ITAT grants exemption under section 10(23C)(iiiad) for corpus donation, deeming it non-taxable income.

The ITAT allowed the appeal, setting aside previous orders and directing the Assessing Officer to grant exemption to the assessee under section 10(23C)(iiiad) of the Income Tax Act. The corpus donation was deemed not taxable income and excluded from the total receipts, leading to the eligibility for exemption.

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Issues:
1. Addition of corpus donation to total receipts
2. Disallowance of deduction under section 10(23C)(iiiad)
3. Eligibility for exemption under section 10(23C)(iiiad)

Analysis:

Issue 1: Addition of Corpus Donation to Total Receipts
The case involved an appeal against the order of the Ld. CIT(A) regarding the addition of a corpus donation to the total receipts of the assessee. The Assessing Officer noted that the assessee had received a corpus fund along with revenue receipts, leading to gross receipts exceeding Rs. 1 crore. As the assessee was not registered under section 12AA or section 10(23C)(vi) of the Income Tax Act, the provision of section 10(23C)(iiiad) was deemed inapplicable. Consequently, the corpus fund amount was added to the income of the assessee.

Issue 2: Disallowance of Deduction under Section 10(23C)(iiiad)
The assessee contended that the corpus fund was received for specific purposes and should not be considered part of the total receipts. Referring to relevant case law, the assessee argued that corpus donations are capital receipts and not taxable even without exemption under section 12A of the Income Tax Act. However, the Ld. CIT(A) upheld the addition of the corpus fund to the total receipts, resulting in the disallowance of the deduction under section 10(23C)(iiiad).

Issue 3: Eligibility for Exemption under Section 10(23C)(iiiad)
The counsel for the assessee cited precedents where similar corpus donations were not considered taxable income. Relying on decisions from various ITAT benches, including Delhi, Agra, and Calcutta, it was argued that corpus donations meant for capital expenditure should not be included in the annual receipts of an educational institution. The ITAT, following previous rulings, concluded that the corpus fund, intended for specific capital expenses, should not be part of the educational institution's annual receipts. Consequently, the assessee was granted exemption under section 10(23C)(iiiad) of the Income Tax Act.

In conclusion, the ITAT allowed the appeal of the assessee, setting aside the orders of the authorities below and directing the Assessing Officer to grant exemption to the assessee under section 10(23C)(iiiad) of the Income Tax Act.

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