ACIT, Jaipur V. SHYAM LAL PAWAR ANANDI DEVI MEMORIAL CHARITABLE TRUST, Jaipur

ITA 110/JPR/2015

• Counselvise Citation: [2016] 131 COUNSELVISE.COM (IT) 4996 (ITAT-JAIPUR)
• Duration Of Justice: 1 year(s) 9 month(s) 3 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 31-10-2016
• Appeal Filed By: Department
• Order Result: Partly Allowed
• Bench Allotted: A
• Assessment Year: 2011-2012
• Appeal Filed On: 28-01-2015
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: D S KOTHARI CIT DHK
• Assessee Lawyers: G M MEHTA
• Keywords: Capital asset; Charitable institution; Retrospective amendment; Tangible material; Capital receipt; Benefit of exemption; Condonation of delay; Revenue expenditure
• Section: 143(3); 12A; 12AA; 147; 12; 11

Judgement Text

VK;DJ VIHYH; VF/KDJ.K] T;IQJ U;K;IHB] T;IQJ IN THE INCOME TAX APPELLATE TRIBUNAL, JAIPUR BENCHE S, JAIPUR JH DQY HKKJR] U;KF;D LNL; ,OA JH FOE FLAG ;KNO ] YS[KK LNL; DS LE{K BEFORE: SHRI KUL BHARAT, JM & SHRI VIKRAM SINGH YAD AV, AM VK;DJ VIHY LA-@ ITA NO.110/JP/15 & CO. NO.13/JP/15 FU/KZKJ.K O'K Z@ ASSESSMENT YEAR : 2011-12 THE ACIT (EXEMPTIONS), JAIPUR CUKE VS. SHYAM LAL PANWAR ANANDI DEVI MEMORIAL CHARITABLE TRUST, 135, RAM NAGAR EXTENSION, NEW JYOTI SANGANER ROAD, JAIPUR LFKK;H YS[KK LA-@THVKBZVKJ LA-@ PAN NO. AADTS 0692 R VIHYKFKHZ@ APPELLANT IZR;FKHZ@ RESPONDENT FU/KZKFJRH DH VKSJ LS@ ASSESSEE BY : SHRI G.M. MEHTA (CA) JKTLO DH VKSJ LS@ REVENUE BY : SHRI D.S. KOTHARI ( CIT ) LQUOKBZ DH RKJH[K@ DATE OF HEARING : 22.08.2016 ?KKS'K .KK DH RKJH[K @ DATE OF PRONOUNCEMENT : 01/11/2016. VKNS'K@ ORDER PER SHRI VIKRAM SINGH YADAV, A.M. THIS IS AN APPEAL FILED BY THE REVENUE AND THE CROS S OBJECTIONS BY THE ASSESSEE AGAINST THE ORDER OF THE LD. CIT (A)-I, JA IPUR DATED 25.11.2014. REVENUES GROUNDS OF APPEAL: (1) ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE A ND IN LAW THE LD. CIT(A)-I, JAIPUR HAS ERRED IN DELETING THE ADDITION OF RS. 5,30,09,085/- MADE ON ACCOUNT OF CORPUS DONATIONS RECEIVED IN THE FORM OF BUILDING FUND TREATED BY THE AO AS REVENUE RECEIPTS. (I) HOLDING THAT THE ASSESSEE WAS ELIGIBLE TO CLAI M BENEFIT OF SECTION 11(1)(D) OF THE IT ACT 1961 AS THE REGISTRATION U/S 12AA WAS GRANTED BY THE CIT-I, ITA NO.110/JP/15 & CO. NO/. 13/JP/15 SHYAMLAL PANWAR ANANDI DEVI MEMORIAL CHARITABLE TRU ST VS. ACIT(EXEMPTIONS), JAIPUR 2 JAIPUR ON 08.08.2014 DESPITE THE FACT THAT THE ASSE SSMENT U/S 143(3) WAS COMPLETED BY THE AO ON 21.02.2014 AND UPTO THAT TIM E THE ASSESEE WAS NOT REGISTERED U/ 12AA AS SUCH THE ASSESSEE WAS NOT ELIGIBLE TO CLAIM OF DEDUCTION U/S 11(1)(D) OF THE IT ACT. (II) BUILDING FUND RECEIVED BY THE ASSESSEE IS PART OF FEE RECEIPT AND IT IS NOT VOLUNTARY . ANY NON VOLUNTARY CONTRIBUTION CANNOT BE HELD AS DONATION AND NEVER BE COVERED U/S 11(1)(D). (III) THE FEE RECEIPTS DOES NOT HAVE WORD CORPUS M ENTIONED THERE IN THUS IT CANNOT BE TREATED AS CORPUS DONATION. (IV) FUNDS RECEIVED FOR SPECIFIC PURPOSES (I.E. BUI LDING FUND) ARE FOR THE APPLICATION FOR SPECIFIC PURPOSES. IT IS NOT THE C APITAL OF THE SOCIETY THEREBY NOT THE CORPUS OF THE SOCIETY. (2) ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CA SE AND IN LAW THE LD. CIT(A)-I, JAIPUR HAS ERRED IN DELETING THE ADDITION MADE ON ACCOUNT OF DISALLOWANCE U/S 40(A)(IA) OF RS. 11,06,513/-. (3) ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CA SE AND IN LAW THE LD. CIT(A)-I, JAIPUR HAS ERRED IN DELETING THE ADDITION MADE ON ACCOUNT OF DISALLOWANCE OF TDS AMOUNTING TO RS. 13862/-. ASSESSEES GROUNDS OF APPEAL IN ITS CROSS OBJECTION : (1) THAT THE LD. CIT(A) WAS LEGALLY CORRECT IN TREA TING THE ASSESSEE TRUST BEING ENTITLED FOR BENEFIT OF REGISTRATION UNDER SECTION 12AA OF THE IT ACT AFTER CONSIDERING VARIOUS JUDICIAL PRONOUNCEMENTS, TRUST DEED DATED 24 TH NOVEMBER, 2001 ON THE BASIS OF WHICH LD. CIT HAS GR ANTED REGISTRATION U/S 12AA OF IT ACT AND THE INTENTION OF THE ACT IN INSERTING FIRST PROVISO TO SECTION 12A OF THE IT ACT. (2) THAT THE LD. CIT(A) WAS LEGALLY JUSTIFIED THAT: (A) DELETING ADDITION OF CORPUS D ONATION OF RS. 5,30,09,085/- RECEIVED THROUGH INDIVIDUAL RECEIPTS IN CASH OR THROUGH CHEQ UES FOR SPECIFIC PURPOSE AS TOWARDS BUILDING FUND WHICH IS CORPUS DO NATIONS AS PER PROVISIONS OF SECTION 11(1) (D) OF IT ACT. ITA NO.110/JP/15 & CO. NO/. 13/JP/15 SHYAMLAL PANWAR ANANDI DEVI MEMORIAL CHARITABLE TRU ST VS. ACIT(EXEMPTIONS), JAIPUR 3 (B) DELETING ADDITION OF RS. 11,06,51 3/- MADE U/S 40(A)(IA) OF IT ACT AND RS. 13,862/- BEING INTEREST ON TDS FOR THE REASON T HAT SURPLUS AFTER INCLUDING BOTH SUMS BUT AFTER EXCLUDING ADDITION FO R CORPUS DONATION TOWARDS BUILDING FUND IS NOT IN EXCESS OF 15% OF TH E INCOME OF THE ASSESSEE TRUST. 2. THE FACTS OF THE CASE ARE THAT THE ASSESSEE, M/S SHYAM LAL PANWAR ANANDI MEMORIAL CHARITABLE TRUST IS ENGAGED IN THE EDUCATION ACTIVITIES AND RUNNING EDUCATIONAL INSTITUTIONS. DURING THE COURS E OF SCRUTINY ASSESSMENT PROCEEDINGS, THE AO NOTICED THAT THE ABOVE TRUST HA S RECEIVED A SUM OF RS. 5,30,09,085/- SHOWN AS CAPITAL RECEIPTS UNDER THE HEAD BUILDING FUNDS. WHILE COMPLETING THE ASSESSMENT, THE AO OBSERVED TH AT THE ASSESSEE WAS NOT REGISTERED U/S 12AA OR U/S 10(23C)(VI) AS SUCH BENE FIT OF SECTION 11(1)(D) CANNOT BE ALLOWED AND A SHOW CAUSE NOTICE WAS ISSU ED BY THE AO WHEREBY THE ASSESSEE WAS ASKED TO EXPLAIN AS TO WHY AN AMOU NT OF RS.5,30,09,085/- SHOWN BY THE ASSESSEE AS CAPITAL RECEIPTS UNDER TH E HEAD BUILDING FUNDS SHOULD NOT BE CONSIDERED AS REVENUE RECEIPT. 2.1 IN RESPONSE TO THE SHOW CAUSE ISSUED BY THE AO, THE ASSESSEE SUBMITTED AS UNDER: (I) IT IS SUBMITTED THAT THE ASSESSEE IS A CHARITAB LE TRUST, PROVIDING EDUCATION TO THE STUDENTS AT LARGE, WITHOUT ANY CON SIDERATION FOR CASTE OR CREED. ALTHOUGH THE AFORESAID ASSESSEE TRUST IS NO T REGISTERED EITHER U/S 12A OR U/S 10(23C)(VI) OF THE IT ACT 1961, THE ACTIVITIES CARRIED ON BY IT ARE COVERED WITHIN THE DEFINITION OF THE TERM CHARITABLE PURPO SE WITHIN THE MEANING OF SECTION 2(15) OF THE IT ACT, 1961. (II) DURING THE YEAR, THE ASSESSEE RECEIVED VOLUNTA RY DONATIONS /CONTRIBUTIONS FROM ITS STUDENTS ETC. WITH SPECIFIC DIRECTION TO USE THESE DONATIONS TOWARDS DEVELOPMENT OF BUILDING INFRASTRU CTURE. BY VIRTUE OF THESE ITA NO.110/JP/15 & CO. NO/. 