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TMI Blog2021 (7) TMI 1341X X X X Extracts X X X X X X X X Extracts X X X X ..... e complex situation in our country. If the provision of law is interpreted in such a manner to allow all donations to corpus as exempted from tax, it would certainly open the floodgates to all and sundry, making it difficult for the Income Tax authorities to differentiate between the original and fake. The registration of trust, in case the trust has to accept donations and build corpus, is one way of regulating the flow of money into the trust and avoid unscrupulous elements trust from evading tax by seeking exemptions indiscriminately. - Decided against assessee. - Tax Case Appeal Nos.281, 290 & 291 of 2016 - - - Dated:- 30-7-2021 - Hon'ble Mr.Justice M. Duraiswamy And Hon'ble Mrs.Justice R. Hemalatha For the Appellant : M/s.G.Vardhini Karthik for Ms.J.Sree Vidhya For the Respondent : Mr.J.Narayanasamy Senior Standing Counsel COMMON JUDGMENT R. HEMALATHA, J. The three appeals are filed by the appellants M/s.Rasipuram Rotary Club Trust and M/s.Rasipuram Kannada Saineegar Samuga Pradama Sangam Educational Trust, Rasipuram against the orders of the ITAT 'SMC' Bench, Chennai in ITA Nos.45/Mds/2015, 43/Mds/2015 44/Mds/2015 for the assess ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... i. Whether on the facts and circumstances of the case, the contributions towards the corpus fund with specific directions can be treated as income under Section 2(24)(iia) in the case of the assessee, who is not registered charitable trust under Section 12AA of the Act? ii. Whether on the facts and in the circumstances of the case, the conditions laid down in Sections 11 and 12 shall apply even to trusts, which are not registered under Section 12AA of the Act, 1961? and iii.Whether on the facts and in the circumstances of the case, the Appellate Tribunal was right in holding that the corpus donations, which are capital receipts, are liable to be taxed at normal rates, since the appellant trust is not registered under Section 12AA, even though the appellant is not claiming exemption under Section 11? 4. Ms.J.Sree Vidhya, learned counsel for the appellants would contend that a) the trust has not claimed exemption under Section 11 of the Income Tax Act which the Income Tax Appellate Tribunal failed to note. b) the accretion to the corpus fund has to be treated as capital receipts and are not liable to tax. c) the voluntary contributions made with specific direction ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d Section 12. Nevertheless, to claim such tax benefits individuals need to get registered as per the norms of Section 12A of Income Tax Act. In case a non-profit organisation fails to register under Section 12A, all their future financial transactions and receipts will be deemed taxable. All these make it essential for non-profit entities to become familiar with the components of Section 12A of Income Tax Act in detail. They should also find out more about the eligibility requirements and documents among others. 7. Thus in the light of the above it can be inferred that- a) voluntary contributions received with a specific direction that it forms a part of the corpus of the trust is treated as follows : i. If the trust or charitable institution is registered under Section 12 AA of Income Tax Act, 1961 the voluntary contributions are not taxable as per Section 11(1)(d) of Income Tax Act, 1961 ii. If the trust or institution is not registered under Section 12AA, the voluntary contributions are taxable as per Section 2 (24) (iia) of the Income Tax Act, 1961 b) voluntary contributions received without direction that it forms part of corpus is generally taxable in all cases ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e registration was pending, and therefore the facts were different. 9.The various Income Tax Appellate Tribunals in the following decisions also did not deal with an unregistered trust : I. ITO Vs. Shrisachyaya Mataji Osian, Jodhpur ITA No.538/Jodh/2013, dated 09/05/2014 II. DIT (Exemption) Vs. Basanti Devi and Chakkhanlal Garg Educational Trust III.N.A.Ramachandra Raja Charity Trust V. First ITO (1985) 14 ITD 230 (Mad. Trib) ; Meherangarh Museum Trust V. Asstt. CIT (2014) 48 taxmann.com 129 (Jodh. Trib) IV.Hakmuddin Mulla Hasanbhai Singaporewala Charitable Tust V. 5th ITO [1985] 23 TTJ 43 (Bom. Trib) V. DIT V. Sri Ramakrishna Seva Ashrama [2012] 18 taxmann.com 37, 205 Taxman 26(Kar.) VI.St.Ann's Home for the Aged V. ITO [1980] 10 TTJ 144 (Bang. Trb) VII.Shri Vasu Pujiya Jain Derasar Pedhi V. ITO [1991] 39TTJ337 (JP. Trib) VIII.ITO V. Sardar Vallabhbhai Education Society [2012] 26 taxmann.com 174 (Ahd. Trib.) (TM) IX.CIT Vs. Trustees of Visha Nima Charity Trust, (1982) 138 ITR 0564 (Bom HC) - AY 1965-66 X. ITO Vs. Gaudiya Granth Anuved Trust, (2014) 65 SOT 0137 (Agra) ((URO)) - AY 2007-08 XI.Chandraprabhu Jain Vs. ACIT, ( ..... X X X X Extracts X X X X X X X X Extracts X X X X
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