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TMI Blog2016 (11) TMI 1041X X X X Extracts X X X X X X X X Extracts X X X X ..... ads as under : "I. Treating corpus donation of Rs. 4,55,446 as income 1. The learned Commissioner of Income-tax (Appeals) failed to appreciate that the appellant is a duly registered trust, and hence, corpus donation of Rs. 4,55,446 was income derived from property held under trust, and hence, entitled to exemption. 2. Without prejudice to the above, the learned Commissioner of Income-tax (Appeals) failed to appreciate that Rs. 4,55,446 is capital receipt, and hence, not taxable. 3. Without prejudice to the above, even if Rs. 4,55,446 is held liable to tax, the deficit of Rs. 2,00,897 in receipt and expenditure account should have been deducted from the same, and only balance should have been taxed. III. Invoking section 164(2) 4. The learned Commissioner of Income-tax (Appeals) failed to appreciate that all surplus corpus donation of the appellant was exempt under section 11. Hence, the provisions of section 164(2) of the Act are not applicable." 3. The brief facts of the case are that the assessee is a religious charitable trust registered under the Bombay Public Trusts Act, 1950 engaged in providing stay facilities to sadhus and sadhvis, and pooja facilities to Swet ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on 12A/ 12AA of the Act. The Assessing Officer observed that as per the provisions of section 11(1)(d) of the Act income in the form of voluntary contributions made with a specific direction that they shall form part of the corpus of the trust shall not be included in the total income of the previous year of the trust in receipt of the income. In the absence of registration under section 12A or 12AA of the Act the immunity granted by section 11(1)(d) is not available to the assessee for corpus donation as section 11 of the Act is not applicable for association of persons. Thus, the Assessing Officer added an amount of Rs. 4,55,446 to the total income of the assessee being corpus donation received by the assessee, vide assessment order dated January 31, 2014, passed under section 143(3) of the Act. 4. Aggrieved by the assessment order dated January 31, 2014 passed by the Assessing Officer under section 143(3) of the Act, the assessee filed its first appeal before the learned Commissioner of Income-tax (Appeals). 5. Before the learned Commissioner of Income-tax (Appeals), the assessee-trust submitted that the assessee is charitable trust formed for religious and charitable purposes ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e Act, that no part of the trust funds are invested in contravention of the investment pattern prescribed under section 13(5) of the Act, the assessee-trust is not engaged in any business and the objects of trust is not to earn profit and to share among the members. The assessee relied upon the following case law : 1. ITO v. Peetadhipathi Trust ITA Nos. 1382 and 1535/Bang/2010, dated January 31, 2012. 2. Sree Sree Ramkrishna Samity v. Deputy CIT [2015] 44 ITR (Trib) 678 (Kol), ITA Nos. 1680 to 1685/2012 dated October 9, 2015. 3. ITO v. Gaudiya Granth Anuved Trust [2013] 28 ITR (Trib) 161 (Agra) ITA No. 386/Agra/2012. 4. Shri Shankar Bhagwan Estate v. Income-tax Officer, [1997] 61 ITD 196 (Cal). 5. Society for the promotion of Education, Adventure Sport and Conservation of Environment v. CIT [2015] 372 ITR 222 (All) (Appnx.) ; [2008] 171 Taxman 113 (All). 6. Rev Father Trust Oscar Colasco Memorial Medical Association v. CIT [2009] 31 SOT 1 (Mum). 7. R. B. Shreeram Religious and Charitable Trust v. CIT [1988] 172 ITR 373 (Bom). The assessee submitted that the Assessing Officer has erred in bringing to tax the income of the assessee at maximum marginal rate in the statu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rought to tax corpus donation at maximum marginal rate of tax. It is submitted that there is corpus donations of Rs. 4,55,446 which is not taxable even if the trust is not registered under section 12A/ 12AA of the Act. It is submitted that the donors have donated the corpus donations with specific directions about its application towards specific purpose for which the respective funds were created and it cannot be used for any other purposes. The learned counsel relied upon the following decisions : 1. ITO (Exemptions) v. Smt. Basanti Devi and Shri Chakhan Lal Garg Education Trust ITA No. 5082/Delhi/2010 dated January 19, 2011, Delhi Tribunal. 2. DIT v. Smt. Basanti Devi and Shri Chakhan Lal Garg Education Trust ITA No. 927 of 2009 dated September 23, 2009, Delhi High Court. 3. ITO v. Gaudiya Granth Anuved Trust [2013] 28 ITR (Trib) 161 (Agra). 4. Indian Society of Anaesthesiologists v. ITO [2014] 32 ITR (Trib) 152 (Chennai). 