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Income Tax Appellate Tribunal, COCHIN BENCH
Before: S/SHRI P K BANSAL & GEORGE GEORGE K, JM
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.
ITA No 330/Coch/2016
Briefly stated the facts of the case are as follows:
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/-“
Aggrieved by the assessment order, the assessee preferred an appeal to the first
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
ITA No 330/Coch/2016
that the amount received from the donors for building fund is exempt under section
11(1)(d) of the Act.
On appeal, the CIT(A) allowed the plea of the assessee. The relevant finding of
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 Revenue, being aggrieved, has filed the present appeal before the Tribunal.
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.
The Ld. AR on the other hand relied on the submissions made before the Income
Tax authorities and relied on the conclusions of the CIT(A).
ITA No 330/Coch/2016
We have heard the rival contentions and perused the material on record. The
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:
DIT (Exemptions) vs. Jaipur Golden Charitable Clinical Laboratory Trust (311 ITR 365 (Del). 2. DIT(Exemptions) vs. N.H. Kapadia Education Trust (136 ITD 111)(Ahd) 3. Indian Society for Anesthesiologists vs. ITO (32 ITR Trib. 152) (Chennai)
ITA No 330/Coch/2016
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.
In the result, the appeal filed by the Revenue is dismissed.
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