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TMI Blog2021 (9) TMI 883X X X X Extracts X X X X X X X X Extracts X X X X ..... the capital funds of the society towards application of receipts. 4. That the appellant craves leave to add or amend the grounds of appeal before the appeal is finally heard or disposed off. 3. Vide Ground No. 1 & 2 the grievance of the assessee relates to the sustenance of addition of Rs. 17,57,837/- out of the Corpus Donation and of Rs. 2,61,838/- by considering that the same was not for specific purposes and was a revenue receipt. 4. Facts of the case in brief are that the assessee filed its return of income on 23/02/2017 declaring an income of Rs. 25,035/-. Subsequently the case was selected for scrutiny. During the course of assessment proceedings the A.O. noticed that the assessee had received an amount of Rs. 2,61,838/- from its students as "Funds" which was directly taken in the balance sheet without including/routing the same through the Income & Expenditure Account. The assessee submitted that the said Funds were not accounted for in the Income & Expenditure Account as the same were meant to be used for specified purpose only and furnished, the reply dt. 22/12/2017 furnished by the assessee reads as under: "Sir, the school has received following amounts on account o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nothing but an afterthought to escape addition. * One of the necessary preconditions of a "Corpus Donation" is that it should be made by the Donor with a specific direction that it shall form a part of the corpus of the trust or institution. However, in the case under consideration, the assessee has only provided a list of the Donors without providing any evidence/proof that the same was given with a specific direction. However, since the claim of "Corpus Donation" has already been out rightly rejected owing to the absence of registration u/s. 12AA, such details were not specifically called for, examined and verified during the course of assessment proceedings. 5. Being aggrieved the assessee carried the matter to the Ld. CIT(A) and submitted as under: "In the remand report, the Ld. AO has rightly observed that registration granted to appellant u/s. 12AA of IT Act shall also be applicable for the year under appeal before your good self as appellate proceedings are continuation of assessment proceedings. Your kind attention is further drawn to appellant ground No. 1 and ground No. 3 which are reproduced as below:- The Ld. AO has erred in law and facts in denying exemption u/s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in the Hon'ble Supreme Court. For A.Y. 2003-04, the CIT(A) has erroneously held that receipt of money by the assessee in the status of AOP has to be seen under normal provisions of the Act. Further, for A.Y. 2003-04, ld. CH(A) failed to appreciate provisions of section 164 of the Income tax act while erroneously holding that provisions of chapter IV would apply. Hon'ble ITAT has dismissed departmental appeal and upheld the order of CIT(Appeal). This view was also upheld in the case of Divine Educational Institute and Social Development Society Vs. ITO (Exemptions) of ITAT Delhi Bench in ITA No. 380/Del/2017, wherein the appellant has taken the following grounds of appeal:- That having regard to the facts and circumstances of the case, Ld. CIT(A) has erred in law and on the facts in confirming the action of Ld. AO in making addition of Rs. 22,76,539/- on account of corpus donation and has further erred in treating the same as part of total receipts and that too by recording incorrect facts and findings and without observing the principles of natural justice. That having regard to the facts and circumstances of the case, Ld. CIT(A) has erred in law and facts in not rev ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 0(23C)(iiiad) of IT. Act. In the result appeal of assessee is allowed. It has been held that the Corpus donations do not form part of the Revenue receipts and hence if the other receipts are less than Rs. 1 Crore, the deduction u/s. 10(23C)(iiiad) is to be allowed even if the trust/society is not registered u/s. 12AA of IT Act, whereas in our case, the society has obtained registration u/s. 12AA of IT Act and same is applicable for the year under consideration as reported by the AO in its remand report. There is no such proviso in IT Act regarding exemption u/s. 10(23C)(iiiad) of IT Act. Your kind attention is also drawn to AO enquiry available at Page-5 para 8.7 of assessment order, which is reproduced as below:- He was asked to Show cause that in the absence of valid Registration u/s. 12AA, as to why the amounts claimed as "Funds" and "Corpus donations" be not considered as a part of its Revenue receipt and passed/routed through its income and expenditure account, thereby denying exemption u/s. 10(23C)(iiiad). This objection/query stands meted in view of aforementioned judgments and AO remand report. The list of corpus donations was placed on the file during