COMMISSIONER OF INCOME-TAX vs. VISHASHRIMALI L KUNVERJI

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ITR/235/1993HC GujaratGJHC24021270199318 July 2002Author: HONOURABLE MR. JUSTICE MOHIT S. SHAH,HONOURABLE MR. JUSTICE K.A.PUJ3 pages
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What did the High Court hold?

The High Court held that the Appellate Tribunal was right in concluding that the donation of Rs. 50,400/- received by the assessee-trust was not income. The reasoning was that the donation was received for a specific purpose, namely the construction of Ghati Wadi, which was an object of the trust. The Court found that this issue was squarely covered by its earlier decision in the case of Commissioner of Income-tax, Rajkot vs. Shri Sthanakvasi Vardhman Vanik Jain Sangh, Jamjodhpur (Income-tax Reference No. 73 of 1993), decided on the same day. The principle established is that donations received for a specific purpose and intended for corpus are not to be treated as income of the trust. The question referred to the Court was answered in the affirmative, in favour of the assessee and against the revenue. No issue was left undecided.

What were the facts?

The assessee, a trust, received a donation of Rs. 50,400/- for the specific purpose of constructing Ghati Wadi, which was one of its objects. The Income-tax Officer treated this donation as income. The Deputy Commissioner of Income-tax (Appeals) and the Income-tax Appellate Tribunal (ITAT) held that the donation, received for a specific purpose and intended for utilization as corpus, could not be treated as income of the trust. The revenue has challenged this decision by referring a question of law to the High Court. The assessment year in question is 1986-87. The High Court heard the revenue's counsel, but no one appeared for the assessee despite service of notice.

What were the issues?

1. Whether the Appellate Tribunal is right in law and on facts in holding that a donation of Rs. 50,400/- received by the assessee trust is not income of the trust, particularly when it was received for a specific purpose for the construction of Ghati Wadi, which was one of the trust's objects? (Question of law and fact, concerning Section 12 read with Section 2(24)(iia) of the Income Tax Act, 1961). Assessee's Contention: The donation was received for a specific purpose (construction of Ghati Wadi) and was to be utilized as corpus, thus not taxable as income. The ITAT relied on decisions in Dharmapratistenam vs. ITO and Swetamber Murtipujak Jain Sangh, Jamnagar. Revenue's Contention: The revenue argued that the donation was income, as it was received for one of the trust's objects. The Income-tax Officer initially treated it as income.

Which sections of the Income-tax Act were involved?

Section 12,Section 2(24)(iia)

AI-generated summary — verify with the full judgment below

IN THE HIGH COURT OF GUJARAT AT AHMEDABAD

INCOME TAX REFERENCE No 235 of 1993

For Approval and Signature:

Hon'ble MR.JUSTICE M.S.SHAH and Hon'ble MR.JUSTICE K.A.PUJ

============================================================ 1. Whether Reporters of Local Papers may be allowed : NO to see the judgements?

2.

To be referred to the Reporter or not? : NO 3. Whether Their Lordships wish to see the fair copy : NO of the judgement?

4.

Whether this case involves a substantial question : NO of law as to the interpretation of the Constitution of India, 1950 of any Order made thereunder?

5.

Whether it is to be circulated to the Civil Judge? : -------------------------------------------------------------- COMMISSIONER OF INCOME-TAX Versus VISHASHRIMALI L KUNVERJI -------------------------------------------------------------- Appearance: 1. INCOME TAX REFERENCE No. 235 of 1993 MR MANISH R BHATT for Petitioner No. 1 NOTICE SERVED for Respondent No. 1

--------------------------------------------------------------

CORAM : MR.JUSTICE M.S.SHAH and MR.JUSTICE K.A.PUJ

Date of decision: 18/07/2002

ORAL JUDGEMENT (Per : MR.JUSTICE K.A.PUJ)

At the instance of the revenue, the following question of law is referred for the opinion of this Court:-

"Whether, the Appellate Tribunal is right in law and on facts in holding that donation received by the assessee trust of Rs.50,400/- is not income of the trust particularly when the said donation was received for a specific purpose for the construction of Ghati Wadi which was one of the objects of the trust ?"

2.

The assessment year involved is the assessment year 1986-87. The assessee received an amount of Rs.50,400/- as donation towards construction of Ghati Wadi. Since the said amount was directly taken to the balance sheet, the Income-tax Officer treated the same as income and accordingly assessed the same since the donation was given for the construction of Ghati Wadi which was one of the objects of the trust.

3.

The Deputy Commissioner of Income-tax (Appeals), however, was of the opinion that the amount had been received with a specific direction and that was for utilization as corpus and, therefore, it could not be treated as income of the trust under Section 12 read with Section 2(24)(iia) of the Act. The Deputy Commissioner of Income-tax (Appeals) relying upon the decision of the Income-tax Appellate Tribunal, Delhi Bench "A" in the case of Dharmapratistenam vs. ITO and the Income-tax Appellate Tribunal, Ahmedabad Bench in the case of Swetamber Murtipujak Jain Sangh, Jamnagar allowed the claim of the assessee. The Tribunal has also relied on these orders and decided the matter in favour of the assessee.

4.

Being aggrieved by the said order, the revenue has preferred the above reference before this Court.

5.

Heard Mr Manish R Bhatt, the learned senior standing counsel appearing for the applicant-revenue. No one appears on behalf of the respondent-assessee though the notice is duly served.

6.

The issue involved in the present reference is squarely covered by our decision in the case of Commissioner of Income-tax, Rajkot vs. Shri Sthanakvasi Vardhman Vanik Jain Sangh, Jamjodhpur being Income-tax Reference No. 73 of 1993 which was decided by us today. For the reasons stated therein and the view taken by us therein, we are of the view that the Tribunal was right in holding that the donation received by the assessee-trust of Rs.50,400/- is not income of the trust particularly when the said donation was received for a specific purpose for the construction of Wadi which was one of the objects of the trust. We, therefore, answer the question referred to us in the affirmative i.e. in favour of the assessee and against the revenue.

7.

The reference is disposed of accordingly with no order as to costs.

(M.S. Shah, J.) (K.A. Puj, J.)

sundar/-

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