TMI Blog1984 (8) TMI 117X X X X Extracts X X X X X X X X Extracts X X X X ..... ate of infinite correlation. It is claimed that with this great benefit in the field of physiology, psychology, sociology and ecology were noticed, and that they were substantiated by the scientific researches carried out in more than 200 universities and research institutions all over the world. Inspired by this phenomenal success of this technique, Maharishi Mahesh Yogi inaugurated in 1975 what is described as the age of enlightenment, to usher in and perpetuate the age of enlightenment. Maharishi founded the world Government of the age of the enlightenment in 1976. Inspired by the success of this movement, a global plan was formed to establish Sidha Land in every one million population of the world, where 100 people will participate and do some activities to make themselves sufficient, giving preference to unemployed people and unused or underused land and other resources. It is also proposed to intensify the Yoga Shakti, whose ultimate aim is to generate truth in the atmosphere. This movement has grown in 114 countries of the world with approximately 25 lakh meditators. With this background, it was proposed to bring the achievements of Vedas and science in the field of dharma, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ng 20,000 are towards the corpus of the society and the balance amount equal to Rs. 48,83,550 is for general and running expenses on Veda Yoga and Udyog Vibhag. These activities cannot be treated as corpus. Moreover, the scrutiny of Form No. 3 which was filed with the Ministry of Home Affairs, Govt. of India, reveals that the purpose of donations is for spreading T.M. T.N. In view of these facts, the balance amount of Rs. 48,83,550 is treated as income of the assessee-Pratishthanam as the conditions set forth in section 2(24)(iia) are not fulfilled. " The main emphasis of the ITO in levying tax on the equivalent of the other sums received by way of donations appears to be that that amount was received for general and running expenses on Veda, Yoga, and that they could not be treated as corpus. It would also appear that had there been proof to show that those amounts also were received as and by way of corpus, the ITO would not be levying tax on it treating it as income. 4. Aggrieved by this treatment, appeal was filed before the Commissioner (Appeals), who substantially agreed with the ITO's view. Before him, the assessee produced letters obtained from the donors showing that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er tracing the history behind the introduction of section 2(24)(iia) and after taking us through the Wanchoo Committee report on the Direct Taxes Enquiry, based upon which the above section was stated to have been inserted, the learned counsel for the assessee submitted that the authorities below have proceeded on a total misconception of law, which resulted in the miscarriage of justice and virtually turning against the assessee what was in effect meant to confer benefit. He originally opened his arguments by formulating four propositions, which are : 1. Even if the income is spent for the purposes of the trust, still the receipt retains its character as non-taxable. 2. Under section 2(24)(iia), read with section 12, the voluntary contributions having been specified to form part of the corpus did not constitute income at all. 3. The amount was received towards corpus, though it was stated by the department to be ambiguous as to its nature at the time of receipt. 4. Lastly, even assuming the direction, still under the circumstances, it is to be disregarded and it continued to remain as part of the corpus, irrespective of the fact as to how it was spent and continue to enjoy ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... corpus, showing that the corpus was spent towards the objects, the trust would not convert the case of the assessee from that of taxability to non-taxability. 6. We have carefully considered the arguments addressed to us at some length and have gone through the relevant provisions of the Act as well as the paper book filed before us and we are of the view that there is a misconception of the legal proposition. Section 2(24)(iia) is the relevant section, which is in the following terms and which needs to be reproduced here : " (24) 'income' includes-- (iia) voluntary contributions received by a trust created wholly or partly for charitable or religious purposes or by an institution established wholly or partly for such purposes, not being contributions made with a specific direction that they shall form part of the corpus of the trust or institution. " An analysis of this section shows that (a) there must be a trust created wholly or partly for charitable or religious purposes, or (b) by an institution established wholly or partly for such purposes, (c) such a trust must receive voluntary contributions, and (d) the exception is that those contributions, if made with a speci ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... a combined reading of section 2(24)(iia) and section 12 that voluntary contributions received by a trust created wholly for charitable or religious purposes other than contributions made towards the corpus will be deemed to be the income derived from the property held under trust and the provisions of section 11 and section 13 are made to apply. Now even if voluntary contributions are received by a trust which are not specifically earmarked for the corpus, if they satisfy the requirements of section 11, they continue to enjoy the exemption provided for under section 11. To put it simply, a voluntary contribution received by a charitable or religious trust will earn exemption (a) if it is received with a specific direction that it forms part of the corpus of the trust, or (b) it satisfies the requirements of section 11. If either of these conditions are satisfied, the exemption from the levy of tax is available. As the department in this case has, as we see from the orders passed by the authorities below, approached the problem only from the point of view as to whether the contributions received were towards corpus or not and not from the standpoint whether, even if they are to be t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mounts were received towards the corpus, it ceased to be the income within the meaning of section 2(24)(iia). They are clearly out of the purview of taxation. The long arms of tax law cannot reach them. That leaves us with the other two items of pound 25,000 received on 26-6-1979 and pound 1,00,000 received on 13-12-1979, which were claimed by the department to have been received without specification that they were towards corpus but spent for expenses though later clarified to be towards corpus and whether the later clarification converted them into corpus. This controversy also is to be resolved in favour of the assessee for more than one reason. Assuming in favour of the revenue that these contributions were to be treated as income for non-specification, still these were to be treated as income derived from a trust wholly and exclusively for charitable or religious purposes for the purpose of section 11 and since that amount was also spent, it became eligible for exemption under section 11, read with section 2(24)(iia) and section 12. 8. That leaves us with the question whether any amount received towards corpus can be spent for running expenses and if so spent, whether it lo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... not think that this is the object of the legislation. In any case, this is contrary to what is recommended by the Direct Taxes Enquiry Committee, which was accepted by the Government. What is earmarked for corpus is not to be treated as income not because it is spent for the purpose of the trust but because that forms the fund of the trust. It is nowhere laid down that the funds of the trust should never be spent for the purposes of the trust unless it is a direction of the donor that the fund shall be invested in such a way as to produce income and only the income shall be spent for the purposes of the trust. Even so, if a departure is made by the trustee in the implementation of this wish of the donor, the trustee is to be penalised and not the trust. Looked at from any angle, we find it difficult to subscribe to the view so forcefully put forward before us by the learned departmental representative and so explained in the orders of the authorities below. 9. We, therefore, accept the contentions raised on behalf of the assessee and hold that the voluntary contributions are not to be treated as income. In the view that we have taken, we thought it unnecessary to go into the ques ..... X X X X Extracts X X X X X X X X Extracts X X X X
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