Falahe Darain Education Society Vs DCIT (ITAT Ahmedabad)
Corpus Donations & Cash Fee Receipts Upheld: ITAT Allows Full Exemption and Deletes Section 69A Addition
The Ahmedabad Bench of the ITAT allowed the appeal of an educational trust, granting full exemption under section 11(1)(d) for corpus donations and deleting the addition made towards cash deposits treated as unexplained under section 69A.
On corpus donations (₹48.38 lakh), the Tribunal held that the CIT(A) erred in denying exemption merely on technical or factual misconceptions. It was found that:
- Major corpus donations (about 88%) were supported by identifiable donors and were wrongly disallowed without any basis.
- In cases where written donor directions existed but were ignored, the denial was held to be factually incorrect.
- Donations collected by students for the Building Fund (Corpus) were supported by the Principal’s letter, and the intention of corpus donation stood established.
- Foreign donations credited into the FCRA account, accompanied by receipts clearly stating that the contribution formed part of the corpus, were held sufficient to meet the requirement of “specific direction.”
Accordingly, the Tribunal directed allowance of entire corpus donation exemption under section 11(1)(d).
On cash deposits of ₹70.69 lakh, the ITAT held that the additions were unsustainable as the trust had demonstrated that the deposits represented fees collected from students, duly recorded in the audited books, supported by cash books, student lists, and bank statements. In the absence of any defect in the books of account or adverse audit remarks, mere non-production of some fee receipts could not justify an addition under section 69A.
Thus, all additions were deleted and the assessee’s appeal was allowed in full.
FULL TEXT OF THE ORDER OF ITAT AHMEDABAD
