SNDP Yogam Kozhencherry Union Vs ITO (ITAT Cochin)
Assessee is a registered charitable trust under the Charitable Trust Act but not registered u/s 12AA of the Income Tax Act, 1961. No returns were filed u/s 139(1). Based on information about cash deposits of in specified bank notes (SBNs) during demonetization, AO initiated reassessment proceedings u/s 148 & completed the assessment u/s 147 r.w.s.144B. Further, AO added ₹21,26,524, being donations received towards a building fund, holding that in the absence of Sec12AA registration, exemption u/s 11 is not available, & voluntary contributions are taxable.
Though the assessee argued before CIT(A) that voluntary contributions are capital in nature & hence not taxable, CIT(A) upheld the additions made by the AO.
On further appeal, Tribunal noted that the issue that arises for its consideration is “whether the voluntary contributions received by the appellant trust towards building fund are liable to tax”. Tribunal noted that “Provisions of clause (2a) of sub-section (24) of section 2 defines income to include voluntary contributions received by a trust created wholly or partly for charitable or religious purposes or by an institution established wholly or partly for such purposes. Therefore, in the absence of registration u/s. 12AA of the Act, such income does not qualify for exemption u/s. 11 of the Act and is clearly taxable in view of the plain provisions of section 2(24) of the Act. The fact that the voluntary contributions were made towards building fund do not alter this position.”
