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2013 (4) TMI 761 - ITAT BANGALORETest of charitable institution - Corpus donation - whether contribution to development fee was not a voluntary contribution? - Held that:- The fact that the donations were given by students who joined the educational institution of the Assessee as in return for admission granted would not affect the character of the contribution as voluntary contribution. The reason why clause (d) to Sec.11(1) of the Act was inserted by the Direct Tax Laws (Amendment) Act, 1987 w.e.f. 1st April, 1989 and Section 2(24) amended by the same amending Act to include voluntary contribution with direction that they would form of corpus of the trust as income, was to treat them as income in the hands of the recipient, but in the case of trusts or institutions, who comply with the requirements for exemption under section 11 of the Act and not tax such receipts. Prior to the insertion of the above provisions, they were treated as capital receipts not chargeable to tax. However, in case the trust or institution loses the exemption under section 11 of the Act, either by not complying with the conditions laid down in section 12A or by falling within the mischief of section 13, corpus donations will be included in its income and taxed. Therefore the question whether the donations were voluntary or not becomes irrelevant and what becomes relevant is the application of such contributions for the objections of the trust which are admittedly charitable. The application of such contributions for objects of the trust is not in dispute. - Decided in favour of assessee.
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