Shree Aanta Kadva Patidar Samaj Vs ITO (Exemption) (ITAT Ahmedabad)
Subsequent 12AA Registration Saves Trust: ITAT Treats Corpus Donation as Capital Receipt, Deletes Tax Addition
The Ahmedabad ITAT granted relief to Shree Aanta Kadva Patidar Samaj and held that corpus donations received by the trust could not be taxed merely because registration under Section 12AA was granted subsequently. The Tribunal observed that once registration stood granted before processing of return and there was no change in objects of the trust, benefit of Section 11 could not be denied.
The assessee-trust had claimed corpus donation of ₹22.28 lakh as exempt under Section 11(1)(d). However, CPC while processing return under Section 143(1), and later while rejecting rectification application under Section 154, denied exemption and computed tax at maximum marginal rate of 30%. The CIT(A) also confirmed the action.
Before the Tribunal, it was pointed out that registration under Section 12AA had already been granted on 08.02.2018, whereas the intimation under Section 143(1) was passed later on 31.03.2019. The ITAT noted that neither the genuineness of corpus donations nor the charitable nature of the trust was disputed by the department. Further, the authorities failed to consider the effect of subsequent registration and the first proviso to Section 12A(2).
The Tribunal accordingly held that corpus donations were capital receipts eligible for exemption and that taxing the trust at maximum marginal rate was unjustified. Relief was also granted regarding incorrect tax computation and consequential interest.
FULL TEXT OF THE ORDER OF ITAT AHMEDABAD
