10 June 2024


Judgments

Income Tax Appellate Tribunal

Nandkishor Education Society vs. Income-Tax Officer

MANU/IP/0048/2023

17.01.2023

Direct Taxation

Voluntary contributions specifically received towards corpus of the trust cannot be brought to tax

The only issue emanates for consideration is as to whether the CIT(A) justified in confirming the addition made by the AO on account of corpus contribution treating the same as revenue receipts in the facts and circumstances of the case.

The assessee is a society registered under the Bombay Public Trust Act, 1950. The assessee operates blood bank under the name and style as "Arpan Blood Bank" in various districts of Maharashtra. The assessee conducts donor's camps at various places to collect the blood and to preserve it in good condition for which it requires to maintain laboratory with modern equipments with well trained staff. It was submitted that, the assessee received voluntary donations for specific purpose. The assessee made entries to that effect in the Balance sheet as capital receipts. There is no dispute with regard to filing of details of list of donors, sample vouchers and other details in support of its claim.

Both the authorities below disallowed corpus donations as revenue receipts in view of the fact that the assessee has no registration under Section 12AA of the Income Tax Act, 1961 (IT Act). The learned AR referred to the decision of Co-ordinate Bench of the Tribunal in the case of Serum Institute of India Research Foundation and argued that irrespective of having registration under Section 12AA of the IT Act, the voluntary contributions specifically received towards corpus of the trust cannot be brought to tax.

The facts in the case of Serum Institute of India Research Foundation are similar to the facts of the case on hand. In the present case, as is evident from the impugned order that the assessee claimed a fund of Rs.54,50,000 as donation to the corpus of the assessee. The AO held that, the assessee is not eligible for exemption as the assessee not having registration under Section 12AA of the IT Act. Admittedly, the voluntary donations received for specific purpose forming the corpus of assessee's trust for directly made to the Balance sheet as the capital receipt. Therefore, when the donations forming the corpus of the assessee's trust received with specific purpose are capital in nature. Thus, the corpus specific voluntary donations are not taxable in the case of unregistered trust also and in view of the same the order of CIT(A) is not justified. Therefore, the denial of exemption for not having registration under Section 12AA of the IT Act resulted into disallowance therein is deleted. The appeal of assessee is allowed.

Tags : Exemption Denial Legality

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