COMMISSIONER OF INCOME TAX v. KHALSA RURAL HOSPITAL & NURSING TRAINING INSTITUTE
[Citation -2008-LL-0204-13]

Citation 2008-LL-0204-13
Appellant Name COMMISSIONER OF INCOME TAX
Respondent Name KHALSA RURAL HOSPITAL & NURSING TRAINING INSTITUTE
Court HC
Relevant Act Income-tax
Date of Order 04/02/2008
Assessment Year 1997-98
Judgment View Judgment
Keyword Tags exemption under section 11 • charitable activities • managing director
Bot Summary: Whether, on the facts and circumstances of the case, the learned Income-tax Appellate Tribunal is right in law in confirming the order of the Commissioner of Income-tax granting exemption under section 10(22) of the Income-tax Act, 1961 2. Whether, on the facts and circumstances of the case, the learned Income-tax Appellate Tribunal is right in law confirming the order of the Commissioner of Income-tax deleting the addition of Rs. 40 lakhs on account of unaccounted capitation fee 3. Whether, on the facts and circumstances of the case, the learned Income-tax Appellate Tribunal is right in law in confirming the order of the Commissioner of Income-tax, granting the exemption under section 10(22) against the claim of the assessee under section 11 of the Income-tax Act, 1961 4. Whether, on the facts and circumstances of the case, the learned Income-tax Appellate Tribunal is right in law in recording a perverse finding that the assessee is carrying on charitable activities under section 10(22) of the Income-tax Act, 1961 The brief facts giving rise to this appeal are as under: The assessee runs M/s. Khalsa Rural Hospital and Nursing Training Institute, V and PO Nangal Kalan. During the course of assessment proceedings under section 143(3) for the assessment year 1997-98, the Assessing Officer noticed that the assessee has claimed exemption under section 11 of the Income-tax Act, 1961, on the income derived by the assessee. The Commissioner of Income-tax, Bathinda, vide his order dated June 23, 2000, allowed the appeal filed by the assessee and accepted the claim of the assessee that the books of account were damaged in floods as per the evidence given by the assessee. Regarding capitation fee the Tribunal upheld the view of the Commissioner of Income-tax, for want of evidence on record and found that in fact there is no evidence on record to show that the assessee has charged an amount of Rs. 2 lakhs from each medical student as capitation fee.


JUDGMENT judgment of court was delivered by Rakesh Kumar Garg J. This order shall dispose of I. T. A. Nos. 33 and 34 of 2007. Revenue has filed these appeals under section 260A of Incometax Act, 1961 (hereinafter referred to as Act ) against order dated August 11, 2006, passed by Income-tax Appellate Tribunal, Amritsar Bench, Amritsar in I. T. A. Nos. 418(ASR)2000 and 513(ASR)2001 in case of respondent-assessee for assessment year 1997-98 raising following substantial questions of law: 1. Whether, on facts and circumstances of case, learned Income-tax Appellate Tribunal is right in law in confirming order of Commissioner of Income-tax (Appeals) granting exemption under section 10(22) of Income-tax Act, 1961? 2. Whether, on facts and circumstances of case, learned Income-tax Appellate Tribunal is right in law confirming order of Commissioner of Income-tax (Appeals) deleting addition of Rs. 40 lakhs on account of unaccounted capitation fee? 3. Whether, on facts and circumstances of case, learned Income-tax Appellate Tribunal is right in law in confirming order of Commissioner of Income-tax (Appeals), granting exemption under section 10(22) against claim of assessee under section 11 of Income-tax Act, 1961? 4. Whether, on facts and circumstances of case, learned Income-tax Appellate Tribunal is right in law in recording perverse finding that assessee is carrying on charitable activities under section 10(22) of Income-tax Act, 1961? brief facts giving rise to this appeal are as under: assessee runs M/s. Khalsa Rural Hospital and Nursing Training Institute, V and PO Nangal Kalan (Mansa). During course of assessment proceedings under section 143(3) for assessment year 1997-98, Assessing Officer noticed that assessee has claimed exemption under section 11 of Income-tax Act, 1961, on income derived by assessee. Assessing Officer disallowed benefit of sections 11 and 12 of Act to assessee and made addition of Rs. 40 lakhs on account of capitation fee not declared in income of return. Assessing Officer also rejected books of account of assessee and refuted claim of assessee that same has been damaged in floods. Commissioner of Income-tax (Appeals), Bathinda, vide his order dated June 23, 2000, allowed appeal filed by assessee and accepted claim of assessee that books of account were damaged in floods as per evidence given by assessee. Commissioner of Incometax (Appeals) also held that entire income of trust including alleged receipt of capitation fee stands exempted under provisions of section 10(22) of Act as trust is running solely for educational purposes and not for profits. Regarding addition on account of capitation fee to tune of Rs. 40 lakhs made by Assessing Officer, Commissioner of Income-tax (Appeals) held that same is not justified in view of fact that no evidence has been brought on record in this regard. Aggrieved against this order of Commissioner of Income-tax (Appeals), Bathinda, Revenue filed appeal before Tribunal who, vide its order dated August 11, 2006, affirmed order of Commissioner of Income-tax (Appeals), Bathinda, observing that assessee-trust exists solely for educational purposes and its income has been utilised for purpose of education only. Tribunal also accepted plea of assessee that its records have been destroyed in floods. Regarding capitation fee Tribunal upheld view of Commissioner of Income-tax (Appeals), for want of evidence on record and found that in fact there is no evidence on record to show that assessee has charged amount of Rs. 2 lakhs from each medical student as capitation fee. Mr. Yogesh Putney, learned counsel for Revenue, has stated that it is admitted fact and is known to every concerned person that majority of BDS seats were allotted after payment of capitation fee. that majority of BDS seats were allotted after payment of capitation fee. However, assessee has not furnished any details of criteria followed for allotment of seats to PMT students on merits. It has been further argued by him that media has also published number of times that huge amount of capitation fee is charged from students seeking admission in BDS course in institute of assessee. Sh. Yogesh Putney has argued that during course of assessment proceedings, managing director of trust verbally admitted to have allotted some seats free of any charges of capitation fee and, therefore, order of Tribunal cannot be sustained and findings of Tribunal are perverse. We have heard learned counsel for Revenue and perused record. contentions raised by Mr. Putney are devoid of any force. There is nothing on record to show that assessee s trust was charging any capitation fee. There is no admission of respondent-trust on record. so-called verbal admission during course of assessment proceedings by managing director of trust cannot be relied upon. Neither it can be presumed from mere assumptions that BDS seats are allotted after payment of capitation fee in absence of any material. Even otherwise, Assessing Officer has not found any irregularity in accounts of trust. There is no document to show that trust is being run for any purpose of profit except that for educational purposes. In view of this, no interference is called for in pure findings of fact given by Tribunal. No substantial question of law arises from order of Tribunal. Thus, both aforementioned appeals are dismissed being without any merit. *** COMMISSIONER OF INCOME TAX v. KHALSA RURAL HOSPITAL & NURSING TRAINING INSTITUTE
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