JUDGMENT judgment of court was delivered by R. Sudhakar J.-These appeals are filed by Revenue under section 260A of Income-tax Act, 1961, challenging order of Incometax Appellate Tribunal, "A" Bench, Chennai, dated April 5, 2011, made in I. T. A. Nos. 1476 to 1482/Mds/2010 (reported as Asst. CIT v. Balaji Educational and Charitable Public Trust [2011] 11 ITR (Trib) 179 (Mad)) for assessment years 2002-03 to 2008-09, respectively, raising following questions of law: "(i) Whether, on facts and in circumstances of case, Tribunal was right in not considering that capitation fee received by assessee-trust is revenue receipt liable for taxation under Income-tax Act, 1961? (ii) Whether, on facts and in circumstances of case, Tribunal was right in not considering that trust was receiving capitation fee for admission of students under management quota, as it would clearly prove that it was not doing any charitable activities as per section 2(15) of Act? (iii) Whether, on facts and in circumstances of case, Tribunal was right in deleting addition of capitation fees received from students who were admitted in management quota? (iv) Whether, on facts and in circumstances of case, Tribunal was right in not following jurisdictional High Court judgment in case of P. S. Govindasamy Naidu and Sons v. Asst. CIT [2010] 324 ITR 44 (Mad)?" 2.1. facts in nut-shell are as under: respondent-assessee is trust registered under section 12AA of Income-tax Act, 1961 (for brevity, "the Act"). trust is running various educational institutions, namely, (i) Bharathiyar College of Engineering Technology, Karaikal; (ii) Mahatma Gandhi Medical College, Pondy; (iii) Indira Gandhi Institute of Dental Science, Pondy; (iv) Kasturba Gandhi Nursing College, Pondy; (v) Sri Venkateswara College of Education, Pondy; (vi) Rajiv Gandhi College of Engineering and Technologies and others, for conducting various professional courses such as engineering, MBA, nursing and other paramedical courses, etc. 2.2. search and survey operation under section 132/133A of Act was conducted at various premises of educational institutions and also at residence of chairman of trust on August 13, 2007. Department proceeded on premise that huge amounts of capitation fee is collected for admission to professional courses conducted by various educational institutions run by assessee-trust. 2.3. Thereafter, notice under section 153A of Act dated September 4, 2008, was issued to assessee. In response, on October 6, 2008, assessee filed returns admitting "nil" income for all assessment years. Pursuant to same, notice under section 143(2) of Act was issued on July 9, 2009, in respect of all assessment years, followed by issuance of notice under section 142(1) of Act on November 6, 2009, annexing detailed questionnaire regarding case. 2.4. At this juncture, for better clarity on manner in which Department proceeded in matter, we take up annexure to one such notice issued under section 142(1) of Act wherein after referring to statement of chairman of trust, in query (viii), Assistant Commissioner of Income-tax records that in return of income filed by assessee certain amount has been admitted as donation collected, whereas on basis of statement of chairman and inference drawn by Assessing Officer, higher amount should be shown as donation. specific query has been posed in query (x) as follows: "(x) In your audited accounts filed with return of income you have shown voluntary contribution of Rs. 13,18,24,217 as compared to Rs. 2,40,00,000 in financial year 2005-06. You are caused to furnish evidence for amount of voluntary contribution and also furnish list of persons from whom voluntary contribution have been received." 2.5. In response to notices under section 142(1) of Act, assessee submitted reply on December 9, 2009, stating that allegation of receiving capitation fee from students is baseless and solely based on statement recorded from chairman of trust, which he had retracted later. It was pointed out that voluntary contributions were received only from philanthropists; family friends; corporate bodies; patients and relatives of patients treated in hospital; parents and relatives of students. It was also stated that there is no evidence to come to conclusion that such contributions received are involuntary. Along with reply, assessee also enclosed details sought for by Assessing Officer. 2.6. Based on these materials, Assessing Officer came to conclusion that educational institutions run by trust collected huge amount of capitation fee under guise of donation while admitting students under management quota to various professional courses and no receipts were given for capitation fee collected and it is also not disclosed in income-tax returns for taxation purposes. 2.7. To buttress abovesaid stand of Department, statement recorded from chairman of trust at time of search is relied upon, more particularly, reply given to question No. 8. said statement of chairman contains two components-one is in relation to fees charged for courses and other relates to donation. In said statement, it is averred that they charge regular fees for Government quota students and it is not denied that there were donations taken in respect of NRI quota. It was clarified by stating that they did not get donations from all students or their relatives. It was also stated that in respect of Kasturba Gandhi Nursing College, no donations are taken. In reply to question No. 9, chairman of assessee-trust states that around Rs. 10 crores was received as donations by Mahatma Gandhi Medical College and around Rs. 2 to Rs. 3 crores for engineering college. 2.8. On this basis, Assessing Officer came to conclusion that these donations are nothing but capitation fee. Taking note of number of students admitted under management quota in various colleges and by making computation on basis of estimate, for which he falls back on statement of chairman, Assessing Officer determined receipt of higher amount as capitation fee, in guise of donation, as against admitted figure of donation as claimed by assessee in respect of each assessment year. 2.9. To arrive at such conclusion, Assessing Officer relied upon two other relevant factors, which are admitted and not in dispute, which we find have been uniformly applied in all these cases. For instance, relevant portion of assessment order passed for assessment year 2002-03 is extracted hereunder: "5.3. loose sheets 5 to 22 in LS Sl. No.3 of ANN/SO/B&D/LS seized during search and referred to in questionnaire issued to assessee, contain list of students along with details of amount received, repaid and total paid and balance. following amounts are appearing in above seized document: I Batch Received Rs. 378.25 lakhs Refund Rs. 283.45 lakhs Balance Rs. 94.80 lakhs II Batch Received Rs. 206 lakhs Refund Rs. 35 lakhs Balance Rs. 171 lakhs Shri Rajagopalan, in his statement dated November 12, 2007, has stated that above amount was refund of fees to students who have not joined institution during year 2005-06. From this, it is ascertained that donation collected from students have been returned to them since they have not joined institution, which further confirms fact that assessee have been collecting capitation fees in name of donation but not accounting same in its books of account. 5.4. It is further seen that during search conducted at residence of Shri Rajagopalan, chairman, who was at helm of affairs of trust, huge cash amounting to more than Rs. 44 lakhs was found from his bed room, which he said, belonged to trust. In reply to question No. 5, it was stated by Shri M. K. Rajagopalan that cash book of trust was not maintained on day- to-day basis and that aforesaid cash found at his residence during search, was not recorded in books of account. In view of these facts, there is no doubt that trust did not fulfil conditions laid down in clause (iv) of section 80G(5) of Act." 2.10. Assessing Officer, after considering response of chairman of assessee-trust, retracting his earlier statement, rejected explanation given by assessee stating that retraction is belated; and that assessee failed to submit list of students admitted under management quota. It is also observed that assessee was asked to submit list of persons making voluntary contributions and this was tallied to verify assessee's claim that donations were not related to admissions under management quota. Thereafter, Assessing Officer held that voluntary contributions were related to admissions of students and rejected assessee's contention. Thus, Assessing Officer worked out income of trust by multiplying amount of donation with number of students admitted under management quota in various courses. total amount of donation calculated was treated as income of trust not being exempt as per section 13 read with section 11 of Act for all assessment years. 