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TMI Blog2008 (10) TMI 590X X X X Extracts X X X X X X X X Extracts X X X X ..... 2005-06. On consideration of the said application as well as the submissions made on behalf of the assessee-trust in support thereof, the following adverse findings were recorded by the learned Commissioner of Income-tax : (i) The trust is a wholly religious one as was evident from its objects and the same, therefore, does not qualify for exemption under section 80G. (ii) The amount of Rs. 20,55,631 received by the assessee-trust from Smt. Khushan Devi through her will was shown by it as donation towards corpus. There was, however, no specific direction from the deceased as per her will to the effect that the said amount would form part of the corpus of the assessee-trust. The said amount thus was liable to tax in the hands of the assessee-trust under section 12 read with section 11(1)(a) and it was thus not entitled for exemption as per the provisions of section 80G(5)(i). (iii) The various amounts received by the assessee-trust on account of shop rent, sale of milk and advertisement as well as water and electricity charges from the inmates of the Ashram were shown as donations received and the receipts meant for the donations were issued for the said amounts. As per the trust- ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he hon'ble Bombay High Court in the case of CIT v. Rajneesh Foundation [2006] 280 ITR 553. As regards the amount received by the assessee-trust through the will of Smt. Khushan Devi and taken to its corpus, learned counsel for the assessee submitted that the amount received through will cannot by any stretch of imagination be treated as income chargeable to tax. He contended that the learned Commissioner of Income-tax, therefore, was wrong in holding that the said amount was chargeable to tax. He also contended that the accounting treatment given by the assessee-trust to the said amount by crediting to its corpus was not relevant in this context and such accounting treatment was not conclusive to decide the nature of the said amount. He submitted that the intention of the deceased as impliedly apparent from the relevant will in any case was to give the funds to the assessee-trust for its overall welfare and there was thus nothing wrong on its part to credit the said amount to the corpus. Relying on the decision of the hon'ble Punjab and Haryana High Court in the case of Sonepat Hindu Educational and Charitable Society v. CIT [2005] 278 ITR 262, he contended that the taxability of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... for the period April 1, 1986 to March 31, 1988 and the same was renewed subsequently from time to time upto March 31, 2007. The application filed by the assessee in the prescribed form and in the prescribed manner on March 12, 2007 for renewal of the said exemption for a further period beyond April 1, 2007, however, was rejected by the learned Commissioner of Income-tax without pointing out any material change in the factual position including the objects of the trust. This action of the learned Commissioner of Income-tax thus was not in consonance with the rule of consistency as held, inter alia, by the hon'ble Supreme Court in the case of Radhasoami Satsang v. CIT [1992] 193 ITR 321 and by the hon'ble Delhi High Court in the case of Director of Income-tax (Exemptions) v. Escorts Cardiac Diseases Hospital Society [2008] 300 ITR 75. A perusal of the impugned order of the learned Commissioner of Income-tax shows that the renewal of registration under section 80G was denied by him to the assessee-trust mainly on three grounds which have already been enumerated by us while narrating the facts of the case in the foregoing portion of this order. At the time, of hearing before us, learn ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ent prescribed therein shall not be included in the total income of the previous year of the person in receipt thereof. Section 12(1) is a deeming provision whereby any voluntary contributions received by a trust created wholly for charitable or religious purposes or by an institution established wholly for such purposes, not being contributions made with a specific direction that they shall form part of the corpus of the trust or institution, is deemed to be the income from property held under trust for the purposes of section 11. A combined reading of the provisions of sections 11(1)(a) and 12(1) thus makes it clear that these are not charging provisions and in our opinion, the learned Commissioner of Income-tax was not correct in holding that the amount received by the assessee-trust under a will without a specific direction that it shall form part of the corpus of the trust is chargeable to tax in the hands of the assessee-trust as per the said provisions. On the other hand, the said provisions clearly provide for exemption and if the amount in question received by the assessee-trust was covered by the said provisions as held by the learned Commissioner of Income-tax himself, t ..... X X X X Extracts X X X X X X X X Extracts X X X X
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