B.R. Morden School Samiti Tara Lodge Vs ITO (ITAT Dehradun)
The ITAT Dehradun allowed the appeal of an educational society for Assessment Year 2016–17, holding that corpus donations received with a specific direction for building or infrastructure development cannot be treated as part of “annual receipts” for the purpose of exemption under Section 10(23C)(iiiad) of the Income Tax Act, 1961. The Assessing Officer had denied exemption by aggregating the institution’s educational receipts of ₹66.88 lakh with voluntary contributions toward a building fund of ₹48.89 lakh, thereby treating total receipts as ₹1.16 crore, exceeding the ₹1 crore threshold. The Tribunal observed that corpus donations earmarked for specific purposes constitute capital receipts and cannot be included in annual receipts while determining eligibility for exemption. Relying on earlier tribunal and judicial precedents, the ITAT held that only receipts from educational activities should be considered for the threshold test. Since the institution’s annual educational receipts were below ₹1 crore, it was held eligible for exemption under Section 10(23C)(iiiad).
Key Facts
The assessee (educational society) declared:
Educational receipts: ₹66,88,268
Corpus donation (building fund): ₹48,89,866
The AO clubbed both → Total ₹1.16 crore → Denied exemption u/s 10(23C)(iiiad) (threshold ₹1 crore).
The assessee contended that corpus donation is a capital receipt and not part of annual receipts.
Tribunal’s Findings (ITAT Dehradun)
1. Meaning of “Aggregate Annual Receipts”
Refers only to revenue receipts from educational activities.
Does not include capital receipts.
2. Nature of Corpus Donations
Donations with specific direction (e.g., building fund):
Treated as capital receipts.
Not taxable and not part of annual receipts.
3. AO’s Error
Wrongly included corpus donation while computing the threshold limit.
4. Reliance on Judicial Precedents
The Tribunal followed the consistent view that:
Corpus donations do not form part of income/receipts for this purpose.
Held: Corpus donations (with specific direction) = capital receipts.
Excluded from annual receipts u/s 10(23C)(iiiad).
Since receipts (₹66.88 lakh) < ₹1 crore →
Exemption allowed.
Case Laws Relied Upon
ACIT vs Shiksha Samiti (Delhi ITAT)
Divine Education Institute vs ITO
CIT vs Shanthi Devi Educational Trust (P&H HC)
ITO vs Serum Institute of India Research Foundation (Pune ITAT)
Sathyam Educational & Charitable Trust vs ITO (Chennai ITAT)
FULL TEXT OF THE ORDER OF ITAT DEHRADUN
