ITAT deletes Addition for Cash Payment as Capitation Fee for MBBS Admission [Read Order]

The Delhi bench of the Income Tax Appellate Tribunal (ITAT) has deleted an addition made in respect of cash payment made by the assessee as capitation fee / donation for obtaining admission in the Medical College for the higher studies of son.

The assessee is a doctor by profession. The Assessing Officer, while concluding the assessment proceedings, noticed that the assessee made cash payments of Rs.21,01,000/- as donation/capitation fee over and above the regular course fee to Santosh Medical College, Ghaziabad for admission of his son.

Before the authorities, the son of the assessee made a statement that he is an income-tax payee since long and addition, if any, on account of such capitation fee could have been made in his hands and not in the hands of his father. He further submitted that Shri Sandeep jain qualified and became an MBBS doctor in 1995 as per his statement recorded His wife also is a doctor and both of them had worked in reputed hospitals for the last 12 years drawing good salaries and could have easily paid the capitation fee. Therefore, the addition, if any could have been made in their hands who are income-tax payees.

The Tribunal observed that when Shri Sandeep Jain admitted before the Assessing Officer regarding the payment of such capitation fee and when Shri Sandeep Jain and his wife are both doctors which is not in dispute.

“Therefore, in my considered opinion, addition, if any could have been made in the hands of the son of the assessee i.e., Shri Sandeep Jain and not in the hands of the assessee. No doubt Shri P. Mahalingam in his statement had accepted to have received capitation fee as unaccounted money from Shri S.K. Jain, f/o Shri Sandeep Jain and has surrendered the same for taxation as mentioned by the Assessing Officer. However, a perusal of the statement recorded of Shri Mahalingam, which has been reproduced by the CIT(A) in his order, nowhere shows he has taken the name of the assessee. Page 21 of the order of the CIT(A) shows the name of the students/course pursued and the students’ fathers’ name and addresses. Nowhere it conclusively shows that the capitation fee was paid by Shri Sudarshan Kumar Jain, father of Dr. Sandeep Jain. Since the son of the assessee Dr. Sandeep Jain had appeared before the Assessing Officer and has stated that he and his wife are doctors and had enough source to pay the admission and donation/capitation fees for his higher studies, therefore, in the facts and circumstances of the case, I am of the considered opinion that no addition is called for in the hands of the assessee. Addition, if any, could have been made in the hands of only Dr. Sandeep Jain,” the Tribunal said.