TaxTMI 
TaxTMI 
2021 (7) TMI 1341
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.... 11(1)(d) of the Income Tax Act in the absence of 12AA registration of the Trust. The amount of such donations was Rs.8,71,157/- in 2007-2008, Rs.5,55,607/- in 2008-2009 and Rs.3,00,477/- in 2009-2010. In all the three cases, the Commissioner of Income Tax (Appeals) who heard the appeals against the Assessment Orders held that registration under Section 12AA is a prerequisite for any exemption to be claimed under Section 11(1)(d) of Income Tax Act and in the absence of the registration of the trust under Section 12AA, the voluntary contributions lose the exemption status, irrespective of whether such voluntary contributions are obtained with specific directions or not. The Income Tax Appellate Tribunal in its orders had upheld the orders of the Commissioner of Income Tax (Appeals) and hence these appeals in this Court. 3. These appeals were admitted on the following substantial questions of law: Substantial Questions of Law in TCA No.281/2016 : i. Whether on the facts and circumstances of the case, the contributions towards the corpus fund with specific directions can be treated as income under Section 2(24)(iia) in the case of the assessee, who is not registered cha....
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....ystal clear let us first go into the nitty gritty of the relevant sections. As per Section 2(24)(iia) of Income Tax Act, 1961 "Income" includes - voluntary contributions received by a trust created wholly or partly for charitable or religious purposes or by an institution established wholly or partly for such purposes or by an association or institution referred to in clause (21) or clause (23), or by a fund or trust or institution referred to in sub-clause (iv) or sub-clause (v) of clause (23C) of Section 10] or by an electoral trust. Explanation - For the purposes of this sub clause, "trust" includes any other legal obligations" Section 11(1) (d) of Income Tax Act 1961, amended in 1995, reads as follows: "Income from property held for charitable or religious purposes - 11.(1) Subject to the provisions of Sections 60 to 63, the following income shall not be included in the total income of the previous year of the person in receipt of the income ...... a................... b.................. c.................. d.income in the form of voluntary contributions made with a specific directions that ....
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.... 1961. Her contention is that since the Section 2(24)(iia) is silent about the contribution to corpus fund, it has to be construed as eligible for exemption. But the analysis of these Sections reveal that both these Sections are interlinked and it cannot be said to operate independently. This is like claiming tax exemption available for senior citizens without attaining the age of 60. The appellant assessee had adduced letters expressing the intent of the donors that the donations were with specific directions (of application). The learned counsel for the appellants also relied on the following decisions of various Income Tax Appellate Tribunals, High Court of Andhra Pradesh, High Court of Karnataka and this Court. I. In the decision in "[2019] 110 taxmann.com 69 (Madras), Commissioner of Income-tax, Chennai Vs. Pentafour Software Employees, Welfare Foundation" the facts are totally different for the simple reason that the assessee was not a charitable trust. Moreover, the assessee had only questioned the re-opening of the assessment under Section 148 after four years of the assessment. II. In the decision in "[1997] 92 Taxman 0431, Commissioner of Income Tax Vs. ....
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.... the amendment brought in Section 12A by Finance Act 2014 with effect from 01.10.2014 by way of insertion of first proviso to Section 12A (2) of the Act which is reproduced below :- Section 12A (2) (2)Where an application has been made on or after the 1st day of June 2007, the provisions of Section 11 and 12 shall apply in relation to the income of such trust or institution from the assessment year immediately following the financial year in which such application is made : Provided that where registration has been granted to the trust of institution under Section 12AA, then, the provisions of Sections 11 and 12 shall apply in respect of any income derived from property held under trust of any assessment year preceding the aforesaid assessment year, for which assessment proceedings are pending before the Assessing Officer as on date of such registration and the objects and activities of such trust or institution remain the same for such preceding assessment year : Provided further that no action under Section 147 shall be taken by the Assessing Officer in case of such trust or institution for any assessment year preceding the aforesaid assessment....