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2013 (11) TMI 1594 - HC - Income TaxEntitlement to claim exemptions as a charitable institution under section 11 - Held that:- The recipient has accounted the receipt as the amount receive towards building funds and thereafter, a separate account is maintained for the said amount. Form this, it could be inferred that there is a ‘Specific direction by the donor’. The said amount is used as part of the corpus. It may be possible that, in a given case, the provision may be abused and unaccounted monies could be converted into corpus fund without furnishing the particulars of the person who are contributing and to avoid tax liability to have benefit of exemption, but that is a question of fact. The court has to decide on the material available on record, whether the said provision is abused in the aforesaid manner or not. In the absence of any material to show that the said provision is abused and if it is demonstrated that the educational institution has collected money in the form of voluntary contributions from public and may be from the parents of the students who are studying in the institution and when they have issued receipts acknowledging the said amount towards building fund and made requisite entries in the books and deposited the same in the bank, if the court is satisfied with the genuineness of the transaction, it is well within the power of judicial authority to hold that the requirement of Section 11(1)(d) of the Act is fulfilled and the assessee in entitled to be exempted. In the fact of the case, we are satisfied from the material on record that these voluntary contribution made by the public to the assessee was with a specific direction to use the name for building purpose and therefore, the said donations shall form part of the corpus of the trust and assessee is entitled to the benefit under Section 11 of the Act.
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