LOKNAYAK JAIPRAKASH NARAYAN LEPROSY ERADICATION TRUST,MUMBAI V. INCOME TAX OFFICER EXEM WARD 1(4), MUMBAI

ITA 2827/MUM/2025

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The case involves Loknayak Jaiprakash Narayan Leprosy Eradication Trust, a charitable trust engaged in medical treatment of leprosy, which appealed against the order of the Commissioner of Income Tax (Appeals) upholding the disallowance of a corpus donation of Rs. 10,21,500 by the assessing officer. The assessing officer had initially treated the donation as a general donation due to the absence of specific direction letters from the donors at the time of assessment. The Tribunal, after considering the subsequent submission of these letters and relevant case law, concluded that the donations were indeed corpus donations as they were intended for specific purposes that align with the trust's objectives.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 708709 (ITAT-MUMBAI)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 18-07-2025
• Appeal Filed By: Assessee
• Order Result: Allowed
• Assessment Year: 2011-2012
• Other Referred Cases: Dwarkadeesh Charitable Trust Vs ITO 98 ITR 557, DIT Vs Ramakrishna Seva Ashrama (2011) (10) TMI 369, CIT Vs Sir Plot Swetambara Murti Pujak Jain Mandal 211 ITR 293, Bharatiya Sanskriti Vidyapeeth Trust in ITA No. No. 278 of 2007
• Laws Referred To: Income Tax Act
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: MAHESH DATTATRAYA LONDHE
• Assessee Lawyers: ANAND DESAI
• Keywords: Capital receipt; Charitable institution; Benefit of exemption
• Section: 147; 148; 12A

Judgement Text

"IN THE INCOME TAX APPELLATE TRIBUNAL “SMC” BENCH, MUMBAI BEFORE SHRI PAWAN SINGH, JUDICIAL MEMBER ITA No. 2827/MUM/2025 (AY: 2011-12) (Physical hearing) LoknayakJaiprakash Narayan Leprosy Eradication Trust Plot No. 16, Krishna Kunj, J.P. Nagar Road No. 3, Goregaon East, Mumbai-400063. [PAN No. AAATL0220B] Vs ITO Exemption Ward-1(4), Room No. 216, 2nd Floor, MTNL Building, Peddar Road, Cumball Hill, Mumbai-400026. Appellant / Assessee Respondent / Revenue Assessee by Shri Anand Desai, CA Revenue by Shri Mahesh Dattatraya Londhe, Sr. DR Date of hearing 03.07.2025 Date of pronouncement 18.07.2025 Order under section 254(1) of Income Tax Act PER PAWAN SINGH, JUDICIAL MEMBER; 1. This appeal by assessee is directed against the order of Ld. CIT(A), Mumbai dated 13.03.2025 for assessment year (AY) 2013-14. The assessee has raised following grounds of appeal: “1) The Learned Commissioner of Income Tax (Appeals) erred upon in upholding the disallowance u/s 11(1)(d) made by the learned Assessing Officer pertaining to Specific Donation received with Specific Directions of Rs. 10,21,500.00 for FY. 2010-11 (AY. 2011-12) 2) The Learned Commissioner of Income Tax (Appeals) erred upon perusing and examining the detailed submission and evidence pertaining to Specific Donation with Specific Directions made in course of appeal proceedings. 3) The Learned Commissioner of Income Tax (Appeals) erred upon in perusing the judicial precedents pertaining to the subject submitted on records and giving a reasoned order. 4) The appellant craves leave to add, alter, amend or modify any of the grounds of appeal at any time before the time of hearing and make the necessary submissions.” ITA No. 2827/Mum/2025 Loknayak Jaiprakash Narayan Leprosy Eradication Trust 2 2. Brief facts of the case are that assessee is a charitable trust / institution engaged in medical treatment of leprosy particularly in Adivasi and Farmers communities. The assessee is registered with Charity Commissioner, Mumbai. The assessee trust was also having registration under section 12A of Income Tax Act. The case of assessee was reopened under section 147 and notice under section 148 dated 2803.2018 was served upon the assessee. Reasons of reopening were that case of assessee was highlighted in Non-filers Monitoring System (NMS). On verification of NMS details, it was found that assessee has made deposited in their bank account. During the assessment, the assessing officer noted that in the statement of income and return of income filed by assessee, the assessee claimed corpus conation of Rs. 10,21,500/-. The assessing officer recorded that assessee has not furnished any direction letter