RAKESH KUMAR GARG, J. - (1.) THIS order shall dispose of IT Appeal Nos. 33 and 34 of 2007. The Revenue has filed these appeals under s. 260A of the Income -tax Act, 1961 (hereinafter referred to as the 'Act') 513/Asr/2001 in the case of respondent assessee for the asst. yr. 1997 -98 raising the following substantial questions of law : "1. Whether on the facts and circumstances of the case the learned Tribunal is right in law in confirming the order of the CIT(A) granting exemption under s. 10(22) of the IT Act, 1961 ? 2. Whether on the facts and circumstances of the case the learned Tribunal is right in law confirming the order of CIT(A) deleting the addition of Rs. 40 lacs on account of unaccounted capitation fee ? 3. Whether on the facts and circumstances of the case, the learned Tribunal is right in law confirming the order of CIT (A), in granting the exemption under s. 10(22) against the claim of assessee under s. 11 of the IT Act, 1961 ? 4. Whether on the facts and circumstances of the case, the learned Tribunal is right in law in recording a perverse finding that the assessee is carrying on charitable activities under s. 10(22) of the IT Act, 1961 -
(2.) BRIEF facts giving rise to this appeal are as under : The assessee runs M/s Khalsa Rural Hospital & Nursing Training Institute, V & PO Nangal Kalan (Mansa). During the course of assessment proceedings under s. 143(3) for the asst. yr. 1997 -98, the AO noticed that the assessee has claimed exemption under s. 11 of the IT Act, 1961 on the income derived by the assessee. The AO disallowed the benefit of ss. 11 and 12 of the Act to the assessee and made an addition of Rs. 40 lacs on account of capitation fee not declared in the income of return. The AO also rejected the books of accounts of the assessee and refuted the claim of the assessee that the same has been damaged in floods.
(3.) CLAIM of the assessee that books of accounts were damaged in floods as per the evidence given by the assessee. The CIT (A) also held that the entire income of the trust including the alleged receipt of capitation fee stands exempted under the provisions of s. 10(22) of the Act as the trust is running solely for the educational purposes and not for profits. Regarding the addition on account of the capitation fee to the tune of Rs. 40 lacs made by the AO, CIT(A) held that the same is not justified in view of the fact that no evidence has been brought on record in this regard. Aggrieved against this order of the CIT(A), Bathinda, the Revenue filed an appeal before the Tribunal who vide its the educational purposes and its income has been utilised for the purpose of education only. The Tribunal also accepted the plea of the assessee that its records have been destroyed in floods. Regarding capitation fee the Tribunal upheld the view of the CIT(A), 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 lacs from each medical student as capitation fee.;