2.11. Assessing Officer further held that assessee is not carrying on charitable activities for purpose of section 13 read with section 11 of Act. In fine, Assessing Officer concluded as follows: "9. In view of discussions made above and decisions relied upon, I hold that assessee earned income under head voluntary contributions in books of assessee are not actually voluntary and that these are only selling of seats in exchange of capitation fees. amount of capitation fee thus collected by assessee is treated as undisclosed capitation fees being not exempt as per section 13 read with section 11 of Income-tax Act." 2.12. Similar orders have been passed for all assessment years by Assessing Officer. These facts are not disputed by learned counsel for appellant-Department. 3.1. assessee, aggrieved by such assessment, pursued matter before Commissioner of Income-tax (Appeals), inter alia, contending that finding with regard to violation of section 13 read with section 11 of Act is perverse and not based on materials and rejection of return filed on basis of voluntary contributions is not tenable, as socalled amount of donation, alleged to be involuntary, determined by Assessing Officer is based on hypothetical formula and not based on any materials available on record. That finding is perverse in law as ingredients of section 13 is not attracted to facts of present case. 3.2. It was contention of assessee that in respect of assessment years 2002-03 and 2003-04, Chief Commissioner of Income- taxVI, Chennai, having jurisdiction over case, has notified in terms of section 10(23C)(vi) of Act that there is no applicability of section 11 or section 13 in those years and, therefore, there is no applicability of section 11 or section 13 in those years as income of trust is exempted under section 10(23C)(vi) of Act. relevant portion of said observation reads as follows: "For two assessment years, i.e., 2002-03 and 2003-04 as Chief Commissioner of Income-tax-VI, Chennai, having jurisdiction over case has notified this under section 10(23C)(vi), there is no applicability of section 11 or section 13 in those two years. income of trust is exempt under section 10(23C)(vi) for those two years." In so far as these two assessment years are concerned, Commissioner of Income-tax (Appeals) rendered finding that Assessing Officer has failed to establish case of breach of section 10(23C)(vi) of Act and, therefore, respondent-trust will be entitled to benefit of exemption contained therein. 3.3. With regard to finding of Assessing Officer that amount stated in loose sheets 5 to 22 seized during search is donation received and returned to students and this donation is capitation fee which is unaccounted, it is specific case of assessee that amount reflected in loose sheets is relatable to refund of fees to students who have not joined institution during year 2005-06. stand of assessee is that it has returned fees because of non-admission of those students during that year in view of restraint imposed by Government of Puducherry to effect that all seats of medical college will go to Government quota and no admission can be made under management quota and, therefore, assessee had no other option except to refund fees collected. However, Assessing Officer misdirected himself to state that amount, which was later returned, was received as donation from students and same is unaccounted. This factual mistake was agitated before Commissioner of Income-tax (Appeals) and accepted by said authority. relevant portion of said order reads as under: "The content of this seized document as mentioned by Assessing Officer shows that some amount was received and part of it is refunded and balance of amount is mentioned in seized document. These papers were confronted to Sri MKR, managing trustee of trust who had stated that contents of paper is fee collected from students which was refunded to students as admissions were denied to those students and all these entries are recorded in books of account. reason for same was explained that for financial year 2006-07 Government of Pondicherry took decision that all seats of medical college will go to Government quota and no admission will be left to management quota. Therefore, trust has to refund fees collected from students as they could not give admission to those students. There is no further enquiry contrary to statement of Sri MKR done either by Investigation Wing or by Assessing Officer. However, Assessing Officer has mentioned that above figure is donation received and returned to students and this donation is capitation fee and same is unaccounted. To arrive at this conclusion, Assessing Officer has not mentioned any reason in assessment order. In light of specific statement of Sri MKR on this paper and without disproving same it was not logical on part of Assessing Officer to draw adverse inference about contents of seized document. In view of above, it would be improper to accept findings of learned Assessing Officer that amount represents involuntary donations received from students at time of admission. Therefore, in my view, only seized material referred to by Assessing Officer in entire assessment order does not prove receipt of capitation fee by appellant-institution for taking admission of students in management quota. Hence, receipt of capitation fee is not proved by any seized document mentioned in assessment order." (emphasis supplied) 3.4. next issue is relating to seizure of cash of Rs. 44 lakhs from residence of chairman. It is specific case of assessee that said amount was not recorded in books of account but chairman had offered this amount as income in his own hands and paid tax thereon. It was pleaded that said amount is not relatable to affairs of trust nor is amount relatable to receipt for or on behalf of trust. finding of Commissioner of Income (Appeals), in this regard, is as follows: 2. Cash of Rs. 44 lakhs found and seized at residence of Sri M. K. Rajagopalan, managing trustee of appellant-trust: There is no doubt that cash of Rs. 44 lakhs was found and seized from bed room of Sri M. K. Rajagopalan during search operation on August 13/14, 2007. During statement on August 13, 2007, Sri M. K. R. has stated that cash belongs to trust. However, subsequently on August 31, 2007, statement of M. K. R. was recorded by ADIT and offered Rs. 2 crores as additional income and has specifically mentioned that this disclosure of unaccounted income is on account of various assets. His statement has been reproduced in this order earlier. Further, employee of appellant-trust, Sri Bhaskar, on date of search has stated that he has not sent any cash to residence of Sri M. K. R. In continuation of his above statement, he has filed return of income declaring undisclosed income of Rs. 3 crores. Assessing Officer has accepted this disclosure and has even mentioned in assessment order that this unaccounted income of Rs. 3 crores includes cash found at his residence. Therefore, Assessing Officer has given finding in assessment order of Sri MKR in individual capacity that said cash belongs to Sri MKR and, therefore, same cannot belong to trust also. When copy of sworn statement recorded on August 13, 2007, was given to Sri MKR he has retracted said statement that cash belongs to trust. He has produced medical certificate in support of 50 per cent. hearing disability. Furtherance, to statement of disclosure