Key Sections - Section 11 , Section 12 , Section 12A , Section 13 

Key Words - Corpus Donations , Voluntary Contributions , Capitation Fee 

Case Summary
Case Name: Nagarjuna Educational Society vs. ACIT
Citation: [2011] 12 taxmann.com 375 (Visakhapatnam)
Date: 27th July 2011
Bench: ITAT Visakhapatnam Bench
Assessment Years: 2001-02 and 2006-07

Explanation
1)  Facts:

• The assessee is a charitable society running educational institutions, registered under Section 12A.

• It received donations classified as "corpus donations" with specific directions from donors.

• The Assessing Officer (AO) alleged that these were capitation fees disguised as corpus donations, not eligible for exemption.

2)  Assessment Proceedings:

• The AO treated these donations as ordinary contributions (income) and added them to total receipts.

• The assessee provided evidence, including donor details, receipts, and confirmation letters, to establish that the donations were voluntary and corpus in nature.

3) CIT(A)’s Decision:

• The appellate authority accepted the donations as corpus, stating that the donations were voluntary and directed to the corpus fund.

• It observed that the AO had no material evidence to support allegations of capitation fees.

4)  ITAT’s Ruling:

• It upheld the CIT(A)’s findings and confirmed the corpus nature of the donations.

• The AO failed to prove the donations were coerced or that they lacked specific directions to form part of the corpus.

• The Tribunal emphasized that neither the AO nor the assessee could alter the classification of contributions as corpus or ordinary; only the donor's intent matters.

Summary of Rulings
1) Donor’s Intent Prevails:

• Contributions with specific directions to form part of the corpus are exempt under Section 11(1)(d).

• The classification depends solely on the donor’s explicit instructions.

2) Failure of AO to Substantiate Allegations:

• The AO did not examine evidence or donors to prove the donations were coerced.

• In the absence of concrete proof, the AO’s action was deemed baseless.

3) Exemption Upheld:

• The donations qualified as corpus donations and were exempt under Section 11(1)(d).

Conclusion

The appeals by the Revenue were dismissed, reaffirming the principle that corpus donations directed by donors are exempt under Section 11(1)(d), and such classification cannot be altered by the AO. The Tribunal’s decision strengthens the interpretation of corpus donations and protects charitable institutions from arbitrary assessments.

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