Contact us   Feedback   Annual Subscription   New User   Login      
Tax Management India .com
TMI - Tax Management India. Com
Extracts
Home List
← Previous Next →

2016 (11) TMI 1041 - ITAT MUMBAI

2016 (11) TMI 1041 - ITAT MUMBAI - [2016] 50 ITR (Trib) 355 - Taxability of Corpus donations receipt - scope of total income u/s 2(24)(iia) - unregistered trust u/s 12AA - Entitlement to exemption u/s 11 - Held that:- The Income-tax Appellate Tribunal, Chennai in Indian Society of Anaesthesiologists v. ITO in decision reported in [2014 (5) TMI 1031 - ITAT CHENNAI] held that specific funds created for fulfilling specific objectives for which these separate funds are constituted remain as capital .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

re capital receipts being corpus fund and tied up grants for specific purposes - Corpus donations received by the assessee-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 ( .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

"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 donation of ₹ 4,55,446 as income 1. The learned Commissioner of Income-tax (Appeals) failed to appreciate that the appellant is a duly registered trust, and hence, co .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

ould have been taxed. III. Invoking section 164(2) 4. The learned Commissioner of Income-tax (Appeals) failed to appreciate that all surplus corpus donation of the appellant was exempt under section 11. Hence, the provisions of section 164(2) of the Act are not applicable." 3. The brief facts of the case are that the assessee is a religious charitable trust registered under the Bombay Public Trusts Act, 1950 engaged in providing stay facilities to sadhus and sadhvis, and pooja facilities to .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

py of application submitted to the Commissioner of Income-tax, Thane (CIT). The Assessing Officer observed that the assessee has not submitted the copy of registration under section 12AA of the Act granted in favour of the assessee or the application made to the Commissioner of Income-tax for granting of registration and made the claim without any supporting evidence, therefore, the trust was assessed as association of persons and also taxed at maximum marginal rate under section 167B(1) of the .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

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 they shall form part of the corpus of the trust would not be considered as income of the trust. The Assessing Officer rejected the contentions of .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

ry contributions made with a specific direction that they shall form part of the corpus of the trust shall not be included in the total income of the previous year of the trust in receipt of the income. In the absence of registration under section 12A or 12AA of the Act the immunity granted by section 11(1)(d) is not available to the assessee for corpus donation as section 11 of the Act is not applicable for association of persons. Thus, the Assessing Officer added an amount of ₹ 4,55,446 .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

aritable trust formed for religious and charitable purposes and is duly registered with the Charity Commissioner under the Bombay Public Trusts Act, 1950 vide registration certificate dated September 5, 1953 and was also registered with the Commissioner of Income-tax. The assessee submitted that the assessee has received corpus donation to the tune of ₹ 4,55,446 and filed its return of income declaring nil income. The assessee submitted that the certificate under section 12A of the Act gra .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

oses 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 u .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

m other sources. It was also submitted that the Assessing Officer also erred in taxing the assessee's income at maximum marginal rate in the status of association of persons. It was submitted that no part of the assessee's income is liable to be charged at maximum marginal rates since no part of the income of the assessee enures or is used or applied directly or indirectly for the benefit of specified category of persons referred to in section 13(3) of the Act, that no part of the trust .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

. ITO v. Gaudiya Granth Anuved Trust [2013] 28 ITR (Trib) 161 (Agra) ITA No. 386/Agra/2012. 4. Shri Shankar Bhagwan Estate v. Income-tax Officer, [1997] 61 ITD 196 (Cal). 5. Society for the promotion of Education, Adventure Sport and Conservation of Environment v. CIT [2015] 372 ITR 222 (All) (Appnx.) ; [2008] 171 Taxman 113 (All). 6. Rev Father Trust Oscar Colasco Memorial Medical Association v. CIT [2009] 31 SOT 1 (Mum). 7. R. B. Shreeram Religious and Charitable Trust v. CIT [1988] 172 ITR 37 .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

f application made to the Commissioner of Income-tax for applying for registration was produced before the Assessing Officer, hence, exemption claimed under section 11 of the Act was rightly rejected by the Assessing Officer. The learned Commissioner of Income-tax (Appeals) further held that the assessee is not entitled 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 r .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

y 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 asse .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

essing Officer denied the exemption to the assessee and brought to tax corpus donation at maximum marginal rate of tax. It is submitted that there is corpus donations of ₹ 4,55,446 which is not taxable even if the trust is not registered under section 12A/ 12AA of the Act. It is submitted that the donors have donated the corpus donations with specific directions about its application towards specific purpose for which the respective funds were created and it cannot be used for any other pu .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

5. ITO v. Vokkaligara Sangha [2015] 44 CCH 509 (Bang) 6. Shri Shankar Bhagwan Estate v. ITO [1997] 61 ITD 196 (Cal). The assessee contended that the corpus donations cannot be brought to tax and also the learned Commissioner of Income-tax (Appeals) directed the Assessing Officer to bring these income to tax at the normal rate and not maximum marginal rate as held by the Assessing Officer and in view of the relief granted by the learned Commissioner of Income-tax (Appeals) to the extent of charg .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

egistration 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 .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

