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Showing contexts for: Infrastructure Development in Akshay Educational & Social Welfare ... vs Dcit, Circle-3, Gaya on 11 January, 2023Matching Fragments
2. For that the ld. CIT(A) has erred in holding that there was no specific direction by the donor towards utilization of the fund so donated.
3. For that the ld. CIT(A) has erred in holding that though the contribution in question has been received towards infrastructure development, no activity on this account has been carried out.
I.T.A. No.03/Pat/2017 Assessment Year: 2011-12 Akshay Educational & Social Welfare Charitable Trust
4. During the assessment proceedings, the Assessing Officer observed that the assessee had shown Rs.57,25,000/- as 'development fund' in his 'receipt and payment account' but it has not credited this amount in his 'Income and Expenditure Account'. The assessee trust claimed that the said amount was donated by Association Akshy Patriarca, San Jose, CA, US for infrastructural development and other development and further in case of other necessity, the trustees in consultation with the Chairman can use the fund for the development of trust activities. The assessee trust, therefore, claimed that the said donation was towards the corpus fund of the trust with a specific direction to be used for infrastructural development and, therefore, the same was a capital receipt, not taxable even in the absence of registration u/s 12A of the Act. However, the Assessing Officer did not agree with the above contention of the assessee and held that the exemption for donation received towards corpus fund was available to a trust only if the same was registered u/s 12A of the Act.
The above said order of the Hon'ble Tribunal is squarely applicable to the facts of the appellant's case. The donation has been received for a specific purpose as would be evident from the confirmation of the donor i.e. for "infrastructural development and other development work" and thus forms part of corpus. The CIT(A) has also accepted the fact that the contribution was received towards infrastructure development as would be evident from findings at page-4 (just above para 3.7) of the order wherein it has been held that "the facts remain that though the contribution in question has been received towards infrastructure development no activity on this account whatsoever has been carried out though the fund was received well before the closure of the financial year." However, adverse inference was drawn merely on the ground of non-utilization of fund in the year under consideration. There is no requirement under law to utilize the corpus fund and/or donation for specific purpose in the year of receipt and the fact of non-utilization in the year of receipt will not convert a capital receipt / corpus fund/ donation received for specific purpose into a revenue receipt so as to attract taxation. The Ld. CIT has noticed the fact of utilization of the fund in A.Y. 2012-13 to the extent of Rs.36,42,963/- and utilization of the remaining in subsequent year for infrastructure development i.e. construction of the building in para 3.4 page-3 of its order.
This further certified 80,000 Euros (equivalent to Rs.57,25,000) sent by way of donation during the year 10-11 for infrastructural development and other development work, and in case of other necessity the Trustee in consultation with the Chairman can use the fund for the development of Trust activities."
16. A perusal of the aforesaid confirmation reveals that firstly it has been mentioned that the said donor has agreed to extend financial I.T.A. No.03/Pat/2017 Assessment Year: 2011-12 Akshay Educational & Social Welfare Charitable Trust support and sponsor the program and project of the assessee and to be utilized exclusively for the purpose of the trust activities. However, in the second part, it has been mentioned that 80,000 euros (equivalent to Rs.57,25,000) were sent by way of donation for infrastructural development and other development work and in case of other necessity, the trustee in consultation with the Chairman can use the fund for the development of trust activities. Therefore, it has been provided that the trustees in consultation with the chairman can use the fund for trust activities. Hence, it cannot be said that it is a clear direction that the donation will form part of the corpus fund, rather, a liberty has been given to use it for trust activities in consultation with the chairman. Under such circumstances, even otherwise, the said donation, in our view, does not strictly conform as the donation towards corpus fund.