TaxTMI 
TaxTMI 
2022 (11) TMI 672
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....rder dated 17.06.2016 in ITAs No.206 & 207/Bang/2014 and 1099/Bang/2015 for the AYs-2009-10, 2010-11 and 2011-12 respectively, have been admitted to consider the following questions of law: "a. Whether the Tribunal is justified in law in holding that the Appellant is not engaged in charitable activities which is contrary to material on record and consequently passing perverse order and thereby denying the Appellant the exemptions u/s. 11 of the Act on the facts and circumstances of the case? b. Whether the Tribunal is correct in law in reversing the well-reasoned order of the CIT(A) and holding that the donations received by the Appellant are in the nature of capitation fees and therefore taxable in the hands of the Appellant on the fac....
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....the Trust for charitable or religious 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 purpose of Section 11 of the Act must be construed as income. He further submitted that if contributions are received with a specific direction for a particular purpose, the same shall be treated as capital receipt and the other income shall be shown in the Income and Expenditure account; and that the question whether the contributions were made voluntary or involuntary was considered by the Madras High Court in the case of Commissioner Of Income-Tax, Central-III, Chennai -Vs- Balaji Educational & Charitable Public Trust [2015] 56 TAXMANN.COM 182 (PARA 4.8....
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....ning a commercial organization and not a charitable organization. 9. We have carefully considered the rival contentions and perused the records. 10. Assessee claims to be a charitable society and obtained certificate under Section 12(A) of the Act. 11. The assessee has received donations and shown it in the Income and Expenditure account. By the impugned order, the ITAT has denied the benefit under Section 11 of the Act. 12. Section 11(1)(d) of the Act relied upon by Shri. Sanmathi, makes it clear that the voluntary donation made with a specific direction shall form a part of the corpus. The person who makes a contribution can make such contribution either with a specific direction or without any direction. Section 11(1)(d) of the Act r....
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....on to these provisions was considered by the Tribunal in the following manner: "35. To proceed further, we have to examine the (30) scheme of law of charities provided under the Income-tax Act, 1961. There is no concept of involuntary contributions in that scheme. The only distinction recognized by law is the voluntary contributions to be treated as income under section 12 and the corpus donations to be treated as capital receipt under section 11(1)(d). The corpus donations are not generally in the nature of income. The voluntary contributions are taxable only if not applied for charitable purposes. In the present case, the assessee-trust itself has treated the contributions as voluntary contributions in the nature of income. The assesse....
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...., we find that whether it is treated as voluntary or involuntary, the only course of action available before law is to see whether such contributions have been treated by the assessee as the income and also applied for charitable (30) purposes." This reasoning of the Tribunal, we are inclined to accept. 4.9. The finding of the Tribunal is that the department has not established a case that the assessee had in this case not utilized the donations or income for charitable purpose. The clear finding of the Tribunal is that if the assessee had not utilized the amount for charitable purpose, it would automatically become taxable and the assessee would not be entitled to exemption. But, on the contrary, without there being a finding of violat....