N H Kapadia Education Trust Vs ACIT (Gujarat High Court)
Conclusion: Corpus donations received by the trust was exempted under Section 11(1)(d) as the donation was bound to have been given for material gain in securing admission, the same could not be characterised as donation towards charitable purpose and admission fee charged from the students was forming part of the corpus of the Trust.
Held: Assessee filed its return of income declaring its income at a loss of Rs. 60,84,191/-. It also filed revised return of income declaring its income at a loss of Rs. 5,68,80,691/-. The trust received donation aggregating to Rs.5,00,60,184/- collected from students as corpus donation of which assessee also claimed benefit of exemption under Section 11(1)(d) amounting to Rs.5,00,60,184/- collected from the students as “corpus donation”. AO passed an order of assessment under Section 143(3) wherein the income of assessee was declared as ‘Nil’. Further, AO observed that assessee had received one time admission fees of Rs.5,00,60,184/- from parents/guardians which was treated as corpus fund and directly credited in its balance sheet as an earmarked fund. AO further observed that in the copies of the receipts issued to students for the payment of the one-time admission fee it was mentioned that the amount paid was for the one-time admission fees and held that the said receipt/fee was not a voluntary contribution given with a specific direction to treat the same as corpus donation which could be claimed as exempt in Section 11(1)(d). Therefore, AO treated one-time admission fees of Rs.5,00,60,184/- as income of the assessee and added back to the total income of the assessee. It was held that in case of assessee, the amount paid by the parents of the students admitted to the education institution run by assessee was required to be held as a payment towards corpus donation and same was not collected by way of capitation fee. As observed by this Court, AO had not taken any inquiry with regard to examination of parents who admitted the students in School as to whether the payment was made towards corpus fund or capitation fee. It was true that the donation was bound to have been given for material gain in securing admission, the same could not be characterised as donation towards charitable purpose and assessee would not be entitled to have the benefit but in the facts of the case, in absence of any material on record, such view could not be taken in the circumstances, the Tribunal had committed an error by treating the admission fee charged from the students as not forming part of the corpus of the Trust. There-fore, in this case, following the decision in Tax Appeal No.356 of 2012, this appeal was also allowed.
