2017 (10) TMI 1619 - AT - Income Tax

Tribunal upholds assessee's exemption under section 11(1)(d) for building fund amount.

The Deputy Commissioner of Income Tax (Exemptions), Kochi Versus Chinmaya Mission Educational & Charitable Trust, Greater Cochin

The Deputy Commissioner of Income Tax (Exemptions), Kochi Versus Chinmaya Mission Educational & Charitable Trust, Greater Cochin - TMI Issues:1. Exemption of donations towards building fund under section 11(1)(d) of the Income Tax Act, 1961.Analysis:The appeal in this case concerns the deletion of an addition of Rs.52,66,500 on account of donations received during the assessment year 2011-12 towards the building fund. The primary issue revolves around whether the conditions under section 11(1)(d) of the Income Tax Act were satisfied by the assessee to claim the building fund as exempted. The Assessing Officer disallowed the claimed amount as exempt income, stating that specific directions as described in the Act were not met, and the contributions were voluntary. The assessee contended that the donations were corpus funds specifically for the building development fund, as evidenced by donation receipts issued. The CIT(A) allowed the plea, emphasizing that the sum of Rs.2,53,18,335 represented aggregate contributions over multiple years, while only Rs.52,66,500 was received during the relevant assessment year.The key contention during the appeal was whether the donations were given to the Corpus Fund, as the Revenue argued that the assessee failed to prove this aspect due to the absence of a separate account. The Revenue claimed that the Assessing Officer was justified in denying the claim under section 11(1)(d) of the Act. However, the assessee maintained that the donors' contributions were specifically for the building fund, supported by detailed accounts and receipts. The Tribunal examined the details provided by the assessee, noting that the contributions were earmarked for infrastructure development, particularly building construction. Citing judicial precedents, including the Karnataka High Court's decision, the Tribunal concluded that the assessee satisfied the conditions for corpus fund donations under section 11(1)(d). The Tribunal upheld the CIT(A)'s decision, emphasizing that the amount of Rs.52,66,500 was received solely for the building fund during the concerned assessment year, thus entitling the assessee to exemption under the Act.In conclusion, the Tribunal dismissed the Revenue's appeal, affirming the CIT(A)'s decision to delete the addition of Rs.2,53,18,335, and upholding the assessee's entitlement to exemption under section 11(1)(d) for the specific amount received towards the building fund during the relevant assessment year.