form the donor that they have given such donation as a corpus donation. The assessing officer treated such corpus donation as general donation and added to the total income of the assessee. Aggrieved by the action of assessing officer, the assessee filed appeal before ld. CIT(A). Before ld. CIT(A), the assessee filed detailed statement of fact as recorded on page 2 to 5 of impugned order. The assessee in its statement of fact explained its object and activities and submitted that all the donations were credited to specific fund created in the books of accounts of the assessee trust. Particularly, specific donations of Rs. 10,21,500/- were credited to patient medical fund. This confirmations / letters from donors were not readily available with the trustees. It was explained to the assessing officer that only working trustee that Dr. J.D. Samant who was known and having ITA No. 2827/Mum/2025 Loknayak Jaiprakash Narayan Leprosy Eradication Trust 3 confidence of leprosy patient were not well and died unexpectedly on 19.01.2018. Dr. Samant used to take medical requirement, legal and social obligation. General or specific donations collected by him and all formalities were attended by him. Other trustees were not aware about working of trust. On account of his sudden death, no one from management trustees were aware. Thus, specific donation letters were not immediately available for submission. Later on his wife, Smt. J.J. Samant has started looking on the trust activities. The directions letters with regard to the donation of Rs. 10,21,500/- is now available and were furnished. The assessee prayed for considering such donation for corpus donation. The assessee also relied on the decision of Allahabad High Court in Dwarkadeesh Charitable Trust Vs ITO 98 ITR 557. In response to show cause notice under section 250 to Income Tax Act, the assessee also furnished additional submission. All additional submissions of assessee are recorded from page no. 6 to 16 of impugned order. 3. The ld. CIT(A) on considering the submissions confirmed the action of assessing officer. The ld. CIT(A) held that assessee has provided letters from donors, these letters do not explicitly contain specific direction that donations are to form part of corpus. The assessee has created donations to “patient medicine fund”. Further, aggrieved the assessee has filed appeal before Tribunal. 4. I have heard the submissions of learned Authorised Representative (ld. AR) of the assessee and the learned Senior Departmental Representative (ld. Sr. DR) for the revenue and perused the order of lower authorities carefully. The ITA No. 2827/Mum/2025 Loknayak Jaiprakash Narayan Leprosy Eradication Trust 4 ld. AR of the assessee submits that assessee is a charitable trust registered with Charity Commissioner, Mumbai. The assessee was also having registration under section 12A of Income Tax Act. Object and activities of the assessee are not doubted and disputed by lower authorities. Only dispute is with regard to the receipt of donation of Rs. 10,21,500/-. The assessing officer treated such receipt as a ‘general receipt’ instead of ‘corpus donation’ for the want of directions from donor. We find that explanation of the assessee before ld CIT(A) was that the direction letters from donors were not readily available and non-availability of such letter was explained. It was explained that Dr. Samant used to look after compliance work of assessee- trust, who expired. During first appellate stage, the assessee furnished such direction letters, copies of directions letters from various donors are also placed on record at page no. 90 to 95 of paper book. The ld. AR by referring such letter would submit that donation of Rs. 5,00,000/- was received from Sanjay M Naik vide cheque no. 010788 dated 13.04.2010 drawn on Bank of Baroda and direction is also mentioned of his donation letter. Similarly, Rs. 1,61,000/- was received from Prof. Vijay Page, Rs. 25,000/- from R.D. Baghi, Rs. 20,000/- from Dr. Ulhas R. Tendulkar, Rs. 20,000/- from Sonia Prabhu and Rs. 5,00,000/- from Mahalakshmi Temple Trust. The ld. AR for the assessee submits that statue does not prescribed direction from donor in writing. The corpus donation has to be considered in the context of its purpose. If any contribution