TaxTMI 
TaxTMI 
2021 (10) TMI 413
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....for four Asstt. years is bad in law, facts and equity. 2. That on the facts and circumstances of the case the Ld. CIT (A), Noida, has erred in law, facts & equity in passing the Appeal Order dated 30.3.2017, when the admitted and alleged final date of hearing was 31.3.2017 as stated in the Appeal Order. 3. That on the facts and circumstances of the case the Ld. CIT (A), Noida, has erred in passing said the Appellate Order dated 30.3.2017 on such factswhich are contrary to the facts of the Appellant, (para 17 to 19 72, 86, 90, 121 and 122). 4. That on the fact and circumstances of the case the Ld. CIT (A), Noida, had erred in issuing a show cause notice dated 09.09.2015 u/s 251(2) of the act proposing to increase the income of appellant by making various new disallowances/incomes which were not the subject matter of the Assessment Order. 5. That on the facts and circumstances of the case the learned Commissioner of Income Tax (Appeals) has grossly erred both in law and on facts in directing the learned Assessing Officer to bring to tax the entire gross receipts including the corpus donations, without considering and allowing the exemption u/s 11 a....
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....a 76 to 77). e) The income of the Appellant by way of collection of fee from students is not an income derived from property held under Trust, (para 78 to 83 and 87, 88). f) The Corpus donations received by the Appellant from persons other than students/parents and shown in the Balance sheet of the Appellant, had been wrongly conceived by the said CIT (A) as voluntary donation, without any basis or information on hand, (para 89 to 93). g) That the Appellant has made a violation of section 13 of the Act and thus the entire benefit of section 11 has been withdrawn whereas no such violation was incurred (para 121 and 122). 7. Without prejudice to above and on the facts and circumstances of the case the learned Commissioner of Income Tax (Appeals) has grossly erred both in law and on facts in considering the gross receipts of the Appellant as income from other sources u/s 56 and not allowing any deduction u/s 57 of the Act. (para 108 to 113). 8. That on the facts and circumstances of the case the learned Commissioner of Income Tax (Appeals) has grossly erred both in law and on facts in not allowing any expenditure incurred by the Appellant t....
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....rcumstances of the case the Ld. CIT (A), New Delhi, has erred in law, facts & equity in not allowing the relief to the Appellant by giving reasons that the said amendment in Section 11(6) of the Income Tax Act, 1961 made w.e.f. from 01.04.2015 is retrospective in nature and not prospective. 5. That on the facts and circumstances of the case the Ld. CIT (A) erred in making a disallowance of Depreciation specially when the same had been allowed to us by the CIT (A) and ITAT in earlier years in Appellant's own case since A.Y. 2000- 01 to A.Y. 2010-11, and also by the Hon'ble Allahabad High Court in A.Y. 2001 - 02, 2002-03, 2004-05 and 2005-06 in Appellant's own case. 6. That on the facts and circumstances of the case, the said Officer erred in not allowing the excess application of income of earlier and current year(s) to be carried forward and to be set off against the future income of the Appellant, without any basis and without providing any opportunity to the Appellant and without considering that the same had been allowed to the Appellant in A. Y. 2008-09 by the CIT(A) and ITAT. 7. That without prejudice to the above grounds, disallowances and addit....
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....ar 2007-08 by Rs. 55.19 crores, for assessment year 2009-10 by Rs. 62.37 crores for assessment year 2011-12 and by Rs. 69.19 crores for assessment year 2012- 13. He held that as assessee is not entitled to the benefit of Section 11 and 12 of the act and the income of the assessee is required to be assessed under the head "Income from other sources" under Section 56 of the Act and no deduction under Section 57 of the Act is allowable to the assessee. He further held that the donation received by the assessee is also chargeable to tax. He passed a combined order for all these years assessee is aggrieved with that and has preferred these appeals. 5. The learned authorised representative submitted that identical decision has been passed by the learned CIT - A in case of another trust namely Adarsh Public School versus joint Commissioner of income tax. This decision has reached to the coordinate bench and it has been decided as per order dated 31/1/2018. He further referred to the order of the learned CIT - A in that assessee's case, which is placed at, page number 30 - 70 of the paper book. He submitted that there is no difference in the facts of this case with the case decided by t....
