Corpus donations under a trust deed remain exempt where the deed treats them as accretions to corpus.

Donations received under the trust deed were treated as accretions to corpus because the deed itself directed that such receipts be held on the same trust with the same powers and provisions. The trustees in fact retained the amounts as corpus and not as revenue income. On that basis, the receipts qualified for exemption under section 12 of the Income-tax Act, 1961, and the disputed addition was deleted.

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Issues: Whether donations received by the trust and credited as part of its corpus were exempt under section 12 of the Income-tax Act, 1961.

Analysis: The trust deed expressly provided that donations received by the mutavallis would be deemed accretions to the trust and held on the same trust with the same powers and provisions as contained in the deed. The donations were accordingly treated by the trustees as part of the corpus and not as revenue income. Even without relying on the donor letters, the governing deed itself showed that the amount was received towards the corpus of the trust and retained as such.

Conclusion: The donations formed part of the trust corpus and qualified for exemption under section 12 of the Income-tax Act, 1961. The addition of Rs. 33,000 was rightly deleted, and the appeal succeeded.

Final Conclusion: Donations received under the trust deed as corpus accretions were held to be exempt, resulting in deletion of the disputed addition.

Ratio Decidendi: Where the trust instrument itself requires donations to be treated as accretions to corpus and the amount is in fact held as part of the corpus, such receipts are entitled to exemption as corpus donations under the Act.

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