2022 (3) TMI 1339

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....t quota in the garb of voluntary contributions/corpus fund and this fact of collecting more than the fee notified has been proved without any dispute in as much as the assessee itself furnishing the details? 3. Whether in the facts and circumstances of the case, the CIT(A) is right in law in holding that the assessee is eligible for exemption u/s 11 and 12 of the I.T. Act, 1961, since there is no element of charity in the assessee's activity and there is an unwritten direction from the society that a certain amount is mandatorily payable for the purpose of securing admission in the educational institutions run by the Society, thereby flouting the rules laid down by "Karnataka Educational Institutions prohibition of capitation fee Act, 1984" against collection of capitation fee by educational institutions. 4. Whether in the facts and circumstances of the case, the CIT(A) is right in law in holding that the assessee is eligible for exemption u/s 11 and 12 of the I.T. Act, 1961, when in a decision by the Hon'ble Uttarakhand High Court in the case of Queen's Education Society reported in 177 Taxman 326, it was held that if systematic profits are being earn....

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....tional pursuits and sports activities. c) To bring to the notice of Governments and other interested bodies the difficulties and problems of the community and to take effective steps to redress the same. d) To work for the dissemination of knowledge in the community through the of Reading rooms, libraries and purchases of useful books and magazines besides collecting literature relating to the community to help enhance knowledge relating to the community and where found necessary to publish in other languages and distribute the same and by felicitating the eminent and other brilliant scholars in the community. e) To collect funds exclusively from the members of the community by way of donations and to receive and dispose of moveable and immoveable properties as per rules and byelaws so as to achieve the aims objects of the Sangha to further the welfare of the members. To receive from non- members without any territorial limits prosperities moveable or immovable for the purpose of protecting the interest of the community. f) To undertake construction, renovation/extention under the auspices of the Sangha, Temples dharmachatrs, Kalyana Mandirs and ....

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....ed as existing for charitable purposes under section 2(15) of the Act. The AO also made a reference to the decision of the Uttarakhand High Court in the case of Queen's Education Society, 177 Taxman 326 wherein it was held that if systematic profits are being earned, then the purpose may not be held as charitable and exemption under section 11 many not be permissible. The AO thereafter computed the total income of the assessee for Assessment Year 2012-13 as follows: Gross Income of the Trust Rs. 21,01,48,024 Expenditure Rs. 15,64,47,074 Net Income Rs. 5,37,00,000 9. For identical reasons, similar Assessment Orders were passed for Assessment Years 2013-14 and 2014-15. 10. Before CIT(A), the assessee submitted that there was no enquiry made by the AO and the inference drawn by AO that voluntary contributions were nothing but contributions given for admission of children by their parents is purely on suspicion, surmise and assumptions. The assessee submitted that it was providing education which by itself is a charitable activity and it is not requirement of law that education must be provided at a subsidized rate or free of cost to be called a charitable activ....

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....r other than the set aims and objects of the trust or the funds were unduly mis-utilized for the benefit of any member or trustee of the society in order to deny the benefit of exemption as provided by the provisions of Income Tax Act. The AO was therefore directed that the benefit of exemption under section 11 be allowed to the assessee. 13. Aggrieved by the order of the AO, the Revenue has filed the present appeals before the Tribunal. 14. We have heard the rival submissions. Learned DR placed reliance on the order of the AO. Learned Counsel for the assessee while reiterating submissions made before the CIT(A) relied on the order of the CIT(A). 15. We have carefully considered the rival submissions. We find that the AO on noticing that the assessee was in receipt of voluntary contributions came to the conclusion that the voluntary contributions were received only from students and were admitted in the assessee's educational institutions. According to the AO, the contributions were not given out of free will and was a quid-pro-quo for admission of students in the assessee's educational institutions. There is no material whatsoever for this conclusion drawn by the AO. On t....