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2020 (1) TMI 559 - AT - Income TaxExemption u/s 11 - AO treated the receipt of development fees as undisclosed income - case was selected for scrutiny vide CASS - HELD THAT:- No material brought on record by the lower authorities or before us by the Ld. DR to substantiate that the contribution towards development fund was not voluntary or that it was in exchange for the services provided by the assessee society to the payers. In this regard we may gainfully refer to the decision of Hon'ble Delhi High Court in case of DIT (Exemption) v. National Association of Software & Services Co's. [2012 (5) TMI 204 - DELHI HIGH COURT] wherein the Hon'ble High Court has held that onetime fee paid by members who are aware that it could be spent by assessee only towards capital purposes was in the nature of corpus donation and not taxable as income. The Court also took note of the fact that apart from the one time fees, the association was collecting fees separately for the services rendered to the members and therefore the one-time fee could not be linked with the services rendered to the members. For the reasons set out above, we therefore hold that the assessee society had received contribution towards development fund from the students, apart from the tuition fees, with the clear understanding that it shall be solely used for creation of capital asset necessary for achieving the educational objects of the assessee society and therefore formed part of the corpus and therefore, not in the nature of revenue receipts. The AO is accordingly directed to re-compute the income of the assessee society after excluding the development fees from the purview of Section 11. Disallowing the claim of depreciation by way of application of income of the assessee society - HELD THAT:- We do not countenance the action of Ld. CIT(A) on the simple ground that the claim made by the assessee for depreciation for the year under consideration is no longer resintegra since the Hon'ble Supreme Court in the decision in CIT Vs. Rajasthan & Gujarati Charitable Foundation [2017 (12) TMI 1067 - SUPREME COURT] upheld the action of the Hon'ble High court, which in turn upheld the action of Tribunal, allowing the depreciation claimed by the assessee on the assets acquired/expenditure made, which has been allowed as application of income as well. In the said judgment, the Hon'ble Supreme Court had also taken specific note of the amendment brought in by the Legislature in section 11(6) of the Act by Finance Act (No. 2) of 2014 and held that the amendment is prospective and is therefore effective from AY 2015-16 and onwards. We direct the AO to allow the depreciation as claimed by the assessee society.
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