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Tripada Education Trust Versus The Deputy Director of Income Tax (Exemption) , Ahmedabad

2016 (7) TMI 108 - ITAT AHMEDABAD

Addition U/s 115BBC - Anonymous donations - Held that:- Confirmation obtained from donors during the course of remand proceedings, therefore, impugned donations are no more anonymous in nature (II) Voluntary contributions made with a specific direction to form part of the corpus is not treated to be as income - The impugned donations are no more anonymous in nature. Decided in assessee’s favour. - Addition of admission fees - Held that:- The assessee-trust passed resolutions for obtaining ad .....

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al activities only. Hon’ble jurisdictional high court in CIT vs. S.V. Vanik Jain Sangh [2002 (7) TMI 34 - GUJARAT High Court] is of the view that a voluntary contribution made with specific direction to form part of the corpus is not treated to be as income. Same appears to be the ratio of hon’ble Delhi high court DIT vs. NASS COM [2012 (5) TMI 204 - DELHI HIGH COURT ] holding that a one time admission fee paid by members to be spent only for acquiring capital asset is a corpus donation not taxa .....

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nd CIT(A)-9/283/DDIT Exem/2014-15 ; respectively, in proceedings under section 143(3) of the Income Tax Act, 1961; in short the Act . 2. The assessee s former appeal ITA 1936/Ahd/2015 for assessment year 2010-11 raises the following substantive grounds:- 1. The learned CIT(A) erred in law and on facts in confirming the addition of ₹ 21,72,100/- under section 115BBC of Income Tax Act, 1961, considering the corpus fund received by the assessee Trust as anonymous donation, such addition is re .....

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in the two corresponding grounds. The assessee has moved additional grounds as well on 11-04-2016 in both the appeals raising an alternative plea that both the lower authorities ought to have assessed its income in commercial manner as mandated u/s. 11 of the act. Ld. representatives point out at the outset that these two appeal raise identical substantive as well as alternative pleadings. We take up ITA 1936/Ahd/2015 for assessment year 2010-11 as the lead case. 4. The assessee is a trust exclu .....

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ing school building, furniture, vehicle for students and other equipments. Its balance sheet claimed to have already utilized all of the funds in its educational activities. The Assessing Officer in assessment order dated 25-03-2013 treated these donations as anonymous ones u/s. 115BBC of the Act thereby observing that the assessee had failed to furnish copies of donation receipt specifically towards corpus of the trust followed by their confirmations at the donors end along with their names, ad .....

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2.2 I have carefully considered the submission of the appellant. The appellant during the course of appellate proceedings has submitted that it has already furnished details of donation receipts for verification at the time of hearing before the A.O. The copies of ledger account of corpus fund, receipt of donation containing the details of name and address of donors have also been submitted before the A.O. and all donations are less than ₹ 20,000/-. The appellant submitted copy of donation .....

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detail was called on random basis from some of the individuals -who had given donation to the Tripada Education Trust. The reply -was received from their side and all have confirmed that they have given donation to the trust towards corpus. The individuals -with their confirmation letter have provided the copy of their identity proof, return of income and bank statements. 4. The assessee was also given opportunity to justify their claim. They have submitted that "All corpus donation receive .....

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med that they have made payments to Tripada Education Trust towards corpus for creation of asset." As mentioned in the assessment order, during the course of assessment proceedings the assessee has been given umpteen times to furnish copies of the receipts wherein donations have been received specifically towards the corpus of the trust and a confirmation in this regard from the donors end. But assessee has failed to furnish the same till the time of assessment order and has failed to subst .....

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s which would suggest a true picture of the state affairs of the trust. The A.O. observed while perusing this ledger account that all these donations received were in cash. In view of the aforesaid reason A.O.'s office is but compelled to understand and to treat the entire amount received as donations as anonymous in nature u/s.115BBC of the IT. Act, 1961 and taxed accordingly. The appellant furnished the said details very late in spite of given sufficient opportunities with the intent that .....

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unt received as donation by the appellant as anonymous in nature. After going through the facts, I am not inclined to agree with the contentions of the appellant and case law relied upon by it. The anonymous donations have been compulsorily taken from the students and that too in cash, who have opted to take admission in the educational institutions run by the appellant. This makes amply clear the trust is running the educational institution with profit motive. Therefore, I am inclined to agree .....

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onors in remand proceedings. The CIT(A) has adopted a hyper technical approach in the above extracted findings by holding that the Assessing Officer had rightly invoked section 115BBC in the assessment proceedings. We find that this approach is not sustainable in view of the fact that it is only after being convinced with assessee s ground raised in the lower appellate proceedings that the CIT(A) had himself directed the Assessing Officer to conduct remand proceedings. It transpires from the cas .....

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e of remand proceedings. The impugned donations are no more anonymous in nature. We find force in assessee s first substantive ground that the authorities have erred in treating corpus donation as its income liable to assessed. This first substantive ground is decided in assessee s favour. 7. We come to the second issue of addition of admission fees of ₹ 67,80,850/-. The Assessing Officer show caused the assessee for having collected the above stated admission fee as to why the same had be .....

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choice left for students parents except to pay the impugned admission fees. He relied on assessee s printed receipt allegedly indicating the same were in the nature of compulsory donation. He would accordingly conclude that the assessee s institution had been established with profit motive. All this discussion led to addition of the impugned admission fees amounting to ₹ 67,80,650/- in question. The CIT(A) confirms the same. 8. We have heard rival contentions. Relevant findings stand peru .....

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