1985 (4) TMI 134 - AT - Income Tax

Summary

Issues Involved:
Assessment of income of a charitable trust under section 12 of the Income-tax Act, 1961.

Summary:

1. Assessment of Income:
The appeal related to the assessment year 1978-79 of a charitable trust assessed as an 'AOP'. The Income Tax Officer (ITO) disallowed the exemption claimed by the trust under section 12, stating that the donations received were not exclusively for the corpus of the trust. The Appellate Authority Commissioner (AAC) upheld the decision partially, allowing only a statutory allowance of 25%. The trust was assessed on a total income of Rs. 60,160.

2. Donations Towards Corpus:
The assessee contended that the donations were explicitly stated to be towards the corpus in the receipts issued to donors. The learned counsel argued that this satisfied the requirements of section 12 for exemption.

3. Specific Directions for Donations:
The departmental representative argued that specific directions from donors were necessary prior to donation, which were lacking in this case. He contended that the description in the receipts did not constitute specific direction as required by section 12.

4. Decision on Contributions:
The Tribunal examined the provisions of section 12 and reviewed the receipts bearing a stamp 'towards corpus only'. The Tribunal noted that the receipts indicated the donations were for the corpus of the trust. Referring to a Supreme Court case, the Tribunal held that the donations were validly earmarked for charitable purposes and exempt under section 12.

5. Exemption Granted:
Based on the evidence presented in the receipts, the Tribunal concluded that the trust met the requirements of section 12, entitling it to exemption. Therefore, no assessment to tax was applicable for the relevant assessment year.

6. Conclusion:
The Tribunal allowed the appeal, as the trust was found to have fulfilled the conditions of section 12, and did not delve into the aspect of income application.

End of Summary