TMI Blog2016 (11) TMI 1041X X X X Extracts X X X X X X X X Extracts X X X X ..... see-trust cannot be brought to tax despite the fact that the assessee-trust was not registered under section 12A/12AA of the Act. - I. T. A. No. 230/Mum/2016 - - - Dated:- 12-8-2016 - Saktijit Dey (Judicial Member) And Ramit Kochar (Accountant Member) For the Appellant : Rahul R. Hakani For the Respondent : Vishwas S. Jadhav, Senior Authorised Representative ORDER Ramit Kochar (Accountant Member) 1. This appeal, filed by the assessee-trust, being ITA No. 230/Mum/2016, is directed against the appellate order dated October 21, 2015 passed by the learned Commissioner of Income-tax (Appeals)-3, Thane (hereinafter called the CIT(A) ), for the assessment year 2011-12, the appellate proceedings before the learned Commissioner of Income-tax (Appeals) arising from the assessment order dated January 31, 2014 passed by the learned Assessing Officer (hereinafter called the AO ) under section 143(3) of the Income-tax Act, 1961 (hereinafter called the Act ). 2. The grounds of appeal raised by the assessee-trust in the memo of appeal filed with the Income-tax Appellate Tribunal, Mumbai (hereinafter called the Tribunal ) reads as under : I. Treating corpus d ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (Rs.) 1. Building fund 50,000 2. Dev Dravya fund 2,92,066 3. Gyan fund 41,541 4. Veya Vacha fund 1,809 5. Akhand Deepak fund 12,951 6. Dadawadi fund 25,020 7. Jiv Daya fund 18,063 8. Ayambil fund 13,996 Total 4,55,446 The Assessing Officer asked the assessee to explain why corpus fund donations received of ₹ 4,55,446 should not be added to the income of the assessee and taxed as deduction under section 11 is not available to the trust. The assessee submitted that any receipt cannot be taxed unless it is an income within the meaning of section 2(24)(iia) read with section 12 of the Act. It is submitted by the assessee that contribution made with a specific direction that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s been received and hence it shall be deemed that registration has been granted. The assessee submitted that the corpus fund of ₹ 4,55,446 received are in the nature of donations with specific directions as to its application towards specific purposes for which respective funds were created which cannot be used for any other purposes as per religious customs and thus being capital receipts cannot be taxed. Thus, it was submitted that by virtue of provisions of section 11(1)(d) and section 12(1) of the Act, donations received towards corpus of the trust/various funds shall not be deemed to be income derived from property held under trust wholly for charitable or religious purposes. It was submitted that receipt cannot be taxed as income unless it is an income within meaning of section 2(24)(iia) of the Act read with section 12 of the Act. Section 12 of the Act makes it clear that contributions made with a specific directions that they shall form part of the corpus of the trust or institution shall not be considered as income of the trust. The assessee also submitted that being association of persons, by virtue of provisions of section 56(2)(vii) of the Act, such receipts are n ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d to exemption under section 11 of the Act being unregistered trust, therefore, the assessee's status had to be treated as association of persons and the corpus fund donation receipt is liable to be taxed. However, in the absence of elaborate discussion by the Assessing Officer as to whether the association of persons has to be taxed under section 167B(1) or under section 164(2), and the objects of the setting up of the trust is for public trust, therefore the provisions of section 164(2) of the Act are applicable and the assessee's income shall be taxed at normal rates instead of maximum marginal rates, vide appellate orders dated October 21, 2015. 6. Aggrieved by the appellate order dated October 21, 2015 passed by the learned Commissioner of Income-tax (Appeals), the assessee is in second appeal before the Tribunal. 7. The learned counsel for the assessee submitted that the assessee is religious charitable trust duly registered under the Bombay Public Trusts Act, 1950. It is submitted that the assessee has received corpus donations of ₹ 4,55,446 during the previous year relevant to the assessment year. The learned counsel submitted that the assessee is not re ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... gious charitable trust duly registered under the Bombay Public Trusts Act, 1950. The assessee could not produce registration under section 12A/12AA of the Act and hence it could be presumed that the assessee is not registered under section 12A/12AA of the Act as the onus was on the assessee to bring on record the evidences to prove its contentions which it want court to believe and consequently to seek immunities and protections granted to a registered trust. The assessee has received corpus donations to the tune of ₹ 4,55,446 during previous year relevant to the assessment year which are being given with specific directions by the donors to be applied towards specific purpose for which the respective funds were created. This is an