Tribunal rules corpus donations to unregistered trusts are non-taxable capital receipts under section 12AA.

The tribunal ruled in favor of the assessee, quashing the revenue's order and allowing the appeal for registration under section 12AA. It emphasized the importance of trust genuineness and alignment with main objectives, stating that corpus donations to unregistered trusts are capital receipts and not taxable. The tribunal highlighted the need for trust activities to align with charitable objectives and cited legal references supporting the non-taxability of corpus donations pre-registration.

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Issues:
- Registration u/s 12AA denied based on alleged activities beyond trust deed objectives and tax evasion on corpus receipts.
- Whether corpus donations are taxable before registration u/s 12AA.
- Genuineness of trust activities and compliance with main objectives for registration.

Analysis:
1. The appeal challenged the rejection of registration u/s 12AA by the ld. CIT(E) for A.Y. 2020-21, citing activities beyond trust deed objectives and tax evasion on corpus receipts.
2. The assessee, a charitable trust operational since 2018, applied for registration under section 12AA, which was denied by the ld. CIT(E) based on concerns regarding commercial nature income generation and corpus donations.
3. The counsel argued that the trust's activities align with charitable objectives under section 2(15) of the Act, emphasizing contributions for genuine charitable purposes, as supported by legal precedents like Bhartiya Kisan Sangh Sewa Niketan case.
4. Regarding corpus donations, the counsel contended that they are capital receipts and not taxable pre-registration, citing legal references such as the Versova Kohni Sunni Trust case.
5. The ld. CIT DR supported the ld. CIT(E)'s decision, highlighting the trust's commercial income generation activities beyond its deed objectives.
6. The tribunal observed that corpus donations to unregistered trusts are capital receipts and not taxable, referencing relevant sections like 2(24)(iia)/12(1)/11(1)(d)/35/56(2), and emphasized the need for trust genuineness and alignment with main objectives for registration under section 12AA.
7. Ultimately, the tribunal ruled in favor of the assessee, quashing the revenue's order and allowing the appeal, emphasizing the importance of trust genuineness and adherence to main objectives during the registration process.

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