DEPUTY COMMISSIONER OF INCOME TAX (EXEMPTION), CIRCLE, JAIPUR vs. GURUKUL SHIKSHAN SANSTHAN, SIKAR, SIKAR

आयकर अपीलीय अधिकरण] जयपुर न्यायपीठ] जयपुर IN THE INCOME TAX APPELLATE TRIBUNAL, JAIPUR BENCHES, JAIPUR Jh fot; iky jko] U;kf;d lnL; ,oa Jh Hkkxpan] ys[kk lnL; ds le{k BEFORE: SHRI VIJAY PAL RAO, JM & SHRI BHAGCHAND, AM vk;dj vihy la-@ITA No. 44/JP/2018 fu/kZkj.k o"kZ@Assessment Year: 2011-12 cuke DCIT(E), M/s Gurukul Shikshan Sansthan, Vs. Circle, Jaipur. Opp.- Shiv Mandir Cinema, Fatehpur Road, Sikar. LFkk;h ys[kk la-@thvkbZvkj la-@PAN/GIR No.: AAATG 8671 K vihykFkhZ@Appellant izR;FkhZ@Respondent jktLo dh vksj ls@ Revenue by : Shri J.C. Kulhari (JCIT) fu/kZkfjrh dh vksj ls@ Assessee by : Shri P.C. Parwal (CA) lquokbZ dh rkjh[k@ Date of Hearing : 04/04/2018 mn?kks"k.kk dh rkjh[k@ Date of Pronouncement : 05/04/2018 vkns'k@ ORDER

PER: BHAGCHAND, A.M.

This is an appeal filed by the revenue emanates from the order of

the ld. CIT(A)-1, Jodhpur, camp at Jaipur dated 27/09/2017 for the A.Y.

2011-12, wherein the revenue has taken following grounds of appeal: “1) On the facts and in the circumstances of the case and in law the Ld. CIT(A) has erred in deleting the addition of Rs. 84,82,000/-by holding that development fees was utilized for creation of capital assets and same cannot be treated as revenue receipts. 2) On the facts and circumstance of the case and in law the Ld.CIT(A) has not considered the facts that development fee received from the students/ parents is violation of provision of

ITA 44/JP/2018_ 2 DCIT(E) Vs M/s Gurukul Shikshan Sansthan

section 11(1) (d) of the Act as it was received in normal fee and compulsory for all the students.

3) On the facts and circumstance of the case and in law the Ld.CIT (A) has not considered the facts that development fee was made without specific directions of donors/ students and fee was compulsory in nature.”

“5.2. I have considered the assessment order, appellant’s submissions and case laws relied upon by the appellant. The appellant had capitalized the “development fees” of Rs.84,82,000/- received by the appellant society as corpus fund in the Balance Sheet, the AO included the same in the declared gross receipts of Rs.8,06,70,964/- and worked out the total receipts at Rs.8,91,52,964/-. The appellant has contended that amount received from students which is directly credited to the development fund is a corpus donation u/s 11(1 )(d) of the Act and the action of the AO in treating the Development fees received from students as revenue receipt is uncalled for & the same be directed to be considered as corpus donation, i.e. capital receipt exempt u/s 11(1 )(d) of the Act. Considering the facts of the case and judicial precedents cited by the appellant, I find force in the various submissions made by the appellant. It is seen that the appellant society has received development fees from the student apart from the tuition fee, the development fees is received with the clear understanding that it is to be used for creation of capital asset necessary for achieving the objects of the society, the development fees of Rs.84,82,000/- received during the year is directly credited to the corpus fund of the Society, the development fund is used in creating fixed assets, like purchase of school land, construction of school building & other capital asset of the school, during the year, the total development fees receipt is Rs.84,82,000/- whereas the total addition in the fixed

ITA 44/JP/2018_ 3 DCIT(E) Vs M/s Gurukul Shikshan Sansthan

assets is of Rs.2,53,90,537/-. Keeping in view all these facts, it could be concluded that the Development fees is utilised in creation of capital asset and therefore the same cannot be treated as revenue receipt. Considering the facts of the case, it is held that the AO is not justified in treating the development fees of Rs.84,82,000/- as revenue receipt, the same is directed to be excluded from the total receipts of the society. The ground No. 1 raised by the appellant regarding this issue is allowed.”

that this amount of Rs. 84,82,000/- was the development fees and was a

revenue receipt. It was not a voluntary donation as provided in Section

11(1)(d) of the Income Tax Act, 1961 (in short the Act), which provides

for income in the form of voluntary contribution made with specific

direction that they shall form part of the corpus of the Trust or Institution.

