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TMI Blog2020 (12) TMI 176X X X X Extracts X X X X X X X X Extracts X X X X ..... exempted. In the present case, it is nobody s case that donors herein have collected any donation on behalf of the present assessee from the students or from parents for giving the admission in the institutions run by the present assessee - AO in this case without looking into this issue, straightaway treated as the donation income of assessee. AO has failed to carryout necessary enquiry with regard to sources from which such donors have donated the amount to the present assessee and are unable to comment on this aspect.- Appeal of the Revenue is dismissed. - I.T.A. No.1464/Bang/2018 - - - Dated:- 3-12-2020 - Shri Chandra Poojari, AM And Smt. Beena Pillai, JM For the Assessee : Shri V. Srinivasan, Adv. For the Revenue : Shri Pradeep Kumar, CIT(DR) ORDER PER CHANDRA POOJARI, AM This appeal filed by the Revenue is directed against the order of the CIT(A), Mangaluru dated The relevant assessment year is 2015-16. 2. The assessee has raised the following grounds of appeal: 1. The order of the CIT(A) is opposed to facts and circumstances of the case. 2. The CIT(A) has erred in directing the Assessing Officer to treat the donation received fro ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... credited or paid, out of income referred to in clause (a) or clause (b) read with Explanation 1, to any other trust or institution registered under section 12AA, being contribution with a specific direction that they shall form part of the corpus of the trust or institution, shall not be treated as application of income for charitable or religious purposes. 4.1 The CIT(A) directed the Assessing Officer to treat the sum of ₹ 36,16,88,341/- as corpus donation u/s. 11(1)(d) of the I.T. Act. 5. Against this, the Revenue is in appeal before us. The Ld. DR submitted that on verification of corpus donation it was found that from the list provided out of ₹ 41,42,32,911/-, ₹ 36,16,88,341/- were donations from sisters trusts, transferred out of their regular income which is not allowable. It was submitted that all such donations from other trusts are to be treated as regular income of the assessee and cannot be claimed as corpus nature. According to the Ld. DR, this will lead to large scale manipulation between trusts by transferring regular income as corpus donation to other trusts thus making the same immune from application during the year. Hence, the Ld. DR sub ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er in the case of Chandraprabhu Jain Swetamber Mandir Vs. ACIT (supra) reads as follows: 6. We have heard the learned representatives of the parties and records perused. The grievance of the Revenue is that the Commissioner of Income-tax (Appeals) has wrongly followed the judgment of the hon'ble Delhi High Court in I. T. A. No. 5082/Del./2010, whereas that order has been challenged before the hon'ble Supreme Court. The Revenue did not dispute the facts. We noticed that the Commissioner of Income-tax (Appeals) after considering the decision of three Tribunals, i.e., Income-tax Appellate Tribunal, Delhi in the case of ITO (Exemption) v. Smt. Basanti Devi Shri Chakhan Lal Garg Education Trust [IT Appeal No. 5082 (Delhi) of 2010, dated 30-1-2009] the Revenue filed appeal before the hon'ble Delhi High Court. The hon'ble Delhi High Court confirmed the order of the Income-tax Appellate Tribunal, the Revenue filed appeal before the hon'ble Supreme Court, which has been dismissed for non-prosecution vide judgment Civil Appeal Nos. 7036 of 2011, judgment dated January 28, 2013, Income-tax Appellate Tribunal Chennai Bench in the case of Pentafour Software Employees ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion of the Income-tax Appellate Tribunal, Delhi in the case of Basanti Devi and Sri Chakhan Lal Garg Education Trust for both assessment years 2002-03 and 2003A-04 are annexed with this order as annexure A-1 in which reference to the decision in the case of Pentafour Software Employees Welfare Foundation is also given. 7.2 The ITAT, Kolkata in the case of Shri Shankar Bhagwan Estate v. ITO [1997] 61 ITD 196 (Cal) in which, the taxability of corpus donation has been examined in the light of section 12 read section 2(24)(iia) of the Income-tax Act has held as under : So far as section 2(24)(iia) is concerned, this section has to be read in the context of the introduction of the present section 12 it is significant that section 2(24)(iia) was inserted with effect from April 1, 1973 simultaneously with the present section 12, both of which were introduced from the said date by the Finance Act, 1972. Section 12 makes it clear by the words appearing in parenthesis that contributions made with a specific direction that they shall form part of the corpus of the trust or institution shall not be considered as income of the trust. The Board's Circular No. 108 dated March 20, 19 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n as capital funds as the funds can be used for fulfilling specific objectives for which these funds are constituted and hence to be treated as corpus funds and to be excluded from computation of Income. 7.5 The ITAT, Bangalore in ITO v. Vokkaligara Sangha in a decision reported in (2015) 44 CCH 0509 (Bang. Trib.) wherein it was held that voluntary contributions received for a specific purposes cannot be regarded as income u/s 2(24)(iia) of the Act since they were capital receipts being corpus fund and tied up grants for specific purposes. 7.6 In view of the above decisions, the Corpus donations received by the Trusts, which is not registered u/s.12A/12AA of the Act, are not taxable as they assume the nature of Capital receipt the moment the donations are given to the Corpus of the Trust . We find the provisions of section (24)(iia)/12(1)/11(1)(d)/35/56(2) are relevant for deciding the current issue. It is a settled legal proposition, in case of a registered Trust under the Income-Tax Act, the corpus specific Voluntary Contributions are outside the scope of income as defined in section 2(24)(iia) of the Act due to their Capital nature . 8. Further, in the case of Bhara ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... untary contribution made with a specific direction that they shall form part of the corpus of the trust or institution, shall not be included in the total income for the previous year of the person. Therefore, to be eligible for that exemption, the said contribution should be towards a part of the corpus. Though the words 'specific direction' is used in the said provision, the legislature consciously has not used the word 'in writing'. In the absence of any writing, only means to find out as to what is the specific direction can be gathered by considering how the recipient of the amount has accounted for it. The recipient has accounted the receipt as the amount received towards building funds and thereafter, a separate account is maintained for the said amount. From this, it could be inferred that there is a 'specific direction by the donor'. The said amount is used as part of the corpus. It may be possible that, in a given case, the provision may be abused and unaccounted monies could be converted into corpus fund without furnishing the particulars of the persons who are contributing and to avoid tax liability to have benefit of exemption, but tha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... h the judgment of jurisdictional High Court wherein it was observed that in the absence of any material to show that the provisions is abused and if it is demonstrated that the educational institution has collected money in the form of voluntary contributions from public and may be from the parents or the students who are studying in the institution and when they have issued receipts acknowledging the said amount towards building fund and made requisite entries in the books and deposited the same in the bank, if the court is satisfied with the genuineness of the transaction, it is well within the power of judicial authority to hold that the requirement of section 11(1)(d) of the Act fulfilled and assessee is entitled to be exempted. In the present case, it is nobody s case that donors herein have collected any donation on behalf of the present assessee from the students or from parents for giving the admission in the institutions run by the present assessee. The AO in this case without looking into this issue, straightaway treated as the donation income of assessee. The AO has failed to carryout necessary enquiry with regard to sources from which such donors have donated the amount ..... X X X X Extracts X X X X X X X X Extracts X X X X
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