of unaccounted income, Sri MKR, having turnover of more than Rs. 30 crores in his petrol pump business has declared unaccounted income of Rs. 3 crores, Assessing Officer has accepted disclosure in assessment order and has specifically mentioned in assessment order that this unaccounted income is towards cash found and seized at his residence and other unaccounted asset and expenditure. In view of above finding, it is difficult to accept that this unaccounted cash belongs to appellanttrust and same forms part of capitation fee received by appellant-trust. Hence, cash found at residence of Sri MKR also does not support receipt of capitation fee by appellant-trust. (emphasis supplied) 3.5. De hors above two relevant issues, other issue that was decided by Commissioner of Income-tax (Appeals) is whether donations received by trust would partake of character of capitation fee or involuntary donation. To refute plea of Department that donations are not voluntary, assessee relied upon order passed by Commissioner of Income-tax, Puducherry, having jurisdiction over assessee at that time, who passed order under section 264 of Act for assessment years 1998- 99 to 2001-02, where finding has been given that donation received from students or parents are not compulsory in nature and, therefore, same is not capitation fee. To buttress this argument, it was pointed out that there was no material in form of statement from any one of donors-students or parents or any such person to effect that donations received by trust from whatever source person to effect that donations received by trust from whatever source was not voluntary and that it will partake of character of capitation fee. assessee also relied upon response dated July 14, 2014, received from Public Information Officer for query raised under Right to Information Act wherein it is stated that "there is no any complaint received from any student/parent regarding capitation fee charged by above institutions so far". 3.6. On above said issue, Commissioner of Income-tax (Appeals) observed that there is no investigation done either by Investigation Wing or Assessing Officer to prove that donations were not voluntary and they partake of character of capitation fee. He, therefore, held that presumption drawn by Assessing Officer that all management quota admissions are subject to capitation fee is based on no material. 3.7. Commissioner of Income-tax (Appeals) also accepted plea of assessee that there was no benefit derived by trustees or any member of trust. source of income to charitable institution is of no relevance. What is relevant is application of income for providing exemption under section 11 of Act. It is for Department to prove that there is misutilisation of income of trust as stated in section 13 of Act. He, therefore, holds that denying exemption under section 11 of Act without there being case made out for violation of section 13 of Act is totally incorrect. He further held that receipt of donation at uniform rate for admission in management quota is not supported by any material evidence. He, therefore, allowed appeals of assessee. 4.1. Department pursued matter before Tribunal. case of Department was summarised by Tribunal in paragraph 28 as under (page 197 of 11 ITR (Trib)): "That only ground pointed out by Assessing Officer to refuse exemption is that assessee has violated provisions of law contained in section 13. Section 13 contains different sub-sections and clauses to address different situations of violation. Therefore, it is necessary to cite specific sub-section and clause to allege that assessee has violated law stated in section 13. In present case, Assessing Officer has not referred to any such sub-section or clause of section 13. He has made bald reference to section 13 and proceeded to deny benefits of exemption available to assessee under section 11." (emphasis supplied) 4.2. Tribunal held that Revenue had made belated attempt to allege violation of section 13(1)(d) of Act. In fact, issue was clarified in paragraph 29 of order of Tribunal, which reads as under (page 197 of 11 ITR (Trib)): "It is only now that learned Commissioner appearing for Revenue makes belated attempt to bring case of alleged violation under section 13(1)(d) stating that seizure of cash of Rs. 44 lakhs from residence of chairman of assessee-trust is appropriation of funds of trust for his personal benefits. But such allegation is not justified as said amount has already been included in income offered by chairman of assessee- trust for taxation." (emphasis supplied) 4.3. Tribunal rejected case of Assessing Officer that what is exempted from taxation under sections 11 and 12 of Act is voluntary contribution and not contribution granted against allotment of seats. It further held that finding of Assessing Officer that capitation fee collected by trust should be treated as undisclosed is erroneous. 4.4. We shall now consider issue as to how Tribunal has considered facts, as has been addressed by original authority and Commissioner of Income-tax (Appeals). Tribunal, as in case of Commissioner of Income-tax (Appeals), relied upon order passed under section 264 of Act by jurisdictional Commissioner for assessment years 1998-99 to 2001-02, to come to conclusion that donations received from students or parents are voluntary in nature. Similar allegations made by Revenue have been considered and rejected, as admission of students is done as per procedure prescribed by Director of Health and Family Welfare Services, Government of Puducherry. For clarity, we set out paragraph 33 of order passed by Tribunal (page 198 of 11 ITR (Trib)): "The first such conclusion is that there is no basis for Assessing Officer to allege that activities carried on by assessee-trust are not genuine. assessing authority himself has noted down names of about eight prominent educational institutions carried on by assessee-trust on face of assessment order. same is reproduced in paragraph 2 of this order. These institutions included medical and engineering colleges. paper book filed before us contains copies of relevant documents and certificates in pages 326 to 360, issued by appropriate authorities, which prove that assessee is carrying on its educational activities by running number of institutions within domain of Central and State laws. letter of Deputy Director of Public Health, Government of Puducherry, at page 326 of paper book permits assessee's medical college to utilise facilities of Government hospitals for clinical practice of medical students. Page 327 is copy of letter issued by Puducherry Health Secretariat regarding constitution of permanent admission committee under chairmanship of hon'ble Justice A. Ramamurthy (Retd.,) Madras High Court. copy of procedure on admission of medical students issued by Director of Health and Family Welfare Services, Government of Puducherry, is available in page 331. Page 332 contains copy of letter from Directorate of Higher and Technical Education. copy of recognition report issued by Medical Council of India is placed in pages 330 to 337. Accreditation status conferred by All India Council for Technical Education is available at pages 338 and 339 and so also in pages 340 and 341. copy of order of Government of India in Ministry of Human Resource Development is available in pages 342 and 343 granting status of deemed to be university under section 3 of UGC Act, 1956. Pages 344 to 360 contain copies of various memorandum of association entered into between medical college run by assessee- trust and various public sector undertakings including BSNL to provide for in- house medical facilities to employees of those public sector enterprises. All these materials go to prove that assessee-trust is running number of educational institutions recognised by law and by public and its charitable educational institutions recognised by law and by public and its charitable activities by way of education are bona fide. allegation of Revenue has no force." (emphasis supplied) 4.5. plea of Revenue that no regular books of account are maintained by assessee-trust has been rejected by