The Pune bench of Income Tax Appellate Tribunal (ITAT) recently held that voluntary contributions received towards the corpus of trust could not be taxable .
Assessee Nandkishor Education Society is a society registered under the Bombay Public Trust Act, 1950. The assessee operates blood banks under the name and style as “Arpan Blood Bank” in various districts of Maharashtra. The assessee conducts donor’s camps at various places to collect the blood and to preserve it in good condition for which it requires to maintain a laboratory with modern equipment with well trained staff. Assessing officer disallowed corpus donations as revenue receipts in view of the fact that the assessee has no registration under section 12AA of the Income Tax Act 1961.Against the order assesee filed appeal before ITAT.
Sanket M. Joshi counsel for the assessee relied upon the decision of the Serum Institute of India Research Foundation case submits that “irrespective of having registration u/s. 12AA of the Act, the voluntary contributions specifically received towards corpus of the trust cannot be brought to tax”.
Ramnath P. Murkunde counsel for the revenue submits that assessee is not eligible for exemption because assessee not having registration under section 12AA of the Income Tax Act 1961.
After considering the contentions of the both parties the division bench of the Inturi Rama Rao, (Accountant Member ) S.S. Viswanethra Ravi, (Judicial Member)allowed the appeal filed by the assessee and observed that voluntary donations received for specific purpose forming the corpus of assessee’s trust were directly made to the Balance sheet as the capital receipt. Also corpus specific voluntary donations are not taxable in the case of unregistered trust.
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