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Facts
The assessee, a registered trust, received a corpus donation of Rs. 1 crore. The AO(CPC) treated this as income from other sources, an action confirmed by the Ld. CIT(A), who relied on the amended provisions of Section 11(1)(d) of the Income Tax Act.
Held
The Tribunal held that the amended provisions of Section 11(1)(d), which include conditions for investment of corpus donations, were introduced by the Finance Act, 2021, and are effective from April 1, 2022. Therefore, these amended provisions are not applicable to the Assessment Year 2018-19, and the addition made by the lower authorities by retrospectively applying the amendment was set aside.
Key Issues
Whether the amended provisions of Section 11(1)(d) of the Income Tax Act, requiring investment of corpus donations as per Section 11(5), are retrospectively applicable to Assessment Year 2018-19.
Sections Cited
11(1)(d), 11(5), 12A, 143(1), 143(3), 142(1), 60, 63
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Income Tax Appellate Tribunal, DELHI BENCH ‘C’ : NEW DELHI
IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH ‘C’ : NEW DELHI BEFORE SHRI SHAMIM YAHYA, ACCOUNTANT MEMBER and SHRI YOGESH KUMAR US, JUDICIAL MEMBER ITA No.2336/DEL/2023 (Assessment Year: 2018-19) Jan Swasthya Sahyog, vs. DCIT, Circle, S – 295, Greater Kailash Part II, Exempt 1(1), New Delhi – 110 048. Delhi. (PAN : AAATJ0614R) (APPELLANT) (RESPONDENT) ASSESSEE BY : Shri Ved Jain, Advocate Shri Aman Garg, CA REVENUE BY : Ms. Parul Singh, Sr. DR Date of Hearing : 04.06.2024 Date of Order : 06.06.2024 ORDER PER SHAMIM YAHYA, ACCOUNTANT MEMBER : This appeal by the assessee is directed against the order of the ld. CIT (Appeals)/National Faceless Appeal Centre (NFAC) dated 20.07.2023 for the assessment year 2018-19. 2. Grounds of appeal taken by the assessee read as under :- “1. On the facts and circumstances of the case, the order passed by the Commissioner of Income Tax (Appeals), National Faceless Appeal Centre (NFAC) is bad both in the eyes of law and on facts. 2. On the facts and circumstances of the case, the CIT(A). NFAC has erred both on facts and in law in confirming the
2 ITA No.2336/DEL/2023 action of the AO(CPC) of making the adjustment by exercising its powers beyond the scope of section 143(1) of the Income Tax Act. 3.(i) On the facts and circumstances of the case, the CIT(A), NFAC has erred both on facts and in law in confirming the addition of Rs.1,00,00,000/- on account of corpus donation received during the year treating the same as income from other sources. (ii) That the above said addition has been confirmed ignoring the fact that the corpus donation received are exempt under Section 11 (1)(d) of the Income Tax Act. 4.(i) On the facts and circumstances of the case, the CIT(A). NFAC has erred both on facts and in law in holding that the assessee has not furnish any details or documentary proof to establish that such voluntary contributions are invested or deposited as per the modes specified under section 11 (5) of the Act in view of section 11 (1)(d) of the Act. (ii) That the CIT(A) has erred in ignoring the fact that such condition is inserted under section 11(1)(d) of the Act by Finance Act, 2021 w.e.f. 01-04-2022 and will apply prospectively and thus, not applicable to the current assessment year.” 3. Brief facts of the case are that the assessee is a registered trust under section 12A of the Income-tax Act, 1961 (for short ‘the Act’) and during the year under consideration, it has received purpose fund of Rs.1 crore from Novartis Healthcare Pvt. Ltd. Assessee filed its return of income and corpus fund of Rs.1 crore received during the year was duly reflected in Schedule I – Corpus fund of the audited financial statement, Part B-II-Voluntary Contribution forming part as per section 11(1)(d) of the Act and computation of income. AO (CPC) processed return of income of the assessee and
