COMMISSIONER OF INCOME TAX Vs. PUNYARPAN CHARITABLE TRUST

JUDGEMENT

(1.) Punyarpan Charitable Trust, the assessee, was assessed to income-tax for the assessment year 1968-69, the corresponding accounting year ending on the March 31, 1968. In the said year, the assessee had received donation from the Rai Bahadur Moogtulal Taparia Trust, another charitable trust, of Rs. 45,000 by way of 450 cumulative preference shares of the face value of Rs. 100 each of Kamala Mills Ltd. The Income-tax Officer computed the taxable accumulation of the assessee in the said assessment year and in doing so, he added the said amount of Rs. 45,000.

(2.) Being aggrieved, the assessee preferred an appeal to the Appellate Assistant Commissioner contending that the said donation should be exempt from tax. It was contended that the said amount was received by the assessee as part of its capital and, therefore, was not taxable as income at all. The Appellate Assistant Commissioner held that under Section 12(2) of the Income-tax Act, 1961, voluntary contribution received by the assessee from another charitable trust should be held to be income of the trust receiving such contribution. The assessment was confirmed.

(3.) There was a further appeal by the assessee to the Income-tax Appellate Tribunal. The assessee contended before the Tribunal that the donation was received from the donor trust on certain conditions and the donation was acknowledged by the following letter dated May 11, 1967, from the assessee to the donor-trust recording as follows :