13/JP/15 SHYAMLAL PANWAR ANANDI DEVI MEMORIAL CHARITABLE TRU ST VS. ACIT(EXEMPTIONS), JAIPUR 4 DIRECTIONS, IT WAS NOT ENTITLED TO USE THEM FOR ANY OTHER PURPOSE OR PURPOSES. CONSEQUENTLY, THESE DONATIONS AMOUNTED TO CORPUS FU ND OF THE ASSESSEE TRUST AND CONSTITUTED ITS CAPITAL RECEIPTS. IT MAY BE NO TED THAT THE FUNDS SO RECEIVED WERE BEING UTILIZED FOR DEVELOPMENT OF BUILDING INF RASTRUCTURE. (III) TREATMENT OF AMOUNT RECEIVED TOWARDS BUILDING FUND : IT HAS BEEN HELD IN VARIOUS JUDICIAL PRONOUNCEMENTS THAT VOLUNTARY CONTRIBUTIONS IN THE NATURE OF TIED UP GRANT RECEIVED BY THE TRUST/INSTITUTION OR SOCIETY TOWARDS CAPITAL FUND I.E. BUILDING CONSTRUCTION (IN ASSESSEES CASE ) CANNOT BE BROUGHT TO TAX IN OTHER WORDS, ANY AMOUNT RECEIVED BY THE CHARITABLE TRUST FOR ANY SPECIFIC PURPOSES IS THE CAPITAL RECEIPTS AND CANNOT BE TREA TED AS REVENUE RECEIPT EVEN THOUGH THE TRUST IS NOT REGISTERED U/S 12A OF THE A CT. (IV) AS PER ACCOUNTING STANDARD HAVING RECOGNITION UNDER THE INCOME TAX ACT AND SUPPORTED BY VARIOUS JUDICIAL PRONOUNCEMENTS, T HERE ARE TWO TYPES OF RECEIPTS IN SUCH TRUSTS. ONE IS REVENUE RECEIPT AN D OTHER IS CAPITAL RECEIPT. THE REVENUE RECEIPTS ARE PART OF INCOME AND EXPENDITURE ACCOUNT WHEREAS CAPITAL RECEIPTS ARE DIRECTLY TRANSFERRED TO CORPUS AND TE RMED AS CORPUS DONATIONS. (V) DISCRETION OF THE ASSESSEE TO TREAT THE RECEIPT S AS PER HIS OWN CHOICE: THERE IS NO DISCRETION LEFT WITH THE MANAGEMENT/TRU STEES OF THE ASSESSEE TRUST. SINCE ASSESSEE TRUST IS RUNNING EDUCATIONAL INSTIT UTION IN WHICH ABOUT 2500 STUDENTS ARE STUDYING, THEIR FEE AND OTHER RECEIPT S ARE ACKNOWLEDGED BY ISSUANCE OF RECEIPTS IN DUPLICATE. ORIGINAL IS ISS UED TO THE STUDENTS WHEREAS CARBON COPY IS KEPT FOR THE RECORDS OF ASSESSEE TRU ST. THE CATEGORY OF THE INCOME (WHETHER REVENUE OR CAPITAL RECEIPT) IS MARK ED IN THESE RECEIPTS AS PER THE DIRECTION OF THE STUDENTS/PARENTS OF THE STUDEN TS TO WHOM ORIGINAL RECEIPTS ARE ISSUED AND NOT AS PER THE DISCRETION OF THE TRU STEES OR THEIR EMPLOYEES. ITA NO.110/JP/15 & CO. NO/. 13/JP/15 SHYAMLAL PANWAR ANANDI DEVI MEMORIAL CHARITABLE TRU ST VS. ACIT(EXEMPTIONS), JAIPUR 5 THROUGH CARBON COPIES OF THE RECEIPTS, RELEVANT ENT RIES ARE MADE IN THE BOOKS OF ACCOUNT. THEREFORE, THE DISCRETION OF RECEIPT B EING REVENUE OR CAPITAL RECEIPT IS NOT OF THE ASSESSEE TRUST BUT OF THE DON ORS, PAYING THE AMOUNT. AFTER MAKING NECESSARY ENTRIES IN THE BOOKS, THESE ARE CH ECKED AND VERIFIED BY THE ACCOUNTANT AND AFTER AUDIT, THE RETURN OF INCOME IS SUBMITTED. 2.2 THE REPLY OF THE ASSESSEE WAS CONSIDERED BUT NO T FOUND ACCEPTABLE BY THE ASSESSING OFFICER WITH THE FOLLOWING REASONING: (I) (A) IN THE INSTANT CASE, STUDENTS ARE PAYING F EES TO PURSUE THEIR EDUCATIONAL QUALIFICATIONS. IN LIEU OF THIS PAYMENT, THEY ARE GETTING EDUCATIONAL DEGREES. THERE IS NO VOLUNTARY ELEMENT INVOLVED IN IT RATHER IT IS COMPULSORY FOR THEM TO PAY FEES FOR THESE COURSES. SO THE CONTENTION OF THE ASSESSEE IS NOT ACCEPTABLE THAT IT IS VOLUNTARY DONATION. IT IS NO T VOLUNTARY AT ALL. THE STUDENTS HAVE TO PAY THIS FEES COMPULSORILY. FURTHER QUESTI ON OF GIVING SPECIFIC DIRECTION DOES NOT ARISE AS THIS IS NOT THE DONATION BUT TH E FEES RECEIVED FOR ACQUIRING EDUCATIONAL QUALIFICATIONS. MERE ASSIGNING THE NAM E OF BUILDING FUND TO RECEIPTS OF REVENUE NATURE DOES NOT WARRANT THAT THESE RECEIPTS WILL BE CONSIDERED AS CAPITAL RECEIPTS. STUDENTS DO NOT HA VE CHOICE TO DONATE THE AMOUNT FOR BUILDING FUND WITH SPECIFIC DIRECTIONS . THEY HAVE TO PAY FEES IN ANY FORM. (B) THERE IS NO DONOR/DONEE RELATIONSHIP WHICH IS P ERQUISITE FOR DONATION. (C) ANOTHER DISTINCTION IS THAT IN DONATION THE DON OR DOES NOT EXPECT ANY CONSIDERATION OR SERVICES FROM THE DONEE BUT IN THE INSTANT CASE THE STUDENTS ARE GETTING THEIR EDUCATIONAL QUALIFICATION IN LIEU OF PAYMENT MADE TO INSTITUTION. THEREFORE ONE CAN EASILY INFER THAT T HE AMOUNT IN QUESTION IS NOTHING BUT THE FEES RECEIVED FROM STUDENTS IN THE NAME OF BUILDING FUND. ITA NO.110/JP/15 & CO. NO/. 13/JP/15 SHYAMLAL PANWAR ANANDI DEVI MEMORIAL CHARITABLE TRU ST VS. ACIT(EXEMPTIONS), JAIPUR 6 (II) NO OTHER PARTIES ARE GIVING ANY VOLUNTARY CONT RIBUTION TO THE ASSESSEE AS HE HIMSELF ADMITTED IN HIS REPLY DATED ON 18.10.20 13 AT POINT NO.7. ONLY THE STUDENTS HAVE MADE PAYMENTS IN THE FORM OF FEES. IT IS NEITHER IN THE NATURE OF GRANT WHICH IS BEING GIVEN FOR DEVELOPMENT OF IN FRASTRUCTURE NOR THE STUDENTS ARE CAPABLE OF GIVING SUCH GRANTS SO THE C ONTENTION OF THE ASSESSEE ON THIS POINT IS ALSO NOT ACCEPTABLE. (III) IT HAS ALSO BEEN OBSERVED THAT NO SEPARATE B OOKS OF ACCOUNT ARE BEING MAINTAINED FOR THE USE OF THIS FUND I.E. NO SEPARAT E ACCOUNT IN THE FORM OF BUILDING FUND IS BEING MAINTAINED IN ANY BANK SO T HAT ITS USE CAN BE ASCERTAINED. ASSESSEE HAS FAILED TO ESTABLISH THAT THESE FUNDS ARE BEING UTILIZED FOR THE SPECIFIC PURPOSE. MANAGEMENT IS FREE TO US E THIS FUND AS PER HIS OWN SUITABILITY. ASSESSEE CAN USE THESE FUNDS IN ANY F ORM EITHER FOR CONSTRUCTION OF BUILDING OR FOR PURCHASE OF VEHICLES OR FOR ACQUISI TION OF ANY CAPITAL ASSETS OR CAN USE IT FOR DAY TO DAY AFFAIRS. THERE IS NO BAR FOR USING IT AS REVENUE EXPENDITURE. EVEN THERE IS NO DISTINCTION OF FEES RECEIPTS ITSELF. ON CLOSE SCRUTINY OF FEES RECEIPT, IT CAN EASILY BE SEEN THA T BUILDING FUND NOMENCLATURE HAS BEEN ADDED AFTERWARDS JUST TO DIVERT THE NATUR E OF RECEIPTS. (IV) ASSESSEE HAS ALSO REFERRED ABOUT THE CORPUS FU ND IN HIS REPLY. I HAVE EXAMINED THE TERM CORPUS FUND AND CORPUS DONATION A S IT IS BEING GENERALLY USED WITH RESPECT TO A TRUST. A CORPUS FUND DONAT ES A PERMANENT FUND KEPT FOR THE BASIC EXPENDITURE NEEDED FOR THE ADMINISTR ATION AND SURVIVAL OF THE ORGANIZATION. THE CORPUS FUND IS GENERALLY NOT ALL OWED TO BE UTILIZED FOR THE ATTAINMENT OF THE PURPOSES, BUT THE INTEREST/DIVIDE ND ACCRUED ON SUCH FUND CAN BE UTILIZED AS WELL AS ACCUMULATED. SUCH FUND C AN ALSO BE USED FOR CREATION OF CAPITAL ASSET OR PROPERTY OF THE TRUST FROM WHIC H INCOME CAN BE GENERATED. CORPUS FUND ARE GENERALLY CREATED OUT OF CORPUS D ONATION. A DONATION WILL BE ITA NO.110/JP/15 & CO. NO/. 13/JP/15 SHYAMLAL PANWAR ANANDI DEVI MEMORIAL CHARITABLE TRU ST VS. ACIT(EXEMPTIONS), JAIPUR 7 TREATED AS CORPUS DONATION ONLY IF IT IS ACCOMPANIE D BY A SPECIFIC WRITTEN DIRECTION OF THE DONOR. IN THE ABSENCE OF ANY WRIT TEN DIRECTION OF THE DONOR, A CONTRIBUTION OF GRANT CANNOT BE TRANSFERRED TO CORP US FUND. CORPUS COMES INTO PICTURE ONLY WHEN ASSESSEE TRUST IS REGISTERED U/S 12A OR 10(23C)(VI) WHICH IS NOT THE CASE HERE. CORPUS IS VERY WELL DEFINED U/S 11(1)(D). SECTION 11 COMES INTO PICTURE ONLY WHEN THE TRUST IS REGISTERED U/S 12A. (V) ASSESSEE ALSO CITED SOME CASE LAWS IN HIS REPLY . THE CASE LAWS CITED BY THE ASSESSEE IS OF NO HELP TO THE ASSESSEE TRUST FO R THE REASON THAT ALL THESE CASE LAWS SUPPORT THE CONTENTION WHEN THE TRUST IS REGISTERED U/S 12A/10(23C)(VI) OF IT ACT, 1961. IN THE INSTANT CA SE THE TRUST IS NOT REGISTERED UNDER ANY OF THESE SECTIONS. IN VIEW OF THE ABOVE DISCUSSION, THE CONTENTION OF THE ASSESSEE THAT THESE RECEIPTS ARE OF CAPITAL NATURE WAS NOT ACCEPTED AND IT WAS HELD THAT THESE ARE THE REVENUE RECEIPTS AND IT WAS BROUGHT TO TAX. 2.3 WE NOW REFER TO THE ORDER OF THE LD CIT(A) AND HIS RELEVANT FINDINGS ARE AS UNDER: 3.2.2....I HAVE DULY CONSIDERED APPELLANT SUBMISSI ON AND ALSO GONE THROUGH THE ASSESSMENT ORDER. IN THIS CASE, THE DONATIONS OF RS. 5,30,09,085/- PAID THROUGH INDIVIDUAL RECEIPTS FOR BUILDING FUND WAS D IRECTLY TRANSFERRED TO BALANCE SHEET UNDER THE HEAD BUILDING FUND BUT WAS TREATE D BY THE AO AS REVENUE INCOME AND ADDITION WAS MADE WITHOUT CONSIDERING TH E INTENTION OF THE DONORS. SECTION 12AA_______ ITA NO.110/JP/15 & CO. NO/. 