleged for engaged in profiteering also. 6.4 The assessee has contested that no fee was fixed by the state level fee fixationcommittee for the year under consideration and, therefore, computation of theexcess fee by the Assessing Officer, is based on presumption and without anydocumentary evidence in support. The decisions relied upon 'by the AssessingOfficer are in respect of the capitation fee and in absence of any such evidence ofcollection of capitation fee, the decisions relied upon are not applicable over thefacts of the assessee. The Ld. CIT(A) has correctly held that once the assessee isregistered section l2AA of the Act, the Assessing Officer has to examine applicabilitypf section 11, 12 and 13 of the Act. No such violation has been pointed out by thelearned Assessing Officer of section 11, 12 and 13 of the Act. The Section 11prescribe application of the income toward charitable purposes, which in the case ofthe assessee is for education and the assessee has duly applied its income for saidpurposes as per the rules specified in the Act. In view of the above facts andcircumstances, we do not find any error in the order of the Ld. CIT(A) on the issuein dispute and, accordingly, we uphold the same. The ground of the appeal of theRevenue is accordingly dismissed". The findings recorded by CIT(A) and ITAT are findings of fact based onconsideration of the relevant materiel on record. Thus, no substantial question oflaw involved in the present appeal.