Corpus exemption requires verifiable individual donor directions; trustee resolutions can support specified charitable accumulation claims under section 11.
Corpus exemption for voluntary contributions depends on a specific, verifiable and contemporaneous direction from each donor that the contribution forms part of the corpus, together with compliance with prescribed investment conditions. A recipient's later classification or directions from an unauthorised group representative cannot replace that donor direction. Reassessment initiated beyond four years requires recorded material showing failure of full and true disclosure and independent prima facie satisfaction rather than a change of opinion. Application of accumulated income to immovable property requires verification of the stated accumulation purpose, funding source, charitable-object nexus and actual use. Statutory accumulation remains available for contributions not accepted as corpus, subject to conditions and no double benefit. A trustee resolution may supplement Form No. 10 where it identifies distinct and sufficiently specific accumulation projects.
Issues: (i) Validity of reassessment after four years under section 147; (ii) Eligibility of voluntary contributions for corpus exemption under section 11(1)(d); (iii) Application of accumulated income to purchase immovable property; (iv) Availability of fifteen per cent statutory accumulation after denial of corpus exemption; and (v) Validity of accumulation under section 11(2) based on Form No. 10 and the trustee resolution.
Issue (i): Validity of reassessment after four years under section 147.
Analysis: The proviso to section 147 requires failure to make full and true disclosure of material facts where reassessment is initiated beyond four years. The recorded reasons identified material considered insufficiently disclosed. The record did not establish that the specific matters forming the basis of reassessment had been consciously examined and decided in the original assessment, and therefore did not establish a prohibited change of opinion. Proceedings under section 263 for another year merely provided the background; the recorded reasons disclosed independent prima facie satisfaction. The enquiries related directly to taxable income and were not a fishing or roving enquiry.
Conclusion: The reassessment was valid. The issue is decided against the assessee.
Issue (ii): Eligibility of voluntary contributions for corpus exemption under section 11(1)(d).
Analysis: Section 11(1)(d) requires a voluntary contribution to be accompanied by a specific direction of the donor that it shall form part of the corpus, along with compliance with the prescribed corpus-investment requirement under section 11(5). Individual donor letters expressing such intention require verification of their authenticity and contemporaneity. Directions issued only by persons managing a group of contributors cannot be treated as directions of the individual donors without material establishing their authority. Contributions initially made for general activities, with only a contingent future transfer of surplus to corpus, do not amount to an unconditional donor direction that the contribution itself shall form part of the corpus.
Conclusion: The issue is partly in favour of the assessee. Donations supported by individual donor directions are remitted for limited verification, while the claim for contributions supported only by group-manager directions is not allowable as corpus exemption.
Issue (iii): Application of accumulated income to purchase immovable property.
Analysis: Acquisition of immovable property from accumulated income does not by itself establish application in conformity with section 11(2). The purpose stated in Form No. 10, the source of acquisition funds, the nexus with charitable objects, and contemporaneous evidence of actual utilisation require verification. The available purchase records, electricity records and activity register are relevant but do not conclusively establish the nature and purpose of utilisation.
Conclusion: The claim is restored for limited factual verification and fresh adjudication. The issue is decided in favour of the assessee only to the extent of this remand, with no final allowance determined.
Issue (iv): Availability of fifteen per cent statutory accumulation after denial of corpus exemption.
Analysis: The statutory accumulation under section 11(1)(a) is available while computing eligible exempt income and cannot be refused solely because a claimed corpus exemption under section 11(1)(d) is denied. The allowance remains subject to statutory conditions and must not result in a double benefit.
Conclusion: The statutory benefit of fifteen per cent accumulation is allowable, to the extent permissible in law, in respect of donations ultimately not accepted as corpus. The issue is decided in favour of the assessee.
Issue (v): Validity of accumulation under section 11(2) based on Form No. 10 and the trustee resolution.
Analysis: Section 11(2) read with Rule 17 permits the purpose of accumulation to be disclosed in Form No. 10 by reference to a trustee resolution where the prescribed form has limited space. The resolution identified distinct proposed projects and did not merely reproduce broad charitable objects. The disclosed purposes were sufficiently specific for the statutory accumulation claim.
Conclusion: The accumulation under section 11(2) is allowable. The issue is decided in favour of the assessee.
Final Conclusion: Reassessment jurisdiction remains valid; corpus treatment is confined to contributions supported by verifiable individual donor directions, while group-manager directions are insufficient; the property claim requires factual determination; and the statutory accumulation benefits under sections 11(1)(a) and 11(2) must be granted as directed.
Ratio Decidendi: A voluntary contribution qualifies for corpus exemption only where a specific direction that it shall form part of corpus emanates from the donor; subsequent classification by the recipient or an unauthorised group representative cannot substitute that direction.