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August 2022

Charitable purpose — Exemption u/s 11 — Voluntary contributions towards corpus fund used for purchase of land — Allowable as application of income to charitable purpose

By K. B. Bhujle, Advocate
Reading Time 2 mins
31 CIT(Exemption) vs. Om Prakash Jindal Gramin Jan Kalyan Sansthan
[2022] 444 ITR 498 (Del)
A.Y.: 2010-11
Date of order: 26th April, 2022
S. 11(1)(d) of ITA, 1961

Charitable purpose — Exemption u/s 11 — Voluntary contributions towards corpus fund used for purchase of land — Allowable as application of income to charitable purpose

After the transfer of the corpus fund of Rs. 19 crores to general reserves, the assessee-trust purchased land worth Rs. 5,27,45,958 and donated Rs. 13.4 crores to another trust. The Assessing Officer made an addition of Rs. 19 crores as additional income.

The Commissioner (Appeals) set aside the addition on the ground that exemption on corpus donation was allowable for the purchase of land, as it was a purchase of a capital asset. The Tribunal affirmed the order of the Commissioner (Appeals) allowing utilisation of corpus fund of Rs. 19 crores as application of income u/s 11(1)(d) of the Income-tax Act, 1961.

On appeal by the Revenue, the Delhi High Court upheld the decision of the Tribunal and held as under:

“i) There was no ground of appeal either before the Tribunal or before the court challenging the concurrent finding of the Commissioner (Appeals) and the Tribunal that the substance of the transaction was that the corpus fund had been utilised for the purchase of a capital asset.

ii) The court was in agreement with the findings of the Commissioner (Appea
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