TaxTMI 
TaxTMI 
TaxTMI 
2010 (12) TMI 1057
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....d circumstances of the case, the Income Tax Appellate Tribunal was justified in law in deleting the addition of Rs.23,17,13,997/- as the said addition made in accordance with the provisions contained in Section 12(1) of the Income Tax Act, 1961?" 2. The assessment year is 2004-2005 and the relevant accounting period is the financial year 2003-2004. The respondent-assessee is registered as a trust under the provisions of section 12A of the Act. Its income is exempt under the provisions of sections 11 to 13 of the Act subject to fulfilling the certain conditions. The assessee maintained proper books of accounts during the year and such accounts were audited by the Chartered Accountant as required. The assessee filed return of income as per i....
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.... Officer, it was submitted that the appeal deserves consideration and a question of law, as proposed or as may be deemed fit is required to be formulated. 4. Opposing the appeal, Mr. S.N. Soparkar, learned senior advocate appearing on caveat on behalf of the respondent-assessee, submitted that the Tribunal has rightly taken into consideration the Government Resolution dated 31st January, 2007 issued by the Government of Gujarat, Science and Technology Department as well as the decision of the jurisdictional High Court in the case of CIT v. Sthanakvasi Vardhman Vanik Sangh, (2003) 260 ITR 366, while holding that that the grants received by the assessee-society claimed as capital receipts do not form part of the income of the previous year. ....
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....outlay and intended for implementing the capital project. As such, the accounting of the grants by the assessee was proper. The Commissioner (Appeals) placed reliance upon the decision of the Supreme Court in the case of Sahney Steel & Press Works Ltd. v. Commissioner of Income-tax, A.P.-I, Hyderabad, (1997) 223 ITR 253, and keeping in mind the principles enunciated in the said decision, found that the assessee had correctly accounted the grants as capital receipts in respect of first three items in question. The Commissioner (Appeals) was of the view that once it is found that a receipt is not forming part of income of the trust (in this case as the receipts are capital in nature); the restrictions in section 12 do not apply. It was noted ....
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....for such purposes (not being contributions made with a specific direction that they shall form part of the corpus of the trust or institution) shall for the purposes of section 11 be deemed to be income derived from property held under trust wholly for charitable or religious purposes and the provisions of that section and section 13 shall apply accordingly. [2] xxxxxx 10. A bare reading of the aforesaid provision makes it amply clear that for the purposes of section 11 of the Act, contributions made with a specific direction that they shall form part of the corpus of the trust or institution would not be deemed to be income derived from property held under trust wholly for charitable or religious purpose. 11. Section 11 of the Act insof....
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....ons received from the Government would fall within the excluded category under section 12 of the Act, viz. contributions made with a specific direction that they shall form part of the corpus of the trust or institution. Hence, the amount received by way of the contributions made by the Government would not be income derived from property held under trust wholly for charitable or religious purpose for the purposes of section 11 of the Act. Moreover, in the light of the provisions of section 11(1)(d) of the Act the said income is not to be included in the total income of the previous year of the person in receipt of the income. 14. In the aforesaid background, the Tribunal was justified in holding that the grant-in-aid received by the asses....