AI Structured Summary
Not yet generated for this judgment
Judgment
PER SHRI SUDHIR KUMAR, JM :
This appeal by the Revenue is directed against the orders of the Commissioner of Income-tax (Appeals)-3, Gurgaon [hereinafter referred to as “Ld.CIT(A)”] vide order dated 04-07-2023 relevant to assessment year 2020-21.
The Revenue has raised the following ground in appeal as under:
1.Whether the CIT(A) has erred in law and on facts in holding that the amount of Rs. 13,32,42,321/- received towards the 'Development Fund' constitutes a corpus donation within the meaning of section 11(1)(d) of the Income Tax Act, 1961, instead of treating it as a revenue receipt.
2.Whether the CIT(A) was justified in holding that the Development Fund is capital in nature, ignoring the facts that the said fund was incidental to and directly connected with the regular activities of the assessee’s educational institutions and, therefore, forms part of the revenue receipts.
3.Whether the CIT(A) has erred in not appreciating that the Development Fund was collected compulsorily from students alongwith tuition fees as part of the prescribed fee structure, thereby lacking the voluntary and specific direction required for exemption under section 11(1)(d) of the Act.
4.Whether the CIT(A) failed to consider that, in the absence of an expenses written direction from each contributor, the essential condition for treating the contribution as corpus under section 11(1)(d) was not satisfied, as laid down in various judicial pronouncements.
5.Whether the CIT(A) was correct in invoking the principle of consistency, despite the AO having remained the issue based on fresh facts and settled judicial precedents highlighting the compulsory nature of the Development Fund collection.
6.Whether the CIT(A) has erred in deleting the addition of Rs. 13,32,42,321/- made by the AO by treating the Development Fund as revenue receipt, without establishing that all statutory conditions under section 11(1)(d) were duly fulfilled by the assessee.
7.Whether, in the facts and circumstances of the case, the Ld. CIT(A) was justified in granting relief to the assessee without properly appreciating the evidences on record and the findings of the AO.
The brief facts of the case are that the assessee is a charitable trust registered u/s. 12AA and is engaged in running various educational institutions including engineering and medical colleges as well as schools majority in Haryana. Assessee’s case for AY 2020-21 was taken up for scrutiny u/s. 143(3) and vide order dated 29.9.2022 passed u/s. 143(3), the AO held Development Fund of Rs. 13,32,42,321/- to be part of revenue receipts. This development fees was otherwise categorized as corpus receipts by assessee as it had been collected from students for specific purpose for incurring capital expenditure and was also utilized during the year for the said purpose. Against the said action, the assessee appealed before the Ld. CIT(A), who rejected the action of the AO and held development fund to be part of corpus receipts and delete the additions. Aggrieved, revenue is in appeal before us.
We have heard the rival contentions and perused the records. Before us, it was submitted by the Ld. Counsel for the assessee that Ld. CIT(A) has passed a well reasoned order by relying upon the order dated 27.6.2022 in assessee’s own case in ITA No. 1966-1972/Del/2021 for AY 2009-10 to AY 2015-16, wherein the Tribunal had held that development fees were to be categorized as corpus receipts u/s. 11(1)(d) and not as revenue receipts. It was further submitted that the aforesaid order of the Tribunal was accepted by the Department and no appeal against the same order has been filed before the Hon’ble High Court. Ld. DR could not controvert the aforesaid proposition. We find that the Tribunal vide its aforesaid order has observed as under:-
22.In the instant case, the Development Fee has been directly taken to corpus account as capital receipt u/s. 11(1)(d) and has also invested in the fixed asset in the year.
23.Ergo, we hold that the Development Fee is to be treated as corpus fund allowed to be taken as capital receipt.
Respectfully following the aforesaid precedent, we do not see any reason to interfere with the findings of the Ld. CIT(A), thus, we uphold the action of the Ld. CIT(A) and accordingly, dismiss the Revenue’s appeal.
In the result, the appeal of the Revenue is dismissed.