TaxTMI 
TaxTMI 
2020 (8) TMI 49
X X X X Extracts X X X X
X X X X Extracts X X X X
....d Technology (hereinafter referred in short as "CIET)" at Bud-Bud, Burdwan. Further, the Ld. CIT, Durgapur observed after a perusal of the Income & Expenditure Account that the assessee had received by way of donation from students amounting to Rs. 27,75,400/- (Schedule-9) during the FY 2010-11 and Rs. 65,00,000/- (Schedule-12) during the FY 2011-12 over and above the Tuition Fees in both the years. The ld. CIT, Durgapur observes that the assessee had submitted the complete break-up of the donations received from the students mentioning their names, addresses, roll numbers, amount, and the stream in which the students got admission etc. in the Institute. Considering the said facts, the Ld. CIT, Durgapur was of the opinion that assessee was receiving donation connected with the admission of the students and therefore it has to be treated as collection of Capitation fees as held by the Hon'ble Supreme Court in TMA Pai Foundation Vs. State of Karnataka 2002 (8) SCC 4. Thereafter, the Ld. CIT, Durgapur relied on the decision of the Hyderabad Tribunal in Vodithala Education Society Vs. ADIT (Exemptions)-II, 20 SOT 353 (Hyd.) and held that the assessee is indulged in sale of education an....
X X X X Extracts X X X X
X X X X Extracts X X X X
....on to page no. 2 which shows that only thirty four (34) students have given donation which ranges from Rs. 3 lacs to Rs. 1 lacs totalling Rs. 65,00,000/- during the period F.Y 2011-12. Thus, according to Ld. AR, the donation was only made by 19 students for FY 2010-11 and 34 students in 2011-12 whereas the number of students who got admission was eighty four (84) and one hundred and thirteen (113) number of student for academic years 2010-11 and 2011-12 respectively. Therefore, according to ld. AR, from the aforesaid facts it can be seen that the date of admission and receipt of donation there was interval of about six to seven months which clearly reveals that donation has nothing to do with the admission. And even in management quota, at the time of admission the capitation fee is insisted and so the donation in this case is post-admission and unless evidence is brought on record to prove otherwise the adverse inference drawn by Ld CIT is erroneous. And the ld AR pointed out that the variance in the amount of donation as well as the fact that few students gave the donation shows and the fact that the donations were not received at the time of admission goes on to show that the do....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... same year. The relevant extract of the Fixed Asset Schedule as on 31.03.2012 is given below: Particulars As on 01.04.2011 Addition Land and Land Development Rs. 4,01,44,153 Rs. 1,23,11,500 Building Rs. 12,88,59,040 Rs. 1,95,60,525 6. According to the Ld. AR, the investment in land and building was made for setting up of a new educational institute namely, Camellia Institute of Polytechnic and he brought to our notice that initially the assessee society was having only one educational institution namely Camellia Institute of Engineering & Technology and the assessee society got approval to set up a new institute in the name of Camellia Institute of Polytechnic on 03.08.2011 (refer pages 44 to 45 of paper book). The Ld. AR also drew our attention to the pages 46 to 74 of the paper book to show the sample bills for construction of building, proof of purchase of land etc to show the genuineness of the application of donation. Thus the Ld. AR contended that the entire donation received by the assessee including the donation received from the companies to the tune of Rs. 2.03 crore was expended for the purpose of the expansion/application of the charitable activity (education)....
X X X X Extracts X X X X
X X X X Extracts X X X X
....s other than for achieving the objectives of the society, therefore, he has contended that the denial of registration u/s. 12AA of the Act and approval u/s 80G of the Act was totally unjustified in law. Thereafter, he cited the decision of the Hon'ble Supreme Court in the case of Ananda Social & Educational Trust Vs. CIT (2020) 114 taxmann.com 693 (SC) wherein it was held as under: "Section 12AA undoubtedly requires the Commissioner to satisfy himself about the objects of the trust or institution and genuineness of its activities and grant a registration only if he is so satisfied. The said section requires the Commissioner to be so satisfied in order to ensure that the object of the trust and its activities are charitable since the consequence of such registration is that the trust is entitled to claim benefits under sections 11 and 12. In other words, if it appears that the objects of the trust and its activities are not genuine that is to say not charitable the Commissioner is entitled to refuse and in fact, bound to refuse such registration. [Para 9] The purpose of section 12AA is to enable registration only of such trust or institution whose objects and activities are genu....
