The Tax Publishers2020 TaxPub(DT) 5220 (Bang-Trib) INCOME TAX ACT, 1961
Section 11(1)(d)
Corpus donation of a charitable trust to another charitable trust was not prohibited until amendment to section 11(1)(d) by inserting an explanation in the Finance Act, 2017 with effect from 1-4-2018 and said amendment was effective prospectively, and not retrospectively. Accordingly, AO was directed to treat amount received by assessee-trust from the group trust as corpus donation under section 11(1)(d).
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Charitable trust - Corpus donation - Amount received from group trust -
Assessee trust received corpus donation of Rs. 41,92,32,911 out of which Rs. 36,16,88,341 was from the assessee's group Trusts AO disallowed claim of corpus nature and treated Rs. 36,16,88,341 as regular income of assessee trust. AO took the view that all such donations from other trusts are to be treated as regular income of assessee and could not be claimed as corpus nature which would lead to large scale manipulation between trusts by transferring regular income as corpus donation to other trusts thus making the same immune from application during the year under consideration.Held: It was nobody's case that donors had collected any donation on behalf of assessee from students or from parents for giving admission in the institutions run by assessee. AO without looking into this issue, straightaway treated donation income of assessee. AO failed to carryout necessary enquiry with regard to sources from which such donors had donated the amount to assessee and was unable to comment on this aspect. Corpus donation of a charitable trust to another charitable trust was not prohibited until amendment to section 11(1)(d) by inserting an explanation in the Finance Act, 2017 with effect from 1-4-2018 and said amendment was effective prospectively and not retrospectively. Accordingly, AO was directed to treat the sum of Rs. 36,16,88,341 as corpus donation under section 11(1)(d).
REFERRED : Bharatiya Samskriti Vidyapith Trust ITA No. 278/2007, dated 13-11-2013 : 2014 TaxPub(DT) 3718 (Karn-HC).
FAVOUR : In assessee's favour.
A.Y. : 2015-16
IN THE ITAT, BANGALORE BENCH
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