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TMI Blog2023 (6) TMI 815X X X X Extracts X X X X X X X X Extracts X X X X ..... funds constitute corpus donation. 2. On the facts and circumstances of the case, the learned CIT(A) ought to have allowed the following earmarked funds as corpus donations. New Building Fund Rs. 2,38,850 Room Donation Account Rs. 6,00,001 School Namkaran Donation Fund Rs. 13,00,000 Campus Donation Fund Rs. 30,00,000 Total Rs. 51,38,851 3. Without prejudice to the above, if the learned CIT(A) were to hold view of confirming addition of the earmarked funds received for building, room and campus, he ought to have allowed corresponding application to the extent of Rs. 1,80,44,368/- which were consciously not claimed by the assessee. (II) Addition of Rs. 2,00,000 received as unsecured loan: On the facts and circumstances of the case, the learned CIT(A) was not justified in confirming addition of Rs. 2,00,000. (III) Addition of Rs. 3,80,657/- being excess cash deposit into the bank: 1. The learned CIT(A) was not justified in confirming cash deposit of Rs. 3,80,657/- particularly when the assessee could demonstrably show that there was source to support the cash deposits. 2. On the facts and evidences, the addition ought to have been deleted. (IV) Alternate ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ified precisely to say what constitutes a corpus fund of trust, the same cannot be treated as corpus fund as qualified for exemption u/s 11(1)(d) of I.T. Act by its general meaning and understanding, as per the observations of the A.O. in the assessment order. Therefore, the assessee was asked, vide notice of assessing officer u/s 142(1) of the Act, dated 05-02-2016, to show cause, as to why the same should not be treated as normal donations and taxed accordingly. 6. However, in response to the notice of the assessing officer, the assessee submitted its reply on 15-02-2016, which is reproduced as under: "The above said donation received for the specific purpose shown in "Earmarked Fund" in Balance sheet. Kindly take the note of the above and oblige". 7. However, assessing officer observed that as per the provisions u/s 12 of the Act and u/s 11(1)(d) of the I.T. Act a corpus fund means a voluntary contribution made by any donor with a specific direction, that such donation as paid, shall form part of corpus and accordingly, the A.O. is of the view that in the absence of such specific direction from relevant donor-assigning it the status and purpose of corpus fund, the same would ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f A.O and held to the view that earmarked funds are only corpus funds eligible for claim of exemption u/s 11(1)(d) of I.T. Act. Thus, ld Counsel contended that earmarked funds are only corpus funds eligible for claim of exemption u/s 11(1)(d) of I.T. Act. 10. On the other hand, the Ld. DR for the Revenue submitted that in the instant case, assessee could not provide any substantial evidences confirming these receipts as corpus donations as confirmed by donors with specified purpose of such corpus fund spending activity, therefore, ld DR prays the Bench that addition made by the assessing officer should be sustained. 11. We find merit in the submission of ld Counsel. We note that assessee is a registered Pubic Charitable Trust registered under 'the Bombay Public Trust Act' The assessee-trust is also registered u/s 12A of the Income Tax Act vide registration number E149451074. The assessee is having 80G registration vide registration number SRT/CITI/ ITO/TECH/104/L-5/2008-09/244. The assessee-trust furnished the following information on the Earmarked funds received from various donors vide letter dated 15-2-2016 (Page 118 of Paper book). (i) On date-wise, donor-wise, amount-wise, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... application against the earmarked funds as deduction. 14. We note that assessee- trust being a public charitable trust, runs a school primarily to address students from the very lower strata of the society and relying on donors to fund the school. The assessing officer has grossly erred in treating the Earmarked funds as revenue receipts particularly when the clear evidence before the assessing officer had demonstrated that what the donors had given was nothing but Earmarked funds for new building, room and campus developments. We note that stand taken by the Assessing Officer is not tenable in law, reason being that trust deed is only constitution of the trust and the nature and character of donation can be decided based on the intention of the donor and the direction given by the donor. We note that intention of the donor can be judged through receipt given by the donee or letter of the donor to the effect that he is donating the amount in the corpus fund. We note that it is a well-settled position in law when a trust received a particular sum, which is earmarked, for a specific purpose, it constitutes nothing but a receipt to be treated as forming part of the corpus. For this, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed the reconciliation of fees before the Bench and as per said reconciliation difference of Rs. 3,80,657/- narrows down to Rs. 95,146/-. The ld Counsel submits that the computer fees received particularly of Kishor Vihar and English Medium School, vide ledger accounts (Page No.140 to 147- English translation on Page. 140A to 147A), the assessee had debited expenditure incurred against the computer fees by cheque and only net amount of fees was taken to the audited income and expenditure account refer Page No.60 and 74). These ledger accounts were produced before the AO as mentioned at para 17 of letter dated 21-1-2016 (page No. 9 and 10). On the other hand, ld DR for the revenue states that on this issue, assessee could not give any further evidence with due reconciliation to establish the excess cash deposited as attributable to accounted school fee receipts thereby matching the total cash fees collected with total cash fees deposited in the assessee's bank account during the year, therefore addition made by AO may be sustained. We note that the position taken by the AO is that since total cash deposits into the bank account exceeded the total fees received, the excess needs to be ..... X X X X Extracts X X X X X X X X Extracts X X X X
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