Tribunal after referring to order passed under section 264 of Act for assessment years 1998-99 to 2001-02 in following manner (page 199 of 11 ITR (Trib)): "Another allegation made out by Revenue is that assesseetrust is not maintaining regular books of account. This is without any basis. Commissioner, Pondicherry, in his order passed under section 264 for assessment years 1998-99 to 2001-02 has examined similar allegation made out by Revenue that assessee was not maintaining proper books of account. After detailed examination of materials and evidences placed before him, Commissioner of Income-tax came to conclusion that assessee was maintaining regular books of account in its ordinary course of activities. As far as impugned assessment years are concerned, there again Assessing Officer has not brought any adverse materials on record to substantiate allegation that assessee is not maintaining proper accounts. It is fact to be borne in mind that assessee has been claiming exemption of its income from taxation on ground of educational activities since long in past. Earlier it was enjoying said benefit under section 10(22) and section 10(23C)(vi) and, thereafter, under section 11 and section 13. assessee is registered under section 12AA of Income-tax Act, 1961. assessee is filing regular returns before assessing authority. assessing authority himself has stated in his order that he has examined returns of income in light of books of account, financial statements and balance-sheets of assessee-trust. Even in course of search operations, assessing authority has no case that proper accounts were not maintained by assessee-trust except allegation regarding nature of certain seized documents relating to refund of fees made to students, who were not given admission in colleges of assessee-trust. We do not find any reason to endorse above allegation made out by Revenue, which is without any basis." (emphasis supplied) 4.6. Thereafter, Tribunal proceeded to go into core issue of violation of provisions of section 13(1)(d) of Act which prompted Assessing Officer to deny benefit of section 11 of Act to assessee. Tribunal, as in case of Commissioner of Income-tax (Appeals), was inclined to discard two findings rendered by Assessing Officer based on: (i) loose sheets relating to return of fees; and (ii) seizure of cash from residence of chairman. relevant portion of finding of Tribunal in this regard is as under (page 200 of 11 ITR (Trib)): "The next grievance of Revenue is that assessee-trust has violated provisions of section 13(1)(d), which enabled Assessing Officer to deny benefits of section 11 to assessee. basis of such findings is that sum of Rs. 44 lakhs was found and seized in course of search from residence of chairman of assessee-trust. In spite of repetition, we have to state that said sum of Rs. 44 lakhs has been explained as'income' of chairman of assessee-trust and said amount has been offered for taxation in return of income filed by chairman in regular course. Apart from that, most interesting aspect is that there is no case that sum of Rs. 44 lakhs was applied by chairman for any of his personal requirements. only complaint is that said sum was found in his possession at his residence. There is nothing unnatural in chairman of assessee-trust keeping money in his custody, even if it is belonged to assessee-trust. Money cannot be kept in educational institutions run by assessee-trust or in trust office. Either money has to be kept in bank or in safe custody of responsible persons. chairman of assessee-trust is responsible person. money was found in his custody. Even if that amount belonged to assessee-trust, think for while, it is not possible to hold that chairman has utilised that much amount of money for his personal benefit. Keeping money belonging to assessee-trust is essentially different from spending money belonging to assessee-trust. assessing authority has equated safe keeping of money to spending of money. 33.4. basis of allegation of Assessing Officer regarding accepting capitation fee is that certain entries found in seized materials relating to refund of amounts collected from certain students, who were not ultimately admitted in colleges run by trust. assessee has explained that during that particular financial year all medical seats were taken over by Government of Pondicherry and no seats were available in hands of assesseetrust for allotment under management quota. It was in that contingency, amounts collected earlier from students had to be refunded. These details have been brought out in accounts maintained by assessee-trust. If Assessing Officer had any strong intuition about capitation fee on basis of this solitary opinion, Assessing Officer should have conducted proper enquiries before coming to conclusion against assessee-trust. assessing authority has not conducted any such enquiries either with students or with parents of students or with any other person interested in activities carried on by assessee-trust." (emphasis supplied) 4.7. question, as has been posed by Tribunal, is whether contributions or donations are voluntary or involuntary and what is effect of such donation. Tribunal was of view that there is no concept of involuntary contributions and went on to hold that voluntary contributions should be treated as income under section 12 of Act and that corpus donations to be treated as capital receipt under section 11(1)(d) of Act and corpus donations are not generally in nature of income. It further held that voluntary contributions are taxable only if not applied for charitable purposes. emphasis is on, not applying same for charitable purposes. 4.8. Whether contribution is voluntary or involuntary and its implication in relation to these provisions was considered by Tribunal in following manner (page 201 of 11 ITR (Trib)): "To proceed further, we have to examine scheme of law of charities provided under Income-tax Act, 1961. There is no concept of involuntary contributions in that scheme. only distinction recognised by law is voluntary contributions to be treated as income under section 12 and corpus donations to be treated as capital receipt under section 11(1)(d). corpus donations are not generally in nature of income. voluntary contributions are taxable only if not applied for charitable purposes. In present case, assessee-trust itself has treated contributions as voluntary contributions in nature of income. assessee claims exemption under section 11 not on basis of nature of contributions but for reason that contributions were applied for charitable purposes. When assessee-trust itself has treated contributions as voluntary contribution in nature of income, which is best situation that Revenue would always welcome, what is relevance of arguing whether contributions were voluntary or not? Even if contributions are treated as not voluntary what could be legal consequence of that finding? Whether Revenue will treat such involuntary contributions as capital and give exemption from taxation? No, it will not. Revenue will still find such involuntary contribution as income liable for taxation. If so, what is real distinction between voluntary contribution and involuntary contribution as far as taxation of charities is concerned? In both cases, it will be brought for taxation if assessee has not utilised contributions for charitable purposes. expression'voluntary contributions' is used in Act instead of'contributions' to highlight principle of non-compulsion in matters of participating in charitable activities and to underline gratuitous nature of donations and charitable activities. There is no compulsion in making contributions to charities. If expression was 'contributions' there could be naunce of compulsion like contribution to provident fund and like. Therefore, we find that whether it is treated as voluntary or involuntary, only course of action available before law is to see whether such contributions have been treated by assessee as income and also applied for charitable purposes." (emphasis supplied) This reasoning of Tribunal, we are inclined to accept. 