2020 (12) TMI 228 - HC - Income Tax

Exemption u/s 11 - Whether AO and appellate forums have jurisdiction to adjudicate the genuineness of the receipts by the trust which is vested with the Commissioner u/s 12A and 12AA especially when Sections 12(1) and 2(24)(iia) deems all income received by the assessee Trust to the rigor of Sections 11, 12 and 13 - voluntary contributions received by the appellant are in the nature of capitation fees - HELD THAT - As assessee submitted that the aforesaid substantial questions of law have already been answered against the revenue by a Bench of this Court in 'COMMISSIONER OF INCOME-TAX Vs. ADICHUNCHANGIRI MASAMSTANA MUTT' 2019 (1) TMI 1832 - KARNATAKA HIGH COURT AND 2019 (1) TMI 1829 - KARNATAKA HIGH COURT - The aforesaid submission could not be disputed by the learned counsel for the revenue. - Decided in favour of assessee.

Summary

Issues:
Jurisdiction of assessing officer and appellate forums to adjudicate genuineness of trust receipts under Sections 12A and 12AA of the IT Act.
Taxability of voluntary contributions as capitation fees in the hands of the appellant.

Analysis:
1. The appeal under Section 260-A of the Income Tax Act, 1961 was preferred by the assessee for the Assessment Year 2010-11. The substantial questions of law raised pertained to the jurisdiction of the Assessing Officer and appellate forums to assess the genuineness of trust receipts, especially when the IT Act deems all income received by the assessee Trust to the rigor of relevant sections. Additionally, the issue of whether voluntary contributions received by the appellant should be considered as capitation fees and hence taxable was also raised.

2. The counsel for the assessee pointed out that similar substantial questions of law had been answered against the revenue in previous judgments of the Court. Specifically, the decisions in 'COMMISSIONER OF INCOME-TAX Vs. ADICHUNCHANGIRI MASAMSTANA MUTT' and another division bench judgment were cited, which favored the assessee's position. The counsel for the revenue did not dispute this submission.

3. The Court, in line with the precedents set by the previous judgments of two Division Benches, ruled in favor of the assessee and against the revenue. The substantial questions of law framed in the appeal were answered in favor of the assessee. Consequently, the order of the Income Tax Appellate Tribunal for the Assessment Year 2010-11 was quashed, and the appeal was allowed.

4. The judgment highlighted the importance of consistency in legal interpretation and application, relying on past decisions to guide the resolution of similar issues. The ruling provided clarity on the jurisdiction of assessing authorities regarding trust receipts and the taxability of specific contributions, ensuring a fair and just application of tax laws in the given context.