The Mumbai bench of Income Tax Appellate Tribunal (ITAT) has recently held that the admission fee paid for post graduation courses did not amount to capital fee. Therefore the bench deleted the addition made under Section 69C of the Income Tax Act, 1961.
The above appeal was filed by the assessee Krishna D. Pawar against the order of CIT(A) made an addition of Rs.95 Lakhs as unexplained expenditure under Section 69C of the Income Tax Act.
The fact of the case is that the assessee is a doctor by profession who had filed his return of income for Assessment Year 2014-15 on 24.07.2014 declaring total income of Rs.64,68,380/-.
After selecting assesse’s case for scrutiny assessee jurisdiction was transferred to ITO Mumbai, pursuant to the order of the PCIT under Section 120(5) of the Income Tax Act.
Thereafter, AO received an information from the DCI regarding payment of Capitation fee/Donation of Rs.95,00,000/- by the assessee to Sinhgad Technical Education Society (STES) for admission of his daughter Dr. Sai Shrikrishna Pawar for securing admission for the course of Post Graduation (PG) in Dermatology for academic year 2013-14.
The AO asked the assessee to explain the source of the same. Thereafter the AO made an addition under Section 69C of Income Tax Act, 1961. Aggrieved assessee filed appeal before CIT(A). The CIT(A) confirmed the addition made by the AO. Further, the assessee filed a second appeal before the tribunal.
When the matter was preferred before the tribunal, counsel for the assessee, Dinesh Ahir submitted that assessee has not made any payment other than the tuition fee of Rs 5.5 Lakhs per year which was paid through banking channel and denied having made any capitation fees of Rs 95 Lakhs for securing admission.
Krishna Kumar, counsel for the reveneu submitted that the appraisal report of Investigation Wing have stated that Dr. Sai secured admission by making payment of capitation fees of Rs. 95 Lakhs.
The tribunal, after considering the contentions, observed that the addition was made on the basis of the scribbling note without any other oral/documentary evidence to support the allegation of capitation fees.
Further, the tribunal bench determined that the assessee’s daughter had secured 65% for MBBS while completing her MBBS Degree from Government Medical College and General Hospital at Akola and secured her admission after clearing the NEET Exam, which is the eligibility/qualifying test and that the addition had been made only on the basis of the scribbling note.
Therefore, the two member bench of Aby T. Varkey, (Judicial Member) and Amarjit Singh, (Accountant Member) allowed the appeal filed by the assessee.
Keywords:Admission Fee, PG Course, Capitation Fee, Addition, section 69C of the Income Tax Act, unexplained expenditure, scribbling note, ITAT, CIT(A)
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