4.9. finding of Tribunal is that Department has not established case that assessee had in this case not utilised donations or income for charitable purpose. clear finding of Tribunal is that if assessee had not utilised amount for charitable purpose, it would automatically become taxable and assessee would not be entitled to exemption. But, on contrary, without there being finding of violation of section 13 of Act, inference is drawn on alleged receipt of donation and, consequently, allegation is made that there is violation of section 13(1)(d) of Act. hypothetical finding is given that because capitation fee is charged, it is not income in terms of section 11 of Act and, therefore, there is violation of section 13(1)(d) of Act. Tribunal held that such reasoning cannot be accepted because if donations are offered for income and if Department wants to disprove nature of income on basis of material, as has been pointed out by Commissioner of Income-tax (Appeals), it should be borne out by records based on investigation, which Assessing Officer failed to do, except falling back on statement which is not supported by materials. 4.10. On activities of trust, Tribunal has given finding that activities of assessee-trust are genuine educational activities entitled to be treated as charitable activities and there is no evidence on record to show that assessee has accepted capitation fee for allotment of seats. Tribunal relied on decisions of various courts to show that activities of trust alone are relevant for purpose of allowing benefit of exemption under sections 11 and 12 of Act. In fine, Tribunal held as follows (page 204 of 11 ITR (Trib)): "The above judicial pronouncement makes it clear that litmus test of charitable institution is test of application of funds and not colour of donations received by institution. In facts and circumstances we find that these appeals filed by Revenue are liable to be dismissed. cross-objections filed by assessee-trust become infructuous and, therefore, to be dismissed." (emphasis supplied) 4.11. Aggrieved by said order, Revenue has filed these appeals. We have heard Mr. T. R. Senthilkumar, learned standing counsel for Revenue and Mr. S. Sridhar, learned counsel for assessee and perused orders passed by Tribunal and authorities below. Before adverting to merits of case, it is apposite to refer to sections 11, 12 and 13 of Income-tax Act: "11. Income from property held for charitable or religious purposes.-(1) Subject to provisions of sections 60 to 63, following income shall not be included in total income of previous year of person in receipt of income- (a) income derived from property held under trust wholly for charitable or religious purposes, to extent to which such income is applied to such purposes in India; and, where any such income is accumulated or set apart for application to such purposes in India, to extent to which income so accumulated or set apart is not in excess of fifteen per cent. of income from such property; (b) income derived from property held under trust in part only for such purposes, trust having been created before commencement of this Act, to extent to which such income is applied to such purposes in India; and where any such income is finally set apart for application to such purposes in India, to extent to which income so set apart is not in excess of fifteen per cent. of income from such property; (c) income derived from property held under trust- (i) created on or after 1st day of April, 1952, for charitable purpose which tends to promote international welfare in which India is interested, to extent to which such income is applied to such purposes outside India, and (ii) for charitable or religious purposes, created before 1st day of April, 1952, to extent to which such income is applied to such purposes outside India: Provided that Board, by general or special order, has directed in either case that it shall not be included in total income of person in receipt of such income; (d) income in form of voluntary contributions made with specific direction that they shall form part of corpus of trust or institution. Explanation.-For purposes of clauses (a) and (b),- (1) in computing fifteen per cent. of income which may be accumulated or set apart, any such voluntary contributions as are referred to in section 12 shall be deemed to be part of income; (2) if, in previous year, income applied to charitable or religious purposes in India falls short of eighty-five per cent. of income derived during that year from property held under trust, or, as case may be, held under trust in part, by any amount- (i) for reason that whole or any part of income has not been received during that year, or (ii) for any other reason, then- (a) in case referred to in sub-clause (i), so much of income applied to such purposes in India during previous year in which income is received or during previous year immediately following as does not exceed said amount; and (b) in case referred to in sub-clause (ii), so much of income applied to such purposes in India during previous year immediately following previous year in which income was derived as does not exceed said amount, may, at option of person in receipt of income such option to be exercised in writing before expiry of time allowed under sub-section (1) of section 139, for furnishing return of income, be deemed to be income applied to such purposes, during previous year, in which income was derived; and income so deemed to have been applied shall not be taken into account in calculating amount of income applied to such purposes, in case referred to in sub-clause (i), during previous year in which income is received or during previous year immediately following, as case may be, and, in case referred to in sub-clause (ii), during previous year immediately following previous year in which income was derived... 12. Income of trusts or institutions from contributions.-(1) Any voluntary contributions received by trust created wholly for charitable or religious purposes or by institution established wholly for such purposes (not being contributions made with specific direction that they shall form part of corpus of trust or institution) shall for purposes of section 11 be deemed to be income derived from property held under trust wholly for charitable or religious purposes and provisions of that section and section 13 shall apply accordingly. (2) value of any services, being medical or educational services, made available by any charitable or religious trust running hospital or medical institution or educational institution, to any person referred to in clause (a) or clause (b) or clause (c) or clause (cc) or clause (d) of sub-section (3) of section 13, shall be deemed to be income of such trust or institution derived from property held under trust wholly for charitable or religious purposes during previous year in which such services are so provided and shall be chargeable to income-tax notwithstanding provisions of sub-section (1) of section 11. For purposes of this sub-section, expression'value' shall be value of any benefit or facility granted or provided free of cost or at concessional rate to any person referred to in clause (a) or clause (b) or clause (c) or clause (cc) or clause (d) of sub-section (3) of section 13. (3) Notwithstanding anything contained in section 11, any amount of donation received by trust or institution in terms of clause (d) of sub-section (2) of section 80G in respect of which accounts of income and expenditure have not been rendered to authority prescribed under clause (v) of sub- section (5C) of that section, in manner specified in that clause, or which has been utilised for purposes other than providing relief to victims of earthquake in Gujarat or which remains unutilised in terms of sub-section (5C) of section 80G and not transferred to Prime Minister's National Relief Fund on or before 31st day of March, 2001, shall be deemed to be income of previous year and shall accordingly be charged to tax. 13. Section 11 not to apply in certain cases.