13/JP/15 SHYAMLAL PANWAR ANANDI DEVI MEMORIAL CHARITABLE TRU ST VS. ACIT(EXEMPTIONS), JAIPUR 8 IT FOLLOWS THAT THE COMMISSIONER OR DIRECTOR WILL E NQUIRE WHETHER THE OBJECT(S) OF THE TRUST OR INSTITUTION CONSTITUTE RELIGIOUS OR CHARITABLE PURPOSES WITHIN THE MEANING OF SECTION 2(15). FURTHER ONE OF THE KEY C ONDITION FOR CHARITABLE TRUST AND INSTITUTIONS SEEKING TO CLAIM EXEMPTION U/S 11 & 12 OF THE IT ACT, 1961 IS REGISTRATION UNDER THE ACT. SECTION 12A ENACTS THA T THE PROVISIONS OF SECTION 11 AND SECTION 12 WHICH PROVIDE FOR EXEMPTION OF INCOM E TO SUCH TRUSTS AND INSTITUTIONS, WILL NOT BE APPLICABLE UNLESS SUCH TR UST OR INSTITUTION HAS MADE AN APPLICATION IN THE PRESCRIBED FIRM FOR REGISTRATION TO THE COMMISSIONER OR DIRECTOR OF INCOME TAX (EXEMPTION) AND PRESENT CASE HAS BEEN REGISTERED BY THE COMMISSIONER-I, JAIPUR VIDE CERTIFICATE DATED 0 8.08.2014 (EFFECTIVE DATE OF REGISTRATION FROM 26.03.2014). FURTHER ON PERUSAL OF CERTIFICATE ISSUED BY THE ASST. COMMISSIONER, DEVSTHAN VIBHAG, JAIPUR, IT IS ALSO SEEN THAT THE APPELLANT TRUST HAS GOT ITS REGISTRATION W.E.F. 24.11.2003. INCOME IN THE FORM OF VOLUNTARY CONTRIBUTIONS MADE WITH A SPECIFIC DIRECTION FROM THE DONOR THAT THEY SHALL FORM PART OF THE COR PUS OF THE TRUST OR INSTITUTION, ARE GENERALLY REFERRED TO AS CORPUS DONATIONS. F URTHER THE IT ACT, 1961 IS NOT CONCERNED WITH FORM OF ORGANIZATION. THE SAME TREA TMENT IS PROVIDED TO PUBLIC TRUSTS, SOCIETIES, SEC. 25 COMPANIES, AND EVEN TO C HARITABLE FUNDS SET UP BY COMPANIES ETC. CORPUS DONATIONS, ARE NOT TO BE SPEN T, BUT HAVE TO BE INVESTED SO THAT THE RESULTING INCOME CAN BE USED. INCOME TAX ACT, ALLOWS TRUST TO SET THESE CORPUS DONATIONS ASIDE PERMANENTLY. THESE AR E EXCLUDED FROM INCOME. THEREFORE THE MINIMUM EXPENDITURE REQUIREMENT DOES NOT APPLY TO DONATIONS RECEIVED AS CORPUS. ACCORDINGLY, SUCH CORPUS DONAT IONS ARE FULLY EXEMPT FROM TAX U/S 11(1)(D) OF THE ACT. ACCORDINGLY, CORPUS D ONATIONS ARE TO BE EXCLUDED ENTIRELY FROM THE ASSESSABLE INCOME OF THE TRUST OR INSTITUTION U/S 11(1)(D) OF THE ACT. IN OTHER WORDS, VOLUNTARY CONTRIBUTIONS RECEI VED WITH A SPECIFIC DIRECTION ITA NO.110/JP/15 & CO. NO/. 13/JP/15 SHYAMLAL PANWAR ANANDI DEVI MEMORIAL CHARITABLE TRU ST VS. ACIT(EXEMPTIONS), JAIPUR 9 FROM THE DONOR THAT THEY SHALL FORM PART OF THE COR PUS WILL GET EXCLUDED FROM THE TAXABLE INCOME OF THE TRUST OR INSTITUTION U/S 11(1)(D) OF THE ACT. THE REQUIREMENT OF APPLICATION DURING THE YEAR, THE QU ANTUM OF ACCUMULATION ALLOWABLE AND THE PROCEDURAL REQUIREMENTS SUCH AS FILING OF FORMS OR EXERCISING AN OPTION IN WRITING ETC. WOULD NOT APPLY TO THESE AMOUNTS. APPELLANT HAS RELIED ON THE DECISION GIVEN BY HONBLE KARNATAKA HIGH COURT IN THE CASE OF CIT VS. CHILDRENS EDUCATION SOCIETY (SUPRA) WHERE IT H AS BEEN HELD THAT IF THE DONATIONS ARE RECEIVED BY THE ASSESSEE FROM STUDENT S WHO ARE STUDYING IN THE SCHOOL RUN BY IT AND THE SAME ARE PROPERLY ACCOUNTE D FOR IN THE BUILDING FUND/ INFRASTRUCTURE FUND AND SAID AMOUNT IS UTILISED FOR CONSTRUCTION OF BUILDING WHICH IS USED FOR IMPARTING EDUCATION, IT WOULD CON STITUTE CHARITY AND THEREFORE THE ASSESSEE SOCIETY WILL BE ENTITLED FOR EXEMPTIO N. APPELLANT HAS ALSO RELIED UPON FOLLOWING FAVOURABLE DECISION REGARDING TREATM ENT OF VOLUNTARY DONATION MADE FOR A CHARITABLE PURPOSE AND TAKEN TO ITS CORP US FUNDS: HONBLE KARNATAKA HIGH COURT IN THE CASE OF SRI RA MAKRISHNA SEVA ASHARAM (SUPRA) TWO DECISION OF HONBLE BOMBAY HIGH COURT IN THE CA SE OF TRUSTEES OF KILACHAND DEVCHAND FOUNDTION VS. CIT (SUPRA) HONBLE RAJASTHAN HIGH COURT DECISION IN THE CASE O F SUKHDEO CHARITY ESTATE VS. ITO (SUPRA). IN CASE OF APPELLANT TRUST, IT IS ALSO SEEN THAT DO NATIONS OF RS. 5,30,09,085/- PAID THROUGH INDIVIDUAL RECEIPTS FOR BUILDING FUND WERE DIRECTLY TRANSFERRED TO BALANCE SHEET UNDER THE HEAD BUILDING FUND. FROM ACCOUNTANCY POINT OF VIEW AND ALSO FROM LEGAL FRAME WORK OF INCOME TAX ACT, 1 961, AOS ACTION FOR TREATING BALANCE SHEET ITEM I.E. BUILDING FUND AS INCOME CANNOT BE JUSTIFIED. THIS SHOWS LACK OF BASIS ACCOUNTANCY KNOWLEDGE AND INCOME TAX ACT, 1961 ON THE PART OF AO. ON THE FACTS AND CIRCUMSTANCES AS N ARRATED ABOVE, ADDITION OF RS. 5,30,09,085/- OF BUILDING FUND FORMING A PART O F CORPUS FUND OF THE ITA NO.110/JP/15 & CO. NO/. 13/JP/15 SHYAMLAL PANWAR ANANDI DEVI MEMORIAL CHARITABLE TRU ST VS. ACIT(EXEMPTIONS), JAIPUR 10 APPELLANT TRUST, CANNOT BE JUSTIFIED AND SUSTAINED, THEREFORE AO IS A DIRECTED TO DELETE THE SAME. APPELLANT GETS RELIEF OF RS. 5,30 ,09,085/-. 2.4 WE KNOW REFER TO THE SUBMISSIONS OF THE LD AR. THE LD. AR OF THE ASSESSEE SUBMITTED THAT DURING THE YEAR, THE ASSESS EE TRUST HAS RECEIVED VOLUNTARY DONATION OF RS. 5,30,09,085/- FROM STUDEN TS/ PARENTS TOWARD BUILDING FUND AND THIS WAS ONE TIME DONATION. TH E BUILDING FUND SO RECEIVED IS NEITHER FIXED NOR IDENTICAL AMOUNT IN ALL CASES OF DONORS, SINCE IT IS VOLUNTARY. NO DONATION TOWARDS BUILDING FUND WAS RECEIVED AT A LL FROM 269 STUDENTS. THE AMOUNT SO RECEIVED WAS PROPERLY ACCOUNTED FOR AND CREDITED DIRECTLY TO BUILDING FUND ACCOUNT OF THE ASSESSEE. THE BUILDING FUND DONATIONS WERE APPLIED IN CONSTRUCTION OF BUILDINGS FOR EDUCATION AL PURPOSES AFTER RECEIPT WHEREAS THE OTHER RECEIPT-TUITION FEE, CHARGED SEPA RATELY WAS UTILIZED FOR IMPARTING EDUCATION. THE ASSESSEE TRUST WAS GRANTED REGISTRATION U/S 12A A OF IT ACT ON 08.08.2014 AFTER CONSIDERING THE TRUST DEED DATED 24.11.2001, MEANING THEREBY ASSESSEE TRUST WAS QUALIFYING AND WAS ELIGIBLE FOR REGISTRA TION U/S 12AA OF IT ACT FROM VERY BEGINNING FROM 2001. THIS VIEW FURTHER GET STR ENGTH FROM INSERTION OF PROVISO TO SECTION 12A(2) OF IT ACT BY FINANCE (NO. 2) ACT 2014 WHICH WAS MADE APPLICABLE ON ALL PENDING ASSESSMENTS, WHICH SHOWS THAT INTENTION OF THE ACT TO ALLOW BENEFIT OF REGISTRATION U/S 12AA LIBERALLY . HAD THE DONATION TOWARD BUILDING FUND BEEN TREATED AS REVENUE INCOME, THE ASSESSEE TRUST WOULD NOT HAVE RESORTED TO CHARGE SE PARATELY THE MONTHLY/QUARTERLY TUITION FEE. VOLUNTARY DONATION T OWARDS BUILDING FUND CORPUS DONATIONS RECEIVED EITHER THROUGH CHEQUE OR IN CASH WITH NO ITA NO.110/JP/15 & CO. NO/. 13/JP/15 SHYAMLAL PANWAR ANANDI DEVI MEMORIAL CHARITABLE TRU ST VS. ACIT(EXEMPTIONS), JAIPUR 11 CONSEQUENCES OF THE MEDIUM OF INSTRUCTION AND THE S TANDARD IN WHICH WARD (STUDENT) WAS TO BE ADMITTED. ONE TIME PAYMENT OF V OLUNTARY DONATION TOWARD BUILDING FUND WAS NON REFUNDABLE WHEREAS TUITION F EE SO COLLECTED WAS TO BE SPENT FOR ACADEMIC FIELD SUCH AS EDUCATION TO THE S TUDENT, SALARY TO TEACHERS, STATIONARY WORKSHOP EXPENSES, COMPUTER EDUCATION ET C. THE LD. AO HAD FAILED TO DISTINGUISH THE RECEIPT O F CORPUS FUND FROM TUITION FEES. THERE IS A DISTINCTION BETWEEN THE CORPUS FU ND AND TUITION FEE. THE BOARD OF TRUSTEES ARE EMPOWERED TO ACCEPT ANY MONEY FOR THE OBJECT OF THE TRUST AND THUS, THE VOLUNTARY CONTRIBUTIONS GIVEN B Y PARENTS/STUDENTS WERE THE EXCLUSIVE PROPERTY OF THE TRUST WHICH WAS UTILIZED FOR THE OBJECTS OF THE TRUST ONLY. LD. CIT(A) THEREFORE WAS JUSTIFIED IN HIS FIN DING THAT THE SAID VOLUNTARY CONTRIBUTIONS WERE IN THE NATURE OF CORPUS FUND AND AS SUCH EXEMPT UNDER SECTION 12. SECTION 11(1)(D) STATES AS UNDER: SUBJECT TO PROVISIONS OF SECTIONS 60 TO 63, THE FO LLOWING INCOME SHALL NOT BE INCLUDED IN THE TOTAL INCOME OF THE PREVIOUS YEAR O F THE PERSON IN RECEIPTS OF THE INCOME - (D) INCOME IN THE FORM OF VOLUNTARY CONTRIBUTIONS M ADE WITH SPECIFIC DIRECTION THAT THEY SHALL FORM PART OF THE CORPUS OF THE TRUS T OR INSTITUTION. THEREFORE THE VOLUNTARY CONTRIBUTIONS WITH SPECIFIC DIRECTION AS TOWARDS BUILDING FUND ARE CORPUS DONATION WHICH CANNOT BE T REATED AS REVENUE RECEIPTS AS HELD BY THE LD. AO. IN THIS REGARD, RELIANCE IS PLACED ON THE FOLLOWING JUDGEMENTS. 