TMI Blog2017 (4) TMI 765X X X X Extracts X X X X X X X X Extracts X X X X ..... ed that various case laws, relied upon by the assessee, which are discussed at page 7 (page 56 of the paper book) were analysed and thereafter, reached to a particular conclusion. The Tribunal held that the corpus donation, received by the trust, for specific purposes cannot be brought to tax despite the fact that the assessee is not registered u/s. 12A / 12AA of the Act. Identical facts are available in the present appeal before us, thus, following the aforesaid order of the co-ordinate Bench, this ground of the assessee is allowed and the learned Assessing Officer is directed that the voluntary contribution received by the assessee for specific purposes (in the present appeal building fund) cannot be regarded as income u/s.2 (24)(iia) of the Act being capital receipt, being corpus fund and tied up grants for specific purposes. This ground of the assessee is therefore, allowed. - ITA No.264/Mum/2016 - - - Dated:- 15-3-2017 - Shri Joginder Singh, Judicial Member, and Shri N.K.Pradhan, Accountant Member For The Assessee : Shri Rahul K Hakani For The Revenue : Shri Purushottam Kumar ORDER Per Joginder Singh (Judicial Member) The assessee is aggrieved by t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Tribunal ) reads as under:- I. Treating corpus donation of ₹ 4,55,446/- as income 1. The learned CIT (A) failed to appreciate that the Appellant is a duly registered trust, and hence, corpus donation of ₹ 4,55,446/- was income derived from property held under trust, and hence, entitled to exemption. 2. Without prejudice to the above, the learned CIT (A) failed to appreciate that ₹ 4,55,466/- is capital receipt, and hence, not taxable. 3. Without prejudice to the above, even if ₹ 4,55,446/- is held liable to tax, the deficit of ₹ 2,00,897/- in receipt expenditure account should have been deducted from the same, and only balance should have been-taxed. Ill. Invoking section 164(2) 4. The learned CIT (A) failed to appreciate that all surplus corpus donation of the Appellant was exempt u/s 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 Bombay Public Trust Act, 1950 engaged in providing stay facilities to sadhus and sadhvis , and pooja facilities to Swetamber Jains. During the course ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 A.O. rejected the contentions of the assessee as the assessee is not having registration u/s 12A/12AA of the Act and the benefit given by section 2(24)(iia) r.w.s. 12 of the Act is not available to the assessee. The A.O. held that the provisions of section 11 12 are not applicable to the assessee as the assessee is not a registered trust u/s 12A/12AA of the Act. The AO observed that as per the provisions of section 11(1)(d) of the Act income in the 4 ITA 230/Mum/2016 form of voluntary 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 u/s 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 AOP. Thus , the A.O. added an amount of ₹ 4,55,446/- to the total income of the assessee being corpus donation receiv ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... bmitted that no part of the assesse 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 funds are invested in contravention of the investment pattern prescribed u/s 13(5) of the Act, the assessee trust is not engaged in the any business and the objects of trust is not to earn profit and to share among the members . The assessee relied upon the following case laws:- 1. Peetadhipathi Trust, Mysore v. Department of Income Tax, Bangalore ITAT ITA No. 1382 1535/Bang/2010. 2. Sree Ramkrishna Samity v. DCIT Cir. 2, Siligiri, ITA No. 1680 to 1685/2012 dated 9-10-2015. 3. Gaudiya Granth Anuved Trust v. Department of Income Tax, ITA No. 386/Agra/2012. 4. Shri Shankar Bhagwan Estate v. Income Tax Officer (Calcutta), [1997] 061 ITD 0196(Cal). 5. Society for the promotion of Education, Adventure,Sports and Conservation of Environment v. CIT (2008) 171 Taxmann 113(All.) 6. Rev. Father Trust Oscar Colaso Memorial Medical Association v. CIT (2009) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the Trust is not registered under 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 purposes. The ld. Counsel relied upon the following decisions:- 1. ITO v. Smt. Basanti Devi Shri Chakhan Lal Garg Education Trust, ITA No. 5082/Del./2010 date 19.1.2011, Delhi Tribunal. 2. Director Income Tax v. Smt. Basanti Devi Shri Chakhan Lal Garg Education Trust, ITA No. 927/2009 date 23.9.2009, Delhi Tribunal. 3. ITO v. Gudiya Granth Anuved Trust (2013) 28 ITR (Trib) 161 (Agra) (Trib). 4. Indian Society of Anaesthesiologists v. ITO (2014) 32 ITR (Trib) 152 (Chennai Trib). 