Mr. Sham v. Heard Learned Counsel For The Parties

IN THE HIGH COURT OF JUDICATURE AT BOMBAYORDINARY ORIGINAL CIVIL JURISDICTIONINCOME TAX APPEAL (IT) NO.1061 OF 2017WITHINCOME TAX APPEAL (IT) NO.1062 OF 2017WITHINCOME TAX APPEAL (IT) NO.2017 OF 2017WITHINCOME TAX APPEAL (IT) NO.283 OF 2018WITHINCOME TAX APPEAL (IT) NO.384 OF 2018WITH INCOME TAX APPEAL (IT) NO.526 OF 2018WITH INCOME TAX APPEAL (IT) NO.762 OF 2018 The Pr. Commissioner of Income Tax - (central), Pune … AppellantVs.Shikshan Prasarak Mandali … Respondent Mr. Sham V. Walve for Appellant.Mr. Mandar Vaidya for Respondent. CORAM : UJJAL BHUYAN &MILIND N. JADHAV, JJ.DATE :JANUARY 20, 2020 P.C.: Heard learned counsel for the parties. 2.This appeal has been preferred by the Revenue under Section 260-A of the Income Tax Act, 1961 (briefly ‘the Act’ hereinafter) assailingthe order dated 19.10.2016 passed by the Income Tax AppellateTribunal, Pune Bench ‘A’, Pune (briefly ‘the Tribunal’ hereinafter) inIncome Tax Appeal Nos.1127 to 1133/PN/2011 filed by the assessee(respondent) Shikshan Prasarak Mandali pertaining to assessment years 2003-04 to 2009-10. 3.The core issue involved in the appeal is whether the amountcollected by the assessee as donation from the students was within thepermissible limit of 15% or whether the same was done with the profitmotive to suggest that the assessee is running the related educationalinstitute on commercial line. The following questions have beenformulated by the Revenue while assailing the finding of the Tribunal: “1.Whether on the facts and circumstances of the case andin law, the Tribunal was right in holding that the AssessingOfficer had incorrectly given retrospective effect to the orderpassed u/s. 12AA(3) of the Income Tax Act, 1961 by theCommissioner of Income Tax, Pune (Commissioner) when infact the impugned assessment orders were passed subsequent tothe order of the Commissioner u/s.12AA(3) of the Act? Theassessee was not having exemption u/s.12A at the time ofpassing of assessment order. 2.Whether on the facts and circumstances of the case andin law, the Tribunal was right in deleting the addition made onaccount of acceptance of capitation fees by the assessee and isperverse as it had not taken into account the evidence collectedby the Department during the search operation in totality? 3.Whether the Tribunal has erred in holding that theassessee through its various institutes was assessable to pay taxby way of voluntary donations which are not specific donationsfor the corpus of the assessee which was the mandatoryrequirement for the donation to be treated as ‘corpus donation’? 4.Whether the Tribunal has erred in law in failing toappreciate that any fees charged over and above the prescribedfee amounts to selling of education and element of charity nolonger remains in the activities of the assessee? 5.Whether the Tribunal has erred in holding that theassessee trust satisfies the conditions laid down u/s.10(23C)(iiiab) inspite of specific findings given in the assessment orderthat it had engaged in collecting fees over and above theguidelines set by the University? 6.Whether the Tribunal has erred in holding that theassessee Trust satisfies the conditions of Section 10(23C)(iiiab)inspite of specific findings given in the assessment order that ithad engaged in collecting fees over and above the guidelinesset by the University and is illegal in terms of the MaharashtraEducational Institution (Prohibition of Capitation Fees) Act, 1987? 7.Whether the Tribunal has erred in not appreciating thatthe provisions of Section 11(5) read with Section 13(1)(d) havebeen brought into to prevent misuse of funds of the Trust inview of numerous incentive granted to a trust and if the trustinvests or deposits otherwise than in any one or more of theforms or modes specified in sub-sect.5 of Sec.11 then itamounts to clear violation of the said provisions and thuswould lose the exemption u/s.11 and 12?” 1987? 7.Whether the Tribunal has erred in not appreciating thatthe provisions of Section 11(5) read with Section 13(1)(d) havebeen brought into to prevent misuse of funds of the Trust inview of numerous incentive granted to a trust and if the trustinvests or deposits otherwise than in any one or more of theforms or modes specified in sub-sect.5 of Sec.11 then itamounts to clear violation of the said provisions and thuswould lose the exemption u/s.11 and 12?” 4.In the course of hearing, an order dated 11.09.2017 passed by theDivision Bench of this Court in Income Tax Appeal No.59 of 2015pertaining to the same assessee for the assessment years 2010-11 and2011-12 and involving the same issue has been placed before us. ThisCourt, on going through the order of the Tribunal and the reasons andjustifications given, did not find any good reason to interfere with thesame. Relevant portion of the order dated 11.09.2017 is extractedhereunder:- “9.The Tribunal found that the assessee - trust is more than100 years old. It runs more than 60 educational institutionsimparting education to more than 70000 students in variousfields. It was granted registration earlier under Section 12A.The Commissioner of Income Tax, however, relied on certainamounts styled as 'donations collected from students'. He heldthat this was against the assurance to admit them to theseeducational courses. Collection of such donations or moneys,therefore, attracts the provisions under the Capitation Fee Act.The Tribunal found that there is no merit in this finding of theCommissioner. The assessee pointed out that as against 70management quota seats in the educational institutions, theassessee collected donation from nine students. The sum of thedonation is within the prescribed limit and the Government ofMaharashtra has not at all prohibited the receipt of the same. Inparagraphs 8.3 and 8.4 of the order of the Tribunal, the detailsof such students and donations collected from them have beenreferred. Then, the other objection of the Commissioner wasthat the assessee is accumulating huge surplus year after year.However, the Tribunal found that this surplus is within thepermissible limit of 15% and how that is worked out isapparent from paragraph 8.5 of the Tribunal's order. Thus, theTribunal found that the accumulation of surplus is within thepermissible limit. It cannot be said that the assessee is runningeducational institution on commercial lines.” 5.On thorough consideration of the matter, we are of the consideredopinion that the above decision would be squarely applicable to the factsof the present case. Tribunal had assigned cogent and satisfactoryreasons while deleting the addition made by the Assessing Officer. Thereis no error or infirmity in the impugned order of the Tribunal. Nosubstantial question of law arises in these appeals. 6.Consequently, all the appeals are dismissed. However, there shallbe no order as to costs. (MILIND N. JADHAV, J.) (UJJAL BHUYAN, J.) Minal Parab