1. JB EDUCATIONAL SOCIETY VS. ACIT (2014) 159 TTJ ( HYD) 236. ITA NO.110/JP/15 & CO. NO/. 13/JP/15 SHYAMLAL PANWAR ANANDI DEVI MEMORIAL CHARITABLE TRU ST VS. ACIT(EXEMPTIONS), JAIPUR 12 2. DIRECTOR OF IT(EXEMPTION) VS. NATIONAL ASSOCIATI ON OF SOFTWARE & SERVICE COMPANIES (2012) 253 CTR (DEL) 331. 3. DIRECTOR OF IT(EXEMPTION) VS. SHRI RAMKRISHNA SE VA ASHARAM (2013) 357 ITR 731 (KARN.) 4. DIRECTOR OF IT(EXEMPTION) VS. NATIONAL ASSOCIATI ON OF SOFTWARE & SERVICE COMPANIES (2012) 345 ITR 362(DEL) 5. CIT VS. CHILDRENS EDUCATION SOCIETY (2014) 264 CTR 389(KARN) 6. SUKHDEO CHARITY ESTATE VS. ITO (1984)149 ITR 470 (RAJ.) 7. SUKHDEO CHARITY ESTATE VS. ITO (1991)192 ITR 61( RAJ.) 2.5 NOW, COMING TO EACH OF THE SPECIFIC GROUNDS OF APPEAL IN REVENUES APPEAL, THE LD AR SUBMITTED AS UNDER: (I) DEDUCTION U/S 11(1)(D) WITHOUT REGISTRATION U/S 12A A. THOUGH THE ASSESSEE TRUST WAS QUALIFYING FOR REGISTRATION BUT IT WAS NOT PROPERLY GUIDED BY EARLIER CONSULTANT THEREFORE REGISTRATIO N WAS APPLIED LATE IN MARCH 2014. THE REGISTRATION WAS GRANTED BY CIT ON THE BASIS OF ORIGINAL TRUST DEED DATED 24.11.2001. MOREOVER WE RELY ON D ECISION IN THE CASE OF JB EDUCATIONAL SOCIETY. (II) BUILDING FUND RECEIVED AS PART OF FEES: - IT WAS V OLUNTARY DONATION. HAD IT BEEN PART OF FEE, IT WOULD HAVE BEEN OF EQUAL AMOUN T IN ALL CASES AND WOULD HAVE BEEN CHARGED FROM ALL STUDENTS WHEREAS A S PER PARA 3 AT PAGE NO.2 IT WAS NOT RECEIVED FROM 269 STUDENTS. (III) FEE RECEIPTS DO NOT HAVE THE WORD CORPUS: NO NEED UNDER THE ACT THAT IN RECEIPTS CORPUS WORD BE MENTIONED. IT SHOULD BE FOR SPECIFIC PURPOSE (357 ITR 731 (KARN) &149 ITR 470 (RAJ.) THE INTENTI ON OF DONOR & DONEE TO BE SEEN (SUKHDEO CHARITY ESTATE 192 ITR 71 (RAJ. ) (IV) FUND RECEIVED FOR SPECIFIC PURPOSE IS NOT CAPITAL OF SOCIETY AND THEREFORE NOT CORPUS: THIS GROUND APPEARS TO BE GENERAL IN N ATURE WHERE LD. AO AFTER EXAMINING THE RECORDS HAS ADMITTED THAT DONAT IONS WERE FOR SPECIFIC PURPOSES, WHEN IT IS FOR SPECIFIC PURPOSE IT IS CORPUS DONATION AS HELD IN VARIOUS JUDICIAL PRONOUNCEMENTS. 2.6 THE LD CIT(DR) TOOK US THROUGH THE PROVISIONS O F SECTION 12 AND SECTION 11 OF THE ACT AND SUBMITTED THAT THE ASSESSEE TRUST WAS NOT ELIGIBLE TO CLAIM BENEFIT OF PROVISIONS OF SECTION 11(1)(D) AS THE RE GISTRATION GRANTED U/S 12AA WAS W.E.F. 26.03.2014 WHEREAS THE ASSESSEES CASE I S IN RESPECT OF A.Y. 2011- ITA NO.110/JP/15 & CO. NO/. 13/JP/15 SHYAMLAL PANWAR ANANDI DEVI MEMORIAL CHARITABLE TRU ST VS. ACIT(EXEMPTIONS), JAIPUR 13 12. IN THE PRESENT CASE WHILE THE ASSESSMENT PROCE EDING WERE PENDING BEFORE THE AO, THE ASSESSEE WAS NOT HAVING ANY REGISTRATIO N U/S 12AA AS SUCH THE ASSESSEE WAS NOT ELIGIBLE FOR CLAIMING BENEFIT OF P ROVISIONS OF SECTION 11(1)(D). THE CIT(DR) FURTHER RELIED HEAVILY ON THE OBSERVATI ONS/FINDINGS OF THE AO IN HIS ASSESSMENT ORDER AND SUBMITTED THAT THE OBSERVATION OF THE CIT(A) IS NOT ACCEPTABLE AS UPTO THE COMPLETION OF THE ASSESSMENT PROCEEDINGS, THE ASSESSEE WAS NOT GRANTED REGISTRATION U/S 12AA AS S UCH THE AO WAS HAVING NO BASIS TO ALLOW THE BENEFIT OF SEC. 11(1)(D) TO THE ASSESSEE . 2.7 WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE MATERIAL AVAILABLE ON RECORD. THE FIRST ISSUE THAT ARISES FOR CONSIDER ATION IS WHETHER THE ASSESSEE TRUST CAN BE HELD ELIGIBLE TO BENEFIT OF REGISTRATI ON UNDER SECTION 12AA IN TERMS OF NON-APPLICABILITY OF SECTION 11 AND 12 FOR THE I MPUNGED ASSESSMENT YEAR. HERE, WE REFER TO THE PROVISIONS OF SECTION 12A(2) WHICH READ AS UNDER: (2) WHERE AN APPLICATION HAS BEEN MADE ON OR AFTER THE 1ST DAY OF JUNE, 2007, THE PROVISIONS OF SECTIONS 11 AND 12 SHALL AP PLY IN RELATION TO THE INCOME OF SUCH TRUST OR INSTITUTION FROM THE ASSESSMENT YE AR IMMEDIATELY FOLLOWING THE FINANCIAL YEAR IN WHICH SUCH APPLICATION IS MAD E: PROVIDED THAT WHERE REGISTRATION HAS BEEN GRANTED TO THE TR UST OR INSTITUTION UNDER SECTION 12AA, THEN, THE PROVISIONS OF SECTION S 11 AND 12 SHALL APPLY IN RESPECT OF ANY INCOME DERIVED FROM PROPERTY HELD UN DER TRUST OF ANY ASSESSMENT YEAR PRECEDING THE AFORESAID ASSESSMENT YEAR, FOR WHICH ASSESSMENT PROCEEDINGS ARE PENDING BEFORE THE ASSES SING OFFICER AS ON THE DATE OF SUCH REGISTRATION AND THE OBJECTS AND ACTIV ITIES OF SUCH TRUST OR INSTITUTION REMAIN THE SAME FOR SUCH PRECEDING ASSE SSMENT YEAR: PROVIDED FURTHER THAT NO ACTION UNDER SECTION 147 SHALL BE TAKEN BY THE ASSESSING OFFICER IN CASE OF SUCH TRUST OR INSTITUT ION FOR ANY ASSESSMENT YEAR PRECEDING THE AFORESAID ASSESSMENT YEAR ONLY FOR NO N-REGISTRATION OF SUCH TRUST OR INSTITUTION FOR THE SAID ASSESSMENT YEAR: ITA NO.110/JP/15 & CO. NO/. 13/JP/15 SHYAMLAL PANWAR ANANDI DEVI MEMORIAL CHARITABLE TRU ST VS. ACIT(EXEMPTIONS), JAIPUR 14 PROVIDED ALSO THAT PROVISIONS CONTAINED IN THE FIRST AND SECOND PROVISO SHALL NOT APPLY IN CASE OF ANY TRUST OR INSTITUTION WHICH WAS REFUSED REGISTRATION OR THE REGISTRATION GRANTED TO IT WAS CANCELLED AT ANY TIME UNDER SECTION 12AA. 2.8 IN THE INSTANT CASE, THERE IS NO DISPUTE AS TO THE FACT THAT THE ASSESSEE TRUST WAS GRANTED REGISTRATION U/S 12AA OF THE ACT ON 8.8.2014 BY CIT-I, JAIPUR W.E.F. 26.03.2014. AS ON THE DATE OF GRANT OF REGIS TRATION, THE ASSESSMENT ORDER U/S 143(3) WAS PASSED BY THE AO AND THE APPEAL AGAI NST SUCH ASSESSMENT ORDER WAS PENDING BEFORE THE LD CIT(A)-I, JAIPUR. THE AMENDMENT MADE BY THE FA, 2014 BY INSERTION OF PROVISO TO SUB SECTION 2 OF SECTION 12A EFFECTIVE FROM 01.10.2014 HAS BEEN E XPLAINED IN CBDT CIRCULAR NO. 01/2015 DATED 21.1.2015 WHICH CONTAINS THE EXPL ANATORY NOTES TO THE PROVISIONS OF THE FINANCE (NO. 2), 2014 AS UNDER:- 8.2 NON-APPLICATION OF REGISTRATION FOR THE PERIOD PRIOR TO THE YEAR OF REGISTRATION CAUSED GENUINE HARDSHIP TO CHARITABLE ORGANIZATIONS. DUE TO ABSENCE OF REGISTRATION, TAX LIABILITY IS FASTENED EVEN THOUGH THEY MAY OTHERWISE BE ELIGIBLE FOR EXEMPTION AND FULFILL OTH ER SUBSTANTIVE CONDITIONS. HOWEVER, THE POWER OF CONDONATION OF DELAY IN SEEKI NG REGISTRATION WAS NOT AVAILABLE. 8.3 IN ORDER TO PROVIDE RELIEF TO SUCH TRUSTS AND R EMOVE HARDSHIP IN GENUINE CASES, SECTION 12A OF THE INCOME-TAX ACT HAS BEEN A MENDED TO PROVIDE THAT IN A CASE WHERE A TRUST OR INSTITUTION HAS BEEN GRANTED REGISTRATION UNDER SECTION 12AA OF THE INCOME-TAX ACT, THE BENEFIT OF SECTIONS 11 AND 12 OF THE SAID ACT SHALL BE AVAILABLE IN RESPECT OF ANY INCOME DERIVED FROM PROPERTY HELD UNDER TRUST IN ANY ASSESSMENT PROCEEDING FOR AN EARLIER A SSESSMENT YEAR WHICH IS PENDING BEFORE THE ASSESSING OFFICER AS ON THE DATE OF SUCH REGISTRATION, IF THE ITA NO.110/JP/15 & CO. NO/. 13/JP/15 SHYAMLAL PANWAR ANANDI DEVI MEMORIAL CHARITABLE TRU ST VS. ACIT(EXEMPTIONS), JAIPUR 15 OBJECTS AND ACTIVITIES OF SUCH TRUST OR INSTITUTION IN THE RELEVANT EARLIER ASSESSMENT YEAR ARE THE SAME AS THOSE ON THE BASIS OF WHICH SUCH REGISTRATION HAS BEEN GRANTED. 