TMI Blog1979 (2) TMI 66X X X X Extracts X X X X X X X X Extracts X X X X ..... eading to this reference are as follows : We are concerned with the assessment year 1970-71. The asessee before us is a charitable trust. It filed its return of income for the assessment year under consideration showing a loss of Rs. 424. On scrutiny of the income and expenditure accounts, the ITO found that the said account was credited with a sum of Rs. 2,100. He also noticed that the trust fund account was credited with a sum of Rs. 2,74,000. On being asked to furnish the details of these items, the assessee explained that it had received by way of donations from one Uday Education Society, another charitable trust, one thousand shares of Alembic Glass Industries Ltd. of the face value of Rs. 1,00,000 and five hundred shares of Alembic ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the amendment and after the amendment which came into effect from April 1, 1973, and, relying on the decision of the Allahabad High Court in Sri Dwarkadheesh Charitable Trust v. ITO [1975] 98 ITR 557 and applying the principle laid down in the said decision, the Tribunal held that, in this particular case, the donations were made by the donor-trust to the donee-trust towards the corpus or the capital of the trust and could not, therefore, be treated as income in the hands of the assessee-trust. Thereafter, at the instance of the assessee, the question hereinabove set out has been referred to us for our opinion. Section 12, as it stood prior to its amendment, was in these terms : " 12. Income of fruits or institutions from voluntary cont ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ts or institutions from voluntary contributions " and if income of a trust for charitable or religious purposes or of charitable or religious institution was derived from voluntary contributions and was applicable solely to charitable or religious purposes, it was not to be included in the total income of the trustees or the institution, as the case might be. Therefore, what was provided for under sub-s. (1) of s. 12 prior to the amendment was with reference to what may be called " non-capital voluntary contributions " to the trust for charitable or religious purposes or a charitable or religious institution. It is such voluntary contributions as were in the nature of income contributions which were covered by this sub-s. (1) and it was pro ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... were referred to in sub-s. (1) of s. 12, it would be obvious that they would not be covered by sub-s. (2) at all and, therefore, all contributions not stamped with the character of income from whatever source would not be governed either by sub-s. (1) or by sub-s. (2). That, in our opinion, is clear from the unamended provisions of s. 12. That which has to be culled out by a process of interpretation was made specific by the amendment carried out in s.12 by the Finance Act of 1972, with effect from April 1, 1973. Where, contributions made with a specific direction that they shall form part of the corpus of the donee trust, they are exempted but, at the same time, the exemption which was contemplated by s. 12(1) is also taken away and now, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in the instant case, where, as found by the Tribunal, the shares were donated by the donor trust to the donee trust (the assessee before us), with a specific direction that they should be used for the corpus or the trust fund of the donee trust, the provisions of s. 12(2) could never be attracted and, to that extent, the conclusion of the Tribunal is correct. In Sri Dwarkadheesh Charitable Trust v. ITO [1975] 98 ITR 557, the Allahabad High Court has held : " Voluntary contributions made with a specific direction that they shall form part of the corpus of the donee-trust and accepted by the donee- trust as such, are not voluntary contributions which constitute income within the meaning of s. 12(1) of the Income-tax Act, 1961, because th ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