5. ITO v. Vokkaligara Sangha (2015) 44 CCH 509 (Bang) (Trib) 6. Shri Shankar Bhagwan Estate v. ITO (1997) 61 ITD 196 (Cal. Trib). The assessee contended that the corpus donations cannot be brought to tax and also the ld. CIT(A) directed the A.O. to bring these income to tax at the normal rate and not maximum marginal rate as held by the AO and in view of the relief granted by the learned CIT(A) to the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... or any other purposes by the assessee and are credited to the respective funds in the Balance Sheet , and utilization thereof is also reflected from these specific funds. We have gone through the case laws relied upon by the assesse 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 being capital in nature and are not taxable despite the fact that trust is not registered u/s 12A/12AA of the Act. In ITO(E) v. Basanti Devi Shri Chakhan Lal Garg Education Trust in ITA no. 5082(Del.) 2010 for assessment year 2002-03 vide orders dated 19-01- 2011, ITAT, Delhi relying on ITAT, Delhi decision in the taxpayers own case for assessment year 2003-04 whereby the Tribunal held that the amount received by the tax-payer trust from its settler, towards infrastructure fund, was not taxable in the hands of the tax-payer trust, despite the fact that the tax-payer trust is not registered u/s 12A of the Act, and consequently the Tribunal dismissed the Revenue appeal. The revenue went in appeal and the Hon'ble Delhi High Court dismissed the appeal of the Revenue against the Tribunals order for ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tilised for the attainment of the purposes, but the interest/dividend accused on such fund can be utilised as well 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 categorically in his letter, while providing money to the appellant trust, has mentioned the amount of ₹ 68,50,000 as corpus donation and such amount has been used by the trust for purchasing the land and giving money on interest as loan. Therefore, the amount of ₹ 68,50,000 shown by the appellant trust has been found to be in the nature of corpus donation. Now, the question arises whether such corpus donation is taxable as income or not even in the cases in which the trust is not registered under section 12AA because for those trusts which are registered under sec ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mendment to section 12, which means that even before the words appearing to parenthesis in the present section 12, it cannot be held that voluntary contributors specifically received towards the corpus of the trust may be brought to tax. The aforesaid decision was followed by the Bombay High Court in the case of CIT v. Trustees of Kasturbai Scindia Commission Trust[1991] 189 ITR 5 (Bom). The position after the amendment is a fortiori. In the present cases the Assessing 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 time of creating the endowments. 2. The assessees have to be assessed in the status of individual since they are artificial juridical entities and 3. The voluntary contributions received by the assessee towa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mmissioner of Incometax (Appeals) has wrongly followed the judgment of the hon'ble Delhi High Court in I. T. A. No. 5082/Del./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 Tribunal, Delhi in the case of ITO (Exemption) v. Smt. Basanti Devi Shri Chakhan Lal Garg Education Trust [IT Appeal No. 5082 (Delhi) of 2010, dated 30-1-2009] the Revenue filed appeal before the hon'ble Delhi High Court. The hon'ble Delhi High Court confirmed the order of the Income-tax Appellate Tribunal, the Revenue filed appeal before the hon'ble Supreme Court, which has been dismissed for non-prosecution vide judgment Civil Appeal Nos. 7036 of 2011, judgment dated January 28, 2013, Income-tax Appellate Tribunal Chennai Bench in the case of Pentafour Software Employees Welfare Foundation v. Asstt. CIT [I.T. Appeal Nos. 751 752 (Mds.) of 2007] and others and Income-tax Appellate Tribunal, Kolkata Bench in the case of Shri Shankar Bhagwan Estate (supra) decided the issue in favour of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... .12A / 12AA of the Act. In that case also the Assessing Officer held that the provisions of Section 11 12 of the Act are not applicable to the assessee and thus the provisions of Section 11 (1)(d) of the Act with respect to voluntary contribution made with specific direction that they should form corpus of the trust shall not be included in the total income and the Assessing Officer added the same as income of the assessee. The Tribunal also considered various judicial pronouncements as contained at page 5 (page 54 of the paper book) of the order. It is also noted that various case laws, relied upon by the assessee, which are discussed at page 7 (page 56 of the paper book) were analysed and thereafter, reached to a particular conclusion. The Tribunal held that the corpus donation, received by the trust, for specific purposes cannot be brought to tax despite the fact that the assessee is not registered u/s. 12A / 12AA of the Act. Identical facts are available in the present appeal before us, thus, following the aforesaid order of the co-ordinate Bench, this ground of the assessee is allowed and the learned Assessing Officer is directed that the voluntary contribution received by t ..... X X X X Extracts X X X X X X X X Extracts X X X X
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