Corpus donation to registered charitable trust treated as capital receipt; higher tax computation and rectification adjustment rejected.

Corpus donation received by a registered charitable trust was treated as a capital receipt eligible for exemption under section 11, because the trust held registration under section 12A/12AA and the Assessing Officer did not dispute the receipt itself. The adjustment made in the intimation under section 143(1) and the refusal to grant rectification under section 154 were unsustainable because the registration status and exemption claim were not properly considered. The higher tax computation at the maximum marginal rate was therefore not justified, and the addition and tax demand were held to be incorrect.

---

---

Issues: Whether the corpus donation received by a registered charitable trust was liable to be treated as exempt capital receipt under section 11 and whether the tax computed at maximum marginal rate in the intimation and rectification proceedings was justified.

Analysis: The trust was found to be registered under section 12A/12AA with effect from 08.02.2018, and the corpus donation was not disputed by the Assessing Officer. The registration status and the exemption claim relating to the corpus donation were not properly considered while making the adjustment under section 143(1) and while rejecting rectification under section 154. On the facts, the corpus donation was to be treated as capital receipt, and the higher tax computation was not sustainable.

Conclusion: The issue was decided in favour of the assessee, and the addition and tax computation were held to be unjustified.

---