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Facts
The assessee, a charitable trust, received corpus fund donations of Rs. 1,74,01,475/- in AY 2018-19. The Assessing Officer (AO) treated this as income chargeable to tax, disregarding Section 11(1)(d) of the Income Tax Act. The assessee claimed these funds were used to purchase properties for the trust's charitable objects.
Held
The Tribunal held that the corpus fund donations received by the assessee, which were used for acquiring immovable properties for charitable purposes, should not be included in the total income. The assessee's registrations under Section 12A and 80G were valid, and the revenue failed to disprove the utilization of funds for the trust's objects.
Key Issues
Whether corpus fund donations received by a charitable trust and invested in assets for its objects are taxable income, and if the AO correctly applied Section 11(1)(d) of the Income Tax Act.
Sections Cited
11(1)(d), 143(3), 144B, 12AA, 12A, 80G
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, “C” BENCH, MUMBAI
Before: SHRI AMIT SHUKLA & SHRI GIRISH AGRAWAL
Assessment Year: 2018-19 Shri Powai Sthanakvasi Jain vs Income-tax Officer, Sangh Trust Ward 41(1)(4), (Public Charitable Trust) Mumbai Flat No. 104, Atlantis A Wing Hiranandani Gardens Powai, Mumbai - 400076 [PAN: AATTS2580C] Appellant Respondent Present for: Assessee : Shri Kirit Sanghvi, CA Revenue : Mr. Virabhadra S. Mahajan, Sr. DR Date of Hearing : 04.08.2025 Date of Pronouncement : 29.10.2025 O R D E R
PER GIRISH AGRAWAL, ACCOUNTANT MEMBER:
This appeal filed by the assessee is against the order of CIT(A), National Faceless Appeal Centre (NFAC), Delhi vide order no. ITBA/NFAC/S/250/2024-25/1074570665(1), dated 17.03.2025 passed against the assessment order by National Faceless Assessment Centre, Delhi u/s.143(3) r.w.s. 144B of the Income-tax Act, 1961 (hereinafter referred to as the “Act”), dated 31.06.2021 for AY 2018-19.
The only issue involved in the present appeal is in respect of treatment of corpus fund donation of Rs.1,74,01,475/- received by the
Brief facts of the case are that assessee was incorporated on 22.04.2017 vide its registered trust deed placed on record. Assessee is registered u/s.12AA/12A, vide registration number E-49792 (Mumbai) dated 03.10.2017. Assessee is also registered with the Charity Commissioner, Mumbai vide registration No. E-33309 (Mumbai) dated 04.07.2017. Assessee has also obtained certificate u/s. 80G from the Commissioner of Income-tax (Exemptions), Mumbai. All these registrations of the assessee are valid in the year under consideration and even in the present, which is not in dispute.
3.1. The year under consideration before us is the very first year of the assessee for assessment under the Act. Ld. AO observed that assessee had received corpus fund donation of Rs. 1,74,01,475/-. In the impugned assessment order, ld. AO made reference to the returns of the assessee filed for subsequent years, viz. assessment year 2019-20 and assessment year 2020-21 to take note of corpus fund donations received by the assessee in those years also. Details of the corpus fund donation received by the assessee in all these years is tabulated below:
Shri Powai Sthanakvasi Jain Sangh Trust AY 2018-19 Financial Assessment Donation Corpus Donation Total Corpus Year Year Opening Bal. Corpus Reed, Donations during the Year 2017-18 2018-19 - 1,74,01,475 1,74,01,475 2018-19 2019-20 1,74,01,475 3,91,47,666 5,65,49,141 2019-20 2020-21 5,65,49,141 60,10,611 6,25,59,752 3.2. Assessee filed its return of income on 31.10.2018, reporting total income at Rs. 77,260/-. In the course of assessment, ld. AO called for details in respect of corpus fund donation received by the assessee, for which he has taken note of the submissions made by the assessee. In paragraph 4 of the impugned order, ld. AO specifically mentioned that assessee has furnished copies of 76 letters vide which it has received the said corpus fund donations from 76 persons. In the same paragraph, on the observation of the ld. AO that assessee has not incurred any expense on account of any charitable/religious/educational activities, he noted that, assessee made a submission contending that it has not incurred any expense on charitable activities out of the corpus fund received by it. In this respect, it was submitted that assessee had earned income of Rs 1,24,341/- from investment of trust corpus fund and voluntary donations, out of which a sum of Rs 28,430/- was spent on the objects of the trust for which all the required details were furnished and for the balance amount, return of income was filed by the assessee.
3.3. The objects for which the assessee trust is set up are stated to be relief to poor and underprivileged persons, spread of education, medical Shri Powai Sthanakvasi Jain Sangh Trust AY 2018-19 relief and advancement of any other objects of general public utility. Its object also includes spiritual activities, meditation, yoga among other objects for the benefit of public at large. Ld. AO came to the conclusion that assessee is not engaged in charitable/religious/educational activities and has wrongly availed the benefits available to a trust, even though he had taken note of various submissions made online on the portal of the department, as noted in the assessment order. He, thus completed the assessment by making an addition of Rs 1,74,01,475/- to the returned income of the assessee.
