Corpus donation received by Trust not registered under section 12A is not taxable

Versova Kokni Sunni Jamat Trust Vs Centralised Processing Centre (ITAT Mumbai)

CIT(A), though admitted that assessee is not registered under section 12A of the Act and thus no benefit of exemption could be allowed to the assessee under section 11 of the Act, rejected the contention of the assessee that irrespective of status of registration under section 12A of the Act the receipts for specific purposes cannot be treated as income under section 2(24) of the Act by placing reliance upon the order dated 30.01.2017 passed by the Co­ordinate Bench of Tribunal in Bank of India Retired Employees Medical Assistance Scheme v/s CIT: ITA No. 3249/Mum/2016. Being aggrieved the assessee is in appeal before ITAT.

In the present case, it is evident from the record that there is no dispute that the assessee is trust registered with “Maharashtra State Board of Wakf”. It has also not been disputed that assessee is not registered under section 12A of the Act and thus not entitled to any benefit under section 11 of the Act. The Assessing Officer rightly proceeded to disallow the erroneous claim made by the assessee under section 11 of the Act, which is available only to a trust registered under section 12A of the Act. However, before the CIT(A), the assessee agreed that it had made wrongful claim under section 11 even when assessee is not registered under section 12A of the Act and submitted that despite not being registered under section 12A of the Act, the corpus donation received specifically for the purpose of purchase of property/Dargah is not taxable being ^„capital receipt‟ in nature.

The CIT(A) by merely referring to the decision of Co-ordinate Bench of Tribunal in Bank of India Retired Employees Medical Assistance Scheme (supra) rejected the fresh plea made by the assessee. We find that in Bank of India Retired Employees Medical Assistance Scheme (supra), the appeal before the Co-ordinate Bench of Tribunal was against the order passed under section 263 of the Act and the taxpayer before the Tribunal though not being registered under section 12A and thus not eligible for exemption under section 11 of the Act was granted relief by the Assessing Officer under section 11(1)(d) of the Act in respect of corpus donation. Further the corpus donation received by the taxpayer in the aforesaid case was granted without specifying the specific purpose for which the same was to be applied. Thus, in light of these facts, the Tribunal dismissed the appeal filed by the assessee and upheld the order passed under section 263 of the Act. The Tribunal further noted that the decisions, as relied upon by the taxpayer, are not applicable, as in the facts of those cases the corpus donation received by the trust was for utilisation for specific purposes and thus was accordingly held not taxable being ^„capital receipt‟ in nature despite the fact that the trust was not registered under section 12A of the Act. Thus, in view of the above, the reliance placed by CIT(A) on the decision of Co-ordinate bench of Tribunal in Bank of India Retired Employees Medical Assistance Scheme (supra) to deny the claim made, for the first time, by the assessee in the present case is erroneous and cannot be sustained.

Further we find that the Co-ordinate bench of Tribunal in ITO versus Serum Institute of India Research Foundation, ITA No. 621/PUN/2016 vide order dated 29.01.2018 following the decision of another Co-ordinate bench of Tribunal in Chadraprabhu Jain Swetamber Mandir v. ACIT [2017] 82 com 245 (Mumbai-Trib.) held that ^„corpus donations‟ received for specific purpose by the trust, which is not registered under section 12 A/12AA of the Act, are not taxable as they assume the nature of ^„Capital Receipt‟.

Please become a Premium member. If you are already a Premium member, login here to access the full content.