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TMI Blog2025 (3) TMI 804X X X X Extracts X X X X X X X X Extracts X X X X ..... st the AO order u/s 143(3) r.w.s. 147 of the Act by not accepting corpus donation as capital receipt because it is found from the assessment order that there is no finding of AO on utilization of said fund of Rs. 1,24,47,730/-." 3. The brief facts of the case are that the Assessee is a religious and charitable trust, registered with charity commissioner since 1950. Trust was not registered under section 12AA of the Act for the year under consideration, but applied for registration u/s 12AA on 12.07.2019 which got approved on 22.01.2020 w.e.f. 12.07.2019. The Assessing Officer, during the assessment proceedings, observed that the assessee had shown interest earned on FDR of Rs. 3,46,542/- in the assessee's income and expenditure account, however, found that the assessee had not included the donation received of Rs. 1,24,47,730/- in its total income. Since the assessee-trust was not registered u/s 12AA of the Act for the year under consideration, the Assessing Officer treated the assessee not entitled for any exemption u/s 11(1)(d) of the Act and added the amount of Rs. 1,24,47,730/- to the total income of the assessee. 4. Aggrieved by the order of Assessing Officer, the assessee f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ons of section 11 and section 12 shall not apply in relation to the income of any trust or institution unless the following conditions are fulfilled, namely:- (a) the person in receipt of the income has made an application for registration of the trust or institution in the prescribed form and in the prescribed manner to the [***] Commissioner before the 1st day of July, 1973, or before the expiry of a period of one year from the date of the creation of the trust or the establishment of the institution, [whichever is later and such trust or institution is registered under section 12AA] : [Provided that where an application for registration of the trust or institution is made after the expiry of the period aforesaid, the provisions of sections 11 and 12 shall apply in relation to the income of such trust or institution,- (i) from the date of the creation of the trust or the establishment of the institution if the [***] Commissioner is, for reasons to be recorded in writing, satisfied that the person in receipt of the income was prevented from making the application before the expiry of the period46 aforesaid for sufficient reasons; (ii) from the 1st day of the financial yea ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ve conditions. However, the power of condonation of delay in seeking registration was not available. 8.3 In order to provide relief to such trusts and remove hardship in genuine cases, section 12A of the Income-tax Act has been amended to provide that in a case where a trust or institution has been granted registration under section 12AA of the Income-tax Act, the benefit of sections 11 and 12 of the said Act shall be available in respect of any income derived from property held under trust in any assessment proceeding for an earlier assessment year which is pending before the Assessing Officer as on the date of such registration, if the objects and activities of such trust or institution in the relevant earlier assessment year are the same as those on the basis of which such registration has been granted. 8.4 Further, it has been provided that no action for reopening of an assessment under section 147 of the Income-tax Act shall be taken by the Assessing Officer in the case of such trust or institution for any assessment year preceding the first assessment year for which the registration applies, merely for the reason that such trust or institution has not obtained the regis ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssee. The same is as under:- "4.1. The AO during the course of assessment proceedings observed that it is not a registered trust and the donations received by the appellant needs to be routed through Income & Expenditure / P&L A/c. which has not been done as appellant claimed the said donation as corpus donation and claimed exemption u/s 11(1)(d) of the I.T Act, 1961. Subsequently, assessee was show-caused to explain as to why corpus donation should not be rejected as per provisions of section 11(1)(d) of the I.T Act, 1961. The AO after considering the explanation rejected the claim as per provisions of section 11(1)(d) of the I.T Act, 1961 amounting to Rs. 1,24,47,730/-. 4.2 The appellant contended that it is now a registered trust and obtained registration certificate and hence, eligible for exemption u/s 11(1)(d) of the I.T Act, 1961 as assessment was completed after obtaining the certificate. The appellant also contended that the AO also added sum of Rs. 3,81,975/- twice in the total income erroneously as this amount is merely a transfer entry from one account to another account. The appellant stated that contribution received as corpus are used for specific purposes and sa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r corpus. As per section 11(1)(d) of the Act, voluntary contributions received by the trust or charitable institutions with a specific direction that the contribution shall form part of the corpus of the trust or institution shall not be treated as income of the trusts or institution, but this is not the case of the assessee. As per Section 12 of the Act, any voluntary contribution not with a specific direction that it will form part of the corpus will be treated as income of the trust or institution existing for charitable purposes. As per section 12A of the Act, the benefit of Sections 11 & 12 will be available only if the trust or the institution is registered under the Income Tax Act as a trust or charitable institution u/s 12AA. Therefore, in light of the above tax treatment of voluntary contributions can be summarised as follows: Tax treatment of voluntary contributions * Voluntary contribution received with a specific direction that it forms part of the corpus of the trust is treated as follows: * If the trust or charitable institution is registered u/s 12AA of the Income Tax Act'1961 - Then not taxable as per section 11(1)(d) of Income Tax Act'1961. * If the trust or ..... X X X X Extracts X X X X X X X X Extracts X X X X
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