Case Law Details
CIT Vs M/s Mata Amrithandamayi Mata (Kerala High Court)
A reading of Section 11 shows that subject to the provisions of Sections 62 and 63, the incomes enumerated therein shall not be included in the total income of the previous year of the person in receipt of the income. The person in receipt of the income, insofar as these cases are concerned, is the respondent assessee. One of the income that is enumerated in clause (d) of sub-Section (1) of the Section is the income in the form of voluntary contributions made with a specific direction that they shall form part of the corpus of the trust or institution. The fact that the donors had instructed that the interest earned shall be added to the corpus of the trust is undisputed. If that be so, the interest earned on the contributions already made by the donors would also partake the character of income in the form of voluntary contributions made with a specific direction that they shall form part of the corpus of the trust. If that be so, conclusion is irresistible that the Tribunal has rightly held that the interest earned would qualify for exemption under Section 11(1)(d) of the Income Tax Act.
Full Text of the High Court Judgment / Order is as follows:-
In these appeals filed by the Revenue concerning the assessment years 2007-2008, 2008-2009, 2009-2010 and 2012-2013, the common questions of law framed for the consideration of this Court are the following:
1. Whether the ITAT has erred on facts and law in treating the interest on corpus funds received by the assessee as corpus donations u/s 11(1)(d) of the IT Act, to be exempt from Income Tax while section 11(1)(d) covers donations with specific direction that they shall form part of corpus and not interest thereon since it will result in exemption to interest in perpetuity defeating the legislative intent?
2. Whether voluntary contributions received by a trust with specific direction that they shall form part of the corpus includes interest accruing/credited on deposits from above donations?
2. We heard the learned Standing Counsel appearing for the Revenue and the learned Senior Counsel appearing for the assessee.
3. The facts that are relevant to be noted are that the assessee, a charitable institution, entitled to exemption under Section 11 of the Income Tax Act. Such exemption is subject to the conditions prescribed therein. During the assessment years in question, it was found that on the voluntary contributions that were received by the assessee, interest was earned and the income earned on the contributions were added by the assessee to its corpus, acting upon the instructions in that behalf issued by the donors themselves. Rejecting the claim of the assessee for exemption under Section 11 (1)(d) of the Act, the interest earned was brought to tax. That was modified in appeal and the appellate order was confirmed by the Tribunal. It is in this background, the Revenue has come up in appeal.
4. While the learned counsel for the Revenue contended that interest earned being the income of the assessee is liable to be taxed, the learned Senior Counsel appearing for the assessee contended to the contrary.
5. Having considered the submissions made, we are of the view that the question that is framed has to be answered in the light of Section 11(1)(d) of the Act. A reading of Section 11 shows that subject to the provisions of Sections 62 and 63, the incomes enumerated therein shall not be included in the total income of the previous year of the person in receipt of the income. The person in receipt of the income, insofar as these cases are concerned, is the respondent assessee. One of the income that is enumerated in clause (d) of sub-Section (1) of the Section is the income in the form of voluntary contributions made with a specific direction that they shall form part of the corpus of the trust or institution. The fact that the donors had instructed that the interest earned shall be added to the corpus of the trust is undisputed. If that be so, the interest earned on the contributions already made by the donors would also partake the character of income in the form of voluntary contributions made with a specific direction that they shall form part of the corpus of the trust. If that be so, conclusion is irresistible that the Tribunal has rightly held that the interest earned would qualify for exemption under Section 11(1)(d) of the Income Tax Act.
We do not find any question of law arising in these cases for the consideration of this Court.
The appeals fail and are accordingly dismissed.
