Brief about the case
The assessee is a society registered under the Karnataka Societies Registration Act, 1960 for carrying on activities for charitable purposes and was granted registration under Section 12A of the Income Tax Act, 1961 w.e.f. Assessment Year 2012-13 onwards. The Assessing Officer observed that as per the returns of income for Assessment Years 2005-06 to 2009-10, the income from voluntary donations were claimed to be exempt from taxation by claiming application towards charitable purposes, even though the income of the assessee was not eligible for exemption as it did not have the benefit of registration under Section 12A of the Act for these assessment years. Consequently, the Assessing Officer initiated proceedings under Section 147 of the Act to bring to tax income of the assessee that had escaped assessment for Assessment Years 2005-06 to 2009-10 and issued notices under Section 148 of the Act, treating the voluntary donations as taxable income.
The assessee contended that the voluntary contributions received for specific purposes is a capital receipt, hence not taxable.The CIT(Appeals) decided in favour of the assessee. The revenue knocked the door of ITAT.
The ITAT considered numerous case laws and verified whether the donations were genuinely voluntary and tied up.
Finally, The Bangalore ITAT stated that, in the interest of justice it is necessary to direct the Assessing Officer to examine and verify the donation receipts maintained by the assessee, to come to the conclusion as to whether the amounts credited as building fund corpus in the accounts are supported by donation receipts issued. Subject to the examination and verification of the donation receipts as directed above, the amounts credited cannot be regarded as income as the same has been credited to the corpus fund/building fund and the order of the learned CIT (Appeals) is upheld.
Facts of the case:
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