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2022 (9) TMI 1086 - AT - Income TaxExemption u/s 11 - assessee-trust had accumulated the capital receipt - nature of corpus donation is capital receipt & irrecoverable - Whether corpus donation was received for specific purpose related charitable activity of the assessee-trust before the registration u/s 12A/12AA? - HELD THAT:- Corpus donations received by the Trusts, which is not registered u/s.12A/12AA of the Act, are not taxable as they assume the nature of 'Capital receipt' the moment the donations are given to the "Corpus of the Trust". We find the provisions of section 2(24)(iia)/12(1)/11(1)(d)/35/56(2) are relevant for deciding the current issue. It is a settled legal proposition, in case of a registered Trust under the Income-Tax Act, the corpus specific Voluntary Contributions are outside the scope of income as defined in section 2(24)(iia) of the Act due to their "Capital nature". But it is a case of un-registered Trust. Despite the detailed deliberations made by the DR, we find the principles relating to judicial discipline assume significance and the priority. It is also decided issue that there is need for upholding the favourable view if there exist divergent views on the issue. As discussed in the preceding paragraphs above, there are multiple decisions in favour of the assessee. The two issues must be settled during registration u/s 12AA which are genuinity of trust & activities are related to main object of trust. The two limbs must be considered during registration. CIT(E) is silent about the second issue. The first issue is adjudicated in favour of assessee-trust.
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