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2021 (5) TMI 937 - AT - Income TaxRevision u/s 263 - Manner of presentation of the corpus fund in the final accounts of the assessee - donation so received was received for a specific purpose and use, hence it was Corpus Donation. The corpus donation cannot be treated as part of Income and Expenditure account - HELD THAT:- As far as the accounting principles/methods are concerned the Capital has to be shown in the balance sheet of the assessee. The capital shall not be treated as part of the income and expenditure account. Therefore, act of the assessee is correct - Hence, this fund is a nature of Capital Receipts and is required to be shown in the balance sheet not in the income and expenditure account. Therefore, the assessee has correctly shown the same in the books of accounts and final accounts of the assessee. Since the assessee received certain amounts for the specific use i.e. for construction of building and this fact has been mentioned on the donation receipts also, copies of the some of the receipts are reproduced by the Ld. CIT(E) in his order itself, wherein it is categorically mentioned the purpose of donation. This fact has been duly examined by the then assessing officer and mentioned that he is satisfied with the submission and evidences. Even otherwise the directions of the doner a mutual trust has been created between the doner and donee and because of this the donee is bound to use that specific fund into the specifically directed activities for which it was donated. The same has to be kept as liability of the assessee till the utilization of the entire fund into the specified activities. Hence the same is required to be shown in the balance sheet not in the Income and expenditure account. We also observe that the fund in question is a capital fund/corpus fund therefore, it is out of preview of the provisions of section 11(2) of the Act. Section 11 of the Act deals with the utilization of income of a trust. This section is not having any provision about the utilization of corpus donation / fund like general fund or other receipts. The amount so received to the assessee is a Corpus fund / donation, therefore is out of preview of the provisions of section 11(2) of the Act. Therefore, we are of the view that any amount received as donation with specific direction shall be treated as Corpus of the assessee and because of specific directions this is not taxable as per the provisions of section 11(1)(d). Thus we are of the view that where the A.O. has taken a broad view by accepting the issue of corpus donation by carefully examining and satisfying himself with evidences produced by the assessee during the course of hearing, then order of the A.O. cannot be held to be erroneous on the ground of lack of inquiry. Notice issued by the ld. CIT(E) was on the basis of proposal of subsequent ITO, therefore, this act does not provide such powers to the ITO U/s 263 - In the present case, the proposal was sent by the subsequent A.O. to the CIT(E) on the basis of which a show cause notice was issued which is against the provisions of the Act. However, on this proposition, our view is not in favour of the ld AR as we convinced with the arguments of the ld. CIT-DR who had submitted that there is no prohibition U/s 263 of the Act for the Commissioner to act on the basis of proposal by the A.O. if other conditions under the said Section are satisfied. In this regard, the ld. CIT-DR has relied on the decision in the case of Apollo Tyres Ltd.[1997 (10) TMI 98 - ITAT DELHI-E] and Stewarts and Lloyds of India Ltd.[2016 (3) TMI 178 - ITAT KOLKATA] therefore, we reject this contention raised by the assessee. Since, keeping in view our above discussion and reasoning mentioned in detail, we are of the view that the order passed by the A.O. was not erroneous and prejudicial to the interest of the revenue and thus we allow this ground raised by the assessee and set aside the order passed by the ld. CIT(E). - Decided partly in favour of assessee.
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