Corpus donation by charitable trust is not lending of trust property, so section 13 anti-abuse rules do not apply.

Receipt of fixed deposit receipts as a corpus donation by a charitable trust does not amount to lending of the trust's income or property to a person covered by section 13(3) unless the trust itself parts with funds or property through a loan or similar lending transaction. On that basis, the statutory conditions for deeming benefit under section 13(2)(a) were not satisfied, and the same reasoning applied to section 13(2)(h). A corpus donation, by itself, is therefore outside those anti-abuse provisions when no lending by the trust is shown.

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Issues: Whether receipt of fixed deposit receipts as a corpus donation by a charitable trust amounted to lending of the trust's income or property to a person referred to in section 13(3) so as to attract section 13(2)(a) or section 13(2)(h) of the Income-tax Act, 1961.

Analysis: Section 13(2)(a) applies only where any part of the income or property of the trust is lent to a person referred to in section 13(3) without adequate security or adequate interest. The trust here did not lend any part of its income or property to such a person; it merely received fixed deposit receipts by way of donation towards the corpus of the trust fund. On that footing, the statutory condition for deeming use or application for the benefit of a specified person was not satisfied. The same reasoning applied to section 13(2)(h).

Conclusion: The receipt of the donation did not amount to lending of trust funds or property, and sections 13(2)(a) and 13(2)(h) were not attracted. The question was answered in favour of the assessee.

Ratio Decidendi: A corpus donation received by a charitable trust does not constitute lending of the trust's income or property to a specified person unless the trust itself parts with its funds or property by way of a loan or similar lending transaction.

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