These above stated specific donations given by the donors to be utilised for specific purposes cannot be diverted for any other purposes by the assessee and are credited to the respective funds in the balance-sheet, and utilisation thereof is also reflected from these specific funds. We have gone through the case law relied upon by the assessee as set out above and have observed that the courts/Tribunals have taken a consistent view that these corpus donations are held to be capital receipts bei .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

ed by the taxpayer trust from its settler, towards infrastructure fund, was not taxable in the hands of the taxpayer trust, despite the fact that the taxpayer trust is not registered under section 12A of the Act, and consequently the Tribunal dismissed the Revenue's appeal. The Revenue went in appeal and the hon'ble Delhi High Court dismissed the appeal of the Revenue against the Tribunals order for the assessment year 2003-04 in ITA No. 927 of 2009 vide orders dated September 23, 2009 i .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

7-08. 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 .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

stored. 4. The appellant craves to amend the grounds of the appeal stated above and when need for doing so may arise.' The brief facts of the case are that the assessee-trust has shown donation of ₹ 68,50,000 from BBT, Mumbai. The Assessing Officer computed the assessment on total income of ₹ 68,70,000 rejecting the assessee's contention that donation received towards the corpus of the trust. The Commissioner of Income-tax (Appeals) deleted the addition of ₹ 68,50,000 o .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

as accumulated. Such fund can also be used for creation of capital asset or property of the trust from which income can be generated. Corpus fund are generally created out of corpus donation. A donation will be treated as corpus donation only if it is accompanied by a specific written direction of the donor. In the absence of any written direction of the donor, a contribution of grant cannot be transferred to corpus fund. In the present case, the donor, the Bhaktivedanta Book Trust has very cat .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

tered under section 12AA because for those trusts which are registered under section 12AA, exemption to corpus donation has been provided as per the provision of section 11(1)(d). For such trust to which registration under section 12AA has not been provided, its taxability is required to be decided with reference to the scheme of the Act as held in the decision of Pentafour Software Employees Welfare Foundation v. Asst. CIT (supra). In both the decisions referred by the learned authorised repres .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

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 .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

trust. The Board's Circular No. 108 dated March 20, 1973 is extracted at page 1277 of Volume I of Sampath Iyengar's Law of Income-tax, 9th edition. In which the inter-relation between sections 12 and section 2(24) has been brought out. Gifts made with clear directions that they shall form part of the corpus of the religious endowment can never be considered as income. In the case of R. B. Shreeram Religious and Charitable Trust v. CIT [1988] 172 ITR 373 (Bom) it was held by the Bombay Hi .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

sessing Officer on evidence has accepted the facts that all the donations have been received towards the corpus of the endowments. In view of this clear finding, it is not possible to hold that they are to be assessed as income of the assessees. We, therefore, hold that the assessment of the corpus donations cannot be supported. 12. For the above reasons, we hold as under : 1. The religious endowments are not invalid on the ground that neither the temple nor the image had been consecrated at the .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

sed 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 confirm .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

axable income of the assessee is hereby deleted and accordingly, Ground No. 2 is allowed.' The learned Departmental representative relied upon the order of the Assessing Officer, whereas the learned authorised representative relied upon the order of the Commissioner of Income-tax (Appeals) and submitted that the Commissioner of Income-tax (Appeals) has followed the orders of the Income-tax Appellate Tribunal, Delhi Bench, which has been confirmed by the hon'ble Delhi High Court, thus, th .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

the learned representatives of the parties and records perused. The grievance of the Revenue is that the Commissioner of Income-tax (Appeals) has wrongly followed the judgment of the hon'ble Delhi High Court in I. T. A. No. 5082/Delhi/2010, whereas that order has been challenged before the hon'ble Supreme Court. The Revenue did not dispute the facts. We noticed that the Commissioner of Income-tax (Appeals) after considering the decision of three Tribunals, i.e., Income-tax Appellate Trib .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

Software Employees Welfare Foundation v. Asst. CIT (I.T. Appeal Nos. 751 and 752 (Mds.) of 2007) and others and Income-tax Appellate Tribunal, Kolkata Bench in the case of Shri Shankar Bhag wan Estate v. ITO, dated January 13, 1997, [1997] 61 ITD 196 (Cal) decided the issue in favour of the assessee. We find that the facts of the case under consideration are identical to the facts of the case decided by the Income-tax Appellate Tribunal, Delhi Bench in the case of Smt. Basanti Devi and Shri Cha .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

 

 

 

 

 



|| Home || Acts and Rules || Notifications || Circulars || Schedules || Tariff || Forms || Case Laws || Manuals ||

|| About us || Contact us || Disclaimer || Terms of Use || Privacy Policy || TMI Database || Members || Site Map ||

© Taxmanagementindia.com [A unit of MS Knowledge Processing Pvt. Ltd.] All rights reserved.

Go to Mobile Version