S. 11 : Property held for charitable purposes – Dividend received on the shares which were received as donation towards corpus fund-Treated as part of corpus fund – Cannot be treated as income from other sources-Entitle to exemption. [S. 11(1)(d), 11(5), 13(1)(d)]
The issue in dispute is whether the dividend received on the shares, which were received by the assessee as donation towards corpus fund, could also be treated as part of corpus fund or to be treated as income of the assessee which was to be applied or invested as per the provisions of section 11 of the Act. The assessee received 5,00,000 equity shares of Majesco Ltd. as corpus donation. The donor vide its letter dated 17.12.2020 directed the assessee that said shares, any receipt thereof in the form of dividend/sale proceeds and receipts on securities /deposits made out of dividend/sale proceeds was to be treated as corpus donation. According to the assessee the dividend received and interest received on deposit made out such dividend was to be treated as corpus donation , which was claimed exempt u/s 11(1)(d) of the Act while filing the return of income. According to the Assessing Officer, once the asset is donated and transferred, generation of future income from asset will be governed as per the provisions of the Act only, and not under any conditions set by the donor. According to the Assessing Officer, the entire interpretation of section 11(1)(d) of the Act was done wrongly by the assessee and claimed the dividend as exempt under the corpus fund and therefore, he assessed income from dividend as income from other sources . CIT(A) deleted the addition . On appeal by the Revenue the assessee contended that the dividend received and interest received on deposit made out such dividend was to be treated as corpus donation , which was claimed exempt u/s 11(1)(d) of the Act . The Tribunal affirmed the order of the CIT(A) , relied on CIT( E) v. Mata Amrithanandamayi Math [2017] 85 taxmann.com 261 (Ker)(HC ) affirmed by Honourable Supreme Court. (ITA No. 4766/MUM/2023 dt. 30-5 -2024 )(AY.2021 -22)
ITO v. Bhavitha Foundation (Mum)(Trib) www.itatonline.org
(Coram : Hon’ble Shri Om Prakash Kant, AM, and Hon’ble Shri Raj Kumar Chauhan, JM)