ITO Vs Skill Development Society (ITAT Ahmedabad)
ITAT Ahmedabad held that amount of corpus of donations i.e. voluntary donations received by trust registered under section 12A are considered as capital receipts and hence not chargeable to Income Tax Act. Accordingly, appeal of revenue dismissed.
Facts- The assessee i.e. Skill Development Society is a public charitable trust registered/approved under the provisions of Section 12A/12AA of the Income Tax Act, 1961. During the relevant assessment year 2019-10, the assessee did not have any income except the amounts received by way of voluntary contribution as stated by the trust. The approval of the Trust was initially granted on 30-01-2020 w.e.f. 25-10-2019 in respect of section 11 and 12. The income of the trust was claimed to be exempt for the relevant assessment year 2019¬-20. However, this voluntary contributions treated as income by the Income Tax Department and demand for tax applicable thereon to give with interest was raised by the Income tax Department vide intimation u/s. 143(1) dated 26-03-2021. The Income Tax Department did not take assessee’s contention. The CIT(A) allowed the appeal of the assessee. Being aggrieved, revenue has preferred the present appeal.
Conclusion- Held that the assessee has made application for registration on 25-10-2019 and the approval was granted on 30-01-2020. The proviso to section 11 sub-section 2 will apply on the date of approval of pending proceeding and since the CPC proceeded on the date of 27-06¬2023, the approval was already granted and thus the proviso will apply in the present assessee’s case. These submissions of the ld. A.R. appears to be justifiable as there was no change of any objects and activities of the trust for assessment year 2020-21 and that also of assessment year 2019-20. Thus, the decisions cited by the ld. A.R., when the entire process of assessment starts from the stage of filing of return u/s. 139 or issuance of notice u/s. 142(1) till the making of the assessment order u/s. 143(3) of section 144 will be applicable in assessee’s case vis-à-vis the assessment proceedings when pending before the Assessing Officer on the date of registration u/s. 12A of the Act in terms of section proviso of section 12A(2) of the Act which provides for the grant of registration for preceding assessment year. The corpus of donations i.e. voluntary donations are considered a capital receipts which are not chargeable to the Income Tax Act and therefore the same cannot be considered as income.