2.9 FROM THE ABOVE, IT IS CLEAR THAT THE AMENDMENT WAS BROUGHT IN THE STATUE TO REMOVE UNINTENDED AND UNDUE HARDSHIP CAUS ED TO THE GENUINE CHARITABLE TRUSTS AND SOCIETIES CARRYING ON GENUINE CHARITABLE OBJECTS IN THE EARLIER YEARS. NOW, THE QUESTION THAT ARISES FOR C ONSIDERATION IS WHETHER THIS AMENDMENT BY VIRTUE OF THE PROVISO TO SECTION 12A(2 ) CAN BE GIVEN RETROSPECTIVE EFFECT AS IN THE INSTANT CASE. 2.10 IN CASE OF SREE SREE RAMKRISHNA SAMITY VS. DCIT (2015) 44 ITR (TRIB.) 678 (KOLKATA), THE COORDINATE BENCH AT PARA 6.10 HAS HELD AS UNDE R: WE HOLD THAT IT IS AN ESTABLISHED POSITION IN LAW THAT A PROVISO WHICH IS INSERTED TO REMEDY UNINTENDED CONSEQUENCES AND TO M AKE THE PROVISION WORKABLE, A PROVISO WHICH SUPPLIES AN OBVIOUS OMISS ION IN THE SECTION AND IS REQUIRED TO BE READ INTO THE SECTION TO GIVE THE SE CTION A REASONABLE INTERPRETATION, REQUIRES TO BE TREATED AS RETROSPEC TIVE IN OPERATION, SO THAT A REASONABLE INTERPRETATION CAN BE GIVEN TO THE SECTI ON AS A WHOLE AND ACCORDINGLY THE SAID INSERTION OF FIRST PROVISO TO SECTION 12A(2) OF THE ACT WITH EFFECT FROM 1.10.2014 SHOULD BE READ AS RETROSPECTI VE IN OPERATION WITH EFFECT FROM THE DATE WHEN THE CONDITION OF ELIGIBILITY FOR EXEMPTION UNDER SECTION 11 & 12 AS MENTIONED IN SECTION 12A PROVIDED FOR REGIS TRATION U/S 12AA AS A PRE- CONDITION FOR APPLICABILITY OF SECTION 12A. 2.11 IT IS NOTED THAT THE COORDINATE BENCH WHILE HO LDING THAT FIRST PROVISO TO SECTION 12A(2) OF THE ACT WITH EFFECT FROM 1.10.201 4 SHOULD BE READ AS ITA NO.110/JP/15 & CO. NO/. 13/JP/15 SHYAMLAL PANWAR ANANDI DEVI MEMORIAL CHARITABLE TRU ST VS. ACIT(EXEMPTIONS), JAIPUR 16 RETROSPECTIVE IN ABOVE REFERRED CASE HAS RELIED UPO N THE LEGAL PROPOSITION LAID DOWN BY THE HONBLE SUPREME COURT IN CASE OF CIT VS . VATIKA TOWNSHIP PVT. LTD. 367 ITR 466(SC) AND ALLIED MOTORS PVT. LTD. VS . CIT 224 ITR 677 (SC) THAT ANY AMENDMENT MADE IN THE ACT WHICH IS INTENDED TO REMOVE UNINTENDED AND UNDUE HARDSHIP SHOULD BE GIVEN RETROSPECTIVE EFFECT . 2.12 THE NEXT QUESTION THAT ARISES FOR CONSIDERATIO N IS WHERE THE ASSESSMENT ORDER HAS BEEN PASSED AND THE APPEAL AGAINST THE SA ID ASSESSMENT ORDER IS PENDING BEFORE THE LD CIT(A), CAN IT BE SAID THAT T HE ASSESSMENT PROCEEDINGS ARE PENDING AS ON THE DATE OF THE REGISTRATION. THI S ISSUE HAS BEEN DEALT WITH BY THE COORDINATE BENCH IN CASE OF SHREE BHANUSHALI MITRA MANDAL TRUST VS. ITO (2016) 47 CCH 197 WHERE AT PARA 7.3 AND 7.4, IT HELD AS UNDER:- 7.3 WHEN SECTION 12A OF THE ACT WAS AMENDED BY INT RODUCING NEW PROVISOS TO SUB-SECTION (2) OF SECTION 12A BY FINANCE ACT, 2014 WITH EFFECT FROM 01.10.2014, THE ASSESSMENT ORDERS PASSED BY THE ASS ESSING OFFICER IN RESPECT OF THE PRESENT ASSESSEE WERE PENDING IN APPEAL BEFORE THE FIRST APPELLATE AUTHORITY. DURING SUCH PENDENCY, THE ASSESSEE WAS G RANTED REGISTRATION U/S 12AA OF THE ACT ON 17.12.2013 W.E.F. THE ASSESSMENT YEAR 2013-14. THE APPEAL IS THE CONTINUATION OF THE ORIGINAL PROCEEDINGS AND THAT THE POWER OF THE COMMISSIONER OF INCOME-TAX WAS CO-TERMINUS WITH THA T OF THE AO WERE TWO WELL ESTABLISHED PRINCIPLES OF LAW. IN VIEW OF THE ABOVE AND GOING BY THE PRINCIPLE OF PURPOSIVE INTERPRETATION OF STATUES, A N ASSESSMENT PROCEEDING WHICH IS PENDING IN APPEAL BEFORE THE APPELLATE AUT HORITY SHOULD BE DEEMED TO BE 'ASSESSMENT PROCEEDINGS PENDING BEFORE THE ASSES SING OFFICER' WITHIN THE MEANING OF THAT TERM AS ENVISAGED UNDER THE PROVISO . IT FOLLOWS THEREFROM THAT ITA NO.110/JP/15 & CO. NO/. 13/JP/15 SHYAMLAL PANWAR ANANDI DEVI MEMORIAL CHARITABLE TRU ST VS. ACIT(EXEMPTIONS), JAIPUR 17 THE ASSESSEE WHICH OBTAINED REGISTRATION U/S 12AA O F THE ACT DURING THE PENDENCY OF APPEAL WAS ENTITLED FOR EXEMPTION CLAIM ED U/S 11 OF THE ACT. 7.4 THE EXPLANATORY MEMORANDUM TO FINANCE (NO.2) BI LL, 2014, WHICH SOUGHT TO AMEND SECTION 12A EXPLAINS THE OBJECTS AND REASONS FOR MAKING SUCH AMENDMENTS. THE EXPLANATION MAKES IT CLEAR THAT IT WAS IN ORDER TO PROVIDE RELIEF TO SUCH TRUSTS IN RESPECT OF WHICH, DUE TO A BSENCE OF REGISTRATION U/S 12AA TAX LIABILITY GOT ATTACHED THOUGH OTHERWISE THEY WE RE ELIGIBLE FOR EXEMPTION BY FULFILLING OTHER SUBSTANTIVE CONDITIONS THAT THE AM ENDMENT WAS BROUGHT IN. THAT BEING SO, DENYING SUCH BENEFIT TO A TRUST LIKE THE ASSESSEE WHO HAD OBTAINED REGISTRATION U/S 12AA DURING THE PENDENCY OF THE AP PEALS FILED AGAINST THE ORDERS OF THE ASSESSING AUTHORITY, BY NARROWLY INTE RPRETING THE TERM, 'PENDING BEFORE THE ASSESSING OFFICER' SO AS TO EXCLUDE ITS PENDENCY BEFORE THE APPELLATE AUTHORITY, WILL BE DOING VIOLENCE TO THE PROVISIONS OF THE STATUTE AND, AS SUCH, LIABLE TO BE INTERFERED WITH. 2.13 RECENTLY, IN CASE OF AADIWASI MEEN BHAGWAN JAN SEWA SANSTHAN VS THE DCIT CIRCLE-1, ALWAR (ITA NO. 780 & 781/JP/2015) DA TED 7.06.2016 , THE COORDINATE BENCH (WHERE ONE OF US WAS THE AUTHOR OF THE DECISION) HAS TAKEN A SIMILAR VIEW THAT: 3.4. IN THE PRESENT CASE ALSO THE ASSESSEE WAS GRA NTED REGISTRATION UNDER SECTION 12AA OF THE ACT AND ASSESSMENT WAS NOT PEND ING BEFORE THE AO BUT APPEAL AGAINST THE ORDER OF AO WAS PENDING BEFORE L D. CIT (A). IT IS A SETTLED POSITION OF LAW THAT LD. CIT (A) HAS COTERMINOUS PO WER WITH THE AO. THE BENEFIT OF EXEMPTION HAS BEEN DENIED SOLELY ON THE GROUND T HAT ASSESSEE WAS NOT REGISTERED U/S 12AA OF THE ACT. ITA NO.110/JP/15 & CO. NO/. 13/JP/15 SHYAMLAL PANWAR ANANDI DEVI MEMORIAL CHARITABLE TRU ST VS. ACIT(EXEMPTIONS), JAIPUR 18 AFTER CONSIDERING THE FACTS OF THE PRESENT CASE AND IN VIEW OF THE BINDING PRECEDENTS, WE SET ASIDE THE ORDER OF LD. CIT (A) A ND DIRECT THE AO TO GRANT THE BENEFIT OF EXEMPTION UNDER SECTION 11 OF THE ACT. T HIS GROUND OF THE ASSESSEE IS ALLOWED. 2.14 IN THE PRESENT CASE, WHEN THE AMENDMENT WAS MA DE IN SECTION 12A OF THE ACT BY THE FA, 2014, THE APPEAL WAS PENDING BEF ORE THE LD CIT(A). DURING SUCH PENDENCY, THE ASSESSEE WAS GRANTED REGISTRATIO N U/S 12AA OF THE ACT ON 8.8.2014 BY CIT-I, JAIPUR W.E.F. 26.03.2014. THUS, IN VIEW OF THE ABOVE DISCUSSIONS, LD CIT(A) HAS RIGHTLY EXERCISED HIS PO WER WHEREBY HE HAS CONSIDERED AND TAKEN INTO CONSIDERATION THE GRANT O F REGISTRATION TO ASSESSEE U/S 12AA FOR THE IMPUNGED ASSESSMENT YEAR AS APPEAL WAS PENDING BEFORE HIM AND AN ASSESSMENT PROCEEDING WHICH IS PENDING IN AP PEAL BEFORE THE APPELLATE AUTHORITY SHOULD BE DEEMED TO BE ASSESSMENT PROCEED INGS PENDING BEFORE THE AO WITHIN THE MEANING OF THE TERM AS ENVISAGED UNDE R THE PROVISO TO SECTION 12A(2) OF THE ACT. WE MAY ADD THAT IT IS NOT THE CA SE OF THE REVENUE THAT THERE IS ANY CHANGE IN THE OBJECTS AND ACTIVITIES OF THE ASSESSEE TRUST AND THESE OBJECTS/ACTIVITIES ARE NOT THE SAME AS THOSE ON THE BASIS OF WHICH REGISTRATION UNDER SECTION 12AA HAS BEEN GRANTED. FURTHER, IT I S ALSO NOT THE CASE OF THE REVENUE THAT ASSESSEE TRUST WAS REFUSED REGISTRATIO N OR REGISTRATION GRANTED EARLIER WAS CANCELLED AT ANYTIME. IN OUR VIEW, THE ASSESSEE TRUST DULY REGISTERED UNDER SECTION 12AA OF THE ACT IS THUS HE LD ELIGIBLE TO CLAIM BENEFITS OF SECTION 11 AND 12 OF THE ACT FOR THE IMPUNGED AS SESSMENT YEAR. HENCE, REVENUES GROUND NO. 1 (I) IS DISMISSED AND ASSESSE ES GROUND NO. 1 IN ITS CROSS OBJECTION IS ALLOWED. ITA NO.110/JP/15 & CO. NO/. 