Corpus Donation of ₹48.38 Lakh Received by Educational Trust from Multiple Donors Exempted u/s.11(1)(d) of Income Tax Act: ITAT [Read Order]

The Income Tax Appellate Tribunal (ITAT), Ahmedabad Bench, held that the corpus donations received by the educational trust from different donors were eligible for exemption and directed the Assessing Officer (AO) to allow exemption of the entire corpus donation under Section 11(1)(d) of the Income Tax Act, 1961.

The appellant, Falahe Darain Education Society, is a trust formed for educational and charitable purposes registered u/s.12AA and 80G of the Income Tax Act, 1961. During the assessment year the appellant received ₹48,38,779 as Corpus Donation and claimed exemption under section 11(1)(d) of the Income Tax Act, 1961.

During assessment proceedings, the appellant failed to file details regarding corpus donation. Therefore, the AO denied the claim for exemption of Corpus donation and added it to the income of the assessee.

The appellant filed an appeal before the Commissioner of Income Tax (Appeal) ( CIT(A) ) and submitted evidence to prove the genuineness of its claim. CIT(A) admitted the evidence filed by the appellant, forwarded the same to the AO and directed to submit a remand report on the same.

The AO submitted his remand report justifying the addition made during the assessment proceedings. The appellant filed rejoinder to the remand report. After considering both the AO’s report and the appellant reply to the same, CIT(A) confirmed the addition made by the AO.

Sunil Talati, appellant counsel, contended that the findings of the respondent were factually incorrect, based solely on the AO’s remand report. The respondent ignored documents and the reply filed by the appellant to the remand report.

Ananya Kulshresth, appeared as respondent counsel.

Senthil Kumar, Judicial Member, and Annapurna Gupta, Accountant Member, observed that the infirmities noted by the AO and CIT(A) in respect of the corpus donations received by the assessee were not sufficient to disallow the entire corpus donation amounting to ₹48,38,779.

The tribunal dealt with each anomaly and found that the disallowance of exemption for the corpus donation was unjustified and that the denial of exemption by the AO and CIT(A) was incorrect.

In light of the facts and circumstances of the case, the Tribunal directed the AO to allow the assessee’s claim of exemption under Section 11(1)(d) of the Act in respect of the entire corpus donation amounting to ₹48,38,779.

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