Tax Tribunal Upholds Taxability of Corpus Donations for Unregistered Trust

The Tribunal upheld the decision that corpus donations received by an unregistered trust were taxable at normal rates as the trust was not registered under section 12AA of the Income-tax Act. Despite specific directions for contributions, the trust's unregistered status prevented the application of exemption under section 11(1)(d). The appeals of the assessee were dismissed, affirming the taxation of corpus donations at normal rates due to the unregistered status of the trust.

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Issues:
Assessment of corpus donations for unregistered trust under Income-tax Act, 1961.

Analysis:
1. The appeals were against separate orders of the Commissioner of Income-tax (Appeals) for assessment years 2008-09 and 2009-10. The assessee, a trust, declared NIL income for both years and was not registered u/s 12AA of the Income-tax Act. The corpus donations received were credited to the capital account, and donations were admitted for tax under income and expenditure account. The Assessing Officer taxed the corpus donations as the trust was unregistered u/s 12AA.

2. The assessee contended that voluntary contributions with specific directions should be treated as corpus and exempt under section 11(1)(d) of the Act, even without 12AA registration. The CIT(A) concluded that since the trust was not registered u/s 12AA, exemption u/s 11(1)(d) did not apply, and dismissed the appeals.

3. Appeals were then filed before the Tribunal, arguing that corpus donations with specific directions should be considered capital in nature. The Tribunal noted that while corpus donations are exempt from income tax, the trust must be registered u/s 12AA to avail benefits under section 11. Citing a previous Tribunal decision, the corpus donations were taxed at normal rates due to the unregistered status of the trust.

4. The Tribunal upheld the lower authorities' decision, emphasizing that the trust's unregistered status prevented the application of sec. 11 benefits. The appeals of the assessee were dismissed, and the corpus donations were taxed at normal rates.

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