|CORAM:||R. K. Panda (AM), Vikas Awasthy (JM)|
|CATCH WORDS:||capitation fee, donation, educational institution, exemption|
|DATE:||July 13, 2015 (Date of pronouncement)|
|DATE:||July 15, 2015 (Date of publication)|
|FILE:||Click here to download the file in pdf format|
|S. 10(23C) (iiiab): Law on treating an educational institution as running with a profit motive and treating the donations received by it as “capitation fee” on the basis of the allegation of the persons who have made the said donation explained|
(i) The exemption u/s 10(23C) (iiiab) is available to the society as a whole which has been formed for the sole purpose of establishing, running, managing or assisting schools and colleges in different fields. It is the trust or the society that has to apply for registration and claim exemption. Had it been the intention of the legislature to grant exemption only to the institutions individually or independently and not to the society as a whole, the language would have been different. The society or trust may run more than one institutions. Therefore, the argument of the Revenue that it should be institution specific and not the Society as a whole in our opinion is not correct.
(ii) As regards the question whether the trust is for profit motive, it is the allegation of the Revenue that the assessee trust was collecting the capitation fee in the garb of donation and was therefore running with a profit motive. We find the Assessing Officer has not reported the violation, if any, by the assessee trust to the Government of Maharashtra for taking any action for violation of The Maharashtra Educational Institutions (Prohibition of Capitation Fee) Act, 1987. None of the persons who have deposed against the assessee by stating that they had given donation for the purpose of getting admission has complained to the Government for any such violation by the society. It is also to be noted that those persons have filled up the requisite proforma stating that they have given donation to the assessee voluntarily and not for seeking admission. Even some of them claimed deduction u/s.80G, a fact stated by the assessee and not controverted by the Departmental Representative. Therefore, changing the stands after their wards completed their education from the institutions run by the assessee trust are contradictory. Further, it is also a fact that all donations received by the assessee trust are recorded in the books of account. There is no allegation by the Revenue that any part of such donation has been siphoned off for the benefit of any of the trustees or related persons. Nothing has been brought on record that any student has been denied admission for not giving donation. Merely because some of the donors stated that they have given the donation for admission the same in our opinion will not disentitle the society from getting exemption which is existing solely for educational purposes and which is otherwise entitled to the exemption (Chief CIT Vs. Geetanjali University Trust 352 ITR 433, Shikshana Prasaraka Mandali Vs. CIT Central Pune vide ITA Nos.1348 and 1349/PN/2010 order dated 27-03-2014, Sadvidya Educational Institution Vs. Add.CIT, Padanilam Welfare Trust Vs. Dy.CIT 10 ITR 479, Queen’s Educational Society vs. CIT Civil Appeal No.5167/2008 order dated 16-03-2015, Pine Grove International Charitable Trust Vs. Union of India 327 ITR 73 followed)