PRINCIPAL COMMISSIONER OF INCOME TAX vs. M/S UJJAIN SHIKSHAN AVAM SHODH SAMITI

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ITA/221/2017HC Madhya PradeshMPHC02030731201728 November 20172 pages
AI SummaryDismissed

What did the High Court hold?

The High Court held that no substantial question of law arises in the appeal. It affirmed the view taken by the lower appellate authorities that the Rs. 40,00,000 received as corpus donation for building construction, being for a specific purpose, cannot be treated as part of income. The reasoning was that such an amount is in the nature of a capital receipt and therefore not taxable under the Income Tax Act, 1961. This conclusion was based on the law laid down by the Bombay High Court in the case of Commissioner of Income Tax v. Trustees of Kasturba Scindia Commission Trust. Consequently, the addition made by the Assessing Officer towards the taxable income of the assessee was not sustainable. The appeal was dismissed as having no merit.

What were the facts?

The appeal was filed by the Principal Commissioner of Income Tax, Ujjain (the revenue) against an order dated 30.05.2017 passed by the Income Tax Appellate Tribunal (ITAT), Indore Bench. The ITAT had affirmed the order of the Commissioner of Income Tax (Appeal), Ujjain, which in turn dismissed the department's appeal. The core of the dispute concerns Rs. 40,00,000 received by the assessee, M/s. Ujjain Shikshan Avam Shodh Samiti, as corpus donation for building construction. The Assessing Officer had treated this amount as taxable income, despite it being for a specific purpose. The assessee was not registered under Section 12-A of the Income Tax Act, 1961.

What were the issues?

1. Whether the amount of Rs. 40,00,000 received as corpus donation for building construction, for a specific purpose, is taxable as income, even though the assessee is not registered under Section 12-A of the Income Tax Act, 1961? (Question of law) Assessee's Contentions: The assessee argued that the amount received was a corpus donation for a specific purpose (building construction) and therefore constituted a capital receipt, not taxable income. They relied on the decision of the Bombay High Court in CIT v. Trustees of Kasturba Scindia Commission Trust. Revenue's Contentions: The revenue's appeal was dismissed by the Tribunal, and the judgment does not record specific contentions made by the revenue before the High Court. However, the initial action of the Assessing Officer was to treat the donation as taxable income.

Which sections of the Income-tax Act were involved?

Section 260-A,Section 12-A

AI-generated summary — verify with the full judgment below

1 Income Tax Appeal No.221/2017 (Principal Commissioner of Income Tax, Ujjain Versus M/s. Ujjain Shikshan Avam Shodh Samiti) Indore, Dated 28.11.2017 Ms. Veena Mandlik, learned counsel for the appellant – department. Heard on the question of admission. O R D E R This income tax appeal under Section 260-A of the Income Tax Act, 1961 has been filed against order dated 30.05.2017 passed by the Income Tax Appellate Tribunal, Indore Bench, Indore in ITA No.22/Indore/2015, whereby the learned Appellate Tribunal affirmed order dated 30.10.2014 passed by the Commissioner of Income Tax (Appeal), Ujjain in First Appeal No.U-551/2011-12 and dismissed the appeal of the department. 2. It is not in dispute that the respondent – assessee received Rs.40,00,000/- as Corpus Donation for Building Construction, which was for specific purpose; hence, the same cannot be treated as part of Income Tax even though the assessee is not registered under Section 12-A of the Income Tax Act, 1961. This view has been taken by the learned Appellate Authority as well as by the learned Appellate Tribunal on the basis of decision of Bombay High Court in the case of Commissioner of Income Tax v. Trustees of 2 Kasturba Scindia Commission Trust reported in (1991) 189 ITR 5 (Bombay). 3. In the present case, the Assessing Officer on evidence has accepted the fact that Rs.40,00,000/- (rupess forty lakhs) was received by the assessee as Corpus Donation for Building Construction, which was for specific purpose, in view of the law laid down by the Bombay High Court in the case of Commissioner of Income Tax v. Trustees of Kasturba Scindia Commission Trust (supra) and held that the amount being in the nature of Corpus Fund, is not taxable under the Income Tax Act, 1961 being in the nature of Capital Receipt, and therefore, the addition made by the Assessing Officer towards taxable income of the assessee is not sustainable. 4. On due consideration of the aforesaid, so also the reasoning assigned by the learned Appellate Tribunal and the law on the subject, we are of the view that no substantial question of law arises in this appeal. 5. Income Tax Appeal No.221/2017 has no merit and is accordingly dismissed. (P.K. Jaiswal) (Virender Singh) Judge Judge Pithawe RC Ramesh Chandra Pithwe Digitally signed by Ramesh Chandra Pithwe DN: c=IN, o=High Court of Madhya Pradesh, ou=Administration, postalCode=452001, st=Madhya Pradesh, 2.5.4.20=5657c7dcce52095b400cf9f273e8b1cd636b dbf86f330909bb87923adec1e27a, cn=Ramesh Chandra Pithwe Date: 2017.12.17 11:52:08 +05'30'

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