1981 (4) TMI 270 - AT - Income Tax

Summary

Issues:
- Whether the donations made to the assessee-Trust were intended to form part of the corpus of the Trust.
- Whether the donations were made with a specific direction to form part of the corpus under section 12 of the Income Tax Act, 1961.
- Reliability of the affidavit filed by the counsel for the assessee at the appellate stage.
- Sufficiency of evidence to prove that the donations were intended to form part of the corpus of the Trust.

Analysis:

1. The appeals by the Revenue pertain to the assessment years 1973-74 and 1974-75 concerning the donations made to the assessee-Trust. The Trust Deed was executed by settlors who allocated funds for the corpus of the Trust. The donations in question were made by various entities, and the issue revolved around whether these donations were meant to be part of the Trust's corpus as per section 12 of the IT Act, 1961.

2. The Revenue contended that the donations lacked a specific direction to form part of the corpus, based on a statement by the counsel for the assessee. However, the counsel later filed an affidavit stating that his earlier statement was made without proper consultation and instruction from the assessee. The Tribunal found this affidavit to be a reliable piece of evidence as the counsel was not cross-examined by the ITO, leading to the conclusion that the donations were indeed intended for the corpus of the Trust.

3. The evidence on record, including letters from the donating entities and a resolution by the trustees, supported the assertion that the donations were meant for the Trust's corpus. The partners of the donating firm were also the settlors and trustees of the Trust, further reinforcing the intent behind the donations. The Tribunal emphasized that the Revenue's argument regarding the timing of evidence submission was not valid, as the assessee was not given an opportunity earlier in the process. Therefore, the Tribunal upheld the AAC's decision that the donations were specifically directed to form part of the corpus under section 12 of the IT Act, 1961.

4. Ultimately, the Tribunal dismissed the appeals by the Revenue, affirming that the donations were rightfully excluded from the income of the assessee-Trust. The decision was based on the sufficiency of evidence and the interpretation of the specific direction requirement under section 12.