the course ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... otherwise as per calculations placed on your file along with certain confirmation and having made the donations towards corpus fund with their ID's, the more than 85% of receipts have been utilized and thus making appellant fully eligible for grant of benefit of exemption u/s. 11 to the assessee for the year under consideration as the powers of CIT(A) under the act are coterminous with that of AO and CIT(A) can do what the AO has fail to do and can undo what the AO has wrongly done. It is also brought on record that land for the institution over which building is being constructed has been provided by parent body and which will become property of society, necessary evidence was placed on the file of CIT(Exemptions) during registration proceedings and also enclosed herewith. Your kind attention is drawn to judgment of ITAT, Agra Bench in the case of ITO Vs. Gaudiya Granth Anuved Trust cited as [2013] 28 ITR 161, wherein the ITAT has held as under:- Held, dismissing the appeal, that the Commissioner (Appeals), after considering the position of law, prevailing on the basis of three decisions of the tribunal and the High court, held that the corpus donations was in the nature ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ome or in the Balance Sheet. Before the assessing officer only list of the donors was filed. No confirmation of the donors regarding donation made for the specific purpose were filed. No such details have been filed during the appeal proceedings as additional evidence. The provision of section 10(23C)(iiiad) are as under: "(iiiad) any university or other educational institution existing solely for educational purposes and not for purposes of profit if the aggregate annual receipts of such university or educational institution do not exceed the amount of annual receipts as may be prescribed;" As per provisions of this section, the aggregate annual receipts should not exceed the specified limit of Rs. 1 Crore. There is no reference to capital fund or revenue receipts. Since the total receipts of the assessee exceeded Rs. 1 Crore, therefore the assessee is not eligible for exemption u/s. 10(23C)(iiiad) of the Income Tax Act, 1961. These grounds of appeal are thus dismissed. 6. Now the assessee is in appeal. 7. The Ld. Counsel for the assessee reiterated the submissions made before the authorities below and further submitted that the A.O. disallowed the claim of the assessee ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... chool, belonged to the society, Hindu Shiksha Samiti, Haryana and land and building thereon will devolved to the Hindu Siksha Samiti without any payment on closure of the School. The Ld. CIT(A) reproduced the Chart filed by the assessee showing the application of funds at page 11 of the impugned order which read as under: Grass Revenue receipts as determined by the AO vide order dated 25.12.17 11672455.00 Less: Specified funds not forming part of revenue receipts as they are directly deposited in respective bank a/c to be spent for respective fund directly in supervision of Distt. Education and subject to Audit:- AMG+CCWF** Red Cross C.W. Exam Sports **Kindly see Annexure 'A' and Page 8 of Audit report given by Deputy Director, Local Audit Haryana. 230095.00 19893.00 11670.00 90.00 90.00 261838.00 Balance 11410617.00 Less: 15% set apart for future u/s ll(l)(a) 1711592.00 85% of balance Balance 9699025.00 Less: Expenses debited to profit & loss a/c as mentioned by AO Less: Depreciation debited to P&L A/c 7475672.00 536079.00 6939593.00 Balance 2759432.00 Less: Amount appropriated towards construction as mention in ba ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tion of the funds. However neither the A.O. nor the Ld. CIT(A) appreciated the facts in right perspective. 15. In her rival submissions the Ld. DR supported the impugned order passed by the Ld. CIT(A) and reiterated the observations made therein, she further submitted that the assessee was not having any land, so it was not clear how the building was constructed on the land when the assessee was not the owner of the said land. 16. We have considered the submissions of both the parties and carefully gone through the material available on the record. In the present case it is an admitted fact that the assessee reduced the amount of Rs. 18,29,342/- out of the capital funds which is evident from the balance sheet placed at page No. 49 of the assessee's paper book and if the assessee had not reduced the said amount then it could have been shown separately on the asset side and the capital funds was to be increased by the same amount. 16.1. As regards to the objection of the Department that the assessee was not having any land, the Ld. CIT(A) mentioned in para 4.1 of the impugned order that the assessee has filed a copy of certificate mentioning therein that the land being used by ..... X X X X Extracts X X X X X X X X Extracts X X X X
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