13/JP/15 SHYAMLAL PANWAR ANANDI DEVI MEMORIAL CHARITABLE TRU ST VS. ACIT(EXEMPTIONS), JAIPUR 19 3. THE NEXT ISSUE THAT ARISES FOR CONSIDERATION IS WHETHER, IN RESPECT OF BUILDING FUND AMOUNTING TO RS 5,30,09,085 RECEIVED BY THE ASSESSEE TRUST, CAN IT BE HELD ELIGIBLE TO CLAIM BENEFIT OF SECTION 11( 1)(D) OF THE ACT. 3.1 FOR THE PURPOSES, WE REFER TO SECTION 11(1)(D) OF THE ACT WHICH READS AS UNDER: (1) SUBJECT TO PROVISIONS OF SECTIONS 60 TO 63, TH E FOLLOWING INCOME SHALL NOT BE INCLUDED IN THE TOTAL INCOME OF THE PREVIOUS YEA R OF THE PERSON IN RECEIPTS OF THE INCOME - (D) INCOME IN THE FORM OF VOLUNTARY CONTRIBUTIONS M ADE WITH SPECIFIC DIRECTION THAT THEY SHALL FORM PART OF THE CORPUS OF THE TRUS T OR INSTITUTION. 3.2 HERE IT WOULD BE RELEVANT TO EXAMINE THE CIRCUL AR NO. 551 DATED 23 JANUARY 1990 (183 ITR ST. 7) ISSUED BY THE CBDT WHI CH HAS EXPLAINED THE INTENT BEHIND INTRODUCTION OF SECTION11(1)(D) WHICH IS REP RODUCED AS UNDER: 4.2 THE AMENDING ACT, 1989 HAS INSERTED A NEW CLAU SE (D) IN SUB-SECTION (1) OF SECTION 11 TO PROVIDE THAT INCOME IN THE FORM OF VO LUNTARY CONTRIBUTIONS MADE WITH A SPECIFIC DIRECTION THAT THEY SHALL FORM PART OF THE CORPUS OF THE TRUST OR INSTITUTION SHALL BE EXCLUDED FROM THE TOTAL INCOME OF THE TRUST OR INSTITUTION. FOR UNDERSTANDING THE BACKGROUND OF THIS AMENDMENT, IT WILL BE RELEVANT TO DISCUSS THE AMENDMENT MADE TO THE DEFINITION OF THE TERM INCOME IN SECTION 2(24) BY THE AMENDING ACT, 1987. 4.3 UNDER THE OLD PROVISIONS OF SUB-CLAUSE (IIA) OF CLAUSE (24) OF SECTION 2 ANY VOLUNTARY CONTRIBUTION RECEIVED BY A CHARITABLE OR RELIGIOUS TRUST OR INSTITUTION WITH A SPECIFIC DIRECTION THAT IT SHALL FORM PART O F THE CORPUS OF THE TRUST OR ITA NO.110/JP/15 & CO. NO/. 13/JP/15 SHYAMLAL PANWAR ANANDI DEVI MEMORIAL CHARITABLE TRU ST VS. ACIT(EXEMPTIONS), JAIPUR 20 INSTITUTION WAS NOT INCLUDED IN THE INCOME OF SUCH TRUST OR INSTITUTION. SINCE THIS PROVISION WAS BEING WIDELY USED FOR TAX AVOIDANCE B Y GIVING DONATIONS TO A TRUST IN THE FORM OF CORPUS DONATIONS SO AS TO KEEP THIS AMOUNT OUT OF THE REGULATORY PROVISIONS OF SECTIONS 11 TO 13, THE AME NDING ACT, 1987 AMENDED THE SAID SUB-CLAUSE (IIA) OF CLAUSE (24) OF SECTION 2 TO SECURE THAT ALL DONATIONS RECEIVED BY A CHARITABLE OR RELIGIOUS TRUST OR INST ITUTION, INCLUDING CORPUS DONATIONS, WERE TREATED AS INCOME OF SUCH TRUST OR INSTITUTION. HOWEVER, UNDER THE PROVISIONS OF THE NEW SECTION 80F, ALSO INTRODU CED BY THE AMENDING ACT, 1987, SUCH CORPUS DONATIONS, ALONG WITH OTHER INCOM E OF THE TRUST OR INSTITUTION WOULD HAVE BEEN EXEMPT IF SPENT FOR CHARITABLE PURP OSES OR INVESTED IN SPECIFIED ASSETS MENTIONED IN SECTION 80F. 4.4 AS ALREADY POINTED OUT, THE AMENDING ACT, 1989 OMITTED THE NEW SECTION 80F INTRODUCED BY THE AMENDING ACT, 1987 AND REVIVE D THE OLD SECTION 11. CONSEQUENTLY, CORPUS DONATIONS TO TRUSTS, ETC., WOU LD ALSO BE GOVERNED BY THE PROVISIONS OF SECTION 11. SINCE STIPULATIONS IN CLA USES (A) AND (B) OF SUB-SECTION (1) OF SECTION 11 THAT 75% OF THE INCOME OF THE TRU ST SHOULD BE SPENT DURING THE YEAR AND ONLY 25% CAN BE ACCUMULATED FOR APPLICATIO N TO ITS PURPOSES IN FUTURE COULD NOT HAVE BEEN MADE APPLICABLE TO CORPUS DONAT IONS, THE AMENDING ACT, 1989 HAS FURTHER AMENDED SECTION 11 TO EXCLUDE CORP US DONATIONS FROM THE TOTAL INCOME OF THE TRUST, AS EXPLAINED IN PARA 4.2 ABOVE. 4.5 THE EFFECT OF THE AMENDMENT OF DEFINITION OF I NCOME CONTAINED IN SECTION 2(24) BY THE AMENDING ACT, 1987 AND THE AMENDMENT O F SUB-SECTION (1) OF SECTION 11 BY THE AMENDING ACT, 1989 IS THAT ALTHOU GH CORPUS DONATIONS WOULD BE TREATED AS INCOME IN THE HANDS OF THE RECIPIENT , IN THE CASE OF TRUSTS OR INSTITUTIONS, WHICH COMPLY WITH THE REQUIREMENTS FO R EXEMPTION UNDER SECTION ITA NO.110/JP/15 & CO. NO/. 13/JP/15 SHYAMLAL PANWAR ANANDI DEVI MEMORIAL CHARITABLE TRU ST VS. ACIT(EXEMPTIONS), JAIPUR 21 11, THESE WILL BE EXCLUDED FROM THEIR INCOME. HOWEV ER, IN CASE THE TRUST OR INSTITUTION LOSES THE EXEMPTION UNDER SECTION 11, E ITHER BY NOT COMPLYING WITH THE CONDITIONS LAID DOWN IN SECTION 12A OR BY FALLI NG WITHIN THE MISCHIEF OF SECTION 13, CORPUS DONATIONS WILL BE INCLUDED IN IT S INCOME AND TAXED. 3.3 HAVING GONE THROUGH THE PROVISIONS AND INTEND B EHIND INTRODUCTION OF SECTION 11(1)(D), WE NOW REFER TO THE FINDINGS OF T HE LD CIT(A). THE LD CIT(A) IN HIS ORDER HAS STATED THAT INCOME IN THE FORM OF VOL UNTARY CONTRIBUTIONS MADE WITH A SPECIFIC DIRECTION FROM THE DONOR THAT THEY SHALL FORM PART OF THE CORPUS OF THE TRUST OR INSTITUTION, ARE GENERALLY REFERRED TO AS CORPUS DONATIONS. INCOME TAX ACT ALLOWS TRUST TO SET THESE CORPUS DON ATIONS ASIDE PERMANENTLY AND SUCH CORPUS DONATIONS ARE FULLY EXEMPT FROM TAX U/S 11(1)(D) OF THE ACT. THE LD CIT(A) THEN RELIED UPON THE DECISION OF THE HONBLE KARNATAKA HIGH COURT IN THE CASE OF CIT VS. CHILDRENS EDUCATION SOCIETY AND APPLYING THE RATIO OF THE SAID DECISION, LD CIT(A) HAS GIVEN A FINDING THAT THE DONATIONS OF RS. 5,30,09,085/- PAID THROUGH INDIVIDUAL RECEIPTS FOR BUILDING FUND WERE DIRECTLY TRANSFERRED TO BALANCE SHEET UNDER THE HEAD BUILDI NG FUND AND FROM ACCOUNTANCY POINT OF VIEW AND ALSO FROM LEGAL FRAME WORK OF INCOME TAX ACT, 1961, ADDITION OF RS. 5,30,09,085/- OF BUILDING FUN D FORMING A PART OF CORPUS FUND OF THE APPELLANT TRUST, CANNOT BE JUSTIFIED AN D SUSTAINED. 3.4 IT WOULD NOW BE RELEVANT TO REFER TO THE QUESTI ONS RAISED FOR CONSIDERATION BEFORE THE HONBLE KARNATAKA HIGH COU RT IN CASE OF CIT VS CHILDREN EDUCATION SOCIETY (2014) 264 CTR 389 WHICH INTER-ALIA INCLUDES THE FOLLOWING QUESTIONS: WHETHER ON THE FACTS, THE TRIBUNAL IS CORRECT IN H OLDING THAT THE FUNDS COLLECTED TOWARDS CONSTRUCTION OF BUILDING AS DONAT ION IS ALLOWABLE AND CANNOT ITA NO.110/JP/15 & CO. NO/. 13/JP/15 SHYAMLAL PANWAR ANANDI DEVI MEMORIAL CHARITABLE TRU ST VS. ACIT(EXEMPTIONS), JAIPUR 22 BE TREATED AS INCOME OF ASSESSEE UNDER THE PROVISIO NS OF THE INCOME-TAX ACT, 1961? WHETHER THE TRIBUNAL WAS CORRECT IN HOLDING THAT BU ILDING FUND OF RS.28,04,505/-, INFRASTRUCTURE DEVELOPMENT FUND RS. 16,39,73,678/- SHOULD BE TREATED AS THE CORPUS FUND OF THE ASSESSEE EVEN THO UGH THE DONORS HAD NOT BEEN IDENTIFIED AND WAS CONTRARY TO SECTION 11(1)(D ) OF THE I.T. ACT? IN CONTEXT OF ABOVE TWO QUESTIONS, THE HONBLE KARN ATAKA HIGH COURT HAS HELD AS UNDER: 27. THIS ADDITION RELATES TO ASSESSMENT YEAR 2001 TO 2 003. THIS ADDITION IS UNDER THE HEAD OF BUILDING FUND. THE ASSESSING AUTH ORITY TREATED THE BUILDING FUND AS REVENUE RECEIPT. ACCORDING TO THE SOCIETY E VEN IF THE ADDITION IS CONSIDERED AS INCOME, THAT SUM BEING AN INCOME OF T HE SOCIETY THEY CAN CLAIM FOR EXEMPTION UNDER SECTION 10(23C) OF THE ACT. THE REFORE THE SOCIETY SOUGHT FOR EXEMPTION. THE TRIBUNAL HELD THAT THE BUILDING FUND ARE RECEIVED SPECIFICALLY TOWARDS THE CORPUS OF THE ASSESSEE-SOCIETY FOR BEIN G APPLIED IN THE CONSTRUCTION OF THE BUILDING, THE RECEIPT IS CAPITAL IN NATURE A ND THEREFORE IT IS CREDITED DIRECTLY TO THE CORPUS FUND. THE GRIEVANCE IS, THE ASSESSING AUTHORITY HAS CONSIDERED THE SAME AS REVENUE RECEIPT AND HAS MADE ADDITION. IT IS NOT IN DISPUTE THAT THE ASSESSEE AND THE VARIOUS EDUCATION AL INSTITUTIONS RUN BY THE ASSESSEE HAVE RECEIVED SUBSTANTIAL DONATIONS. THE A MOUNT SO RECEIVED FROM THE BUILDING FUND IS NOT INCLUDED IN THE INCOME AND EXP ENDITURE ACCOUNT OF THE SOCIETY. THE AMOUNTS RECEIVED ARE ACCOUNTED UNDER T HE BUILDING FUND. BUILDING IS TO BE CONSTRUCTED ONLY FOR THE EDUCATIONAL INSTI TUTION RUN BY THE SOCIETY. THE OBJECT OF DONATION IS CHARITY IN NATURE. THEREFORE THE TRIBUNAL GRANTED THE BENEFIT OF EXEMPTION. 