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2022 (10) TMI 168 - AT - Income TaxAssessment of trust - bringing to tax corpus donation as alleged income of the appellant trust - assessee is not enjoying registration under section 12A - HELD THAT - Admittedly, the assessee is not enjoying registration under section 12A for the A.Y. 2014-15 and the assessee was granted registration by CIT(E) w.e.f. A.Y. 2015-16 only. From the assessment order it is clearly discernible that the A.O. has not doubted or disputed that the impugned amount pertains to corpus funds received by the assessee during the relevant financial period. This fact was also not disputed by the Ld. CIT(E). But the authorities below have treated the corpus donation as taxable in the hands of assessee for want of registration under section 12A for the A.Y. 2014-15. As has been held in the case of ITO vs., Serum Institute of India Research Foundation 2018 (2) TMI 103 - ITAT PUNE , that even if the assessee is not granted registration under section 12A of the I.T. Act, 1961 for the relevant period, then also corpus funds cannot be taxed in the hands of assessee in absence of such registration. Therefore, Allow the claim of assessee and direct the A.O. to delete the addition. Accordingly, appeal of the assessee is allowed.
Issues Involved:
1. Taxability of corpus donation of Rs. 10,42,750/- as income of the appellant trust. 2. Charging of interest under sections 234A, 234B, and 234C of the Income Tax Act, 1961. Detailed Analysis: 1. Taxability of Corpus Donation: The primary issue revolves around whether the corpus donation of Rs. 10,42,750/- received by the appellant trust should be taxed as income despite the trust not having registration under section 12A of the Income Tax Act, 1961 for the assessment year 2014-15. - Assessee's Argument: The assessee argued that the corpus donation should not be taxed, citing the Order of ITAT, Pune Bench in the case of ITO vs. Serum Institute of India Research Foundation. The precedent established that corpus funds received by a trust are not taxable even if the trust is not registered under section 12A for the relevant assessment year. - Revenue's Argument: The Revenue contended that since the trust applied for registration under section 12A only after filing the return of income and receiving notice under section 143(2), and was granted registration effective from the assessment year 2015-16, the claim for exemption cannot be allowed for the assessment year 2014-15. - Tribunal's Decision: The Tribunal, after considering the rival submissions and referencing the decision in the case of Serum Institute of India Research Foundation, concluded that even if the trust is not registered under section 12A for the relevant period, corpus funds cannot be taxed. The Tribunal emphasized judicial discipline and the need to uphold favorable views when divergent opinions exist. Consequently, the Tribunal directed the Assessing Officer to delete the addition of Rs. 10,42,750/-. 2. Charging of Interest under Sections 234A, 234B, and 234C: The second issue concerns the correctness of charging interest under sections 234A, 234B, and 234C of the Income Tax Act, 1961. - Tribunal's Decision: The Tribunal noted that this ground is consequential in nature and does not require separate adjudication. Therefore, no specific ruling was provided on this issue. Conclusion: The appeal was partly allowed, with the Tribunal ruling in favor of the assessee on the primary issue of corpus donation taxability. The addition of Rs. 10,42,750/- was directed to be deleted, following the precedent that corpus donations are not taxable even if the trust lacks registration under section 12A for the relevant assessment year. The issue of interest under sections 234A, 234B, and 234C was deemed consequential and not adjudicated separately.
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