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.... 2015. He therefore submitted that all the issues involved in this appeal are covered in favour of the assessee. 6. With respect to the enhancement made by the learned CIT - A, he submitted that there is no notice issued by the learned CIT - A u/s 251 of the income tax act which is a mandatory requirement. 7. The learned departmental representative vehemently supported the order of the learned assessing officer as well as the learned CIT - A. 8. We have carefully considered the rival contentions and perused the orders of the lower authorities. The facts clearly shows that for all these years the learned assessing officer has disallowed the depreciation claimed by the assessee stating that there is a double deduction once at the time of claiming entire amount of acquisition is an application of income and then once again at the time of claiming of the depreciation. We find that this issue is covered squarely in favour of the assessee by the decision of the honourable Supreme Court in case of CIT versus Rajasthan and Gujarat the charitable foundation (supra) wherein it has been held as Under:- "1. These are the petitions and appeals filed by the Income Tax Departmen....
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....which arose before the Court for determination was : whether depreciation could be denied to the assessee, as expenditure on acquisition of the assets had been treated as application of income in the year of acquisition? It was held by the Bombay High Court that section 11 of the Income-tax Act makes provision in respect of computation of income of the Trust from the property held for charitable or religious purposes and it also provides for application and accumulation of income. On the other hand, section 28 of the Income-tax Act deals with chargeability of income from profits and gains of business and section 29 provides that income from profits and gains of business shall be computed in accordance with section 30 to section 43C. That, section 32(1) of the Act provides for depreciation in respect of building, plant and machinery owned by the assessee and used for business purposes. It further provides for deduction subject to section 34. In that matter also, a similar argument, as in the present case, was advanced on behalf of the revenue, namely, that depreciation can be allowed as deduction only under section 32 of the Income-tax Act and not under general principles. The Court....
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.... account. This view of the Tribunal has been confirmed by the Bombay High Court in the above judgment. Hence, Question No. 2 is covered by the decision of the Bombay High Court in the above Judgment. Consequently, Question No. 2 is answered in the Affirmative i.e., in favour of the assessee and against the Department." 2. After hearing learned counsel for the parties, we are of the opinion that the aforesaid view taken by the Bombay High Court correctly states the principles of law and there is no need to interfere with the same. 3. It may be mentioned that most of the High Courts have taken the aforesaid view with only exception thereto by the High Court of Kerala which has taken a contrary view in 'Lissie Medical Institutions v. CIT [2012] 24 taxmann.com 9/209 Taxman 19 (Mag.)/348 ITR 344'. 4. It may also be mentioned at this stage that the legislature, realising that there was no specific provision in this behalf in the Income-tax Act, has made amendment in Section 11(6) of the Act vide Finance Act No. 2/2014 which became effective from the Assessment Year 2015-2016. The Delhi High Court has taken the view and rightly so, that the said amendmen....
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....ng education, it has been granted registration u/s.12A by the competent authority, i.e., Ld. CIT Ghaziabad. Once registration u/s.12A is granted, then it is fait accompli and accordingly, all its receipts / income are subject to computation and benefit u/s.11 to 12 and restrictions provided u/s 13. Such a registration u/s 12A has neither been withdrawn nor has any action been taken by the competent authority to withdraw such certificate of exemption granted u/s.12A. That is the reason why the assessments have completed u/s. 143(3) for the subsequent assessment year, wherein the assessee has been given the benefit of Section 11. Here in the impugned assessment year the case of the Assessing Officer was that the audit report in Form 10B was not filed along with return of income and the one which was filed during the course of the assessment proceeding was back dated. This allegation of the Assessing Officer has been negated by the ld. CIT(A) who has found that audit report in Form 10B was proper. Thus, the ground and the finding of the Assessing Officer to deny the claim of benefit of section 11 has been overruled by the first appellate authority, which finding has now attained final....
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....er section 11 but on merits found that there was no material or evidence on record to show whether or not the securities were held by the assessee- Council for any of the charitable purposes and, therefore, it remanded the case. The remand order was never challenged by the revenue by seeking a reference on the ground that a remand was unnecessary because section 11 was ruled out by reason of exemption having been obtained by the assessee- Council under section 10(23A) nor was any such contention raised when reference was sought by the assessee- Council nor when the matter was being argued in the High Court. In these circumstances, it is clear to us that the revenue acquiesced in the view taken by the Tribunal that the claim for exemption under section 11 could not be said to be ruled out by reason of the provisions of section 10(23A). We, therefore, proceed to deal with the second contention which was principally argued before us in these appeals. 13. Thus, the aforesaid observation of the Hon'ble Apex Court, makes it very clear that there is no bar or disharmony between Section 10(23C) and Section 11; and exemption of Section 11 cannot be denied even when there is a s....
