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2013 (8) TMI 875 - AT - Income TaxCorpus donation - whether is taxable as income or not even in the cases in which the trust is not registered under section 12AA ? - CIT(A) deleted the addition - Held that - 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. 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 Chakhan Lal Garg Education Trust and other 2011 (1) TMI 1320 - ITAT DELHI orders of the Income-tax 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. - Decided against revenue.
Issues:
1. Taxability of voluntary contributions received by a charitable trust. 2. Interpretation of corpus donations and their tax treatment under the Income-tax Act. Analysis: 1. The appeal was filed by the Revenue against the order passed by the Commissioner of Income-tax (Appeals) for the assessment year 2007-08. The Revenue contended that voluntary contributions received by a charitable trust are taxable as income under section 2(24)(iia) of the Act, and corpus donations are exempt only if the trust is registered under section 12A/12AA. The Commissioner of Income-tax (Appeals) deleted the addition made by the Assessing Officer, stating that corpus donations are not taxable as income, especially when accompanied by specific written directions from the donor. The Commissioner relied on various judicial decisions, including those by the Income-tax Appellate Tribunal and the Delhi High Court, to support the non-taxability of corpus donations. 2. The legal interpretation of corpus donations and their tax treatment under the Income-tax Act was a crucial aspect of the case. The Commissioner highlighted that corpus donations are considered capital receipts and are not chargeable to income tax, irrespective of whether the trust is registered under section 12AA or not. The Commissioner referred to past decisions by the Income-tax Appellate Tribunal, Kolkata, and other tribunals to support the non-taxability of corpus donations. The Commissioner's decision was based on the premise that corpus donations are meant for specific purposes and are not to be treated as taxable income under the Act. 3. The representatives of the parties presented their arguments based on the orders of the Assessing Officer, the Commissioner of Income-tax (Appeals), and various judicial precedents. The Revenue contended that the Commissioner wrongly followed a judgment of the Delhi High Court that was under challenge in the Supreme Court. However, the Tribunal found that the facts of the case aligned with previous decisions by the Income-tax Appellate Tribunal and the Delhi High Court, leading to the confirmation of the Commissioner's order. The Tribunal upheld the non-taxability of corpus donations as capital receipts, in line with established legal principles and past judgments. 4. Ultimately, the Tribunal dismissed the appeal of the Revenue, affirming the order of the Commissioner of Income-tax (Appeals). The decision was based on the consistent legal interpretation that corpus donations are not taxable as income, regardless of the registration status of the trust under section 12AA. The Tribunal's ruling maintained the precedence set by previous judicial decisions and established the non-taxable nature of corpus donations as capital receipts under the Income-tax Act.
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