is made for capital formation, it has to be treated as ‘corpus donation’ and is ultimately used for object of the trust, it will satisfy the requirement of law and assessee is eligible for benefit of such exemption. ITA No. 2827/Mum/2025 Loknayak Jaiprakash Narayan Leprosy Eradication Trust 5 The Karnataka High Court in Bharatiya Sanskriti Vidyapeeth Trust in ITA No. No. 278 of 2007 held that donation for specific fund and purpose constitute corpus fund. Similarly, Gujarat High Court in CIT Vs Sir Plot Swetambara Murti Pujak Jain Mandal 211 ITR 293 also held that contribution for specific purpose not in general, should be treated as corpus. In a series of decision it is also held that voluntary contributions for specific purpose are capital receipt not chargeable to tax. The ld. AR finally submits that details of corpus donation is given at page no. 62 to 63 of paper book along with receipt number, date of donation and amount of donation and pray for allowing his appeal. 5. On the other hand, the learned Senior Departmental Representative (ld. Sr. DR) for the revenue supported the order of Assessing Officer / ld. CIT(A). 6. I have considered the rival submissions of both the parties and have gone through the orders of lower authorities carefully. I have also deliberated on various case laws relied by ld. AR of the assessee. On careful consideration of fact, I find that a very short dispute is involved in the present appeal that is whether the donation received by assessee is general or a capital receipt for the purpose of corpus of assessee trust. During assessment, the assessing officer treated the donation of Rs. 10,21,500/- as a general donation for the want of letter of direction from donor. However, during the first appellate stage, the assessee furnished direction letter from various donors copies of which are available at page no. 92 to 96 of the paper book. On perusal of such letters / direction, I find that majority of the donation is given for the ITA No. 2827/Mum/2025 Loknayak Jaiprakash Narayan Leprosy Eradication Trust 6 contribution of treatment of leprosy patient, which is ultimate object of assessee. 7. I find that Hon’ble Karnataka High Court in DIT Vs Ramakrishna Seva Ashrama (2011) (10) TMI 369, while considering that definition of word “corpus” held that corpus is not defined in the Income Tax Act. It was held that one has to understand the same in the context of a capital, opposed to an expenditure. It is a capital of an assessee; a capital of an estate; capital of a trust; a capital of an institution and if any voluntary contribution is made with a specific direction it shall be treated as the capital of assessee trust for carrying out its activities and such income shall fall under section 11(d) and is not liable to tax. It is specifically held that it is not necessary that a voluntary contribution should be made with the specific direction to treat it as “corpus”. If intention of the donor is to give that money to a trust which they will keep in a trust account in deposit and is utilised for carrying on a particular activity, it satisfies the definition part of the ‘corpus’ and assessee would be entitled for benefit of exemption from payment of tax. 8. On appreciation of direction in various letters by donors, I find that donors have given donation for utilisation money for object of the assessee trust. I am conscious of the fact that word ‘corpus donation’ is not mentioned on all the receipts but fact remains the same that such donation is made for the purpose of activities of assessee trust. Therefore, treatment of such corpus fund as a general is not justified. Thus, I direct the assessing officer to treat the impugned donation of Rs. 10,21,500/- is ‘corpus donation’ which is not liable to tax. In the result, grounds of appeal raised by assessee is allowed. ITA No. 2827/Mum/2025 Loknayak Jaiprakash Narayan Leprosy Eradication Trust 7 9. In the result, the appeal of the assessee is allowed. Order was pronounced in the open Court on 18/07/2025. Sd/- PAWAN SINGH JUDICIAL MEMBER MUMBAI, Dated 18/07/2025 Biswajit Copy of the order forwarded to: (1) The Assessee; (2) The Revenue; (3) The PCIT / CIT (Judicial); (4) The DR, ITAT, Mumbai; and (5) Guard file. By Order Assistant Registrar ITAT, Mumbai "