5. ITO v. Vokkaligara Sangha [2015] 44 CCH 509 (Bang) 6. Shri Shankar Bhagwan Estate v. ITO [1997] 61 ITD 196 (Cal). The assessee contended that the corpus donations cannot be brought to tax and also the learned Commissioner of Income-tax (Appeals ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s not registered under section 12A/12AA of the Act. In ITO (Exemptions) v. Basanti Devi and Shri Chakhan Lal Garg Education Trust in ITA No. 5082(Delhi) 2010 for the assessment year 2002-03 vide orders dated January 19, 2011, Income-tax Appellate Tribunal, Delhi relying on the Income-tax Appellate Tribunal, Delhi decision in the taxpayers own case for the assessment year 2003-04 whereby the Tribunal held that the amount received by the taxpayer trust from its settler, towards infrastructure fund, was not taxable in the hands of the taxpayer trust, despite the fact that the taxpayer trust is not registered under section 12A of the Act, and consequently the Tribunal dismissed the Revenue's appeal. The Revenue went in appeal and the hon'ble Delhi High Court dismissed the appeal of the Revenue against the Tribunals order for the assessment year 2003-04 in ITA No. 927 of 2009 vide orders dated September 23, 2009 in Smt. Basanti Devi and Shri Chakhan Lal Garg Education Trust. Similar view was taken by the Income-tax Appellate Tribunal, Agra in the case of ITO v. Gaudiya Granth Anuved Trust reported in [2013] 28 ITR (Trib) 161 (Agra) ; [2014] 48 taxmann.com 348 (Agra) whereby Tr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of corpus donation. A donation will be treated as corpus donation only if it is accompanied by a specific written direction of the donor. In the absence of any written direction of the donor, a contribution of grant cannot be transferred to corpus fund. In the present case, the donor, the Bhaktivedanta Book Trust has very categorically in his letter, while providing money to the appellant trust, has mentioned the amount of Rs. 68,50,000 as corpus donation and such amount has been used by the trust for purchasing the land and giving money on interest as loan. Therefore, the amount of Rs. 68,50,000 shown by the appellant trust has been found to be in the nature of corpus donation. Now, the question arises whether such corpus donation is taxable as income or not even in the cases in which the trust is not registered under section 12AA because for those trusts which are registered under section 12AA, exemption to corpus donation has been provided as per the provision of section 11(1)(d). For such trust to which registration under section 12AA has not been provided, its taxability is required to be decided with reference to the scheme of the Act as held in the decision of Pentafour So ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... said decision was followed by the Bombay High Court in the case of CIT v. Trustees of Kasturbai Scindia Commission Trust [1991] 189 ITR 5 (Bom). The position after the amendment is a fortiori. In the present cases the Assessing Officer on evidence has accepted the facts that all the donations have been received towards the corpus of the endowments. In view of this clear finding, it is not possible to hold that they are to be assessed as income of the assessees. We, therefore, hold that the assessment of the corpus donations cannot be supported. 12. For the above reasons, we hold as under : 1. The religious endowments are not invalid on the ground that neither the temple nor the image had been consecrated at the time of creating the endowments. 2. The assessees have to be assessed in the status of 'individual' since they are artificial juridical entities and 3. The voluntary contributions received by the assessee towards the corpus cannot be brought to tax." 6.5 Even after considering the definition of section 2(24)(iia) read with section 12, the hon'ble Income-tax Appellate Tribunal, Kolkata arrived to the conclusion that the voluntary contribution in the nat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... at the Commissioner of Income-tax (Appeals) after considering the decision of three Tribunals, i.e., Income-tax Appellate Tribunal, Delhi in the case of Smt. Basanti Devi and Shri Chakhan Lal Garg Education Trust, the Revenue filed appeal before the hon'ble Delhi High Court. The hon'ble Delhi High Court confirmed the order of the Income-tax Appellate Tribunal, the Revenue filed appeal before the hon'ble Supreme Court, which has been dismissed for non-prosecution vide judgment Civil Appeal Nos. 7036 of 2011, judgment dated January 28, 2013, Income-tax Appellate Tribunal Chennai Bench in the case of Pentafour Software Employees Welfare Foundation v. Asst. CIT (I.T. Appeal Nos. 751 and 752 (Mds.) of 2007) and others and Income-tax Appellate Tribunal, Kolkata Bench in the case of Shri Shankar Bhag wan Estate v. ITO, dated January 13, 1997, [1997] 61 ITD 196 (Cal) decided the issue in favour of the assessee. We find that the facts of the case under consideration are identical to the facts of the case decided by the Income-tax Appellate Tribunal, Delhi Bench in the case of Smt. Basanti Devi and Shri Chakhan Lal Garg Education Trust and other orders of the Income-tax Appellate ..... X X X X Extracts X X X X X X X X Extracts X X X X
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