THE AERONAUTICS EDUCATION SOCIETY,SUNABEDA vs. PR.CIT , SAMBALPUR

Shri P.C.Sethi, P.C.Sethi, ld AR appeared for the assessee and Shri the assessee and Shri Sanjay Kumar, ld CIT Kumar, ld CIT DR appeared for the revenue.

Brief facts of the case are that the assessee is a society engaged in imparting of education to socially and economically backward people living in the villages around the HAL Township and operates educational institutions in the name of Aeronautics Junior and Degree College, Aeronautics Dayanand Anglo Vedic High School and Vyomayana Samstha Vidyalay. The assessment for the impugned year was completed u/s.143(3) of the Act dated 4.2.2021 at a total income of NIL. Thereafter, proceedings u/s.263 of the Act were initiated by the ld CIT (Exemptions), Hyderabad, wherein, he has directed the Assessing Officer to verify the details of grant received and further to examine whether they are corpus donation or voluntary donations which have been received by the appellant and in case, the same are voluntary donation whether appellant has applied 85% or not. In case it is corpus donation whether the same was applied for the purpose or not.

It was submitted by ld AR that during the year, the assessment has received Rs.11,00,00,000/- as corpus donation, which was declared in the balance sheet as corpus donation. It was the submission that since it is a corpus donation, same was not declared in the income and expenditure account but the necessary details were filed before the Assessing Officer in the shape of ledger sheets account. He further submitted that this receipt was received from HAL and the assessee being part of it, the grants were P a g e 2 | 5 taken as corpus donation. Ld CIT (E) in para 7.1 of the order has also accepted this fact, which is reproduced as under:

He thus submitted that when it is an admitted fact that the amounts of Rs.11,00,00,000/- were corpus donation, there is no necessity to include the same in the income and expenditure account. He submitted that there is no question of application of amount of corpus donation by treating it as voluntary contribution. Therefore, the order of ld CIT(E) is devoid of merits and deserves to be dismissed.

In reply, ld CIT DR supports the order of ld CIT(E) and submitted that in this order, the ld CIT(E) has directed the Assessing Officer to verify whether the amount received actually corpus donations or voluntary contributions during the year. He urged to confirm the order of ld CIT(E).

We have considered the rival submissions and perused the material on record. It is seen that the assessee has received Rs.11,00,00,000/- in two instalments from HAL, which was recorded as Corpus Donations in the books of account. In the order passed u/s.263 of the Act, ld CIT(E) has directed the Assessing Officer to verify the said amount as corpus donations or voluntary contributions and if the same is voluntary contributions, whether 85% of the amount has been set as application and whether the corpus donations were invested as specified u/s.11(5) of the I.T.Act. However, from the observation, we find that examination of the donation as corpus donation is not an action by the Assessing officer, which is erroneous and prejudicial to the interest of the revenue. When it is an admitted fact that the amount is received as corpus donation, its application towards object is not question to be verified. Therefore, the order cannot be said to be erroneous and prejudicial to the interest of the Revenue. In these circumstances, we set aside the order of the ld CIT (Exemptions) and allow the appeal of the assessee.

In the result, appeal of the assessee stands allowed.