28. AS IS CLEAR FROM THE ORDER PASSED BY THE ASSESSING OFFICER AS WELL AS THE COMMISSIONER, THE BENEFIT OF EXEMPTION WAS NOT EXTE NDED TO THE ASSESSEE BECAUSE IT FAILED TO GIVE PARTICULARS OF THE PERSON S WHO GAVE THE SAID DONATIONS. IT IS IN THAT CONTEXT THE SAID AMOUNT WERE TREATED AS INCOME AND BROUGHT TO TAX. THE ORDER OF THE APPELLATE AUTHORITY REFERS TO THE LEDGERS AND ACCOUNTS MAINTAINED SHOWING THE SAID ADVANCES. HOWEVER, THE PARTICULARS OF THE CONTENTS OF THE SAID BOOKS ARE NOT SET OUT IN THE O RDER OF THE APPELLATE AUTHORITY. UNDER THESE CIRCUMSTANCES, IF THE SAID A DVANCES ARE RECEIVED BY THE PARENTS OF THE STUDENTS WHOSE CHILDREN WERE STUDYIN G IN THE SCHOOLS AND THE SAME IS PROPERLY ACCOUNTED FOR UNDER THE HEADING OF BUILDING FUND/INFRASTRUCTURE FUND AND THE SAID AMOUNT IF IT IS UTILIZED FOR CONSTRUCTION OF THE BUILDING WHICH IN TURN IS USED FOR IMPARTING ED UCATION, IT WOULD CONSTITUTE ITA NO.110/JP/15 & CO. NO/. 13/JP/15 SHYAMLAL PANWAR ANANDI DEVI MEMORIAL CHARITABLE TRU ST VS. ACIT(EXEMPTIONS), JAIPUR 23 CHARITY. THEREFORE THE SOCIETY WOULD BE ENTITLED TO THE BENEFIT OF EXEMPTION . BUT IT IS PURELY A QUESTION OF FACT. THEREFORE, THE PRO PER THING WOULD BE TO SET ASIDE THE FINDING AND REMAND THE MATTER BACK TO THE ASSES SING AUTHORITY, GIVING AN OPPORTUNITY TO THE ASSESSEE TO PRODUCE THE LEDGER B OOKS AND OTHER ACCOUNTS SHOWING THE RECEIPT OF SUCH PAYMENT AND UTILIZATION OF THE SAID AMOUNT FOR THE PURPOSE OF CONSTRUCTION, SO THAT ON THE AFORESAID M ATERIAL, THE ASSESSING AUTHORITY CAN PASS SUITABLE ORDERS ON MERITS. THERE FORE THE SUBSTANTIAL QUESTIONS OF LAW NOS. 6, 8 AND 10 IS NOT ANSWERED, AS THE MATTER IS REMANDED BACK TO THE ASSESSING AUTHORITY. 3.5 WE ALSO REFER TO THE DECISION OF HIGH COURT OF KARNATAKA IN CASE OF DIRECTOR OF INCOME-TAX, BANGALORE VS. SRI RAMAKRISHNA SEVA ASHRAMA [2012] 18 TAXMANN.COM 37 (KAR.) WHEREIN IT WAS HELD AS UNDER (HEAD NOTES): THE WORD 'CORPUS' IS USED IN THE CONTEXT OF THE AC T. ONE HAS TO UNDERSTAND THE SAME IN THE CONTEXT OF A CAPITAL, OPPOSED TO AN EXP ENDITURE. IT IS A CAPITAL OF AN ASSESSEE; A CAPITAL OF AN ESTATE; CAPITAL OF A TRUS T; A CAPITAL OF AN INSTITUTION. THEREFORE, IF ANY VOLUNTARY CONTRIBUTION IS MADE WI TH A SPECIFIC DIRECTION, IT SHALL BE TREATED AS THE CAPITAL OF THE TRUST FOR CARRYING ON ITS CHARITABLE OR RELIGIOUS ACTIVITIES, THEN, SUCH AN INCOME FALLS UNDER SECTIO N 11(1)( D ) AND IS NOT LIABLE TO TAX. THEREFORE, IT IS NOT NECESSARY THAT A VOLUNTAR Y CONTRIBUTION SHOULD BE MADE WITH A SPECIFIC DIRECTION TO TREAT IT AS CORPUS. IF THE INTENTION OF THE DONOR IS TO GIVE THAT MONEY TO A TRUST WHICH THEY WILL KEEP IT IN TRUST ACCOUNT IN DEPOSIT AND THE INCOME FROM THE SAME IS UTILIZED FOR CARRYING O N A PARTICULAR ACTIVITY, IT SATISFIES THE DEFINITION PART OF THE CORPUS. THE AS SESSEE WOULD BE ENTITLED TO THE BENEFIT OF EXEMPTIONS FROM PAYMENT OF TAX LEVIED. [ PARA 13] THEREFORE, WHAT ULTIMATELY REVEALS THAT, - ( I ) THE INTENTION OF THE DONOR AND ( II ) HOW THE RECIPIENT-ASSESSEE TREATS THE SAID INCOME. IF THE INTENTION OF THE DONOR IS THAT THE AMOUNT/DONATION GIVEN IS TO BE TREATED AS CAPITAL AND THE INCOME FROM THAT CAPITAL HAS TO BE UTILIZED FOR THE CHARIT ABLE PURPOSES, THEN THE SAID VOLUNTARY CONTRIBUTION IS TOWARDS THE PART OF THE C ORPUS OF THE TRUST. SIMILARLY, THE ASSESSEE AFTER RECEIVING THE AMOUNT, KEEPS THE AMOUNT IN DEPOSIT AND ONLY UTILISE THE INCOME FROM THE DEPOSIT TO CARRY OUT TH E CHARITABLE ACTIVITIES, THEN ALSO THE SAID AMOUNT WOULD BE A CONTRIBUTION TO THE CORPUS OF THE TRUST AND THE NOMENCLATURE IN WHICH THE AMOUNT IS KEPT IN DEPOSIT IS OF NO RELEVANCE AS LONG AS THE CONTRIBUTION RECEIVED ARE KEPT IN DEPOSIT AS CAPITAL AND ONLY THE INCOME FROM THE SAID CAPITAL WHICH IS TO BE UTILIZED FOR C ARRYING ON CHARITABLE AND RELIGIOUS ACTIVITIES OF THE INSTITUTE/CORPUS OF THE TRUST, FOR WHICH SECTION 11(1)( D ) IS ATTRACTED AND THE SAID INCOME IS NOT LIABLE FOR TAX UNDER THE ACT. [PARA 15] ITA NO.110/JP/15 & CO. NO/. 13/JP/15 SHYAMLAL PANWAR ANANDI DEVI MEMORIAL CHARITABLE TRU ST VS. ACIT(EXEMPTIONS), JAIPUR 24 INSOFAR AS THE ARGUMENT THAT THE PERSONS WHO MADE T HESE CONTRIBUTIONS DO NOT SPECIFICALLY DIRECT THAT THEY SHALL FORM PART OF TH E CORPUS OF THE TRUST IS CONCERNED, IT HAS NO SUBSTANCE. IN VIEW OF THE LANG UAGE EMPLOYED IN CLAUSE ( B ) OF SUB-SECTION (1) OF SECTION 11, THE REQUIREMENT I S THAT THE VOLUNTARY CONTRIBUTIONS HAVE TO BE MADE WITH A SPECIFIC DIREC TION. THE LAW DOES NOT REQUIRE THAT THE SAID DIRECTION SHOULD BE IN WRITIN G. IN THE INSTANT CASE, THOSE PEOPLE WHO HAVE PAID AMOUNTS BY WAY OF DONATIONS TH AT INCLUDE THE CHEQUE WITH A LETTER WITH A SPECIFIC DIRECTION, WHICH IS I N COMPLIANCE WITH SECTION 11(1)( B ). IN CASE IF THE CONTRIBUTIONS ARE MADE WITHOUT CH EQUES, I.E., BY CASH, AND ORAL DIRECTION HAS BEEN ISSUED TO THE TRUST TO UTILIZE THE SAID FUND FOR THE PURPOSE OF TREATING THE LEPROSY PATIENTS AND IF SUC H AMOUNTS ARE CREDITED TO THE ACCOUNT MEANT FOR IT, EVEN THEN THE REQUIREMENT OF CLAUSE ( B ) OF SUB-SECTION (1) OF SECTION 11 IS COMPLIED WITH. [PARA 17] 3.6 IF WE WERE TO READ THE RATIO EMERGING OUT OF TH E ABOVE TWO JUDGEMENTS, WHAT CLEARLY EMERGES IS TO DETERMINE THE INTENTION OF THE DONOR AND THE TREATMENT OF THE RECEIPTS BY THE DONEE TRUST. WHER E THE INTENTION OF THE DONOR IS THAT THE AMOUNT/DONATION GIVEN IS TO BE TR EATED AS CAPITAL AND THE INCOME FROM THAT CAPITAL HAS TO BE UTILIZED FOR THE CHARITABLE PURPOSES, THEN THE SAID VOLUNTARY CONTRIBUTION IS TOWARDS THE PART OF THE CORPUS OF THE ASSESSEE TRUST. IT IS NOT NECESSARY THAT THE PERSON S WHO MADE THESE CONTRIBUTIONS SPECIFICALLY DIRECT THAT THEY SHALL F ORM PART OF THE CORPUS OF THE TRUST. SIMILARLY, THE ASSESSEE TRUST AFTER RECEIVI NG THE AMOUNT, KEEPS THE AMOUNT IN DEPOSIT AND ONLY UTILISE THE INCOME FROM THE DEPOSIT TO CARRY OUT THE EDUCATIONAL ACTIVITIES, THEN ALSO THE SAID AMOUNT W OULD BE A CONTRIBUTION TO THE CORPUS OF THE TRUST AND THE NOMENCLATURE IN WHI CH THE AMOUNT IS KEPT IN DEPOSIT IS OF NO RELEVANCE AS LONG AS THE CONTRIBUT ION RECEIVED ARE KEPT IN DEPOSIT AS CAPITAL AND ONLY THE INCOME FROM THE SAI D CAPITAL IS UTILIZED FOR CARRYING ON EDUCATIONAL ACTIVITIES OF THE ASSESSEE TRUST. FURTHER, THE VOLUNTARY CONTRIBUTION/DONATION, CAN BE MADE BY THE PARENTS O F THE STUDENTS STUDYING IN THE EDUCATION INSTITUTIONS, WITH A SPECIFIC DIRECTI ON TOWARDS THE BUILDING FUND. THE DIRECTIONS COULD BE IN WRITING OR ORAL. WHERE THE DIRECTIONS ARE ORAL, WHAT ITA NO.110/JP/15 & CO. NO/. 13/JP/15 SHYAMLAL PANWAR ANANDI DEVI MEMORIAL CHARITABLE TRU ST VS. ACIT(EXEMPTIONS), JAIPUR 25 IS ESSENTIAL IS THAT THE CONTRIBUTIONS ARE PROPERLY ACCOUNTED FOR AND INCOME FROM SUCH CONTRIBUTIONS ARE UTILIZED FOR CONSTRUCTI ON OF THE BUILDING. IN LIGHT OF THESE DISCUSSIONS, GROUND NO. 1(III) AND 1(IV) T AKEN BY THE REVENUE ARE DISMISSED. 