IN THE HIGH COURT OF KARNATAKA AT BENGALURU ON THE 14TH DAY OF JANUARY, 2019 BEFORE THE HON'BLE MR. JUSTICE RAVI MALIMATH AND THE HON’BLE MR. JUSTICE MOHAMMAD NAWAZ INCOME TAX APPEAL NO.248 OF 2009 BETWEEN:
1. THE COMMISSIONER OF INCOME-TAX 55 OF 1, SHILPASHREE, VIDYARANYA COMPLEX, VISHVESHWARA NAGAR, MYSURU.
2. THE ADDITIONAL COMMISSIONER OF INCOME-TAX RANGE-2, 55 OF 1, SHILPASHREE, VIDYARANYA COMPLEX, VISHVESHWARA NAGAR, MYSURU.
...APPELLANTS (BY SRI JEEVAN J. NEERALGI, ADVOCATE) AND:
SRI ADICHUNCHANAGIRI SHIKSHANA TRUST ADICHUNCHANAGIRI KSHETRA, NAGAMANGALA TALUK, MANDYA DISTRICT.
... RESPONDENT (BY SRI A. SHANKAR, SENIOR COUNSEL FOR SRI M. LAVA, ADVOCATE) THIS INCOME TAX APPEAL IS FILED UNDER SECTION 260-A OF THE INCOME-TAX ACT 1961, ARISING OUT OF ORDER DATED 31-12-2008 PASSED IN ITA NO.1259/BANG/2008, FOR THE ASSESSMENT YEAR 2005- 2006, PRAYING TO FORMULATE THE SUBSTANTIAL QUESTIONS OF LAW STATED THEREIN; ALLOW THE APPEAL AND SET ASIDE THE ORDER PASSED BY THE INCOME TAX APPELLATE TRIBUNAL, BENGALURU IN ITA NO.1259/BANG/2008, DATED 31-12-2008 AND CONFIRM THE ORDER OF THE APPELLATE COMMISSIONER CONFIRMING THE ORDER PASSED BY THE ADDITIONAL COMMISSIONER OF INCOME TAX, RANGE-2, MYSURU, IN THE INTEREST OF JUSTICE AND EQUITY.
***** THIS INCOME TAX APPEAL COMING ON FOR HEARING THIS DAY, RAVI MALIMATH J., DELIVERED THE FOLLOWING:
JUDGMENT By the order dated 02.06.2010, the instant appeal was admitted to consider the following substantial questions of law:
“i. Whether the Tribunal was correct in holding that the amounts paid by the students / parents to the assessee trust at the time of securing admission to engineering and medical colleges run by the assessee group can be construed as “voluntary donations” and “corpus funds” as envisaged under Section.11(1)(a) and 11(1)(d) r.w.s. 12(1) of the Act or “capitation fees” warranting assessment of such amount under the head “other sources” by denying exemption under Section.11, 12 and 13 of the Act?
ii. Whether the Tribunal was correct in holding that the amounts received from the students / parents for securing admission to engineering and medical colleges run by the assessee group, when treated as “involuntary” will definitely by “capital receipts” not liable to tax?
iii. Whether the Tribunal was correct in holding that the amount received by the assessee trust from the students / parents as quid-pro-quo for giving admission to engineering and medical colleges run by the assessee group as “income derived from property held under trust as envisaged under Section. 12(1) of the Act?
iv. Whether the Tribunal was correct in holding that the amount received by the assessee trust from the students / parents as quid-pro-quo for giving admission to engineering and medical colleges run by the assessee group as “corpus fund donations” in terms of Section 11(1)(d) of the I.T.Act?
v. Whether the Tribunal was correct in holding that the amount received by the assessee trust from the students / parents as quid-pro-quo for giving admission to engineering and medical colleges run by the assessee group as “voluntary donation” in terms of Section 11(1)(a) of the Act?
vi. Whether the Tribunal was correct in holding that the amount received by the assessee trust from the students / parents as quid-pro-quo for giving admission to engineering and medical colleges run by the assessee group, even after assessed under the head “other sources” is entitled to exemption under Section.11 on the ground that the trust was registered under Section.12A of the I.T.Act?”
2. The learned counsels appearing on both sides submit that the substantial questions of law that arises for consideration in this appeal are identical to the questions of law that arises for consideration in ITA Nos.800 of 2009 in the case of COMMISSIONER OF INCOME TAX VS. SRI. ADICHUNCHANAGIRI MAHASAM STANA MUTT. That the very same questions of law would arise in the instant appeal. Therefore, they plead that the questions of law as framed herein would require to be reframed.
3. We have heard the learned counsels on the same. Consequently, the substantial questions of law are reframed and the appeal is admitted to consider the following substantial questions of law:
“i. Whether the Appellate Authorities were correct in not recording a finding for the current assessment year as to whether the assessee was running a charitable trust or not as held by the Apex Court in Aditanar Educational Institutions Vs. Addl. Commissioner of Income Tax 224 ITR 310, when the Assessing Officer had recorded a specific finding that the assessee was not running a charitable organization?
ii. Whether the Appellate Authorities were correct in not taking into consideration the finding recorded by the Assessing Officer that the donations received from parents/students being provided with professional seats was not voluntary contributions envisaged u/s. 11 & 12 of the Act, when the same was contrary to the judgment of the Apex Court in Islamic Academy of Education Vs. State of Karnataka, (2003) 6 SCC 697 and the Karnataka Capitation Fees Act?
iii. Whether the Appellate Authorities were correct in not taking into consideration the finding recorded by the Assessing Officer that the donations collected from ‘Mediation Centre Fund’ was contrary to sections 11(1)(a) and 11(1)(d) of the act and consequently recorded a perverse finding?”
By the order dated 07.01.2019, ITA No.800 of 2009 was disposed off by answering the aforesaid questions of law. Since the very same questions of law arise for consideration in this appeal, the instant appeal is disposed off in terms of the aforesaid order, by answering the substantial questions of law in favour of the assessee and against the Revenue.
Sd/- Sd/-
JUDGE JUDGE JJ