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TMI Blog2019 (10) TMI 289X X X X Extracts X X X X X X X X Extracts X X X X ..... . For that the disallowance of claim of capital receipts on account of Admission Fee of Rs. 4,49,180/-, Re-admission Fees Rs. 1,00,00,000/-, Term Charges Rs. 21,70,700/- have been wrongly made without narrating any cogent reasons". 4. Brief facts qua the issue are that during the course of assessment proceedings, the assessing officer observed from the balance sheet of the assessee as at 31.03.2014, that the General fund at the disposal of the assessee was Rs. 6,14,48,893/- as compared to Rs. 4,48,70,032/- as at 31.03.2013. On being asked, the assessee submitted explanation of the difference in amount of Rs. 1,65,78,861/ ( Rs. 6,14,48,893-Rs. 4,48,70,032), as follows: (i) Rs. 39,58,981/- as Surplus of Income over Expenditure. (ii). Rs. 1,00,00,000/-, collected as Re-Admission Fees. (iii).Rs. 21,70,700/-Term charges. (iv).Rs. 4,49,180/-, Admission fees Totaling Rs. 1,26,19,880/-. 5. The AO was of the view that as per provisions of section 12(1) and section 11(1)(d), a corpus donation is that which comes with a specific direction of the donor that the said donation; would be corpus donation and any other donation is not a corpus donation. A donation given by any donor with a d ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f the assessee along with the documents furnished and the case laws relied upon, and perused the fact of the case including the findings of the ld CIT(A) and other material available on record. We note that ld CIT(A) concluded that assessee collected Fees, and just like the other Fees, these are revenue receipts; and therefore must be routed through the income & Expenditure account. We note that the underlying ground relates to whether one time and non-recurring Annual Receipts from incumbent students being absolute nature of Development Fee, collected by the assessee classified and accounted as (a) Admission Fee Rs. 4,49,180/-, (b) Term Charges Rs. 21,70,700/- and (c) Re- Admission fee Rs. 1,00,00,000/-, are Capital Receipt or Revenue Receipt? The ld Counsel submits before us that the school of the assessee is "unaided school", and in order to provide continuous upgraded infrastructure and facilities to the students for education, sports, auditorium, swimming pool etc. the necessary funds must be raised for required upgradation. The ld Counsel further submits that the Assessee has to develop additional infrastructure to provide quality education to students and all these activit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lementing the resources for purchase, upgradation and replacements of furniture and fixtures and equipment is justified. These propositions were upheld by the Hon`ble Supreme Court in the case of Modern School Vs. Union of India, Appeal No.2699/2001, order dated 27.04.2004. Normally there is no bar wherein the account of development fund is capitalized. We note that it is a well settled principle of law that nomenclature given to the documents is not decisive factor but the nature and substance of the transaction has to be determined. We note that on the identical facts the Hon'ble Supreme Court in the case of Yellapu Uma Maheswari vs. Buddha Jagadheeswarao, in SLP No. 12788 of 2014, order dated 08.10.2015, held as follows: " It is well settled that the nomenclature given to the document is not decisive factor but the nature and substance of the transaction has to be determined with reference to the terms and documents and that the admissibility of a document is entirely dependent upon the recitals contained in that document but not on the basis of the pleadings set up by the party who seeks to introduce the document in question. A thorough reading of both Exhibits B-21 and B- ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... amounting to Rs. 1,03,74,724/-. 11. Brief facts qua the issue are that during the assessment proceedings, the assessee was asked to give his justification regarding his claim of depreciation as the same will tantamount to double deduction as the full cost of the asset was already treated as application in the year in which it was procured. During the assessment proceedings the assesseefiled a revised computation in which he himself excluded the depreciation as application of income. The above facts were discussed in the body of the assessment order dated 30.11.2016 vide para 4.1, 4.2, 4.3 and 4.4 of assessment order. The assessing officer therefore, did not allow depreciation claim amounting to Rs. 1,03,74,724/-, as application of income. 