DUDHSAGAR RESEARCH AND DEMENT ASSOCIATION,MEHSANA vs. THE DY.CIT, CIRCLE-1, EXEMPTION, AHMEDABAD

The brief facts of the case are that the assessee filed its return of income on 03.10.2016 declaring total income at Rs. Nil for A.Y. 2016-17. The case was selected for the Assessing Officer issued notices calling for various details regarding the activities of the trust, its entitlement to exemption under sections 11 and 12 of the Act and the nature of corpus donations claimed under section 11(1)(d) of the Act. The Assessing Officer held that the assessee trust was engaged in activities that fell within the residual limb of “advancement of any other object of general public utility” and that the main source of its revenue was the sale of frozen semen doses, which he held to be an activity in the nature of trade, commerce or business. By invoking the proviso to section 2(15) and section 13(8), the Assessing Officer denied the exemption under sections 11 and 12 of the Act. The Assessing Officer further held that the corpus donation of Rs. 7,23,87,393/- received from milk supplying societies was not a voluntary contribution but a compulsory levy linked to the quantity of milk fat supplied and hence did not qualify as a corpus donation under section 11(1)(d). He therefore brought the amount to tax as income under section 2(24)(iia) and completed the assessment at total income of Rs. 6,41,81,500/-.

The assessee is in appeal before us against the order passed by the CIT(Appeals) dismissing the main grounds of the assessee and treating the corpus donation as revenue receipt and also upholding the applicability of proviso to section 2(15) of the Act.

Before us, the ld. counsel for the assessee submitted that the assessee trust is registered under section 12A(a) since 1975 and is engaged in activities of medical relief to animals, progeny testing, vaccination, artificial insemination, bull rearing, and education in dairy technology. The ld. counsel for the assessee submitted that the activities of the assessee fall squarely within “medical relief” and “education” and therefore the proviso to section 2(15) of the Act cannot be invoked. He placed reliance on the orders of CIT(A) for A.Y. 2014-15 and on the fact that the Revenue had not filed any appeal against that finding. It was also submitted that for A.Y. 2017-18 the Department itself has accepted the assessee as a trust carrying on “medical relief” and “education”. On the corpus donation issue, the ld. counsel &203/Ahd/2025 Dudhsagar Research and Dement Association Vs. DCIT Asst. Years–2016-17 & 2017-18 - 5– submitted that the contributions were made with the specific object of meeting the cost of Dairy Science and Food Technology College and other capital projects of the trust. The resolution of the donor societies and the confirmation certificates issued by the assessee clearly establish that the donations were for the corpus. The ld. counsel for the assessee placed reliance on Loknayak Jaiprakash Narayan Leprosy Eradication Trust v. ITO [2025] 176 taxmann.com 922 (Mum), DIT v. Sri Ramakrishna Seva Ashram [2011] 357 ITR 731 (Kar), CIT v. Bharathiya Sanskriti Vidhyapith Trust (ITA 278/2007), ACIT v. Balaji Educational and Charitable Trust [2011] 15 taxmann.com 53 (Mad), and Gujarat Cricket Association v. JCIT [2019] 101 taxmann.com 453 (Ahd). It was further submitted that in the alternative, if the corpus donation is treated as revenue receipt, the assessee is eligible for exemption under sections 11 and 12 as held by ITAT in assessee’s own case for A.Y. 2014-15 vide order dated 17-01-2024 in ITA No. 1147/Ahd/2018.

We have heard the rival contentions and perused the material on record. Since the primary issue of corpus donation has already been adjudicated by the Ahmedabad Bench in the assessee’s own case for A.Y. 2014-15 in Dudhsagar Research & Development Association v. ACIT (Exemption) [2024] 159 taxmann.com 1465 (Ahmedabad – Trib.) [11-10- 2022], it is necessary to reproduce the relevant findings contained therein:

The concept of voluntary contribution has been explained by N.D. Ojha C.J. speaking for the Division Bench (as his Lordship then was), in the case of CIT v. Madhya Pradesh Anaj Tilhan Vyapari Mahasangh [1988] 37 Taxman 230/171 ITR 677/68 CTR 13 (M.P.) as (page 680): ‘The contributions, in order to be voluntary, had to be made willingly and without compulsion and the money was to be gifted or given gratuitously without consideration.’ 14. In the case of DIT (Exemption) v. Jaipur Golden Charitable Clinical Laboratory Trust [2009] 311 ITR 365 (Delhi), on the voluntary nature of donations, made the following observations: ‘From the perusal of the above clause, it is clear that it was optional for the consulting doctors to contribute donations which are also apparent from the fact that only 61 doctors opted for such arrangement out of 141 doctors working for the assessee. The above mentioned clause neither binds nor forces the doctors. It only gives the option to give or arrange donations in case he wants less deduction from the professional fee payable to him. Considering this condition it can be said that the donations by the doctors have been given of its own volition and without any force……’ 15. In view of the above discussion, we find no infirmity in the order of Ld. Assessing Officer and Ld. CIT(A) and we are of the view that the assessee is not eligible for claim of deduction under Section 11(1)(d) of the Act. In the result, the appeal of the assessee is dismissed.”

In the present appeal, we find that the issue regarding the nature of donations received by the assessee stands squarely covered by the above decision of the Coordinate Bench in assessee’s own case for A.Y. 2014-15 in Dudhsagar Research and Dement Association Vs. DCIT Asst. Years–2016-17 & 2017-18 - 8– Dudhsagar Research & Development Association v. ACIT (Exemption) [2024] 159 taxmann.com 1465 (Ahmedabad – Trib.) [11-10-2022]. The factual matrix for the year under consideration is identical. Respectfully following the binding precedent, we uphold the finding of the Assessing Officer and the ld. CIT(Appeals) that the donations received from milk supplying societies, being compulsorily collected and linked to the quantity of milk fat supplied, do not satisfy the condition of being “voluntary contributions” with “specific direction” as required under section 11(1)(d) of the Act and therefore cannot be treated as corpus donations. Thus, the ground of the assessee on this issue is dismissed. However, on the alternative claim raised by the assessee, we find that this issue is also covered in favour of the assessee by the decision of the Coordinate Bench in assessee’s own case in order dated 17-01-2024, wherein the Tribunal held that once the corpus donation is treated as revenue receipt, the said receipts are liable to be governed by the provisions of sections 11 and 12 of the Act and the assessee is eligible for deduction in accordance with law. The ld. CIT(Appeals) has already followed this decision and allowed the statutory deduction of 15%.

Since the facts for the year are identical and the issue is squarely covered in favour of the assessee by the Coordinate Bench, we hold that the assessee is eligible for statutory deduction at 15%, and the Assessing Officer is directed to grant such exemption in accordance with law.

Accordingly, following the above two orders of the Ahmedabad ITAT in the assessee’s own case for A.Y. 2014-15, the appeal of the assessee &203/Ahd/2025 Dudhsagar Research and Dement Association Vs. DCIT Asst. Years–2016-17 & 2017-18 - 9– is partly allowed in terms of observations made in above paragraphs. So far as assessee’s reliance on judicial precedents cited before us is concerned, we are of the view that the same have been rendered on their own particular set of facts and as discussed above, the issue for consideration before us is directly covered by the decision in assessee’s own case for A.Y. 2014-15.

Since the facts and issues for consideration are common to both the years before us, both appeals are decided accordingly.