THE DCIT(EXEMPTIONS), COCHIN vs. M/S. CHINMAYA MISSION EDUCATIONAL & CHARITABLE TRUST, COCHIN

PER GEORGE GEORGE K,JM:

This appeal, at the instance of the Revenue is directed against the order of the

CIT-III, Kochi dated 10.05.2016. The relevant assessment year is 2011-12.

2 The effective grounds raised reads as under:

2) The ld. CIT(A)-III Kochi erred in deleting the addition of Rs.52,66,500/- on account of donations received during A.Y. 2011-12 towards building fund since the assessee has not satisfied both the conditions in order to claim the building fund as exempted under section 11(1)(d) of the I.T. Act, 1961. 3) The decision of the ld. CIT(A) is not acceptable as the Assessing Officer has rightly pointed out that the assessee, has not proved that ‘specific donations’ were given by the donors that the voluntary donations given by them shall form part of the corpus.

The assessee is a Trust registered under section 12A of the I.T. Act. The return

of income for the assessment year 2011-12 was filed on 29/09/2011 declaring ‘nil’

income. The assessment was taken up for scrutiny by issuance of notice under section

143(2) of the Act. The assessment was completed u/s. 143(3) vide order dated

26/03/2014. In the assessment completed, the Assessing Officer had disallowed a sum

of Rs.2,53,18,335/- claimed by the assessee as exempt income under section 11((1)(d)

of the Act, being contribution to the building development fund. The relevant

observation of the Assessing Officer In disallowing the claim of the assessee reads as

follows:

“Contribution to building fund which assessee considered as exempt income under section 11(10(d) is a wrong claim as long a the specific direction described in Act does not come, they are just voluntary contribution pnly. So the sum is added back in total income + Rs.2,53,18,335/-“

appellate authority. Before the first appellate authority, it was contended that these

donations are corpus fund, received specifically for building development fund. It was

submitted that the same is clearly mentioned in the donation receipt issued by the

assessee. It was further submitted by the assessee that the actual contribution

received during the relevant assessment year is only Rs.52,66,500/- and the sum of

Rs.2,53,18,335/- was the aggregate contribution received over several years. The

assessee placed reliance on the following judicial pronouncements for the proposition that the amount received from the donors for building fund is exempt under section

11(1)(d) of the Act.

the CIT(A) reads as follows:

“7.3 I have considered this issue. The appellant is a charitable trust running an educational institution and also registered u/s. 12A of the IT Act. It is observed from the copies of balance sheet furnished by the appellant that the sum of Rs.2,53,18,335/- represent the aggregate contribution received during the FY 2010-11 was only Rs.52,66,500/- 7.4 It is also observed from the copies of receipts furnished by the appellant that the above sum of Rs.2,00,51,815/- belong to earlier financial years, it cannot be considered for FY 2010-11. In the above circumstances, I am of the opinion that the appellant is entitled for exemption under section 11(1)(d) of the Income Tax Act for the sum of Rs.52,66,500/- received during the FY 2010-11 towards building fund. Hence I direct the Assessing Officer to delete the addition of Rs.2,53,18,335/-.”

The Ld. DR submitted that the assessee could not prove that the donors had given

donations to the Corpus Fund. It was stated that since the assessee was not

maintaining a separate account for this purpose, the Assessing Officer was justified in

denying the claim made under section 11(1)(d) of the Act.

Tax authorities and relied on the conclusions of the CIT(A).

assessee has filed a paper book comprising of 58 pages. In the paper book, the

audited accounts for the year ending 31/03/2011, partywise details of contributions to

the building fund etc. are enclosed. On examining the details of the contributions

towards building development fund, we notice that the receipts are issued by the

assessee stating that the contributions made by the donors are for specific purpose of

putting up infrastructure, namely building. For the relevant assessment year, the total

contribution received towards building fund is to the tune of Rs.52,66,500/-. The

remaining sum of Rs.2,00,51,815/-are contributions received in the earlier assessment

years. The contribution received for building fund has not been denied the benefit of

section 11(1)(d) for the earlier assessment years. The Hon’ble Karnataka High Court in

the case of DIT(Exemption) vs. Sri Ramakrishna Seva Ashrama (357 ITR 731) had held

that if the intention of the donor is to give money to a Trust and to utilize the same for

carrying out a particular activity, it satisfies the definition of the word ‘corpus fund’. It

was concluded by the Hon’ble Karnataka High Court that the assessee would thus be

entitled to the benefit of section 11(1)(d) of the Act. A similar view has been taken by

the following judicial pronouncements:

8.1 As mentioned earlier in the instant case, there is a categoric finding by the CIT(A)

that the amount of Rs.52,66,500/- was received towards building fund only. Therefore,

in view of the judicial pronouncements cited supra, we are of the view that the

assessee is entitled to exemption under section 11(1)(d) of the I.T. Act of amount of

Rs.52,66,500/- received during the concerned assessment year, i.e., 2011-12.

Therefore, we see no reason to interfere with the order of the CIT(A) and we uphold

the same as correct and in accordance with law. It is ordered accordingly.

Order pronounced in the open Court on 05th/10/ 2017.

sd/- sd/- ( P K BANSAL ) (GEORGE GEORGE K ) Vice President Judicial Member

Cochin: Dated 5th/10/ 2017 GJ Copy to: 1. Chinmaya Mission Educational & Charitable Trust, Greater Cochin, Nettipadam Road, Ernakulam, Kochi-682 016. 2. The Deputy Commissioner of Income-tax (Exemptions), Kochi. 3. CIT(A)-III, Kochi. 4. CIT(Exemptions), Kochi 5. DR 6. Guard File By order

Assistant Registrar ITAT, COCHIN