Before the ld. CIT(A), assessee reiterated its factual position corroborated by audited financial statements for the year under consideration as well as for the subsequent two assessment years to demonstrate its actual position in respect of receipt and utilization of corpus fund donation for which addition was made in the hands of the assessee. In respect of the year under consideration, for the corpus fund donation received of Rs 1,74,01,475/-, assessee furnished the details as reported by it in its audited balance sheet as at 31.03.2018, the same are as under:
i. Lease deposit with Heera Nandani Group of 4 Premises – Rs 1,15,00,000/- ii. HGP Community Deposit – Rs 1,00,000/- iii. Bank Balance – Rs 58,97,38/-.
4.1. Thus, the entire corpus fund donation received during the year was invested in the above stated manner. It was further stated that Shri Powai Sthanakvasi Jain Sangh Trust AY 2018-19 assessee purchased two premises for carrying out objects of the Trust in the assessment year 2019-20, details of which is noted as below: i. Flat No. 106, B Wing, Atlantis, Heera Nandani Garden, Powai, Mumbai 400076, purchased for Rs 2,65,00,000/- on 23.04.2018 plus the stamp duty and registration charges, which totaled up to Rs 2,72,82,000/-. ii. Flat No. 104, A Wing, Heera Nandani Garden, Powai, Mumbai 40076 which was also purchased for the same amount of Rs 2,72,82,000/-. Copies of registered purchased deed for these two properties are placed on record and were furnished in the first appellate proceedings. The total investment made by the assessee in these two properties is Rs 5,45,64,000/-.
4.2. Assessee, thus clarified that it had received corpus fund donation of Rs 1,74,01,475/- in the year under consideration and received further such donation of Rs 3,91,47,666/- in the subsequent year totaling to Rs 5,65,49,141/- which was utilized to purchase the above stated two flats at a cost of Rs 5,45,64,000/-. Assessee started using these above two properties for the activities as per the objects for which it was created, since December 2018. Once it started using it, it claimed depreciation on the same from the next assessment years, all of which are duly reported in the audited financial statements based on record. Accordingly, it claimed depreciation on the same in the assessment year 2019-20 of Rs 27,74,086/- and of Rs 52,75,810/- in the assessment year 2020-21.
Shri Powai Sthanakvasi Jain Sangh Trust AY 2018-19 4.3. Assessee furnished all the details in respect of receipt of corpus fund donation including the details of the donors with their PAN and the mode of payment and the cheque details as well as their confirmation containing their direction that this fund donated by them is towards corpus fund donation, viz. for the building fund.
We have perused the audited financial statements for the three assessment years including the year under consideration. We have also gone through the copies of donation letters from 76 donors which were furnished online by the assessee before the authorities below. All the necessary details in respect of corpus fund donation received by the assessee and its subsequent utilization are placed on record, which are verifiable. It is pertinent to note that registration u/s. 12AA, Section 80G and with Charity Commissioners, Mumbai is valid as on date, which proves that assessee is engaged in charitable activities and the corpus fund donation received by it has been utilized for purchase of the immovable properties for carrying out object of the trust.
5.1. Ld. CIT(A) has dismissed the appeal despite taking note of all the factual submissions made by the assessee by holding that assessee has not submitted documentary evidences to substantiate its claim, which in our considered view is not a justifiable reason given for dismissing the appeal of the assessee.
5.2. Provisions of section 11(1)(d) applies in the present case according to which income in the form of voluntary contribution made with a specific direction that they shall form part of the corpus of the trust or of an institution shall not be included in the total income of the assessee. Since the registration u/s.12A is in vogue, section11 applies Shri Powai Sthanakvasi Jain Sangh Trust AY 2018-19 and assessee is entitled to claim such an exemption, for which necessary corroborative documentary evidences are placed on record. There is nothing brought on record by the Revenue to disprove the evidences furnished before the authorities below, neither any deficiency or discrepancy has been pointed out to dislodge the claim of the assessee.
5.3. Observation of ld. AO on the reduction in the corpus fund to Rs. 60,10,611/- as compared to the amount of Rs.3,91,47,666/- received during the preceding year that is AY 2019-20 is on a mistaken fact, as same is clearly brought out from the details tabulated in the above paragraph in respect of receipt of corpus fund donations received by the assessee. Further, both the authorities below have observed adversely on the claim of depreciation in the two subsequent assessment years i.e., AY 2019-20 and AY 2020-21 which the assessee has rightfully claimed after putting to use the said properties to charitable purposes, adequately reported in its audited financial statements.
5.4. We also take note of the factual position that assessee has made a payment of Rs. 1,15,00,000/- to Hiranandani group for the premises which was accounted as lease deposit and duly reported in its audited financial statements. Assessee has placed on record relevant documentary evidence in the paper book which has been perused.
Considering the overall factual matrix as discussed above, provisions of the Act contained in section 11(1)(d) r.w.s.12A and the crucial fact of registrations of the assessee not revoked till date by the Department, we do not find any reason to justify the addition made by the ld. AO. The addition so made in respect of receipt of corpus fund Shri Powai Sthanakvasi Jain Sangh Trust AY 2018-19 donation in the year under consideration is deleted. In the result, grounds raised by the assessee in this respect are allowed.
In the result, appeal of the assessee is allowed.