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TMI Blog2013 (4) TMI 761X X X X Extracts X X X X X X X X Extracts X X X X ..... conditions laid down in section 12A or by falling within the mischief of section 13, corpus donations will be included in its income and taxed. Therefore the question whether the donations were voluntary or not becomes irrelevant and what becomes relevant is the application of such contributions for the objections of the trust which are admittedly charitable. The application of such contributions for objects of the trust is not in dispute. - Decided in favour of assessee. - ITA No.735/Bang/2012 - - - Dated:- 19-4-2013 - SHRI N.V. VASUDEVAN, JUDICIAL MEMBER AND SHRI JASON P. BOAZ, ACCOUNTANT MEMBER Appellant by : Shri Etwa Munda, CIT-III(DR) Respondent by : Smt. Pratibha, Advocate ORDER Per N.V. Vasudevan, Judicial Member This is an appeal by the revenue against the order dated 07.02.2012 of the CIT(Appeals), Mysore relating to A.Y. 2006-07. The grounds raised by the revenue reads as follows:- 1. The order of the learned CIT(A), Mysore is opposed to the facts of the case and provisions of the law in respect of the points allowed by him in appeal. 2. The learned CIT(A) has deleted the addition of ₹ 2,32,63,690 without considering the lack of element ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... urse of survey, it was found that educational institution was collecting money over and above the fee prescribed by Government for admission. The Court held that it was a case of sale of education and cannot be considered as a charitable institution. It was held that exemption u/s. 11 was not available. For all the above reasons, the AO held that a sum of ₹ 2,32,63,693 which was development fee collected by the assessee during the previous year was not exempt u/s. 11 of the Act and he brought the same to tax under the head 'income from other sources'. 4. Before the CIT(Appeals), it was submitted that these donations are not collected by any professional colleges. They are the contributions received from the students who are admitted to unaided courses and management quota which are permitted as per the law of the State Government. There is no bar in the state law for unaided courses. The assessee filed details of donations for development fee collected and a comparative income statement through Note dated 12.11.2010 and pointed out that at no point of time any surplus was made to suggest that there was profit made by the assessee. The surplus was regularly applied ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... assessee-trust for the purposes of its objects and, therefore, the assessee-trust was entitled for the relief under s. 11 of the IT Act, 1961. While the matter was taken up by the Revenue before the Hon'ble High Court, the High Court held as follows page : It is not in dispute that the assessee is a social cultural and educational trust, running educational institutions having various professional courses. However, the contention of the counsel for the Revenue, that the amounts were collected for the purpose of allotment of seats to students for the relevant assessment year is not found on any material and the same is not apparent from the record. Merely because the assessee is an institution which is running professional courses, it could not have been presumed by the AO that the said amounts which were received as donations were attributable to the allotment of seats in the relevant assessment years. In the absence of there being any foundation for such a contention, the contention of counsel for the Revenue that the donations received to an extent of ₹ 28,30,094 during the said period is in violation of the Prohibition of Capitation Fee Act, 1984 and, therefore, t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... available before law is to see whether such contributions have been treated by the assessee as the income and also applied for charitable purposes. The Tribunal also referred to the decision of Hon'ble Karnataka High Court in the case of Garden City Educational Trust (infra) as follows: 47. The nature of the enquiry to be made has been again considered by the Hon'ble Karnataka High Court in the case of Director of IT vs. Garden City Educational Trust (2011) 330 ITR 480 (Kar) : (2009) 28 DTR (Kar) 139. where there is no dispute in respect of the objects of the trust, that of imparting education and also when there is no dispute regarding the fact that the trust has actually imparted education and not carrying any other activities, the trust is qualified, for getting registration under s. 12A as a charitable institution and the question regarding the application of funds and allowability of benefit of exemption under ss. 11 and 12 are matters which are to be examined by the assessing authority at the time of assessment and not by the registering authority. (emphasis provided by us) 48. The above judicial pronouncement makes it clear that the litmus test of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... or involuntary to the extent the same is applied for the purpose of the trust. In a way, the AO in the remand report also admits that since the income is assessed under the head 'Other sources', the expenditure against this income has to be allowed. Respectfully following the decision of the jurisdictional High Court and also the decision of Hon'ble Tribunal Bangalore, I direct the AO to treat the donations received to the extent the same are applied for the purpose of the trust as eligible for exemption. It is claimed by the appellant that there is no surplus generated on account of this which needs to be taxed. The AO is directed to examine this claim once again and allow the exemption in line with the above decision. 9. Aggrieved by the order of the CIT(A), the revenue has preferred the present appeal before the Tribunal. 10. We have heard the submission of the learned counsel for the Assessee and the learned DR. The learned DR reiterated the stand of the Revenue as reflected in the order of the AO. The learned DR reiterated stand as taken before CIT(A) and relied on the order of the CIT(A). 11. We have considered the rival submissions. We are of the view t ..... X X X X Extracts X X X X X X X X Extracts X X X X
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