By TIOL News Service

AHMEDABAD, JULY 04, 2017: THE ISSUE BEFORE THE COURT IS - Whether admission fees received seperately from students with specific stipulation that same would be used for educational purposes, can be added in the hands of trust. NO is the verdict.

Facts of the case:

The assessee trust during A.Y 2010-11, had received donations, however failed to give full details of names, addresses etc. of the donors. The AO therefore with the aid of Section 115BBC, made addition of a sum of Rs.21.72 Lacs treating them as anonymous donations. When the CIT(A) called for a remand report, the AO carried out random inquiries with the so-called donors, who all confirmed having made the donations. The AO thus gave a report which was favourable to the assessee. The CIT(A) despite such report, rejected the assessee's appeal, on the ground that despite several opportunities being given during original assessment, the assesee had not produced such details and further that the AO had merely carried out a sample verification while submitting the remand report.

On appeal, the HC held that,

++ we find that the Appellate Commissioner having called for a remand report on the additional material produced by the assessee, rejected the same without appropriate reasons. We do not hold that the remand report once called would be binding on the Appellate Commissioner. The remand report would be in the nature of fact finding commission, which the AO would present before the Appellate Commissioner in view of additional documents or evidence produced by the assessee or the department, as the case may be. However, in the present case, the Commissioner (Appeals) did not cite sufficient or appropriate reasons to discard such report of the AO and proceeded to confirm the addition ignoring the additional information supplied by the assessee before him. This order was rectified by the Tribunal. No question of law, therefore, arises;

++ the second issue pertains to the donations, which according to the revenue were not made with a stipulation that the same should be used for a specific purpose. The Tribunal, however, noticed that said sum of Rs.67.80 Lacs was by way of receipt from admission fees. The trust had passed a resolution receiving admission fees separately from the students with specific stipulation that the same would be used for educational purposes. That being the position, no question of law arises.

(See 2017-TIOL-1240-HC-AHM-IT)