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Income Tax Appellate Tribunal, DELHI BENCH ‘A’ : NEW DELHI
Before: SHRI N.K. SAINI & SHRI KULDIP SINGH
PER KULDIP SINGH, JUDICIAL MEMBER :
The appellant, DCIT (E), Circle 2 (1), New Delhi (hereinafter referred to as ‘the Revenue’) by filing the present appeal, sought to set aside the impugned order dated 16.02.2015 passed by Ld. CIT (Appeals)-40, New Delhi qua the assessment year 2011-12 on the grounds inter alia that :-
“1. On the facts and in the circumstances of the case and in law, the Ld. CIT(A) has erred in holding that donation made out of corpus fund is application of income ignoring the provisions of section 11(1)(a) which provides for exemption of income subject to application thereof for the objects of the organization. 2. On the facts and in the circumstances of the case and in law, the Ld. CIT(A) has erred in holding that donation made out of corpus fund as application of income ignoring the fact that receipts by way of corpus donation being exempt u/s 11 (1)( d) do not constitute income of the organization and as such benefit u/s 11(1)(a) is not admissible for the same. 3. On the facts and in the circumstances of the case and in law the Ld. CIT(A) has erred in holding that donation do not constitute income of the organization u/s 12(1) of the Act.”
Briefly stated the facts necessary for adjudication of the controversy at hand are : Assessee trust registered under section 12A of the Income-tax Act, 1961 (for short ‘the Act’) and notified u/s 80G (5)(vi) of the Act is running an educational institution in the name of Delhi Public School in Kolkata under Agreement with Delhi Public School Society. During assessment proceedings, AO noticed that the assessee has given donation of Rs.1,75,00,000/- to Usha Martin School from the corpus fund. Declining the contentions raised by the assessee, AO by invoking the provisions contained u/s 11(1)(d) treated the corpus donation of Rs.1,75,00,000/- as income and added the same as income u/s 2(24)(iia) and thereby assessed the total income at Rs.1,75,00,000.
Assessee carried the matter by way of appeal before the ld. CIT (A) who has deleted the addition by allowing the appeal.
Feeling aggrieved, the Revenue has come up before the Tribunal by way of filing the present appeal.
We have heard the ld. Authorized Representatives of the parties to the appeal, gone through the documents relied upon and orders passed by the revenue authorities below in the light of the facts and circumstances of the case.
Ld. DR for the Revenue challenging the impugned order filed short synopsis reiterating the reasons recorded by the AO in the assessment order. However, on the other hand, to repel the arguments addressed by the ld. DR for the Revenue, ld. AR for the assessee also filed written synopsis and supported the findings returned by the ld. CIT (A).
Undisputedly, assessee trust being registered u/s 12A and 80G(5)(vi) of the Act is running an educational institution. It is also not in dispute that the assessee trust has been enjoying the exemption u/s 11 of the Act. It is also not in dispute that the assessee society has donated Rs.1,75,00,000/- to Usha Martin School from its corpus fund of Rs.2.73 crores. It is also not in dispute that no amount of the corpus fund is lying unutilized.
When we examine the income and expenditure account of the assessee trust, available at page 13 of the paper book, it shows that the entire receipt on account of donation has been spent for charitable purpose i.e. for running the school. It further shows that receipt during the year under assessment amounts to Rs.23,91,37,581/- whereas the payment/expenditure amounts to Rs.24,14,55,129/-. It also shows that during the assessment under consideration, the assessee has received Rs.75,00,000/- as corpus donation and had paid Rs.1,75,00,000/- as donation to M/s. Usha Martin School. Even otherwise, when the AO has not arrived at any finding that there was any income of the assessee to be taxed the donation of Rs.1.75 crores given by the assessee to another charitable institution cannot be taxed u/s 11(1)(d) of the Act. Moreover, when the corpus fund of the assessee, a charitable trust, has not been diverted for personal use, donation made by it to some other charitable trust registered u/s 12AA for charitable purpose cannot be brought to tax particularly when there is not an iota of allegation on the part of the assessee that any part of the donation has been diverted for personal use.
In view of what has been discussed above, ld. CIT (A) has passed a reasoned order by applying the settled principles of law on facts of this case, hence finding no illegality or perversity in the impugned order, present appeal filed by the Revenue is dismissed. Order pronounced in open court on this 3rd day of October, 2018.