X X X X Extracts X X X X
X X X X Extracts X X X X
....are genuine, then registration u/s. 12AA of the Act cannot be denied. According to ld. AR, the Ld. CIT, Durgapur erred in relying on the decision of the Hon'ble Supreme Court in TMA Pai Foundation (supra) and the decision of ITAT, Hyderabad in the case of Vodithala Education Society (supra) wherein the facts are distinguishable. Therefore, he prayed that the relief may be granted to the assessee society. 11. Per contra, the Ld. CIT, DR Shri Vijay Shankar vehemently opposed the plea of the assessee's Ld. AR and contended that the assessee having received the donation which is more than the prescribed fees stipulated has indulged in collecting capitation fees and thereby the ld. CIT, Durgapur has rightly relied on the decision of Hon'ble Supreme Court in TMA Pai Foundation (supra) and also the decision of ITAT, Hyderabad in the case of Vodithala Education Society (supra) to reject the application for registration u/s 12AA and approval u/s 80G of the Act. The Ld. DR pointed out that the assessee society in the first FY 2010-11 collected from 19 students and in FY 2011-12 had collected from 34 students goes on to show that these are admissions were facilitated in the management quota ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....assessee had collected donation from 19 students during the FY 2010-11 and in the next year i.e. FY 2011-12 from 34 students. We note that other than the entries in the books of account maintained by the assessee, there is no other material on the basis of which the Ld. CIT has drawn an inference that the assessee was collecting Capitation fee. But the books of account of the assessee nowhere says that the amount collected from the students are in the nature of Capitation fee. In this regard, it is noted that the assessee institution had given admission to 84 students in the first academic session and for 113 students in the second academic session and the donations were collected only from 19 and 34 students in the FY 2010-11 and 2011-12 respectively. It was brought to our notice that the assessee has given admission to the students way back as in August (Month) and the donation were collected after six months after their admission (February/March, Next Year). According to assessee, this donation was given on voluntary basis without any coercion. According to Ld. CIT, DR, these seats must be the management quota seats and, therefore, the assessee must have forced them to part with....
X X X X Extracts X X X X
X X X X Extracts X X X X
....unravel the truth. Since the address of students who gave the donations were furnished by the assessee, which fact the Ld. CIT acknowledges, then in all fairness he should have enquired by issuing summons u/s. 131 of the Act and/or issued notices u/s. 133(6) of the Act or the Ld. CIT ought to have called for some reports from the field and collected some materials which could have cleared the doubt in his mind and in that process could have been able to bring out the truth, which unfortunately the Ld. CIT, Durgapur failed to carry out and moreover, there was no complaint from any quarters in the public domain that the assessee society insisted or indulged in the nefarious practice of collecting donation/capitation fee for giving admission in Management quota etc. Therefore, the Ld. CIT, Durgapur erred in finding that the donation collected by the assessee was Capitation fee or is indulged in collection of in-voluntary donation or the assessee society was running the Institute for making profit or it was selling the seat. So, we find that there is no material to find that assessee had or is indulged in collection of capitation fees for admission or allotment of seats in management q....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... fees from the students for admission, which act of assessee according to him was akin to sale of seats, which fact when contested and denied by the assessee, the Ld. CIT without even conducting a preliminary enquiry on this issue, however, stuck to his impression/assumption that assessee was indulging in Collection of Capitation Fees. However, as discussed in detail (supra) this fact could not be proved against the assessee, which activity if done by assessee was illegal and deprecated by the Hon'ble Supreme Court. And in that process, the Ld. CIT did not bother to look at the objects of the assessee society and the genuineness of the activities. It is settled law that at the time of registration, the authority need to satisfy himself that the objects are charitable in nature and the activities being carried out are genuine, meaning thereby that the activities are in consonance for achieving the charitable objects and nothing else. Since we have seen from the objects of the assessee society that "education" one of the main objects which is a charitable object/activity as per the definition of charitable activity in section 2(15) of the Act and the genuineness of the society stand....