-(1) Nothing contained in section 11 or section 12 shall operate so as to exclude from total income of previous year of person in receipt thereof- (a) any part of income from property held under trust for private religious purposes which does not enure for benefit of public; (b) in case of trust for charitable purposes or charitable institution created or established after commencement of this Act, any income thereof if trust or institution is created or established for benefit of any particular religious community or caste; (c) in case of trust for charitable or religious purposes or charitable or religious institution, any income thereof- (i) if such trust or institution has been created or established after commencement of this Act and under terms of trust or rules governing institution, any part of such income enures, or (ii) if any part of such income or any property of trust or institution (whenever created or established) is during previous year used or applied, directly or indirectly for benefit of any person referred to in subsection (3): Provided that in case of trust or institution created or established before commencement of this Act, provisions of subclause (ii) shall not apply to any use or application, whether directly or indirectly, of any part of such income or any property of trust or institution for benefit of any person referred to in sub-section (3), if such use or application is by way of compliance with mandatory term of trust or mandatory rule governing institution: Provided further that in case of trust for religious purposes or religious institution (whenever created or established) or trust for charitable purposes or charitable institution created or established before commencement of this Act, provisions of sub-clause (ii) shall not apply to any use or application, whether directly or indirectly, of any part of such income or any property of trust or institution for benefit of any person referred to in sub-section (3), in so far as such use or application relates to any period before 1st day of June, 1970; (d) in case of trust for charitable or religious purposes or charitable or religious institution, any income thereof, if for any period during previous year- (i) any funds of trust or institution are invested or deposited after 28th day of February, 1983, otherwise than in any one or more of forms or modes specified in sub-section (5) of section 11; or (ii) any funds of trust or institution invested or deposited before 1st day of March, 1983, otherwise than in any one or more of forms or modes specified in sub-section (5) of section 11 continue to remain so invested or deposited after 30th day of November, 1983; or (iii) any shares in company (not being Government company as defined in section 617 of Companies Act, 1956 (1 of 1956), or corporation established by or under Central, State or Provincial Act) are held by trust or institution after 30th day of November, 1983: Provided that nothing in this clause shall apply in relation to- (i) any assets held by trust or institution where such assets form part of corpus of trust or institution as on 1st day of June, 1973; (ia) any accretion to shares, forming part of corpus mentioned in clause (i), by way of bonus shares allotted to trust or institution; (ii) any assets (being debentures issued by, or on behalf of, any company or corporation) acquired by trust or institution before 1st day of March, 1983; (iia) any asset, not being investment or deposit in any of forms or modes specified in sub-section (5) of section 11, where such asset is not held by trust or institution, otherwise than in any of forms or modes specified in sub-section (5) of section 11, after expiry of one year from end of previous year in which such asset is acquired or 31st day of March, 1992, whichever is later; (iii) any funds representing profits and gains of business, being profits and gains of any previous year relevant to assessment year commencing on 1st day of April, 1984, or any subsequent assessment year: Explanation.-Where trust or institution has any other income in addition to profits and gains of business, provisions of clause (iii) of this proviso shall not apply unless trust or institution maintains separate books of account in respect of such business. Explanation.-For purposes of sub-clause (ii) of clause (c), in determining whether any part of income or any property of any trust or institution is during previous year used or applied, directly or indirectly, for benefit of any person referred to in sub-section (3), in so far as such use or application relates to any period before 1st day of July, 1972, no regard shall be had to amendments made to this section by section 7 other than sub-clause (ii) of clause (a) thereof of Finance Act, 1972... (6) Notwithstanding anything contained in sub-section (1) or subsection (2), but without prejudice to provisions contained in subsection (2) of section 12, in case of charitable or religious trust running educational institution or medical institution or hospital, exemption under section 11 or section 12 shall not be denied in relation to any income, other than income referred to in sub-section (2) of section 12, by reason only that such trust has provided educational or medical facilities to persons referred to in clause (a) or clause (b) or clause (c) or clause (cc) or clause (d) of sub-section (3)." (emphasis supplied) Questions of law (i) and (ii) 7.1. To answer these questions of law raised by Revenue, let us analyse activities carried on by assessee-trust. 7.2. assessee-trust is running about eight educational institutions. Tribunal, based on various documents filed by assessee, (i.e.), permission by Deputy Director of Public Health, Government of Puducherry, to utilise facilities of Government hospitals; constitution of permanent admission committee under chairmanship of hon'ble Justice A. Ramamurthy (Retd.), etc., rendered categoric finding on fact that assessee is running number of educational institutions recognised by law and its charitable activities by way of education are bona fide. Department has not produced any evidence to rebut said finding rendered by Tribunal. Therefore, we do not find any reason to upset said finding. 7.3. It is plea of Department that assessee-trust is not maintaining regular books of account. similar allegation raised by Department was refuted even for assessment years 1998-99 to 2001-02 by Commissioner, Pondicherry, in order passed under section 264 of Act by stating that assessee was maintaining regular books of account in its ordinary course of activities. Assessing Officer, in his order, has stated that he had examined returns of income in light of books of account, financial statements and balance-sheets of assessee-trust. It is not case of Assessing Officer that books of account were not maintained properly. All that Assessing Officer states is that there are certain seized documents relating to refund of fees made to students, who were not given admission in colleges of assesseetrust and, therefore, there is element of suspicion in affairs of assessee-trust. 7.4. On this plea, it is specific case of assessee that during particular financial year all medical seats were taken over by Government of Puducherry and no seats were available in hands of assessee-trust for allotment under management quota and, therefore, amounts collected earlier from students had to be refunded. It is also not in dispute that these details have been brought out in accounts maintained by assessee-trust. Department has not controverted this finding of fact. It establishes assessee's case of bona fide refund. Nothing material turns on this fact to hold against assessee. 7.5. As rightly held by Tribunal, if Assessing Officer had any doubt about receipt of capitation fee or explanation given, he should have conducted enquiry either with students or with their parents or with any other person interested in activities carried on by assessee-trust. But, without doing so, Assessing Officer estimated collection of contributions on basis of number of seats available under management quota multiplied by amount of contribution attributable to individual seats. Any determination for purpose of tax cannot be based on hypothetical facts or conjectures or surmises. inference drawn by original authority is based on probability. 