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2008 (7) TMI 984 - AT - Income TaxTaxability of corpus donation - Validity of reopening of the assessments u/s 147 - registration not done u/s 12A was not disclosed at the time of assessment - HELD THAT:- The mere fact that the assessee is registered u/s 25 of the Companies Act 1956 by itself is not sufficient to prove that the assessee is a charitable organization. It is true that section 25 of the Companies Act gives certain privileges and these privileges are frequently used by bodies which pursue charitable objects as identified in the section. It was made clear that the assessee is not holding property for charitable or religious purposes. It was incorporated solely for the benefit of the employees of Pentafour group of companies. As such the assessee was under no obligation to make registration u/s 12A. In view of this it is not correct to apply the prescription of section 11(1)(d). Section 11 can only be applied when property is held for charitable or religious purposes and the assessee avails the advantage of exemption contemplated for charitable trust. The definition of the word 'income' as given u/s 2(24) is inclusive. It is not exhaustive. Donations towards corpus are not falling within the ambit of the definition of income. This is a capital receipt and not exigible to tax. The department did not doubt the nature or veracity of the receipt. In the case of CIT vs. SRMT Staff Association [1995 (7) TMI 12 - ANDHRA PRADESH HIGH COURT] the registered society of employees got voluntary contributions. It was not a charitable institution. The Hon'ble High Court has held that voluntary contributions received by the society of employees cannot be treated as income or trading receipt within the meaning of section 2(24) of the Income- tax Act. Therefore, we are of the opinion that the donations received by the assessee towards corpus from its employer are not exigible to tax. As such it cannot be said that the income of the assessee escaped assessment. Resultantly jurisdiction u/s 147 was not correctly assumed. Accordingly we decide this issue in favour of the assessee and against the Revenue. In the result the appeals and the cross objection failed by the assessee stand allowed and the appeal filed by the Revenue stands dismissed as infructuous.
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