The Income Tax Appellate Tribunal (ITAT), Delhi, has upheld the treatment of ₹13.32 crore collected as a development fund by an educational trust as a corpus receipt under Section 11(1)(d) of the Income Tax Act, 1961. 

Dismissing the tax department’s appeal for assessment year 2020–21, the bench of Sudhir Kumar (Judicial Member) and M Balaganesh (Accountant Member) followed its earlier ruling in the trust’s own case on the same issue.

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The respondent/assessee is a charitable trust registered under Section 12AA that runs educational institutions, including engineering and medical colleges and schools, primarily in Haryana.

During scrutiny assessment, the Assessing Officer treated ₹13,32,42,321 collected towards the development fund as part of the trust’s revenue receipts. The trust had recorded the amount as a corpus receipt, stating that it was collected for capital expenditure and used for that purpose during the year.

The Commissioner of Income Tax (Appeals) disagreed with the Assessing Officer and deleted the addition. The tax department then appealed to the ITAT.

The department argued that the development fund was collected compulsorily from students along with tuition fees as part of the prescribed fee structure. In its view, the payment was connected with the institutions’ regular activities and should therefore be treated as revenue.

It also contended that the collection did not meet the requirement under Section 11(1)(d) for a contribution made with a specific direction that it form part of the trust’s corpus. The department questioned the absence of an express written direction from each contributor and challenged the appellate authority’s reliance on consistency with earlier years.

The Tribunal had found that the development fee was taken directly to the corpus account as a capital receipt and invested in fixed assets during the year. It had held that the fee could be treated as a corpus fund.

The trust submitted that the department had accepted that order and had not appealed against it before the High Court. The Tribunal recorded that the departmental representative could not controvert that submission.

Following the earlier decision in the trust’s own case, the ITAT found no reason to interfere with the Commissioner (Appeals)’s order. It upheld the deletion of the ₹13.32 crore addition and dismissed the department’s appeal.

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