7.6. With regard to seizure of cash of over Rs. 44 lakhs from residence of chairman of assessee-trust, it is not in dispute that said sum has been assessed in hands of chairman for assessment year 2008-09 and same was received from petrol pump business, turnover of which is more than Rs. 30 crores. Moreover, Assessing Officer has accepted disclosure of seized cash as income of individual and, therefore, in our considered opinion, it cannot be said that assessee-trust had accepted contributions by way of capitation fee. said issue cannot be used both ways. assessment of undisclosed income at hand of individual ends issue there. It has no relevance to affairs of trust and there is no material to hold so. 7.7. In our considered opinion, based on loose sheets and cash seized, which have been held as irrelevant to present issue, it cannot be held that for all assessment years assessee received capitation fee for admission of students in management quota. This is perverse inference. Without conducting any enquiry in this regard to make allegation is unsustainable. information obtained from public information officer to query raised under Right to Information Act to effect that "there is no any complaint received from any student/parent regarding capitation fee charged by above institutions so far" also tilts balance in favour of assessee. It disproves Department's allegation of involuntary collection of amounts. That apart, order passed under section 264 of Act for assessment years 1998-99 to 2001-02 clearly states that donation received from students or parents is not compulsory in nature and, therefore, same is not capitation fee. There is no material to controvert this fact which is to knowledge of Department. No endeavour is made to sustain allegation of involuntary donation. In any event, as rightly held by Tribunal, it is not relevant in present case as allegation is violation of section 13 read with section 11 of Act. 7.8. We find that factually Commissioner of Income-tax (Appeals) and Tribunal have come to conclusion that donations received do not partake of character of capitation fee. There is no element of involuntary nature of donation. specific finding is given that no investigation has been done to show that any parent or student has complained about nature of donation. Department has failed to dispel finding of fact. 7.9. In any event, learned standing counsel for Department pleads that since assessee had not submitted list of students, Assessing Officer had to make estimate adopting his own methodology. This we cannot accept for simple reason that show-cause notice proceeds on basis that assessee has to submit list of donors alone. reply was submitted by assessee and in paragraph 6(iii), Assessing Officer states that all statements tallied. However, Assessing Officer comes to different conclusion that contribution is not voluntary, and it is relatable to admission of students. We find this finding of Assessing Officer, as has been rightly held by Commissioner of Income-tax (Appeals) and Tribunal, is not supported by documents but on basis of Assessing Officer's inference. It cannot be now stated that something was not furnished nevertheless he tallied all materials and came to conclusion as stated above. If Assessing Officer has tallied figures then assessee's case of actual contribution to trust has to be accepted. It has been shown in return of income. bald statement in paragraph (7) of assessment order that assessee is not carrying on charitable activities for purpose of section 13 read with section 11 of Act appears to be mainstay of Department's case. 7.10. In effect, it is clear that authority has confused himself with admission of students in management quota with carrying on activities of trust. distinction is obvious that if Department wanted to make out case of violation of section 13 of Act by trust, it cannot be based on perception of Assessing Officer that donations to trust are not voluntary. We hasten to add that there is no material to support plea that donations are not voluntary. 7.11. Having invoked section 13, mainstay of case of Department should be based on activities of trust to plead that same are not in consonance with section 13 of Act and, therefore, exemption under section 11 of Act should be denied, which we find is abysmally silent in show-cause notice and assessment order. 7.12. We do not find any reason to come to different conclusion on facts, as has been addressed by Commissioner of Income-tax (Appeals) as well as Tribunal on these two issues relating to seizure of cash and loose sheets. Apparently, there is no dispute on that fact. All that Department is trying to show is that there is something improper in manner in which donations are handled. Both these factors clearly establish that allegations have nothing to do with trust and its activities in relation to charitable objects. 7.13. There appears to be no second opinion on this finding because scope of sections 11, 12 and 13, as we find is in relation to application of income and utilisation thereon for charitable purpose, as defined under section 2(15) of Act, which reads as under: "2. (15)'charitable purpose' includes relief of poor, education, medical relief, and advancement of any other object of general public utility." There is not even iota of material to come to conclusion to different conclusion than what has been held by Commissioner of Income-tax (Appeals) and Tribunal. 7.15. We find that Department has not made out case of collection of capitation fee under guise of donation and it has not established case of involuntary nature of donations. Therefore, questions of law (i) and (ii) are answered against Revenue and in favour of assessee. Question of law (iii) 8.1. On third question of law, Mr. T. R. Senthilkumar, learned standing counsel, relied upon letter dated December 9, 2009, which is reply filed by assessee, in which it is stated that details will be provided later. We find that query in question No. (x) is not in relation to admission of students or capitation fee. In any event, we find from assessment order itself that records were tallied and verified. Therefore, whatever income was offered by assessee as contributions will be entitled to exemption under section 11 of Act. 8.2. true intent of sections 11, 12 and 13 of Act is utilisation of funds for charitable purpose and same has been highlighted by Supreme Court in recent decision in Queen's Educational Society v. CIT [2015] 372 ITR 699 (SC); CDJ 2015 SC 215. Supreme Court held that assessing authority must continuously monitor from assessment year to assessment year whether such institutions continue to apply their income and invest or deposit their funds in accordance with law laid down and if activities of institution are found not to be genuine, or are not being carried out in accordance with all or any of conditions subject to which approval has been given, such approval and exemption must forthwith be withdrawn. relevant potion of said decision reads as under (pages 719, 728): "It is clear, therefore, that Uttarakhand High Court has erred by quoting non existent passage from applicable judgment, namely, Aditanar and quoting portion of property tax judgment which expressly stated that rulings arising out of Income-tax Act would not be applicable. Quite apart from this, it also went on to further quote from portion of said property tax judgment which was rendered in context of whether educational society is supported wholly or in part by voluntary contributions, something which is completely foreign to section 10(23C)(iiiad). final conclusion that if surplus is made by educational society and ploughed back to construct its own premises would fall foul of section 10(23C) is to ignore language of section and to ignore tests laid down in Surat Art Silk Cloth case, Aditanar case and American Hotel and Lodging case. It is clear that when surplus is ploughed back for educational purposes, educational institution exists solely for educational purposes