12. Aggrieved by the stand so taken by the Assessing Officer, the assessee carried the matter in appeal before the ld. CIT(A) who has deleted the addition made by the Assessing Officer. Aggrieved by the order of the ld. CIT(A), the Revenue is in appeal before us. 13. The ld. DR for the Revenue has primarily reiterated the stand taken by the Assessing Officer which we have already noted in our earlier para and the same is not being repeated for ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in the case of Jayashree Charity Trust (supra). There was as such, no reason why the matter should be referred to any larger Bench, as submitted by Mr. Bhowmick. In the result, the appeal fails. Both the questions were answered in the affirmative and in favour of the assessee. The appeal was thus disposed of." As regards as to whether the inserted sub-section (6) could have retrospective application, judicial decisions have held that it cannot be interpreted so. The insertion is prospective w.e.f 01.04.2015. The ld Counsel submitted the following case laws:Indraprastha Cancer Society (ITA No. 240 of 2014) dated 18.11.2014 Delhi High Court; DIT (Exemption) vs. Al-Ameen Charitable Fund Trust (2016) 67 Taxmann.com 160 (Karnataka High Court), and CIT(Exemption), Bangalore vs. The Karnataka Law Society (2017),wherein,in sum and substance, it was held as follows: "24. The Constitution Bench of the Apex Court in Vatika Township (P.) Ltd.'s case (supra), had laid down general principles concerning retrospectivity in Paragraphs 33 and 34, and the same is extracted hereunder: "33. We would also like to point out, for the sake of completeness, that where a benefit is conferred by a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 18/04/2016, the assessee was asked to submit breakup of Administrative and Establishment expenses with a sum up in summery sheet and the other expenses. The assessee submitted his reply to notice u/s 142(1) on 27/06/2016. However, assessing officer did not make any discussion in the assessment order and made addition of Rs. 28,22,647/-. 17. Aggrieved by the order of the Assessing Officer, the assessee carried the matter in appeal before the ld. CIT(A) who has deleted the addition made by the Assessing Officer. Aggrieved by the order of the ld. CIT(A), the revenue is in appeal before us. 18. The ld. DR has primarily reiterated the stand taken by the Assessing Officer which we have already noted in our earlier para and the same is not being repeated for the sake of brevity and on the other hand the ld. Counsel for the assessee has defended the order of the ld. CIT(A). 19. We heard both the parties and carefully gone through the submission put forth on behalf of the assessee along with the documents furnished and the case laws relied upon, and perused the fact of the case including the findings of the ld CIT(A) and other materials available on record. We note that administrative an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the trust and not the total income as computed under the provisions of the Act. Our attention has been drawn to several decisions in this connection. In Deo Radha Madhava Lalji Genda Trust v. Property Tax Officer [1980] 125 ITR 531 (MP), it has been observed that tax liability and other outgoings in respect of the trust property are all incidental expenses relating to and connected with the main objects of the trust, which are exclusively religious and charitable. If the trust property is not properly maintained and proper accounts are not kept, the very existence of the trust would be in jeopardy and its object and purpose would be lost. In this view of the matter, simply because a part of the rental income is spent in the maintenance, repairs, payment of salaries to employees, taxes and legal expenses, etc., it could not be said that the income derived from the trust property was not applied exclusively to religious and charitable purposes. 6. In CIT v. Trustee of H.EH. the Nizam's Supplemental Religious Endowment Trust [1981] 127 ITR 378 (AP), it has been held that with regard to the income of the trust as such, it is the accounts of the trust alone that had to be take ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r, should be not less than 75 per cent of the latter, if the trust is to get the full benefit of the exemption under section 11(1)." (p. 285) After quoting that circular, this Court observed as follows: "This circular makes it clear that the word 'income' in section 11(1)( a) must be understood in a commercial sense. The entire income of the trust, in the commercial sense, has been spent for the purpose of charity. There is no reason to deny the benefit of exemption granted by section 11 to that portion of the income which has been taken away by deduction at source on the ground that the amount has not been spent or accumulated for the purpose of charity." (p. 286) 11. In our view, therefore, the expenditure on salaries and miscellaneous expenses for the purpose of carrying out the objects and purposes of the trust must be considered as application for charitable purposes. However, in this case the quantum of the expenditure for carrying out the objects and purposes of the trust and the expenditure made to earn the income had not been separately allocated or determined. We, therefore, answer the second question by saying that the Tribunal was right in holding that the ..... X X X X Extracts X X X X X X X X Extracts X X X X
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