Verified corpus donation not taxable even if received by trust not registered u/s 12AA

Guru Govind Singh Educational Society Vs ITO (ITAT Amritsar)

ITAT Amritsar held that corpus donation received by trust not holding the registration u/s 12AA is not taxable provided the same is verified. Accordingly, matter remitted back to AO for verification of corpus donation.

Facts- The assessee is an educational society and running school in the name and style of G.N. Convent School, Village, Bhaloor, Distt. Moga. During assessment proceeding, AO found that the assessee received corpus fund amounting to Rs.97,42,782/-. The investigation was carried out by AO against the investment of corpus fund. Being dissatisfied on outcome of investigation, AO added back the corpus fund received by the assessee from the party the amount of Rs.97,42,782/- & calculated tax accordingly. AO also claimed that after treating this corpus fund amounting to Rs.97,42,782/- as income the assessee’s turnover is re-calculated amount to Rs.1,88,82,890/-. The assessee was not registered u/s 12A of the Act. So, the exemption u/s 11 and 12 of the Act was rejected for violation of Section 12AA of the Act.

Being aggrieved assessee filed an appeal before CIT(A). CIT(A) upheld the order of AO. Being aggrieved assessee has preferred present appeal.

Conclusion- The assessee is eligible the corpus donation though the assessee is not holding the registration u/s 12AA. From the factual matrix and considering the order of the revenue authorities, it is found that the grievance of the revenue is related to unverified corpus donation. The entire corpus donation was taken in the total income and was taxed accordingly. There is no point that the assessee cannot take the corpus donation without availing the registration u/s 12AA. But the unverified corpus donation is the moot point of the grievance of the revenue. The assessee filed a written submission with details of the payment and assessee is also interested re verification of the evidence before the ld. assessing authority. The ld. DR had not made any strong objection against this assessee’s submission. Accordingly, the matter is remitted back to the ld. AO for further verification of the corpus donation amount to Rs.97,42,782/-received by the assessee for this impugned assessment year.

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