TaxTMI 
TaxTMI 
2017 (12) TMI 354
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....n of the record and particular of the balance sheet noticed that the assessee has shown development fund of Rs. 47,90,56,305/- as on 31.03.2011 and Rs. 59,23,06,694/- on 31.03.2012 showing an increase of Rs. 11,32,50,389/- in the year under consideration. The AO asked to the assessee to explain as to why the development fund has not been routed through the income and expenditure account and also to explain the nature of receipt with documentary evidence. In response the assessee submitted that the amount in question were not credited in the profit and loss account but directly credited to the balance sheet and was claimed as capital receipt exempt u/s 12 of the Income Tax Act. The assessee further explained the contribution as development fund made by the students were in consideration of services to be rendered by the school to student and therefore, these contributions were in the nature of capital receipt and was used in creating fixed assets, like purchase of school land, construction of school building etc. Thus the assessee contended before the AO that the contribution received by the assessee from the parents/students was not current income but capital receipt exempt u/s 12 ....
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....rcumstances of the case and in law the CIT(A) has erred in allowing depreciation without appreciating the fact that the assessee has not carried out the business activities but the receipts utilized for charity. As there was no business activities the claim of depreciation was not allowable, the depreciation is allowable only in the case of business or profession or in the case of 'income from other sources.' 5) Any other question of law as deemed fit in the facts and circumstances of the case may also be framed before the Hon'ble Tribunal in the interest of justice." 3. Before us, the ld. DR has submitted that the development fund is received from the students as a part of other fees on account of tuition fees and term fees, therefore, there is no difference in the nature of development fund and other fees received by the assessee from the students. It is an admitted fact that the development fund is received from the students against the services to be rendered as such it is a fees against service and no voluntary contribution by the students or parents but it is compulsion of student to pay development fund if he or she wants to study in the school. The ld. DR has thus cont....
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....n 11 of the Income Tax Act. The ld. AO has relied upon the decision of Hon'ble Delhi High Court in case of DIT(E) Vs. National Association of Software & Services 345 ITR 362 and submitted that the Hon'ble High Court has held that one time admission fee paid by members who are aware that it could be spent by assessee only for acquiring capital asset is corpus donation not taxable income. The ld. DR thus contended that the assessee has been received development funds from the student apart from the tuition fees with the clear understanding that it is to be used for creation of capital asset necessary for achieving the object of the assessee society. Therefore, the development fees of Rs. 11,32,50,389/- received during the year is directly credited to the development fund account and not routed through the income & expenditure account. The ld. AR has further contended that the development fund fees received by the assessee is utilized only for acquiring the fixed asset and thus the fund utilized in creation of capital asset cannot be treated as revenue receipt. He has also relied upon the various decision of this Tribunal including the decision dated 01.11.2016 of Coordinate Bench of ....
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....for the students but it is compulsory for the students without any discretion or fee will to decide whether to pay or not to pay the development fund fees. Hence, it is a charge by the assessee on the students without having any element of any discretion on the part of the students or parents either to the quantum of fee or the specific purpose as well as the option of making payment or not. Therefore, when this payment is not optional or voluntary on the part of the students but it is compulsory charge in the nature of fee for studying and continuing the study in the institutions of the assessee, then this payment in the name of development fee cannot be regarded as voluntary contribution or donation. The quantum, the time of payments are decided and determined by the assessee and the students are having no say or role in the quantum of fee or any discretion of paying or not paying the same. Thus in the facts and circumstances of the case when the development fee received by the assessee is not voluntary but it is a compulsory charge on the students then the same cannot be classified as capital in nature for specific purpose or part of the corpus fund of the assessee trust. The de....