THE COMMISSIONER OF INCOME TAX (EXEMPTIONS) V. GUJARAT COUNCIL OF SCIENCE CITY

TAXAP/308/2018

AI Insights

The case involves the Commissioner of Income Tax (Exemptions) appealing against the Gujarat Council of Science City regarding the taxability of annual and recurring grants received by the council. The core issue was whether these grants, received without specific direction, were eligible for exemption under section 11(1)(d) of the Income Tax Act. The Income Tax Appellate Tribunal had previously ruled in favor of the council, categorizing the grants as contributions to the corpus fund, which are excluded from taxable income under section 12 of the Act. The High Court of Gujarat, referencing a similar case (Tax Appeal No. 1050 of 2009), dismissed the appeal, agreeing with the Tribunal's decision.

• Counselvise Citation: [2018] 140 COUNSELVISE.COM (IT) 670463 (HC-GUJARAT)
• Appeal Type: Others
• Pronouncement Date: 10-04-2018
• Assessment Year: misc
• Other Referred Cases: Commissioner of Income-tax v. Sthanakvasi Vardhman Vanik Jain Sangh
• Laws Referred To: Income Tax Act
• Result in Favour of: Respondent
• Court: HIGH COURT
• Department Lawyers: MAUNA BHATT
• Assessee Lawyers: MANISH BHATT
• Keywords: Corpus Fund; Exemption; Grant-in-Aid; Income Tax; Tax appeal
• Section: 12; 11(1)(d)

Judgement Text

"C/TAXAP/308/2018 ORDER IN THE HIGH COURT OF GUJARAT AT AHMEDABAD R/TAX APPEAL NO. 308 of 2018 ========================================================== THE COMMISSIONER OF INCOME TAX (EXEMPTIONS) Versus GUJARAT COUNCIL OF SCIENCE CITY ========================================================== Appearance: MR MANISH BHATT FOR MRS MAUNA M BHATT(174) for the PETITIONER(s) No. 1 for the RESPONDENT(s) No. 1 ========================================================== CORAM: HONOURABLE MR.JUSTICE AKIL KURESHI and HONOURABLE MR.JUSTICE B.N. KARIA Date : 10/04/2018 ORAL ORDER (PER : HONOURABLE MR.JUSTICE AKIL KURESHI) 1. Revenue is in appeal against the judgement of the Income Tax Appellate Tribunal dated 31.10.2017 raising following question for our consideration: “Whether on the facts and circumstances of the case and in law, the Tribunal was justified in not appreciating that the annual and recurring grants received by the assessee without any specific direction is eligible for exemption u/s. 11(1)(d) of the Act? 2. From the record it emerges that the Tribunal has relied on its own judgement in case of assessee in the earlier assessment year. We are informed that the Revenue had carrie such matter Page 1 of 3 C/TAXAP/308/2018 ORDER in Appeal. The High Court has been pleased to dismissed the same being Tax Appeal No. 1050 of 2009 making following observations: “13. Thus, the said Government Resolution specifically provides that the grant provided by it is by way of contribution towards the corpus fund of the society. In the circumstances, the contributions received from the Government would fall within the excluded category under section 12 of the Act, viz. contributions made with a specific direction that they shall form part of the corpus of the trust or institution. Hence, the amount received by way of the contributions made by the Government would not be income derived from property held under trust wholly for charitable or religious purpose for the purposes of section 11 of the Act. Moreover, in the light of the provisions of section 11(1)(d) of the Act the said income is not to be included in the total income of the previous year of the person in receipt of the income. 14. In the aforesaid background, the Tribunal was justified in holding that the grant-in-aid received by the assessee is part of the corpus and cannot be held to be the income of the assessee and as such, the assessee would be entitled for exemption under section 11(1)(d) of the Act. 15. The aforesaid view finds support from the decision of this High Court in the case of Commissioner of Income-tax v. Sthanakvasi Vardhman Vanik Jain Sangh, (supra), wherein its has been held that in the light of the provisions of section 12 of the Act, it is obvious that any voluntary contribution which is made with a specific direction that it shall form part of the corpus of the trust or institution, would not be deemed to be the income derived from the property held under trust wholly for the charitable or religious purposes.” Page 2 of 3 C/TAXAP/308/2018 ORDER 3. In the result, Tax Appeal is dismissed. (AKIL KURESHI, J) (B.N. KARIA, J) JYOTI V. JANI Page 3 of 3 "