AI Drafter 
TaxTMI 
TaxTMI 
2013 (4) TMI 761
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....hese and any other grounds that may be urged at the time of hearing, the appeal may be allowed." 2. The assessee is a trust assessed in the status of AOP. It is an educational institution established in the year 1960. In the course of assessment proceedings, the AO while scrutinizing the books of accounts noticed that the assessee had collected a 'development fee' at the time of admission of new students to the schools & colleges run by the Assessee. According to the AO, u/s. 11(1)(d) of the Act, income in the form of voluntary contributions made with a specific direction that they shall form part of the corpus of the trust or institution, is exempt from tax. Similarly, income derived from property held under trust wholly for charitable or religious purposes is alone exempt. Section 12(1) of the Act provides that voluntary contributions received (other than corpus donation) by a trust created wholly for charitable or religious purposes shall be deemed to be the income derived from property held under trust as envisaged u/s. 11(1) of the Act. 3. According to the AO, the above statutory provisions clearly indicate that exemption is allowable only in respect of income de....
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.... It was argued that the decision of Supreme Court in the case of Islamic Society (supra) applies to professional courses only. 5. The assessee also relied on the decision of the Tribunal in the case of Sri Adichunchanagiri Mahasamsthana Muth and Sri Adichunchanagiri Shikshana Trust in ITA No.1258 & 1259(BNG)/08 dated 31.12.2008. In this case, relying on the decision of Hon'ble Supreme Court in the case of Ahmed G.H. Ariff 76 ITR 471 (SC), it was observed that carrying on the educational activities which are approved partake the character of property and the income derived therefrom becomes income from 'property held under trust'. It was held in this case that the contributions were treated as involuntarily will definitely be capital receipts not liable to tax. In the alternative, on the facts and circumstances of the case, the same are to be treated as 'income derived from property held under trust'. Even if the income is assessed under the head 'other sources', even then a charitable trust registered u/s 12A is entitled to exemption u/s 11 for the income so assessed under 'other sources'. 6. Reference was also made to the judgment of the H....
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....h is just and proper." 7. Reference was also made to the decision of the ITAT Chennai Bench in the case of Assistant Commissioner of Income Tax Vs. Balaji Educational & Charitable Public Trust (2011) 48 SOT (Chennai) 281. In the aforesaid decision, the Tribunal while dealing with an identical case of the Assessee as in the present case, observed that there is no concept of involuntary contributions in scheme of taxation of charities. The only distinction recognized by law is the voluntary contributions to be treated as income under s. 12 and the corpus donations to be treated as capital receipt under s. 11(1)(d). The corpus donations are not generally in the nature of income. The Voluntary contributions are taxable only if not applied for charitable purposes. The tribunal thereafter examined the position with regard to exemption u/s.11 when contributions are treated as not voluntary in the following words: "40. Even if the contributions are treated as not voluntary what could be the legal consequence of that finding? Whether the Revenue will treat such involuntary contributions as capital and give exemption from taxation? No, it will not. The Revenue will still find such invo....
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....vations of the CIT(A) in this regard are extracted below:- "10. I have considered the arguments of the appellant and the observations of the AO in the assessment order and the remand report. The admitted facts are that the appellant is a very reputed society running various educational institutions throughout the length and breadth of Karnataka including rural areas. The society is known for its activities and services in the field of education and even the AO acknowledges this fact. The only issue now before me is whatever the donations collected from students in unaided courses and institutions partake the character of involuntary capitation fee received and whether the appellant is not eligible for exemption on these amounts. Another undisputed fact is that these donations are used for the purpose of the activities of the trust. There are two alternative arguments mooted by the appellant in its support. Firstly, the appellant is eligible for exemption in view of various decisions cited supra including the recent decisions of jurisdictional Tribunal in the case of Adichunchanagiri Mahasamsthana cited supra and also other decisions of jurisdictional High Courts. In view of thes....