2016 (7) TMI 108 - AT - Income Tax

Addition U/s 115BBC - Anonymous donations - Held that - Confirmation obtained from donors during the course of remand proceedings, therefore, impugned donations are no more anonymous in nature (II) Voluntary contributions made with a specific direction to form part of the corpus is not treated to be as income - The impugned donations are no more anonymous in nature. Decided in assessee s favour. Addition of admission fees - Held that - The assessee-trust passed resolutions for obtaining admission fee separately from its students with specific stipulation that the same would be used in educational funds. The Revenue has not been able to dispel correctness thereof in course of arguments. There is further no evidence that assessee s students or for that their parents were ever forced to pay the impugned admission fees as alleged by the lower authorities. It is thus clear that the assessee has obtained the impugned admission fees as per its resolutions to be utilized in its educational activities only. Hon ble jurisdictional high court in CIT vs. S.V. Vanik Jain Sangh 2002 (7) TMI 34 - GUJARAT High Court is of the view that a voluntary contribution made with specific direction to form part of the corpus is not treated to be as income. Same appears to be the ratio of hon ble Delhi high court DIT vs. NASS COM 2012 (5) TMI 204 - DELHI HIGH COURT holding that a one time admission fee paid by members to be spent only for acquiring capital asset is a corpus donation not taxable as income. - Decided in favour of assessee.

Summary

Issues Involved:
1. Addition under section 115BBC for corpus fund received by the assessee Trust as an anonymous donation.
2. Addition on account of one-time admission fees.

Analysis:

Issue 1: Addition under section 115BBC for corpus fund received by the assessee Trust as an anonymous donation:
The assessee, a trust engaged in educational activities, received a cash donation projected as a corpus fund for educational purposes. The Assessing Officer treated these donations as anonymous under section 115BBC due to the lack of proper documentation. The CIT(A) initially upheld the addition but later, upon receiving confirmations from donors during remand proceedings, rejected the grounds raised by the assessee. However, the Tribunal found that the donations were not anonymous as confirmed by the donors. The Tribunal held that the CIT(A) erred in treating the corpus donation as income, ruling in favor of the assessee.

Issue 2: Addition on account of one-time admission fees:
The Assessing Officer added the one-time admission fees to the income of the assessee, alleging that it was collected as compulsory donations with profit motive. The CIT(A) upheld this addition. However, the Tribunal found that the admission fees were collected as corpus funds for educational activities based on resolutions passed by the trust. Citing legal precedents, the Tribunal concluded that such contributions made for specific purposes are not taxable as income. Therefore, the addition of the admission fees was deleted, and the assessee's appeal was allowed.

In conclusion, the Tribunal allowed both appeals of the assessee for the assessment years 2010-11 and 2011-12, overturning the additions made by the lower authorities. The judgments highlighted the importance of proper documentation and specific purposes for donations to determine their taxability, ultimately ruling in favor of the assessee in both substantive issues.