SHREE SANT BHOJAJI MAHARAJ DEOSTHAN AJANSARA,WARDHA vs. THE INCOME TAX OFFICER, WARD-4, EXEMPTION, NAGPUR, NAGPUR

PER PAWAN SINGH JUDICIAL MEMBER:

Commissioner of Income Tax (Appeals), National Faceless Appeal Centre

(NFAC), ["learned CIT(A) NFAC], dated 22/02/2025, for the assessment

year (AY) 2016- 17. Though, the assessee has raised multiple grounds

of appeal. However, in our considered opinion the substantial ground of

appeal relates to treatment of corpus donation/ fund received in earlier

year is taxable and /or not taxable being capital receipt. Rest of the

grounds are consequential.

The assessee is registered with Charity Commissioner under the

provisions of Bombay Trust Act. Registration under section 12A/12AA of the Act, was allowed on 30.05.2019, which is effective from A.Y 2019–

21/08/2017 declaring net taxable income at Rs. 1,24,27514/-. In the

computation of income, the assessee claimed deduction under section

11(1)(d) at Rs. 88,20,088/- in respect of voluntary contributions on

account of corpus donation. The CPC while processing return disallowed

such deduction. The assessee filed application for rectification under

section 154was rejected by holding that there is no mistake in the order.

CIT(A). Before, ld. CIT(A), the assessee filed detailed statement of fact

and submission raising the plea application that application for

rectification was rejected without allowing opportunity to explain the

facts. The ld CIT(A) confirmed the action of CPC/ AO by taking view that

the assessee was not having registration under section 12AA for the

assessment year under consideration, which is the condition precedent

for availing benefit under section 11 of the Act. Further aggrieved by the

order the assessee is in appeal before Tribunal.

AR) of the assessee and the learned Commissioner of Income Tax-

Departmental representative (CIT-DR) for the revenue. The ld AR pf the

assessee submits that the assessee trust is a charitable trust established

on remembrance of Late Shri Bhojaji Maharaj who devoted his life for upliftment of economically weaker section of society in providing food

shelter and clean atmosphere. The assessee trust is registered under the

provision of Bombay Public Trust Act. The trust was constituted on

23/07/1965 i.e. trust is 50 years long back trust. The Ld. AR of the

assessee further submits that the trust has decided to build and

community hall and for the development, maintenance fund was

collected from devotees by keeping a box in the temple premises. During

the year under consideration the assessee has received voluntary

contributions of Rs. 88,20,088/- for construction of community hall for

devotee coming from adjoining area of Vidarbha Region as well as other

state also for worship.The Ld. AR of the assessee submits that the

assessee is regularly maintaining it books of account and books of

accounts of the assessee trust were audited as per the provision of

Bombay Public Trust Act and submitted the audit report before the office

of Charity Commissioner. During the year under consideration the

assessee has received voluntary contributions of Rs. 88,20,088/- for

construction of community hall for devotee coming from adjoining area

of Vidarbh for worship. The assessee credited the receipts of voluntary

contribution of Rs. 88,20,088/- to Corpus Fund Account & considered the

same in Balance Sheet as a Capital Receipts and claimed exemption U/s.

11(1)(d) of the Income Tax Act, 1961 as entire amount were actually

incurred for specific purpose for "building construction" only. The assessee trust was not registered under section 12AA of the Income Tax

Act. The CPC/ AO without going into the merits of the case and without

granting proper opportunity to being heard has disallowed the claim of

the assessee and made addition due to non-filing of Rom No. 10B of Rs.

