TaxTMI 
TaxTMI 
2024 (6) TMI 1465
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....the assessee society to secure admission of their wards in schools being run by its sister societies." 3. Brief facts of the case are that the assessee Chadha Education Society is registered u/s 12A of the Income-tax Act, 1961 [the Act, for short]. The main object of the assessee society is to promote and provide education and open schools etc. The assessee runs Maxfort Pre-Primary School in Pitampura and its sister concerns also run schools in Rohini and Pitampura. The assessee has earned Rs 2,19,86,513/- from its educational activities beside receiving a corpus donation of Rs 56,25,000/-. It has expended Rs 2,88,23,445/- on the objects of the Trust. The major portion of expenditure is towards school building. 4. During the course of assessment proceedings, the Assessing Officer observed that the assessee has shown corpus donation of Rs. 56,25,000/- which has not been routed through income and expenditure account and directly taken to the balance sheet. Details of these donors of corpus donation were called for and the same was provided by the assessee. Thereafter, information was sought u/s 133(6) of the Act from the persons who made the donations, which in every case is Rs. 30....
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.... circumstances of the case, I am of the view that the amount of Rs. 56,25,000/- are voluntary and this is not capitation fees and it is held in various decisions of High Courts and thus proviso of section 2(15) does not attract in this case as the assessee is in the field of education and imparting the education and accordingly the AO is directed to allow the benefit of exemption u/s11(1) and the addition of Rs. 56,25,000/- is deleted." 9. Aggrieved by this action of the ld. CIT(A), the Revenue is in appeal before us. 10. Before us, the DR relied heavily on the orders of the AO. The ld. counsel for the assessee, on the other hand, vehemently argued that the funds received were utilized for the construction of the school building. He vehemently contended that there is no nexus between the donation and admission to the particular school. He submitted that it is not that if they would not have paid the donation the children would have been denied admission. It was also argued that none of the persons called by the AO to verify the donation, have said that there was coercion or undue pressure to admit the children. The ld. counsel for the assessee relied upon the decision in the case....
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....re the Hon'ble Supreme Court held that once the registration under section 12A(a) was granted, the grant of benefit and exemptions could not be denied. 15. The other bone of contention is the amount of Rs. 56,25,000/- received towards corpus donation during the year by the assessee. The ld. CIT(A) has given a categorical finding that the assessee is a charitable society and is involved in imparting education and the income of the assessee is mainly from school fees received from the students which are also spent for running the school. We find that the contribution received have been utilized for the purposes of building the school which is in furtherance of the Trust's objective of imparting education. We are also of the opinion that the Revenue has not established that the contributions received as corpus donation was utilized for purposes other than charitable purposes or there is a violation of provisions of section 13(1) or 13(2) of the I T Act. 16. We are in agreement with the findings of the ld. CIT(A)that the contributions cannot but be treated as voluntary in nature towards corpus donation u/s 11(1)(d).On the issue of capitation fee being in the nature of contributio....
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....on to these provisions was considered by the Tribunal in the following manner: "35. To proceed further, we have to examine the scheme of law of charities provided under the Income-tax Act, 1961 . There is no concept of involuntary contributions in that scheme. The only distinction recognized by law is the voluntary contributions to be treated as income under section 12 and the corpus donations to be treated as capital receipt under section 11(1)(d) . The corpus donations are not generally in the nature of income. The voluntary contributions are taxable only if not applied for charitable purposes. In the present case, the assessee-trust itself has treated the contributions as voluntary contributions in the nature of income. The assessee claims exemption under section 11 not on the basis of the nature of contributions but for the reason that the contributions were applied for charitable purposes. When the assessee- trust itself has treated the contributions as voluntary contribution in the nature of income, which is the best situation that the Revenue would always welcome, what is the relevance of arguing whether the contributions were voluntary or not? 36. Even if the contributi....
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.... of Income Tax (Appeals), it should be borne out by records based on investigation, which the Assessing Officer failed to do, except falling back on a statement which is not supported by materials". 14. We are in respectful agreement with the view taken by the Madras High Court. 15. Sri. E.I. Sanmathi, learned advocate is also right in his submission that in each year of assessment, the Assessing Officer will have to examine the case independently. In the case on hand, the Assessing Officer for the A.Y. 2011-2012 has held that he has made enquiry with the parents and collected information that the amount was not made voluntarily. 16. It was argued by Shri. Chandrashekar that Assessing Officer's view that capitation fee was collected in violation of the Karnataka Educational Institution (Prohibitions of Capitation Fee) Act, 1984, is not sustainable because it is for the appropriate authority, which deals with the said Act to investigate into the matter. In substance, his contention is, the Assessing Officer under the Income Tax Act under Section 11 cannot deny the exemption of the Act on the assumption that there is violation of any other statutory provision. He also adver....