3 ITA No.2336/DEL/2023 treated the corpus fund of Rs.1 crore received during the year as income from other sources. 4. Against this order, assessee appealed before the ld. CIT (A). Ld. CIT(A) relied upon the amended provisions of section 11(1)(d) of the Act and confirmed the addition made by the AO (CPC). 5. Against this order, assessee appealed before us. We have heard both the parties and perused the records. 6. Ld. Counsel for the assessee made his submissions as under :- “10. At the outset, it is submitted that genuineness of the corpus fund received during the year is not doubted by AO(CPC), and CIT(A). 11. It is also submitted that assessment in the case of assessee was framed under section 143(3) of the Act and during the course of assessment proceedings, Ld.AO via notice u/s 142(1) of the Act dated 18.12.2020, asked assessee to submit details of voluntary contribution of Rs.1,00,00,000/- received during the year. 12. Thereafter, assessee filed its reply dated 06.01.2021, in response to the above-mentioned notice and furnished the requisite details. 13. Thereafter, Ld.AO passed an assessment order u/s 143(3) of the Act 24.02.2021, wherein no adverse remark was made by AO in respect of corpus fund of Rs.1,00,00,000/- received during the year. 14. It is further submitted that as per the provision of section 11(1)(d) of the Act voluntary contribution received with specific direction shall be treated as part of corpus and shall not form part of the total income of the trust and assessee in due compliance with section of section 11(1)(d) of the Act has duly disclosed corpus fund of Rs.1,00,00,000/- received during the year at Schedule 1- Corpus fund of the Audited Financial statement (PB Pg.73) Part B-TI- Voluntary Contribution forming part as per section 11(1)(d) of the Act (PB Pg.13)
4 ITA No.2336/DEL/2023 Computation of Income (PB Pg.3) 15. It is also submitted that CIT(A) in para 5.1 of his order, while confirming the addition made by AO(CPC) has relied upon the amended provisions of section 11(1)(d) of the Act which was introduced by Finance Act,2021 and was made applicable from 01.04.2022. Memorandum of Finance Bill, 2021 (PB Pg.115- 117). 16. Hence, the amendment to section 11 (1)( d) of the Act which makes it mandatory for assessee to invest or deposit voluntary contribution received during the year in or more forms specified in section 11 (5) of the Act is not applicable to A Y 2018-19 i.e. the assessment year under consideration In view of the above-mentioned submissions, the addition made AO(CPC) and confirmed by CIT(A) is liable to be deleted.” 7. Per contra, ld. DR for the Revenue could not controvert the submissions of the assessee. 8. We find that the disallowance in this case has been done by ld. CIT(A) solely relying upon the amended provisions of section 11(1)(d) of the Act. As clear from the aforesaid submissions of the assessee in the instant assessment year, amended provisions of section 11(1)(d) were not applicable. The amended provisions of section 11(1)(d) were introduced by Finance Act, 2021 and made applicable from 01.04.2022. This is evident from Memorandum of Finance Bill, 2021. Relevant extract of section 11(1)(d) of the Act pre and post amendment is as under :- “Pre-amendment 11.(1) Subject to the provisions of sections 60 to 63, the following income shall not be included in the total income of the previous year of the person in receipt of the income-
5 ITA No.2336/DEL/2023 (d) income in the form of voluntary contributions made with a specific direction that they shall form part of the corpus of the trust or institution" Post-amendment "11.(1) Subject to the provisions of sections 60 to 63, the following income shall not be included in the total income of the previous year of the person in receipt of the income- (d) income in the form of voluntary contributions made with a specific direction that they shall form part of the corpus of the trust or institution [subject to the condition that such voluntary contributions are invested or deposited in one or more of the forms or modes specified in sub-section (5) maintained specifically for such corpus]." 9. Thus, the amendment to section 11(1)(d) which makes it mandatory to assessee to invest or deposit voluntary contribution received during the year in one or more forms specified in section 11(5) of the Act is not applicable to AY 2018-19 i.e. AY under consideration. Therefore, it is abundantly clear that authorities below are erred in invoking the provisions of section 11(1)(d) which is not legally sustainable. Accordingly, we hold that authorities below have erred and the orders of the authorities below are set aside. Hence, the issue is decided in favour of the assessee. 10. In the result, the appeal filed by the assessee is allowed. Order pronounced in the open court on this 6th day of June, 2024.
Sd/- sd/- (YOGESH KUMAR US) (SHAMIM YAHYA) JUDICIAL MEMBER ACCOUNTANT MEMBER Dated the 6th day of June, 2024 TS
6 ITA No.2336/DEL/2023