Case Law Details
Corpus fund is the property of the Trust. The donors contributed the donations therefore could not form part of the income & expenditure account as prescribed by law. The development fees received later on was from students was to be identified by the assessee over and above the corpus funds when the students were made aware that they are contributing the amount apart from development fees, tuition fees, bus fees and other annual charges. The learned Counsel for the assessee before us has submitted that the development fees was received to contribute to the building when the committee seeking such funds made it voluntary was therefore directly held as a liability to identify with the general fund when the major portion was from the students and the remaining was contributed by the managing committee. The managing committee had started construct building was therefore within the parameter specified under the provisions of Sections 11 and 13 of the I.T.Act. The property held by the assessee in trust has been rendered in accordance with the provisions of the Act therefore was the only criteria in the mind of the Assessing Officer of not having been routed through the income & expenditure account. We have perused the assessment order when the Assessing Officer has made efforts to determine the income for consideration of exemption u/s.11 but holding the sum of ₹52 lakhs taxable under the provisions of Section 68 he has determined the same when actually he has allowed the application of income of assets amounting to ₹4,51,93,129. This really indicates that the Assessing Officer misinterpreted the provisions of Sections 11 and 13 to isolate the corpus funds to be taxed as income u/s.68 which was appealed before the learned CIT(A) on all the other relevant observations made by the Assessing Officer which stood contradicted by itself was aptly dealt with by the learned CIT(A) deleting the entire addition but to a specific addition of ₹37,000 u/s.68. We find merit in the contention of the learned Counsel for the assessee that the Assessing Officer misdirected himself to hold a view that Vidya Jyoti Trust was not the school which was seeking corpus funds or voluntary contribution in the form of building or general fund when all the property of the Trust has been created for the purpose it was registered u/s.12AA.Therefore, the contention of the learned CIT-DR is on the effort to identify the trust Vidya Jyoti Trust as different from the educational institution it runs for which purpose the learned CIT granted registration. The Assessing Officer by observing hat the excess of expenditure over income rendered by the trust amounting to ₹ 24,88,855 was not to be taxed therefore concluded that the return filed by the assessee was in accordance with the provisions of I.T.Act,1961 as applicable to Trusts and Societies claiming exemption u/s.12A.This resulted in his allowing the claims u/ss.11 and 13 therefore could not be revisited for the purpose of taxation of ₹ 52,00,000 as corpus fund introduced in the impugned year u/s.68 when he acknowledged that ₹ 4,51,93,129 stood applied to the application of income in the assets of the Trust. The learned CIT(A) therefore rightly considered the deletion of ₹ 52,00,000 but ₹ 37,000 therein in the light of the facts as mentioned earlier. The learned Counsel for the assessee has stated that the two donors corrected themselves to submit that it was school to which they applied for the corpus fund therefore negates the learned CIT(A) finding that the amounts be confirmed u/s.68, was declared as fund by the Trust who runs the School.
IN THE INCOME TAX APPELLATE TRIBUNAL, CUTTACK
I.T.A.No. 333/CTK/2012
Cross objection No.31/CTK/2012 (C.O.filed by assessee)
Asst. Commissioner of Income-tax
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The higher authorities of IT has taken the issue very seriously and gave a good judgement.In the process the lower authorities of IT should not take it otherwise.
If a company could not spend the two percent of net profit under CSR in any particular year for various reasons can the amount be deposited in the foundation account exclusively formed for this purpose ? In such case how the IT dept will take that amount? Can the company show this amount both in income and expenditure?The foundation is of six years old and doing good CSR activities.
Pl reply if possible