TaxTMI 
TaxTMI 
2023 (6) TMI 815
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....ed by the courts, and failed to appreciate that earmarked funds constitute corpus donation. 2. On the facts and circumstances of the case, the learned CIT(A) ought to have allowed the following earmarked funds as corpus donations. New Building Fund Rs. 2,38,850 Room Donation Account Rs. 6,00,001 School Namkaran Donation Fund Rs. 13,00,000 Campus Donation Fund Rs. 30,00,000 Total Rs. 51,38,851 3. Without prejudice to the above, if the learned CIT(A) were to hold view of confirming addition of the earmarked funds received for building, room and campus, he ought to have allowed corresponding application to the extent of Rs. 1,80,44,368/- which were consciously not claimed by the assessee. (II) Addition of Rs. 2,00,000 received as unsecured loan: On the facts and circumstances of the case, the learned CIT(A) was not justified in confirming addition of Rs. 2,00,000. (III) Addition of Rs. 3,80,657/- being excess cash deposit into the bank: 1. The learned CIT(A) was not justified in confirming cash deposit of Rs. 3,80,657/- particularly when the assessee could demonstrably show that there was source to sup....
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....ld that the assessee trust deed nowhere mentions any such earmarked funds to be treated as corpus fund / part of corpus fund of the trust. Accordingly, when the corpus fund is not so specified precisely to say what constitutes a corpus fund of trust, the same cannot be treated as corpus fund as qualified for exemption u/s 11(1)(d) of I.T. Act by its general meaning and understanding, as per the observations of the A.O. in the assessment order. Therefore, the assessee was asked, vide notice of assessing officer u/s 142(1) of the Act, dated 05-02-2016, to show cause, as to why the same should not be treated as normal donations and taxed accordingly. 6. However, in response to the notice of the assessing officer, the assessee submitted its reply on 15-02-2016, which is reproduced as under: "The above said donation received for the specific purpose shown in "Earmarked Fund" in Balance sheet. Kindly take the note of the above and oblige". 7. However, assessing officer observed that as per the provisions u/s 12 of the Act and u/s 11(1)(d) of the I.T. Act a corpus fund means a voluntary contribution made by any donor with a specific direction, that such donation as paid, sh....
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.... as a corpus donation, as any trust speaks only through its resolutions, when the same is not defined in the trust deed as in this case, hence, in this analogy the assessee has negated all contentions of A.O and held to the view that earmarked funds are only corpus funds eligible for claim of exemption u/s 11(1)(d) of I.T. Act. Thus, ld Counsel contended that earmarked funds are only corpus funds eligible for claim of exemption u/s 11(1)(d) of I.T. Act. 10. On the other hand, the Ld. DR for the Revenue submitted that in the instant case, assessee could not provide any substantial evidences confirming these receipts as corpus donations as confirmed by donors with specified purpose of such corpus fund spending activity, therefore, ld DR prays the Bench that addition made by the assessing officer should be sustained. 11. We find merit in the submission of ld Counsel. We note that assessee is a registered Pubic Charitable Trust registered under 'the Bombay Public Trust Act' The assessee-trust is also registered u/s 12A of the Income Tax Act vide registration number E149451074. The assessee is having 80G registration vide registration number SRT/CITI/ ITO/TECH/104/L-5/2008-09/244.....
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....rked funds as application u/s11 of the Act. Therefore, without prejudice, ld Counsel argued that in the worst- case scenario for the assessee, if the earmarked funds were to be treated as non-exempt u/s11(1)(d) of the Act, the assessee logically needs to be allowed application against the earmarked funds as deduction. 14. We note that assessee- trust being a public charitable trust, runs a school primarily to address students from the very lower strata of the society and relying on donors to fund the school. The assessing officer has grossly erred in treating the Earmarked funds as revenue receipts particularly when the clear evidence before the assessing officer had demonstrated that what the donors had given was nothing but Earmarked funds for new building, room and campus developments. We note that stand taken by the Assessing Officer is not tenable in law, reason being that trust deed is only constitution of the trust and the nature and character of donation can be decided based on the intention of the donor and the direction given by the donor. We note that intention of the donor can be judged through receipt given by the donee or letter of the donor to the effect that he i....