ITO v. Gaudiya Granth Anuved Trust

INCOME TAX ACT, 1961

--Charitable trust--Charitable purposeTaxability of corpus donation--Assessee-charitable trust, which was not registered, had shown donation of Rs. 68.50 lakhs from BBT. AO treated donation as income under section 2(24)(iia) and computed assessment on total income of Rs. 68.70 lakhs rejecting assessee's contention that donation received was towards corpus of trust. CIT(A) deleted addition observing that term 'corpus fund' and corpus donation, as is being used with respect to trust denotes a permanent fund kept for basic expenditure needed for administration and survival of organisation. BBT, in its letter has, very categorically, mentioned amount as corpus donation and such amount has been used by trust for purchasing land and giving money on interest as loan. It held that corpus donation is not taxable under IT Act, being in nature of capital receipt. Revenue was in appeal contending that CIT(A) had erred in law and on facts in failing to appreciate that voluntary contributions (whether corpus donations or general donations) received by a charitable trust are income, as defined vide section 2(24)(iia) and corpus donations are exempt from tax under section 11(1)(d) only if assessee is registered under section 12A/12AA of the Act. Held: CIT(A) after considering decisions of Tribunal Benches at Delhi, Chennai and Kolkata, and Delhi High Court had decided issue in assessee's favour. Following those decisions and facts of the present case being identical, it is held that corpus donations, being in the nature of capital receipt, are not chargeable to income-tax, even where trust is not registered under section 12AA. No infirmity being found in order of CIT(A), Tribunal confirmed the same to maintain consistency.