IN THE ITAT, AHMEDABAD BENCH ‘d’ (THIRD MEMBER)
Income-tax Officer, Ward-6(1), Surat
versus
Sardar Vallabhbhai Education Society
IT APPEAL NO. 2984 (AHD.) OF 2008
(c.o. no. 223 (ahd.) of 2008)
[ASSESSMENT YEAR 2000-01]
JULY 13, 2012
ORDER
Mukul Kr. Shrawat, Judicial Member
This is an appeal filed by the Revenue and cross-objection filed by the assessee both arising from the order of ld.CIT(A)-IV, Surat dated 30/06/2008. Ground raised by the Revenue is reproduced below:
[1] On the facts and in the circumstances of the case and in Law, the ld. CIT(A)-IV, Sural has erred in deleting the addition of Rs. 1,54,67,621/- made by the Assessing Officer on account of donations which were not a part of the corpus of the assessee trust.
2. Facts in brief as emerged from the corresponding assessment order passed u/s. 143(3) r.w.s. 147 of the I.T. Act were that the assessee-trust is an educational society. To start a college and to fulfil the objects of the trust, it was appealed to the public to give donation for a technical college. Donation was collected for establishment and development of a technical education centre in a village. A query was raised in this regard and in compliance it was stated that the donation amounting to Rs. 1,54,67,621/- was collected and in support receipts issued to the donors were furnished before the Assessing Officer. On the basis of those receipts, it was alleged by the Assessing Officer that those were prepared by the employee of the trust and signed by an official of the trust. As per Assessing Officer’s allegation, none of those receipts borne the signatures of the donors. It was further alleged that the donation receipts were self-made evidence furnished in support of the corpus fund collected.) As per Assessing Officer, vide section 11(1) of the IT Act there must be a specific direction from the donor in respect of their donations that it should be for the purpose of the corpus. By assigning those reasons Assessing Officer had taxed the entire amount in the hands of the Trust. Being aggrieved the matter was carried before the first appellate authority.
3. Before ld.CIT(A) it was contested that there was no infringement of the provisions of the Act because the said donated amount was treated as a corpus fund and utilized for the establishment of the said educational institution. The ld.CIT(A) has granted relief as per the following observations:-
“1 have considered the submissions and gone through the details. There are two basic issues involved in the said appeal. One whether the donation received by the appellant were for the purpose of corpus and whether the same was utilized for any non-corpus expenditure, while the other issue is whether the appellant trust can claim exemption u/s. 10(23C) of the IT Act. These two issues are inter-connected since if the donation is treated as being not for the purpose of corpus, the income of the appellant would be more than Rs.1 crore. In the instant case a perusal of the receipts issued by the appellant for donations received from 60 donors aggregating to Rs. l,54,67,621/- indicates that in all the cases the column of corpus funds has been tick marked and in most of the cases the donors have specifically stated that the donation was towards corpus of the trust. The Assessing Officer’s objection that the receipts were signed by the official of the trust and no signature of donor was taken and therefore this was a self-made evidence is without appreciating the appellant’s submission. A receipt issued by the trust would obviously have to be signed by the employee or the official of the trust and there is no provision that the signature of the donor should also be taken on such receipt. Further, I also find that no part of the corpus can be said to have been utilized for any other expenditure. Corpus donation cannot he brought as income because even if a part of the amount is temporarily utilized, the character of donation does not change and it cannot be treated as income for the purpose of taxation. I have also gone through the Judicial decisions cited by the Id. AR and find that when the trust is running a educational institution, the said institution would be part of the appellant trust which would come within the expression of educational institution. Therefore, the rent paid by the College to the appellant trust and transfer of surplus to the trust is only an intra-institute transactions were no element of income is involved. I am therefore of the considered view that the donation receipt by the appellant was towards the corpus which would be out of the purview of taxation as per provisions of section 11 of the IT Act and since the other receipt of the trust is less than Rs. 1 crore and it is an educational institution, benefit of exemption u/s 10(23C) of the IT Act is allowable to it. Therefore, the addition made to the returned income because of denial of this exemption and treating donation as not for the purpose of corpus is not sustainable and is directed to be deleted.”
4. We have heard both the sides. We have also perused the orders of the authorities below. The compilation consisted the evidence in respect of the corpus donation receive by this trust. One of the donation was found to be received of Rs. 10 lakhs through cheque by the G.H. Bhakta Memorial Foundation Trust and the donor has categorically stated that the donated amount is to form part of the corpus of the trust towards a Chemical Engineering, one of the Department of the Institution. There is an another evidence on corpus donation of Gujarat State Co-operative Fruit & Vegetable Marketing Federation Ltd., Bardoli of Rs. 1 lakh donated through a cheque with the direction to accept the donation as a corpus fund of the trust. Likewise a sum of Rs. 4 lakhs was received through draft from Radhaben & Khushalbhai Foundation. Likewise, a sum of Rs. 5 lakhs was received through cheque as a corpus for the assessee-trust by Shree Khedut Sahakari Khand Udyog Mandli Ltd. A finding has been given by the first appellate authority alter appreciation of those cogent evidences that in all 60 donors have donated the amount towards corpus fund of the trust and totalling to Rs. 1,54,67,621/-. The receipts as issued by the assessee have been duly “ticked” at the marked column as “corpus fund”. Those receipts were found to be duly signed by the employees of the trust. On the basis of those appreciation of facts, it was held that merely those receipts have not been signed by the donors, the Assessing Officer had wrongly treated the corpus fund as the income of the assessee. We are also of the view that the reason assigned by the Assessing Officer that the receipts were not counter signed by the donors should not be held as a logical basis for assuming that the corpus fund received by the assessee-trust was the taxable income, further, it has also been found that the corpus fund was utilized towards the objects of the trust to establish a technical institution. On appreciation of the factual aspect of the utilization of corpus funds, it was found by the learned CIT (Appeals) that no part of the corpus could be said to have been utilized for any other expenditure except for the establishment of the said educational institution. A corpus of the trust cannot be held as income because corpus is nothing but towards capital of the trust. Few case laws in support of the above contention have also been cited as follows:-
