COMMISSIONER OF INCOME TAX vs. M/S VELLORE INSTITUTE OF

TCA/77/2015HC Madras25 March 2026Bench: Honourable Dr Justice G. JAYACHANDRAN4 pages

AI SummaryDismissed

What did the High Court hold?

The High Court upheld the finding of the Tribunal. It noted that the issue of voluntariness of donations is primarily a question of fact. The Tribunal had found no evidence from the donors to substantiate the Revenue's claim that the donations were collected under compulsion. The Court stated that the best person to speak about the voluntariness of a donation is the donor themselves, not the Income Tax officials. In the absence of any proof or corroboration from the donors, the Court found no substantial question of law against the Department. Therefore, the Tax Case Appeal filed by the Revenue was dismissed. The Court did not expressly leave any issue undecided.

What were the facts?

The Revenue (Commissioner of Income Tax, Central Circle, Chennai) filed a Tax Case Appeal against an order of the Income Tax Appellate Tribunal (ITAT), Chennai. The appeal challenged the ITAT's decision for Assessment Year 2001-02. The core issue revolved around donations collected by the respondent assessee, M/s. Vellore Institute of Technology, a trust running an educational institution. The Revenue contended that these donations, collected towards the corpus fund, were not voluntary but were collected under compulsion from students. The ITAT, however, found no evidence from students to substantiate this claim and held that the donations should be considered at face value.

What were the issues?

1. Whether the donations collected by the educational institution from students towards its corpus fund were voluntary or compulsory, and if compulsory, whether they are taxable. The Revenue argued that the donations were not voluntary but were collected under compulsion, leaving students at the mercy of the institution. They contended that the ITAT erred in not considering this aspect. The Revenue relied on the principle that the voluntariness of a donation should be corroborated by the donors themselves, not just the trust management. The Assessee argued that the ITAT correctly found no evidence of compulsion and that donations should be treated at face value. They implicitly relied on the ITAT's finding that no student had made a statement to support the Revenue's claim of compulsion. The Assessee also implicitly relied on the High Court's previous decision in CIT vs. M/s. Savitha Institute of Medical Technical Sciences.

Which sections of the Income-tax Act were involved?

Section 260A

AI-generated summary — verify with the full judgment below

TCA No. 77 of 2015 IN THE HIGH COURT OF JUDICATURE AT MADRAS DATED: 25-03-2026 CORAM THE HON'BLE DR JUSTICE G. JAYACHANDRAN AND THE HON'BLE MR.JUSTICE SHAMIM AHMED Tax Case Appeal No. 77 of 2015 Commissioner of Income Tax Central Circle, Chennai ..Appellant Vs M/s Vellore Institute of Tehnology No.54 Thenamaran Street, Vellore 632 014. ..Respondent PRAYER: Tax Case (Appeal) is filed under Section 260A of the Income-Tax Act, 1961, against the order of the Income Tax Appellate Tribunal, Chennai “D” Bench, dated 09.06.2011 in ITA No.1332/Mds/2010 for the Assessment Year 2001-02. For Appellant: M/s.V.Pushpa Senior Standing Counsel For Respondent: Mr. R.V. Easwaran Senior Standing Counsel For M/s. Suhrith Parthasarathy JUDGMENT (Judgment of the Court was delivered by Dr.G.Jayachandran J.) The Tax Case Appeal has been filed by the Revenue against the order passed by the Tribunal holding that the assessee, which is a trust not conducting __________ Page1 of 4 https://www.mhc.tn.gov.in/judis ( Uploaded on: 30/03/2026 01:12:18 pm ) TCA No. 77 of 2015 business for profit, cannot be mulcted with tax on the donations collected toward its corpus fund. 2. The short point involved is whether the respondent's educational institution, run by the trust found collecting money from the student under the guise of donation towards the corpus fund. The Revenue contended that the said donations were not voluntary, but were collected under compulsion, leaving students at the mercy of the institution. The Tribunal, after going through the records and the evidence collected, found that no student had made any statement to substantiate the claim of the Department that the donations were given under compulsion and not voluntarily. 3. While so, the donations received by the trust has to be considered at face value. Regarding voluntariness of a donation, the best person to speak is the donor themselves, not the Income Tax officials scrutinising the case. This Court has considered the records and has held against the Revenue in the case of CIT vs. M/s.Savitha Institute of Medical Technical Sciences (TCA Nos. 111, 112 & 113 of 2015). 4. In the absence of any evidence to substantiate the plea that the donations were received under compulsion and not voluntarily, the finding of the Tribunal has to be upheld, since the issue is purely a question of fact. The __________ Page2 of 4 https://www.mhc.tn.gov.in/judis ( Uploaded on: 30/03/2026 01:12:18 pm ) TCA No. 77 of 2015 statements of the persons who manage the affairs of the trust carry only limited probative value and must be properly corroborated by the donars also. 5. In the absence of such proof, we find the substantial questions of law against the Department. Accordingly, Tax Case Appeal stands dismissed. No costs. (G.J.,J.) (S.S.A.,J.) 25-03-2026 Index: Yes/No Speaking/Non-speaking order Neutral Citation: Yes/No rpl __________ Page3 of 4 https://www.mhc.tn.gov.in/judis ( Uploaded on: 30/03/2026 01:12:18 pm ) TCA No. 77 of 2015 DR.G.JAYACHANDRAN J. and SHAMIM AHMED J. rpl TCA No. 77 of 2015 25-03-2026 __________ Page4 of 4 https://www.mhc.tn.gov.in/judis ( Uploaded on: 30/03/2026 01:12:18 pm )

Recent GST High Court judgments

Search GST case law →