AI OCR 
TaxTMI 
TaxTMI 
TaxTMI 
2011 (7) TMI 580
X X X X Extracts X X X X
X X X X Extracts X X X X
....have considered the fact that the assessee has failed to furnish confirmation letters from the donors in respect of major portion of the donations received." 3. The facts relating to the case are stated in brief. The assessee society was formed under the Societies Registration Act on 27-12-1967 with the main objective of imparting of education. It was granted registration as a charitable institution under section 12A of the Income-tax Act by the Learned CIT, Hyderabad on 4-11-1974. In pursuance of its objectives, the assessee society is running following educational institutions in and around Guntur. (a) JKC College (b) RVR & JC College of Engineering (c) RVRR College of Education (d) Dr. KLP Public School (e) JC College of Law The return filed by it for the assessment year 2000-01 was processed under section 143(1) by accepting the NIL income disclosed by it. In that year, the assessee had received donations towards "Corpus Fund" in the following educational institutions: (a) JKC College - 14,35,000 (b) RVR & JC College of Engineering - 5,24,998 (c) RVRR College of Education....
X X X X Extracts X X X X
X X X X Extracts X X X X
....treated the said corpus donations as part of the total receipts of the assessee. 3.2 The assessment of the assessee for the assessment year 2006-07 was also pending at the relevant point of time. Consistent with the view taken in the above said reassessment proceeding, the Assessing Officer completed the assessment of the assessee for the assessment year 2006-07 also by treating the "Corpus donations" received in that year as part of total receipts of the assessee. 3.3 Aggrieved by the orders passed by the Assessing Officer, the assessee carried the matter in appeal before ld. CIT(A), who in his common order, deleted the addition related to the "corpus donations" made in both the years with the following observations: "3.2 I have considered the submissions made by the appellant, gone through the assessment order and heard the Authorised Representative in person. It is crystal clear that the donations were received voluntarily and for the purpose of corpus. It is also seen from the records that the mode of receipt was through banking channels. As seen from the records, no capitation fee was collected by the management and as such no violations of any sort took place. There was no....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ourse of reassessment proceeding, the assessee society has given detailed explanations along with supporting documents and accordingly the Assessing Officer appears to have been convinced that the impugned donations receipts are not capitation fee, though he has not expressly stated so. However, the very fact that the Assessing Officer has granted exemption to the assessee under section 11 of the Act clearly brings out the fact that he has treated the assessee society as a charitable institution and he was further convinced that the assessee society has not indulged in the activity of collecting "Capitation fee". However the Assessing Officer alternatively chose to proceed to treat the "Corpus donations" as ordinary receipts and hence added the "Corpus donations" to the total receipts of the assessee. It is pertinent to note that the Assessing Officer did not give any reason to support his action. In the grounds before us, the revenue has raised the question of "Capitation fee". However, as stated earlier, the case of the Assessing Officer is not that of "Capitation fee", but he was of the view that the donations received by the assessee are not "Corpus donations". Now the real que....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... trust wholly for charitable or religious purposes". For the sake of convenience, we extract below sub-section (1) of section 12 : "Any voluntary contributions received by a trust created wholly for charitable or religious purposes or by an institution established wholly for such purposes (not being contributions made with a specific direction that they shall form part of the corpus of the trust or institution) shall for the purposes of section 11 be deemed to be income derived from property held under trust wholly for charitable or religious purposes and the provisions of that section and section 13 shall apply accordingly". A careful reading of the above said section would reveal that the voluntary contributions ("Donations" under common parlance) are divided into two categories under the Income-tax Act viz., (a) Voluntary contributions made with a specific direction that they shall form part of the corpus of the trust or institution. (b) Voluntary contributions made without any such direction. The first category of voluntary contributions, i.e., those referred in (a) above are called "Corpus donations" in common parlance. 5.2 Under the Income-tax Ac....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ific direction that his donation shall form part of corpus of the trust, then such voluntary contributions are classified as "Corpus donations" exempt under section 11(1)(d) of the Act. Since the Act refers to the specific direction of the "Donor", the option, whether a donation would be for the corpus or not, lies with the donor. Thus it is clear that the classification of "Voluntary contributions" does not depend upon the sweet will and pleasure of the donee trust/institution. Hence, neither the assessee nor the Assessing Officer is authorized to change the character of voluntary contribution from "Corpus" to "ordinary contribution" or vice versa. It is only the prerogative and privilege of the concerned donor to specify the purpose for which the voluntary contributions are given. However, we may hasten to mention here that any trust/institution is not precluded from soliciting donations towards the corpus of the trust/institution. In the case of St. Ann's Home for the Aged v. ITO [1982] 13 TTJ (Bang.) 185, it has been held that the voluntary contributions expressly received for construction of a building were corpus donations, since they were received and utilized for a capital ....