1985 (12) TMI 13

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..... f the assessee in the said assessment year and in doing so, he added the said amount of Rs. 45,000. Being aggrieved, the assessee preferred an appeal to the Appellate Assistant Commissioner contending that the said donation should be exempt from tax. It was contended that the said amount was received by the assessee as part of its capital and, therefore, was not taxable as income at all. The Appellate Assistant Commissioner held that under section 12(2) of the Income-tax Act, 1961, voluntary contribution received by the assessee from another charitable trust should be held to be income of the trust receiving such contribution. The assessment was confirmed. There was a further appeal by the assessee to the Income-tax Appellate Tribunal. .....

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..... under section 256(1) of the Income-tax Act, 1961, the following question has been referred as a question of law arising out of the order of the Tribunal for the opinion of this court: "Whether, on the facts and in the circumstances of the case and on a proper interpretation of section 12(2) of the Income-tax Act, 1961, the Tribunal was correct in holding that the sum of Rs. 45,000 representing the value of 450 cumulative preference shares of Rs. 100 each of M/s Kamala Mills Ltd. received by the assessee-trust as voluntary contribution from Rai Bahadur Moogtulal Taparia Charitable Trust could not be deemed to be income derived, from property in making the assessment of the assessee-trust ? " At the hearing, the learned advocate for the .....

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..... on 12 as they stood at the relevant time and also considered the decision of the Allahabad High Court and answered the question in favour of the assessee. The Gujarat High Court noted that from the decision of the Allahabad High Court, an application for leave to appeal to the Supreme Court had been rejected and the decision of the Allahabad High Court stood confirmed by the Supreme Court. (b) CIT v. Vanchi Trust [1981] 127 ITR 227 (Ker). In this case, the Kerala High Court following the decisions of the Allahabad and Gujarat High Courts held that a contribution given and accepted with a specific stipulation that the same will be treated as a corpus of the receiving trust and not as income will not come within the mischief of section 12(1 .....

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