admitted position between the parties and there is no dispute with respect to this proposition. The details of the corpus donations are as under : (Rs.) 1. Building fund 50,000 2. Dev Dravya fund 2,92,066 3. Gyan fund ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... by the Revenue against the order dated February 24, 2012 passed by the learned Commissioner of Income-tax (Appeals)-I, Agra for the assessment year 2007-08. The Revenue has raised the following grounds of appeal : '1. The learned Commissioner of Income-tax (Appeals) has erred in law and on facts in failing to appreciate that voluntary contributions (whether corpus donations or general donations) received by a charitable trust are income as defined vide section 2(24)(iia) of the Act and corpus donations are exempt from tax under section 11(1)(d) only if assessee is registered under section 12A/12AA of the Act. 2. The learned Commissioner of Income-tax (Appeals) has erred in placing reliance upon the appellate decision of the hon'ble Delhi High Court in ITA No. 5082/Delhi/2010 in the case of ITO (Exemptions) v. Smt. Basanti Devi and Shri Chakhan Lal Garg Education Trust for the assessment year 2003-04, which in turn is now under challenge in the hon'ble Supreme Court. 3. The order of the Commissioner of Income-tax (Appeals)-1, Agra being erroneous in law and on facts be set aside and the order of the Assessing Officer be restored. 4. The appellan ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dation v. Asst. CIT (supra). In both the decisions referred by the learned authorised representative, in case of Pentafour Software Employees Welfare Foundation v. Asst. CIT, it has been held that corpus donation being in the nature of capital receipt are not chargeable to Income-tax. The decision of the Income-tax Appel late Tribunal, Delhi in the case of Smt. Basanti Devi and Shri Chakhan Lal Garg Education Trust for both the assessment years 2002-03 and 2003-04 are annexed with this order as annexure A-1 in which reference to the decision in the case of Pentafour Software Employees Welfare Foundation is also given. I have also come across another decision of the hon'ble Income-tax Appellate Tribunal, Kolkata in the case of Shri Shankar Bhagwan Estate v. ITO, dated January 13, 1997, reported in [1997] 61 ITD 196 (Cal) in which, the taxability of corpus donation has been examined in the light of section 12 read with section 2(24)(iia) of the Income-tax Act and in this decision, it has been held as under : So far as section 2(24)(iia) is concerned, this section has to be read in the context of the introduction of the present section 12 it is significant that section ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... orpus donation raised by the appellant cannot be brought to tax. In this case also, the trust under appeal was a private religious trust not registered under section 12AA and hence, corpus donation received by it should not be taxable as its income. 6.6 After considering the position of law as it is prevailing at present on the basis of the decision of three Tribunals, i.e., Income- tax Appellate Tribunal, Chennai, Income-tax Appellate Tribunal, Delhi and Income-tax Appellate Tribunal, Kolkata and further confirmed by the Delhi High Court, the corpus donation is in the nature of a capital receipt and are not taxable, irrespective of the fact whether the trust is registered under section 12AA or not. Therefore, I agree with the learned authorised representative that the amount of ₹ 68,50,000 being in the nature of corpus donation is not taxable under the Income-tax Act being in the nature of capital receipt and therefore, the addition of ₹ 68,50,000 made by the Assessing Officer towards the taxable income of the assessee is hereby deleted and accordingly, Ground No. 2 is allowed.' The learned Departmental representative relied upon the order of the Assessin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ax Appellate Tribunal. Since facts are identical, therefore, to maintain consistency, we follow the above orders of the Income-tax Appellate Tribunal and the light of facts we do not find any infirmity in the order of the Commissioner of Income-tax (Appeals). The order of the Commissioner of Income-tax (Appeals) is confirmed. In the result, the appeal of the Revenue is dismissed. The Income-tax Appellate Tribunal, Chennai in Indian Society of Anaesthesiologists v. ITO in decision reported in [2014] 47 taxmann.com 183 (Chennai) held that specific funds created for fulfilling specific objectives for which these separate funds are constituted remain as capital funds as the funds can be used for fulfilling specific objectives for which these funds are constituted and hence to be treated as corpus funds and to be excluded from computation of income. The Income-tax Appellate Tribunal, Bangalore in ITO v. Vokkaligara Sangha in a decision reported in [2015] 44 CCH 509 (Bang) whereby the Tribunal held that voluntary contributions received for a specific purposes cannot be regarded as income under section 2(24)(iia) of the Act since they were capital receipts being corpus fund a ..... X X X X Extracts X X X X X X X X Extracts X X X X
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