88,20,088/-. The ld AR of the assessee submits that corpus donation of

trust can never be considered as revenue receipt as it is in the nature of

a gift. No opportunity to explained the facts were allowed by the lower

authorities. Corpus donation is capital receipt and not taxable

irrespective of the fact, the assessee is registered under section 12AA/

12AB or not. Thus, the alternative plea of the assessee may be

considered at this stage. No new facts are to be brought on record for

considering the alternative plea that corpus donation is capital receipt

and not taxable. The Ld. AR of the assessee placed reliance on following

judicial precedents.  Shri Marudhar Sewa Samiti Vs. ITO in ITA No. 501/Ahd/2022 dated 16.06.2023,  Serum Institute of India Research Foundation Vs. ITO in ITA No. 1539/PN/2008 dated 12/08/2016,  Chandra Prabhu Jain Swetamber Mandir Vs. ACIT inITA No. 230/Mum/2016,  CIT Vs. M/s. Pentafour Software Employees' Welfare Foundation in Tax Case Appeal Nos. 582 tο 584 of 2009 dated 05/08/2019(Madras High Court),  ITO Vs Gaudiya Granth Anuved Trust in ITA No 386/ Agra/2012 dated 02/08/2013,  ITO (Exemption) Vs. Smt. Basanti Devi & Shri Chakhan Lal Garg Education Trust in ITA No. 5082/Del/2010 dated 19/01/2011.

lower authorities. The ld CIT-DR for the revenue submits that there was

no mistake in the order of AO/CPC. The assessee was not having

registration under section 12AA, which is condition precedent for

availing benefit of application of income under section 11 of the Act. The

assessee deserves no relief at this stage as claimed in the alternative

plea.

gone through the orders of lower authorities. We have also deliberated

on various case laws relied by ld AR of the assessee. We find that there

is no dispute that the assessee is a charitable trust duly registered

under Bombay Public Trust Act, 1950. The assessee has registration

under section 12AA of the Act, which is valid from 2019-2020. The

assessee has received corpus donations of Rs. 88,20,088/- during

previous year relevant to the assessment year. It is the case of assessee

that the trust has decided to build and community hall and for the

development, maintenance fund was collected from devotees by keeping

a box in the temple premises, thus, there is no written direction of the

donors. The assessee trust has utilized the entire amount of donations

to build and community hall and for the development, maintenance fund

was collected from devotees by keeping a box in the temple premises. In

the Balance Sheet and Box Donation and utilization thereof is also reflected. The assessee used this corpus donation for the purpose of

construction of community hall that is for capital expenditure. The

assessee was denied benefit of section 11 on the ground that there was

registration under section 12AA in AY 2016-17.

respect to a trust. A corpus fund denotes a permanent fund kept for the

basic expenditure needed for the administration and survival of the

trust. The corpus fund is generally not allowed to be utilized for the

object of trust. Such fund can also be used for creation of capital asset

or property of the trust from which income can be generated. Corpus

funds are generally created from corpus donation. A donation will be

treated as corpus donation only if it is accompanied by a specific written

direction of the donor. In the present case, fund was collected from

devotees by keeping a box in the temple premises, therefore there is no

question of written direction of the donors. The assessee trust has

utilized the entire amount of donations to build and community hall and

for the development, maintenance fund was collected from devotees by

keeping a box in the temple premises.

held that corpus donation are capital receipt being capital in nature and

are not taxable despite the facts that trust is not registered under

section 12A/12AA of the Act. Similar view was taken Hon’ble Madras High Court in CIT Vs Pentafour Software Employees’ (supra) and Delhi

High Court while dismissing the appeal of Revenue in ITO Vs Smt.

Basanti Devi & Shri Chakhan Lal Garg Education Trust in ITA No.

927/2009 dated 23.09.2009. We also find that Mumbai Tribunal in

Chandra Prabhu Jain Swetamber Mandir Vs. ACIT (supra) after considering

various other decision followed the same view. Thus, in view of the

aforesaid factual and legal position, we accept the alternative plea of ld

AR of the assessee that corpus donation received by assessee to the

extent of Rs. 88,20,088/- for construction of community hall for devotee

is capital receipt and in not taxable even though the assessee was not

having registration under section 12AA. Hence, entire disallowance of

Rs. 88,20,088/- is deleted. In the result, the grounds of appeal by the

assessee are allowed.

Order pronounced on 20.04.2026 under Rule 34 of Income Tax (Appellate Tribunal) Rules 1963 Sd/- Sd/-

KHETTRA MOHAN ROY PAWAN SINGH ACCOUNTANT MEMBER JUDICIAL MEMBER

Mumbai: Dated: 20/04/2026 Self by author Copy of the order forwarded to: (1) The Assessee; (2) The Revenue; (3) The PCIT / CIT (Judicial); (4) The DR, ITAT, Nagpur; and (5) Guard file.

By order

Assistant Registrar ITAT, Nagpur