9911796707
TMI Blog2004 (7) TMI 310X X X X Extracts X X X X X X X X Extracts X X X X ..... found. The husband of the assessee, Shri P. Janaki Ramulu, who was in charge of administration of OAS, was questioned. He gave details regarding the fees charged for various standards. He also submitted that out of the total fees, 1/3rd of the fee was deposited by the students to Sri Satya Sai Trust for Learning in which he is the Managing Trustee. During the course of assessment, the assessee was asked to furnish names, addresses and other details regarding the donations received by the said Trust. The assessee could file the details only in respect of five students. The Assessing Officer examined the parents of such students. The parents confirmed having paid donations to the Trust. The statement of the assessee was also recorded during the course of assessment proceedings. The assessee submitted that the Trust was set up in 1994, of which her Trustee and her daughter is the Treasurer. The assessee was also asked as to why the name of the educational institution was appearing on the challans for payment of donations. The assessee submitted that the same was voluntary donation made by the students. She was also questioned as to why the date of admission, the date of payment of fee ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... counsel further submitted that the funds received by way of donations have been utilized to acquire a large piece of land to set up an educational institution for poor and needy children. Thus, the assessee had not received any benefit out of such donations. Since the donations were made voluntarily, such income cannot be said to have accrued to the assessee first and thereafter applied to the Trust. It can be treated as diversion by overriding title in favour of the Trust. She relied upon the decision of CIT v. Bijli Cotton Mills P. Ltd. [1976] 116 ITR 60. In that case, the facts are as under: "The respondent, a private company carrying on the business of manufacturing and selling yarn, realised certain amounts on account of "Dharmada" from its customers on sales of yarn and cotton, at the rate of 1 anna per bundle of 10 lbs. of yarn and 2 annas per bale of cotton. In the bills issued to the customers these amounts were shown in a separate column headed "Dharmada". The respondent did not credit the amounts so realised by it in its trading account, but maintained a separate account known as the "Dharmada account", in which the realisations on account of Dharmada were credited and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... haritable purposes could be said to have been created: (a) the compulsory nature of the payment, (b) the fact that the respondent had some discretion as regards the manner in which and the time when the respondent should spend the Dharmada amounts for charitable purposes; or (c) the fact that the respondent did not keep the amounts in a separate bank account." Applying the same principle, the donations by students to Sri Satya Sai Trust For Learning cannot be considered as part of fees and includible in the income of the assessee. 4. The learned departmental representative, Shri Bhaskara Rao, strongly supported the orders of the authorities below. He brought to our notice the fact that the husband of the assessee, who is managing the affairs of the Trust and who, with the consent of the assessee, has made a statement voluntarily, submitted that the fees ranged between Rs. 2,385 and Rs. 7,425 for VIII class to Inter Senior class and for EAMCET. He also confirmed that one-third of the fees was deposited by the students to the Trust of which he is the Managing Trustee. Thus, the total fee charged by the assessee is fixed and the student is asked to deposit part of the fee in the acc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on was paid voluntarily; on the other hand, it can be safely inferred that the affidavits are signed at the behest of the assessee and not given by free will or voluntarily. Though the cause of setting up the Trust may be a noble one, yet the means for achieving the end are not pure and sacrosanct. The assessee, in the grab of receiving the fees, diverted the funds to the Trust account. Since the donations are not voluntary, but only a different form of fees, the same are rightly taxed in the hands of the assessee. At the most, it can be said to be an application of fees received by the assessee to the Trust but not voluntary donations made by the students to the Trust. 5.1 The decision of the Hon'ble Supreme Court in the case of Bijli Cotton Milk P. Ltd. will not help the case of the assessee in the said case, Dharmada paid by the customers is over and above the price of the yarn sold by the assessee to the customers. Hon'ble Supreme Court has given a clear finding that the payments were in fact for charity right from the inception and as per the tradition and practice followed in the line of trade as carried on by that assessee. Dharmada amount collected was handed over to the t ..... X X X X Extracts X X X X X X X X Extracts X X X X
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