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2021 (7) TMI 1341 - HC - Income TaxExemption u/s 11 - corpus donations - absence of 12AA registration of the Trust - Scope of amendment brought in Section 12A by Finance Act 2014 with effect from 01.10.2014 by way of insertion of first proviso to Section 12A (2) - whether the corpus donations in the form of voluntary contributions made with a specific direction would form part of the corpus of the trust and are exempted under Section 11(1)(d) of the Income Tax Act in the absence of 12AA registration of the Trust? - HELD THAT:- As amendment in Section 12A, the intention of the statute is to confer the benefits of exemption under Section 11 of the Act on genuine trusts which are registered under Section 12AA. It is true that equity and taxation are strangers. They cannot co-exist together. It may also be argued that equity has to prevail over the taxation even if the literal constructions of law attempts to cause such an interpretation. But philanthropy in taxation of trusts gets complicated due to the complex situation in our country. If the provision of law is interpreted in such a manner to allow all donations to corpus as exempted from tax, it would certainly open the floodgates to all and sundry, making it difficult for the Income Tax authorities to differentiate between the original and fake. The registration of trust, in case the trust has to accept donations and build corpus, is one way of regulating the flow of money into the trust and avoid unscrupulous elements trust from evading tax by seeking exemptions indiscriminately. - Decided against assessee.
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