3.7 IN THE INSTANT CASE, THE LD AR HAS SUBMITTED TH AT THE VOLUNTARY CONTRIBUTIONS MADE WITH SPECIFIC DIRECTION TOWARDS BUILDING FUND ARE CORPUS DONATION WHICH CANNOT BE TREATED AS REVENUE RECEIPT S AND THE SAME IS ELIGIBLE FOR EXEMPTION UNDER SECTION 11(1)(D) OF THE ACT. I T WAS SUBMITTED THAT DURING THE YEAR, THE ASSESSEE TRUST HAS RECEIVED VOLUNTARY DONATION OF RS. 5,30,09,085/- FROM STUDENTS/ PARENTS TOWARD BUILDIN G FUND AND THIS WAS ONE TIME DONATION DISTINCT FROM THE REGULAR TUITION FE ES. THE BUILDING FUND SO RECEIVED IS NEITHER FIXED NOR IDENTICAL AMOUNT IN A LL CASES OF DONORS, SINCE IT IS VOLUNTARY. NO DONATION TOWARDS BUILDING FUND WAS R ECEIVED AT ALL FROM 269 STUDENTS. THE AMOUNT SO RECEIVED WAS PROPERLY ACCO UNTED FOR AND CREDITED DIRECTLY TO BUILDING FUND ACCOUNT OF THE ASSESSEE. IN SUPPORT, REFERENCE WAS DRAWN TO LEDGER OF BUILDING FUND ACCOUNT AVAILABLE AT APB 7-75. THERE IS NO DISCRETION WITH THE MANAGEMENT OF THE ASSESSEE TRUS T AND THE BUILDING FUND DONATIONS SO RECEIVED WERE APPLIED IN CONSTRUCTION OF BUILDINGS FOR EDUCATIONAL PURPOSES AFTER RECEIPT WHEREAS THE OTHER RECEIPT-TU ITION FEE, CHARGED SEPARATELY WAS UTILIZED FOR IMPARTING EDUCATION. I N SUPPORT, REFERENCE WAS AGAIN DRAWN TO EXPENDITURE INCURRED ON BUILDING INF RASTRUCTURE AND IT WAS SUBMITTED THAT AN AMOUNT OF RS 3,98,47,044 WAS SPEN T DURING THE YEAR ON CONSTRUCTION OF BUILDING INFRASTRUCTURE AND AS ON 3 1.3.2014, AN AMOUNT OF RS 19,16,31,482 HAS BEEN SPENT ON THE BUILDING INFRAST RUCTURE. PER CONTRA, THE LD DR SUBMITTED THAT THE STUDENTS ARE PAYING FEES TO PURSUE THEIR EDUCATIONAL QUALIFICATIONS AND THERE IS NO VOLUNTARY ELEMENT IN VOLVED IN IT RATHER IT IS ITA NO.110/JP/15 & CO. NO/. 13/JP/15 SHYAMLAL PANWAR ANANDI DEVI MEMORIAL CHARITABLE TRU ST VS. ACIT(EXEMPTIONS), JAIPUR 26 COMPULSORY FOR THEM TO PAY FEES FOR THESE COURSES. FURTHER, THE QUESTION OF GIVING SPECIFIC DIRECTION DOES NOT ARISE AS THIS IS NOT THE DONATION BUT THE FEES RECEIVED FOR ACQUIRING EDUCATIONAL QUALIFICATIONS. MERE ASSIGNING THE NAME OF BUILDING FUND TO RECEIPTS OF REVENUE NATURE DOE S NOT WARRANT THAT THESE RECEIPTS WILL BE CONSIDERED AS CAPITAL RECEIPTS. S TUDENTS DO NOT HAVE CHOICE TO DONATE THE AMOUNT FOR BUILDING FUND WITH SPECIFIC DIRECTIONS. THERE IS NO DONOR/DONEE RELATIONSHIP WHICH IS PERQUISITE FOR D ONATION BUT IN THE INSTANT CASE THE STUDENTS ARE GETTING THEIR EDUCATIONAL QUA LIFICATION IN LIEU OF PAYMENT MADE TO INSTITUTION AND THE AMOUNT IN QUESTION IS N OTHING BUT THE FEES RECEIVED FROM STUDENTS IN THE NAME OF BUILDING FUN D. IT WAS FURTHER SUBMITTED THAT NO SEPARATE BOOKS OF ACCOUNTS ARE BE ING MAINTAINED FOR THE USE OF THIS FUND I.E. NO SEPARATE ACCOUNT IN THE FORM O F BUILDING FUND IS BEING MAINTAINED IN ANY BANK SO THAT ITS USE CAN BE ASCE RTAINED. ASSESSEE HAS FAILED TO ESTABLISH THAT THESE FUNDS ARE BEING UTILIZED FO R THE SPECIFIC PURPOSE AND THE MANAGEMENT IS FREE TO USE THIS FUND AS PER THEIR OW N SUITABILITY. A DONATION WILL BE TREATED AS CORPUS DONATION ONLY IF IT IS AC COMPANIED BY A SPECIFIC WRITTEN DIRECTION OF THE DONOR. IN THE ABSENCE OF ANY WRITTEN DIRECTION OF THE DONOR, A CONTRIBUTION OF GRANT CANNOT BE TRANSFERRE D TO CORPUS FUND. 3.8 IN OUR VIEW, WHAT IS RELEVANT TO DETERMINE IS W HETHER THERE IS A VOLUNTARY CONTRIBUTION/DONATIONS BY THE STUDENTS/PARENTS WITH A DIRECTION TO UTILISE THE SAME TOWARDS CONSTRUCTION OF THE BUILDING INFRASTRU CTURE AND SECONDLY, HOW THE SAME HAS BEEN ACCOUNTED FOR AND UTILISED BY THE ASSESSEE TRUST. HOWEVER, GIVEN THE CONTRADICTORY POSITION TAKEN BY THE ASSES SEE AND THE REVENUE AND IN ABSENCE OF ANY TANGIBLE MATERIAL ON RECORD PRODUCED BY EITHER OF THE TWO PARTIES, IT WOULD BE IN INTEREST OF JUSTICE AND FAI R PLAY THAT THE MATTER IS REMANDED BACK TO THE ASSESSING OFFICER WHO SHALL TA KING INTO CONSIDERATION THE ITA NO.110/JP/15 & CO. NO/. 13/JP/15 SHYAMLAL PANWAR ANANDI DEVI MEMORIAL CHARITABLE TRU ST VS. ACIT(EXEMPTIONS), JAIPUR 27 LEGAL PROPOSITIONS AS LAID DOWN BY THE VARIOUS COUR TS AS DISCUSSED ABOVE, WILL EXAMINE THE MATTER A FRESH. WE ACCORDINGLY SET-ASI DE THE MATTER RELATING TO ELIGIBILITY TO CLAIM BENEFIT OF SECTION 11(1)(D) OF THE ACT TO THE FILE OF THE ASSESSING OFFICER. HENCE, REVENUES GROUND NO. 1( II) AND ASSESSEES GROUND NO. 2(A) ARE ALLOWED FOR STATISTICAL PURPOSES. 4. NOW COMING TO GROUND NO. 2 & 3 OF THE REVENUES APPEAL AND GROUND NO. 2(B) OF ASSESSEES CROSS OBJECTION, THE RELEVAN T FINDINGS OF THE LD CIT(A) ARE AS UNDER: I HAVE DULY CONSIDERED AOS CONTENTION AND APPELL ANTS SUBMISSION, PERUSED THE MATERIALS ON RECORD AND FACTUAL MATRIX OF THE C ASE AND ALSO APPLICABLE LEGAL POSITION. IT IS SEEN THAT APPELLANT IS ENGAGED IN CHARITABLE ACTIVITIES AND ACCORDINGLY PREPARED ITS STATEMENT OF AFFAIRS INSTE AD OF P&L ACCOUNT. FURTHER ON THE BASIS OF TRUST DEED DATED 24 TH NOVEMBER,2001 THE APPELLANT TRUST WAS GRANTED REGISTRATION U/S 12AA OF THE IT ACT, 1961. THE INCOME OF THE APPELLANT TRUST IS EXEMPT U/S 11(1)(I)/10(23C) OF THE IT ACT AND ANY ADDITION MADE TO THE INCOME IS ALSO EXEMPT IF THE SURPLUS AND ADDITION S O MADE IS NOT MORE THAN 85% OF GROSS RECEIPT AS PROVIDED UNDER CLAUSE (A) TO TH IRD PROVISO TO SECTION N 10(23C) OF IT ACT, 1961. THEREFORE, WITHOUT CALCU LATING THE SURPLUS AFTER APPLICATION OF INCOME ON FIXED ASSETS FOR CARRYING OUT EDUCATIONAL ACTIVITIES, AOS ACTION IS NOT JUSTIFIED IN MAKING ADDITION OF RS. 11,06,513/- ON ACCOUNT OF PAYMENT OF INTEREST AND RS. 13,862/- ON ACCOUNT OF TDS, THEREFORE IT CANNOT BE SUSTAINED. ASSESSEE GETS RELIEF RS. 11,06,513/- AN D RS. 13,862/-. 4.1 THE ASSESSEE IN SUPPORT OF THE ORDER OF THE LD CIT(A) HAS TAKEN GROUND NO. 2 IN ITS CROSS OBJECTION AND SUBMITTED THAT AS AGAINST GROSS RECEIPTS OF RS. 7,67,52,534/- ON ACCOUNT OF FEE AND OTHER INCOME (O THER THAN CORPUS DONATIONS TOWARDS BUILDING FUND), THE EXCESS OF INC OME OVER EXPENDITURE WAS RS.91,633/-. AS PER PROVISIONS OF SECTION 11(1) OF THE ACT UPTO 15% OF GROSS RECEIPT SHALL NOT BE INCLUDED IN TOTAL INCOME. THE DISALLOWANCE OF RS. 11,06,513/- AND RS. 13,862/-IF INCLUDED IN SURPLUS, WILL BE FAR LESS THAN 15%. ITA NO.110/JP/15 & CO. NO/. 13/JP/15 SHYAMLAL PANWAR ANANDI DEVI MEMORIAL CHARITABLE TRU ST VS. ACIT(EXEMPTIONS), JAIPUR 28 4.2 AS WE HAVE HELD ABOVE, THE ASSESSEE TRUST IS HE LD ELIGIBLE FOR THE BENEFITS OF SECTION 11 AND 12 AS IT IS DULY REGISTERED UNDER SECTION12AA OF THE ACT, WE DO NOT SEE ANY INFIRMITY IN THE ORDER OF THE LD CIT (A). HENCE, GROUND NO. 2 & 3 OF THE REVENUE ARE DISMISSED AND GROUND NO. 2(B) OF THE ASSESSEES CO IS ALLOWED. IN THE RESULT, THE APPEAL FILED BY THE REVENUE AND CROSS OBJECTION BY THE ASSESSEE IS PARTLY ALLOWED FOR STATISTICAL PURPOSES . ORDER PRONOUNCED IN THE OPEN COURT ON 01/11 /2016. SD/- SD/- ( KUL BHARAT ) (VIKRAM SINGH YADAV) U;KF;D LNL;@ JUDICIAL MEMBER YS[KK LNL;@ ACCOUNTANT MEMBER JAIPUR DATED:- 01/11/2016 PILLAI VKNS'K DH IZFRFYFI VXZSF'KR@ COPY OF THE ORDER FORWARDED TO: 1. VIHYKFKHZ@ THE APPELLANT- THE ACIT(EXEMPTIONS), JAIPUR 2. IZR;FKHZ@ THE RESPONDENT- SHYAMLAL PANWAR ANANDI DEVI MEMORI AL TRUST, JAIPUR 3. VK;DJ VK;QDR@ CIT (EXEMPTION), JAIPUR 4. VK;DJ VK;QDRVIHY@ THE CIT(A)-I, JAIPUR 5. FOHKKXH; IZFRFUF/K] VK;DJ VIHYH; VF/KDJ.K] T;IQJ@ DR, ITAT, JAIPUR 6. XKMZ QKBZY@ GUARD FILE (ITA NO. 110/JP/2015 & CO. NO. 13/JP/15) VKNS'KKUQLKJ@ BY ORDER, LGK;D IATHDKJ@ ASSISTANT. REGISTRAR ITA NO.110/JP/15 & CO. NO/. 13/JP/15 SHYAMLAL PANWAR ANANDI DEVI MEMORIAL CHARITABLE TRU ST VS. ACIT(EXEMPTIONS), JAIPUR 29