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2015 (8) TMI 920 - AT - Income TaxRegistration under Section 12AA - CIT (Appeals) deleting the income from Voluntary contributions taxed by the Assessing Officer - whether voluntary contribution received by Trust (whether towards capital or revenue account) is income of the Trust as per section 2(24)(iia) - Held that - Voluntary contributions received for a specific purpose cannot be regarded as income under Section 2(24)(iia) of the Act since they are capital receipts and tied up grants for specific purpose. From a perusal of the orders of the authorities below, it appears to us that the list of donors filed by the assessee has not been examined by the authorities below, since the Assessing Officer has extensively considered the legal issue in the order of assessment. We have already upheld the impugned order of the learned CIT (Appeals) on the legal principles / issues. However, since the facts have not been discussed, we are of the opinion that, in the interest of justice it is necessary to direct the Assessing Officer to examine and verify the donation receipts maintained by the assessee, to come to the conclusion as to whether the amounts credited as building fund corpus in the accounts are supported by donation receipts issued. Subject to the examination and verification of the donation receipts as directed above, the amounts credited cannot be regarded as income as the same has been credited to the corpus fund/building fund and the order of the learned CIT (Appeals) is upheld. - Decided partly in favour of revenue for statistical purposes.
Issues Involved:
1. Whether voluntary contributions received for the specific purpose of constructing a 'Kalyana Mantap' are considered income under Section 2(24)(iia) of the Income Tax Act. 2. The applicability of Section 12A registration for claiming exemptions on voluntary contributions. 3. The legal distinction between capital and revenue receipts in the context of voluntary contributions. Detailed Analysis: Issue 1: Voluntary Contributions as Income The primary issue is whether voluntary contributions received for the specific purpose of constructing a 'Kalyana Mantap' fall within the definition of income under Section 2(24)(iia) of the Income Tax Act. The assessee argued that these contributions were capital receipts and tied-up grants for a specific purpose, and therefore, should not be considered as income. The CIT (Appeals) agreed with the assessee, relying on the ITAT Bangalore case of St. Anns Home for the Aged, which held that voluntary contributions for specific purposes are not income. The Revenue contended that all voluntary contributions, irrespective of their specific purpose, should be considered income under Section 2(24)(iia). Issue 2: Section 12A Registration The Revenue argued that the assessee was not registered under Section 12A during the relevant assessment years (2005-06 to 2009-10) and therefore could not claim exemptions on voluntary contributions. The CIT (Appeals) allowed the assessee's appeals, and the Revenue challenged this by citing the Supreme Court decision in 297 ITR 1, which states that benefits under Sections 11 and 12 are not available to trusts not registered under Section 12AA. Issue 3: Capital vs. Revenue Receipts The assessee contended that voluntary contributions received for specific purposes should be treated as capital receipts, not income. The ITAT Bangalore considered various judicial precedents, including the Hyderabad Bench decision in J. B. Educational Society, which held that tied-up grants for specific purposes are capital receipts and should not be treated as income. The ITAT Bangalore also referred to the Tribunal's decision in Nirmal Agricultural Society, which supported the view that voluntary contributions for specific purposes are not income. Tribunal's Findings: - Legal Position on Voluntary Contributions: The Tribunal examined several judicial pronouncements and concluded that voluntary contributions received for specific purposes are capital receipts and should not be treated as income under Section 2(24)(iia). The Tribunal cited the Hyderabad Bench decision in J. B. Educational Society and other similar cases to support this view. - Applicability of Section 12A Registration: The Tribunal noted that the issue at hand was not the benefit under Sections 11 and 12 but whether voluntary contributions are income. Therefore, the Supreme Court decision in 297 ITR 1 was not relevant to this case. - Verification of Donations: The Tribunal directed the Assessing Officer to examine and verify the donation receipts to confirm whether the amounts credited as building fund corpus were supported by donation receipts. Subject to this verification, the amounts credited to the corpus fund/building fund should not be regarded as income. Conclusion: The Tribunal upheld the CIT (Appeals) order on the legal principles that voluntary contributions for specific purposes are capital receipts and not income. However, it directed the Assessing Officer to verify the donation receipts to ensure they were credited correctly to the building fund corpus. The appeals by the Revenue were partly allowed for statistical purposes. Order Pronouncement: The order was pronounced in the open court on 14th August 2015.
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