and not for purposes of profit. In fact, in S. RM. M. CT. M. Tiruppani Trust v. CIT [1998] 230 ITR 636 (SC); [1998] 2 SCC 584, this court in context of benefit claimed under section 11 of Act held (page 642): '9. In present case, assessee is not claiming any benefit under section 11(2) as it cannot; because in respect of this assessment year, assessee has not complied with conditions laid down in section 11(2). assessee, however, is entitled to claim benefit of section 11(1)(a). In present case, assessee has applied Rs. 8 lakhs for charitable purposes in India by purchasing building which is to be utilised as hospital. This income, therefore, is entitled to exemption under section 11(1). In addition, under section 11(1)(a), assessee can accumulate 25 per cent. of its total income pertaining to relevant assessment year and claim exemption in respect thereof. Section 11(1)(a) does not require investment of this limited accumulation in Government securities. balance income of Rs. 1,64,210.03 constitutes less than 25 per cent. of income for assessment year 1970- 71. Therefore, assessee is entitled to accumulate this income and claim exemption from income-tax under section 11(1)(a).' We set aside judgment of Uttarakhand High Court dated September 24, 2007. reasoning of Income-tax Appellate Tribunal (set aside by High Court) is more in consonance with law laid down by this court, and we approve its decision... view of Punjab and Haryana High Court has been followed by Delhi High Court in St. Lawrence Educational Society (Regd.) v. CIT [2013] 353 ITR 320 (Delhi); [2011] 53 DTR (Delhi) 130. Also in Tolani Education Society v. Deputy DIT (Exemptions) [2013] 351 ITR 184 (Bom), Bombay High Court has expressed view in line with Punjab and Haryana High Court view, following judgments of this court in Surat Art Silk Cloth Manufacturers Association case and Aditanar Educational Institution case as follows (page 194 of 351 ITR): '... fact that petitioner has surplus of income over expenditure for three years in question, cannot by any stretch of logical reasoning lead to conclusion that petitioner does not exist solely for educational purposes or, as that Chief Commissioner held that petitioner exists for profit. test to be applied is as to whether predominant nature of activity is educational. In present case, sole and dominant nature of activity is education and petitioner exists solely for purposes of imparting education. incidental surplus which is generated, and which has resulted in additions to fixed assets is utilised as balancesheet would indicate towards upgrading facilities of college including for purchase of library books and improvement of infrastructure. With advancement of technology, no college or institution can afford to remain stagnant. Income-tax Act, 1961, does not condition grant of exemption under section 10(23C) on requirement that college must maintain status quo, as it were, in regard to its knowledge based infrastructure. Nor for that matter is educational institution prohibited from upgrading its infrastructure on educational facilities save on pain of losing benefit of exemption under section 10(23C). Imposing such condition which is not contained in statute would lead to perversion of basic purpose for which such exemptions have been granted to educational institutions. Knowledge in contemporary times is technology driven. Educational institutions have to modernise, upgrade and respond to changing ethos of education. Education has to be responsive to rapidly evolving society. provisions of section 10(23C) cannot be interpreted regressively to deny exemptions. So long as institution exists solely for educational purposes and not for profit, test is met.' We approve judgments of Punjab and Haryana, Delhi and Bombay High Courts. Since we have set aside judgment of Uttarakhand High Court and since Chief Commissioner of Income-tax's orders cancelling exemption which were set aside by Punjab and Haryana High Court were passed almost solely upon law declared by Uttarakhand High Court, it is clear that these orders cannot stand. Consequently, Revenue's appeals from Punjab and Haryana High Court's judgment dated January 29, 2010 and judgments following it are dismissed. We reiterate that correct tests which have been culled out in three Supreme Court judgments stated above, namely, Surat Art Silk Cloth, Aditanar, and American Hotel and Lodging, would all apply to determine whether educational institution exists solely for educational purposes and not for purposes of profit. In addition, we hasten to add that 13th proviso to section 10(23C) is of great importance in that assessing authorities must continuously monitor from assessment year to assessment year whether such institutions continue to apply their income and invest or deposit their funds in accordance with law laid down. Further, it is of great importance that activities of such institutions be looked at carefully. If they are not genuine, or are not being carried out in accordance with all or any of conditions subject to which approval has been given, such approval and exemption must forthwith be withdrawn. All these cases are disposed of making it clear that Revenue is at liberty to pass fresh orders if such necessity is felt after taking into consideration various provisions of law contained in section 10(23C) read with section 11 of Income-tax Act." (emphasis supplied) 8.3. It only emphasises that Department is empowered to take action in cases where institution does not apply income to further cause of trust. 8.4. That apart, for assessment years 2002-03 and 2003-04 as Chief Commissioner of Income-tax-VI, Chennai, having jurisdiction over case has notified this under section 10(23C)(vi) of Act that there is no applicability of section 11 or section 13 in those two years. Department has not produced any evidence of breach of section 10(23C)(vi) of Act and, therefore, respondent-trust will be entitled to benefit of exemption contained therein. 8.5. In present case, we find that Department had proceeded on wrong premise without any basic materials to establish case of violation of section 13 of Act. Therefore, in our considered opinion, Tribunal was right in deleting addition. third question of law is answered against Revenue and in favour of assessee. Question of law (iv) Apropos fourth question of law, we find that case of P. S. Govindasamy Naidu and Sons v. Asst. CIT [2010] 324 ITR 44 (Mad), relied on by learned standing counsel for Revenue is distinguishable on facts. In said decision, it has been clearly held that examination of parents and students of college found that amounts paid were not corpus donation but capitation fee. Therefore, reasoning given in said decision does not apply to facts of present case, as Assessing Officer has not chosen to conduct any enquiry from any student or parent with regard to donations. Accordingly, fourth question of law is answered against Revenue and in favour of assessee. Additional question of law 10.1. In addition to questions of law raised by Department, we feel it apt to consider following question: "Whether Department has established case of violation of section 13(1)(d) of Act as against respondent-assessee?" learned counsel for either side were heard on this issue. 10.2. very basis of plea of Revenue regarding violation of section 13(1)(d) of Act is that sum of Rs. 44 lakhs was found and seized in course of search from residence of chairman of assessee- trust. With regard to said seizure, Assessing Officer has accepted disclosure of seized cash as income of individual and, therefore, in our considered opinion, it cannot be said that assessee- trust has violated provisions of section 13(1)(d) of Act. In any event, from show-cause notice and order of Assessing Officer, we find that none of ingredients of section 13 is attracted to facts of present case. 10.3. In such view of matter, additional question of law is also answered against Revenue and in favour of assessee. For foregoing reasons, these appeals are dismissed. No costs. *** Commissioner of Income-tax v. Balaji Educational and Charitable Public Trust