1987 (3) TMI 16

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....hand Devchand Charity Trust as voluntary contributions on capital account constituted income under the Income-tax Act, 1961 ? " Involved in the reference is the assessment year 1967-68, the previous year for which ended on December 31, 1966. The assessee is society registered under the Societies Registration Act, 1860. It has charitable objects. On November 11, 1965, a public charitable trust called the Kilachand Devchand Charity Trust made an offer of a capital donation of Rs. 40,000 to the assessee, which offer was accepted. On December 7, 1965, a public charitable trust called Dharma Vijay Agency made an offer of a capital donation of Rs. 2,50,000 to the assessee, which offer was also accepted. Pursuant to the condition of the offers,....

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.... or a charitable or religious institution by a trust or a charitable or religious institution to which the provisions of section 11 apply, such contributions shall, in the hands of the trust or institution receiving the contributions, be deemed to be income derived from property for the purposes of that section and the provisions of that section shall apply accordingly." The provisions of sub-section (2) of section 12 of the Income-tax Act, 1961, apply to " such contributions as are referred to in sub-section (1) " thereof. Sub-section (1) refers to contributions which are" voluntary contributions and applicable solely to charitable or religious purposes ". Donations of a capital nature may be voluntary. They cannot, however, be applied ....

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....nts of the Gujarat and Kerala High Courts in CIT v. Bal Utkarsh Society [1979] 119 ITR 137 (Guj) and in CIT v. Vanchi Trust [1981] 127 ITR 227 (Ker). The same conclusion has been arrived at, though upon a different construction of the provisions of sub-section (2) of section 12 of the Income-tax Act, 1961, by the Allahabad High Court in Sri Dwarkadheesh Charitable Trust v. ITO [1975] 98 ITR 557 and the Delhi High Court in CIT v. Eternal Science of Man's Society [1981] 128 ITR 456. Mr. Dwarkadas, learned counsel for the assessee, pointed out that it had been urged before the Tribunal on behalf of the assessee that section 12(1) of the Income-tax Act, 1961, applied only to the income derived from contributions and not to the contributio....