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''7 Ground No.1: This Ground has been raised against the action of the AO in beating The amount of Rs 2,27,78,950/--on account of development fund as a revenue receipt instead of a corpus donation or a capital receipt.

7.1 I have considered the assessment order and the submissions of the appellants, The basic premise of the AO has been that the receipt of development fees along with the tuition fans is not voluntary in nature since all the children have to pay this amount it is by way of a compulsory donation made by the children towards the school and does not qualify as a voluntary contribution. The school had collected this amount from all the children of the school The appellant on the other hand has stated that the money received by the school on account of the development fee, it utilized only for the purposes of the infrastructure Development and is thus treated as a capital receipt and taken directly ITA NO. 201/JP/2024 ACIT (EXEMPTIONS), CIRCLE-JAIPUR VS NAVRATAN VIDHA MANDIR SHIKSHA SAMITI to the Balance Sheet. Further that the treatment of development fees has in the past been accepted by the AO in the assessment completed 143(3) as capital receipts in AY 10-11 and AY 11-12 The appellant has relied on numerous decisions in support of its contentions 7.2 I am inclined to agree with the view of the appellant on this issue. From the various decisions on the issue what emerges is that what is required to be seen is not the manner in which the money is collected but rather the manner in which the sums are utilized. The Coordinate Bench of the ITAT in the case of ACIT vs JSS Mahavidyapeetha in ITA No 735/Bang/2012 has stated that the litmus Test of charitable institutions is the application of the funds and not the colour of the contribution. It has stated that the question whether the donations were voluntary or not becomes relevant and what becomes relevant is the application of such conditions for the objectives of the trust which are admittedly charitable if the development fee is used for the purposes of creating infrastructure then the same would be treated as a capillal receipt 7.3 Applying the test of application to the facts of the present case it is seen that application of the development fees collected is as under:-

From the above table, it can be seen that the Development fees is utilized in creation of capital asset and therefore the same cannot be treated as revenue receipt. In earlier years also, such development fees is accepted by the AO in assessment completed u/s 143(3) as capital receipt for which the ld. AR of the assessee has submitted the Copy of assessment orders for AY 10-11 & AY 11-12 is at PB 46 49.

3.4.6 It is further noted that co-ordinate bench of Banglore in case of ACIT vs. JSS Mahavidhyapeetha in ITA No. 735/Banglore/2012 has stated that the litmus test of charitable institution is the application of funds and not the colour of the contribution. It has stated that the question whether the donations are voluntarily or not becomes irrelevant and what becomes relevant is the application of such contributions on the objects of the trust which are admittedly charitable. If the developer fees is used for the ITA NO. 201/JP/2024 ACIT (EXEMPTIONS), CIRCLE-JAIPUR VS NAVRATAN VIDHA MANDIR SHIKSHA SAMITI purpose of creating infrastructure then the same would be treated as a capital receipt. We further take into consideration the decision of ITAT Jaipur bench in the case of Global Institute of Technology Society vs. DCIT(E) in ITA No. 1066/JP/2018 order dt.05.11.2018 after relying on the decision of the Hon'ble Supreme Court in case of Modern Schools vs. Union of India at Page 23 held as under:-

"Addition of development receipt/fee treating the same as revenue receipt - Held that:- The development fee received by the assessee from the students as per the guidelines fixing the fee structure by the State Government for the technical institutions and applying the other conditions as specified in the orders of the State Govt., is capital in nature and not revenue . Accordingly, we delete the addition made by the Assessing Officer on this account."

17. The Co-ordinate Bench of ITAT in the case of ACIT vs. JSS Mahavidyapeetha in ITA No. 735/Bang/2012 held the view that litmus test of charitable institution is the application of funds and not the colour of the contributions. It was held, "The AO based his conclusion on the presumption that the contribution to development fee was not a voluntary contribution the question whether the donations were voluntary or not becomes irrelevant and what becomes relevant is the application of such contributions for the objections of the trust which are admittedly charitable. The application of such contributions for objects of the trust is not in dispute."

As per the A.O., money was lent by the assessee continuously to a party who was not paying any interest. The said party had not given any security also. Therefore, he denied exemption claimed by the assessee under Section 11 of the Act and completed the assessment. In its appeal before CIT(Appeals), argument of the assessee was that M/s SPK MAC Charitable Trust, to which loan was given, was also an organization having registration under Section 12AAof the Act and objects of both the organizations were similar. Reliance was also placed on the decision of Hon'ble Delhi High Court in the case of DIT (Exemption) v. Acme Educational Society (326 ITR 146). It was decided by Hon'ble Delhi High Court held that interest-free loan given by the assessee- society to another society, having similar objects and registered under Section 12AA of the Act, did not violate Section 13(1)(d) read with Section 11(5) of the Act, since such loans were neither investments nor deposits. No doubt, the assessee here had mentioned the amounts given to M/s SPK MAC Charitable Trust as "deposits" in its accounts, submission of the assessee that it was nothing but a loan given to the said Trust, for the purpose of its educational objects, has not been rebutted by the Revenue. Therefore it is held that CIT(Appeals) was justified in directing the A.O. to grant exemption claimed by the assessee under Sections 11 and 12 of the Act.