He further pleaded that the government has prescribed these

development fees to each and every course to be paid by student. There

is no alternate or say escape except to pay the development fee for

getting the admission. Therefore, such amount received are not covered

by the provisions of Section 11(1)(d) of the Act. The development fee

paid by the students is a clear in violation of the provisions of Section

11(1)(b) of the Act. He pleaded that order of the ld. CIT(A) deserve to be

set aside.

ITA 44/JP/2018_ 4 DCIT(E) Vs M/s Gurukul Shikshan Sansthan

the ld. CIT(A) was justified in deleting the addition. He submitted that the

Technical Education Department, Govt. of Rajasthan has specified the

amount of development fee and also provided that the management may

charge development fee not exceeding 15% of the total amount of tuition

fee. He also pleaded that the Technical Education Department, Govt. of

Rajasthan has also specified that the development fee is to be treated as

capital receipt and shall be collected only if the institution maintains the

“Depreciation Reserve Fund” equivalent to the depreciation charged in the

revenue accounts and collected under the relevant head as well as the

income generated from the investments made out of this fund. He prayed

to sustain the order of the ld. CIT(A).

that the Technical Education Department, Govt. of Rajasthan has

prescribed the amount of development fees for various courses offered by

the education institutions. Further it also provides that the development

fees as decided by the technical university of Rajasthan shall be collected

from the students by the institutions. It is also pertinent to note that the

Technical Education Department, Govt. of Rajasthan has also provided

that the development fee so collected shall serve the following purposes:

ITA 44/JP/2018_ 5 DCIT(E) Vs M/s Gurukul Shikshan Sansthan B. Development Fee: Development fee should serve the following purposes:- a. Purchases and replacement of the infrastructure. b. Betterment, growth and up-gradation of the institution. c. Special amenities to the students. It also provides that the development fee shall not exceed 15% of the

total amount of tuition fee and the fees collected only if the institutions

maintains the “Depreciation Reserve Fund” equivalent to the depreciation

charged in the revenue accounts and collected under the relevant head as

well as the income generated from the investments made out of this fund.

From the records, we find that there is no clear cut finding regarding the

applicability of Section 11(1)(d) of the Act. The guideline provided by the

Technical Education Department, Govt. of Rajasthan has not been

considered. Therefore, in the interest of justice and equity, we find it

appropriate to restore the issue to the file of the Assessing Officer to be

decided de novo.

purposes only.

Order pronounced in the open court on 05/04/2018.

Sd/- Sd/- ¼fot; iky jko fot; iky jko fot; iky jko½ fot; iky jko ¼Hkkxpan Hkkxpan Hkkxpan½ ½ ½ ½ Hkkxpan (VIJAY PAL RAO) (BHAGCHAND) U;kf;d lnL;@Judicial Member ys[kk lnL;@Accountant Member Tk;iqj@Jaipur fnukad@Dated:- 05th April, 2018. *Ranjan

ITA 44/JP/2018_ 6 DCIT(E) Vs M/s Gurukul Shikshan Sansthan आदेश की प्रतिलिपि अग्रेf’ात@ब्वचल वf जीम वतकमत वितूंतकमक जवरू vihykFkhZ@The Appellant- The DCIT(E), Circle, Jaipur. 1. izR;FkhZ@ The Respondent- M/s Gurukul Shikshan Sansthan, Sikar. 2. vk;dj vk;qDr@ CIT 3. vk;dj vk;qDr¼vihy½@The CIT(A) 4. विभागीय प्रतिनिधि] आयकर अपीलीय अधिकरण] जयपुर@क्त्ए प्ज्Aज्ए Jंपचनत 5. xkMZ QkbZy@ Guard File (ITA No. 44/JP/2018) 6.

vkns'kkuqlkj@ By order,

सहायक पंजीकार@Aेेज. त्महपेजतंत