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....le activity. We are unable to subscribe to this proposition at all, because if fees is not charged from the students then how the activity of imparting education can be carried out. Fees collected from the students itself feeds the charity, unless some other considerations are received for profiteering and personal gains of trustees or members of the society. Strong reliance has been placed by the ld. CIT (A) upon the judgment of Hon'ble Apex Court in the case of ACIT vs. Surat Art Silk Cloth Manufactures Association (supra). In our humble understanding of the said judgment and the principle laid down by the Constitutional Bench of Hon'ble Apex Court, nowhere the Hon'ble Apex court has held that the charging of fees or some profit for carrying out charitable activity would be reckoned as not charitable. The Hon'ble Apex Court held that if primary or dominant purpose of a trust or institution is charitable, then any other object which by itself is not charitable and is mere ancillary to the dominant purpose then also it is held to be valid charity. The primary test which is to be applied is, whether the main or primary object of the trust is charitable or not. It is ....
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....lus for the furtherance of education is permissible. Conditions granting recognition or affiliation can broadly cover academic and educational matters including the welfare of students and teachers." [Emphasis added is ours] 16. Thus, the Hon'ble Apex Court held that in principle there should be no 'capitation fee' or profiteering, but reasonable surplus to meet the cause of education and augmentation of facility does not amount to profiteering. Nowhere the Hon'ble Apex Court has held that educational institution is debarred from taking any kind of fees from the students albeit they have expressed caution in a limited way on a capitation fee for the purpose of profiteering. Similarly in the other judgment relied upon by the ld. CIT (A), that is, in the case of Islamic Academy of Education & Ors vs. State of Karnataka (supra), the Hon'ble Apex Court again following the principle of the constitutional Bench in the case of TMA Pai Foundation & Others (supra) and observed as under:- 212. So far as the first question is concerned, in our view the majority judgment is very clear. There can be no fixing of a rigid fee structure by the government. Eac....
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....neither for profiteering nor for carrying any activity beyond its dominant object. Thus, allegation of the ld. CIT (A) on this score also is hereby rejected. 19. Now coming to the observation that assessee's income by way of fees cannot be held to be derived from property held under the trust, because students cannot be treated as property. If such a proposition or view of ld. CIT (A) is upheld, then probably no education institution in the country would ever be eligible/entitled for exemption u/s.11 and perhaps will defeat the entire purpose of legislature and the definition of 'charitable purpose' of education as defined in Section 2(15). Section 12 of the Act clearly provides that any voluntary contribution received by a trust wholly for charitable or religious purpose, then for the purpose of Section 11 it is deemed to be income derived from the property held under the trust. Such a deeming provision of revenue contribution is held as income derived from the trust which is subject to computation and conditions laid down in Section 11 to 13. If the assessee is carrying out any obligation for educational activity, then it has to be treated as the 'trust' under the provis....
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....ression is of the widest connotation. The word 'general' in the said expression means pertaining to a whole class. Therefore, advancement of any object of benefit to the public or a section of the public as distinguished from benefit to an individual or a group of individuals would be a charitable purpose-CIT v. Ahmedabad Rana Caste Association [1983] 140 ITR 1 (SC). The said expression would prima facie include all objects which promote the welfare of the general public. It cannot be said that a purpose would cease to be charitable even if public welfare is intended to be served. If the primary purpose and the predominant object are to promote the welfare of the general public the purpose would be charitable purpose. When an object is to promote or protect the interest of a particular trade or industry that object becomes an object of public utility, but not so, if it seeks to promote the interest of those who conduct the said trade or industry-CIT v. Andhra Chamber of Commerce [1965] 55 ITR 722 (SC). If the primary or predominant object of an institution is charitable, any other object which might not be charitable but which is ancillary or incidental to the dominant purp....
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....e ground also as raked by the ld. CIT (A), exemption u/s.11 cannot be denied. Accordingly, in view of the finding given above and various legal principle as discussed above, we hold that none of the observations and the finding of the ld. CIT(A) are sustainable and the grounds taken and the reasoning given by him to deny the benefit/exemption u/s.11 to the assessee cannot be upheld either in law or on facts. 21. Accordingly, in view of our finding given above, the entire receipts which has been taxed under the head 'income from other sources' is set aside and we direct the Assessing Officer to grant exemption u/s.11 as per the income and expenditure account submitted by the assessee." 11. Further there is no allegation that the surplus and by the assessee has not been utilized by the assessee for the purpose of charitable activities. Therefore, it remains an uncontroverted fact that the surplus is ploughed back for educational purposes and the assessee exists solely for educational purposes and not for the purposes of the profit. 12. In view of the above facts, respectfully following the decision of the coordinate bench and also the principles laid down by the honour....