JUDGMENT
Dipak Kumar Sen, J.
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 :
“Dear Sirs,
We acknowledge with thanks the receipt of your letter along with 450 preference shares in Kamala Mills Ltd. along with right to dividend accrued thereon as donation. As desired by you, we received these as capital of our trust and has been held as part of corpus of our trust.”
4. On the basis of the aforesaid, it was contended that the provisions of Section 12 did not contemplate that voluntary contributions received by the assessee trust from a charitable or religious institution should not be deemed to be income derived from property for the purposes of Section 11. It was contended further that the donation in question was included in the corpus of the assessee and in any event should not be held to be income. The Tribunal found that the donation was specifically given to augment the corpus of the assessee and, following a decision of the Allahabad High Court in the case of Sri Dwarkadheesh Charitable Trust [1975] 94 ITR 557, held that the said donation should not be included in computing the taxable accumulation of the assessee. The Tribunal allowed the appeal and directed the Income-tax Officer to delete the said amount of Rs. 45,000 in computing the taxable accumulation.
5. On an application of the Revenue under Section 256(1) of the Income-tax Act, 1961, the following question has been referred as a question of law arising out of the order of the Tribunal for the opinion of this court:
” Whether, on the facts and in the circumstances of the case and on a proper interpretation of Section 12(2) of the Income-tax Act, 1961, the Tribunal was correct in holding that the sum of Rs. 45,000 representing the value of 450 cumulative preference shares of Rs. 100 each of M/s Kamala Mills Ltd. received by the assessee-trust as voluntary contribution from Rai Bahadur Moogtulal Taparia Charitable Trust could not be deemed to be income derived from property in making the assessment of the assessee-trust ?”
6. At the hearing, the learned advocate for the Revenue contended before us that there was no material except the letter of the assessee to show that the donation was intended to be added to the corpus of the assessee-trust and should not be used in any other way. It was submitted that the said amount should in law be held to be income derived by the assessee.
7. The learned advocate for the assessee contended, on the other hand, that the controversy raised in the question has been answered in favour of the assessee by more than one High Court. The following decisions were cited :
(a) CIT v. Bal Utkarsh Society [1979] 119 ITR 137 (Guj). In this case, the assessee was a charitable trust and in the assessment year involved had been credited with an amount of Rs. 2,74,000 which was received from another charitable trust by way of shares in commercial companies and partly in cash donations. The Income-tax Officer took the view that the donations in the form of shares constituted income within the meaning of Section 12(2) of the Income-tax Act, 1961, as it stood at the relevant time and included the amount of the market value of the shares in the total income of the assessee. On appeal, the assessee succeeded before the Appellate Assistant Commissioner. The decision of the Appellate Assistant Commissioner was upheld by the Tribunal which followed the decision of the Allahabad High Court in the case of Sri Dwarkadheesh Charitable Trust v. ITO [1975] 98 ITR 957. On a reference, the Gujarat High Court noted the provisions of Section 12 as they stood at the relevant time and also considered the decision of the Allahabad High Court and answered the question in favour of the assessee. The Gujarat High Court noted that from the decision of the Allahabad High Court, an application for leave to appeal to the Supreme Court had been rejected and the decision of the Allahabad High Court stood confirmed by the Supreme Court.
(b) CIT v. Vanchi Trust . In this case, the Kerala High Court following the decisions of the Allahabad and Gujarat High Courts held that a contribution given and accepted with a specific stipulation that the same will be treated as a corpus of the receiving trust and not as income will not come within the mischief of Section 12(1) and voluntary contribution made with such stipulation should not be treated as income of the receiving trust for the purpose of Section 11.
(c) CIT v. Eternal Science of Man’s Society . In this case, a Division Bench of the Delhi High Court, following the Allahabad High Court in the case of Sri Dwarkadheesh Charitable Trust [1975] 98 ITR 557, held that a voluntary contribution of shares in companies to the assessee, a charitable society, by another charitable trust with a specific condition that the donations would constitute the corpus of the society or be an accretion to such corpus and other conditions limiting the user of the donation did not constitute income in the hands of the recipient charitable society, the assessee, and fell outside the provision of Section 12(1) of the Income-tax Act, 1961, as it stood prior to its amendment.
(d) Sukhdeo Charity Estate, Ladnu v. CIT . In this case, the decisions of the Allahabad, Kerala and Delhi High Courts were approved by the Rajasthan High Court in a case the facts whereof were similar to those of the case decided by the Allahabad High Court.
8. In the case before us, the Tribunal has found that the donation of shares was specifically given in order to augment the corpus of the assessee and not being spent for the purpose of the assessee. This finding has not been challenged and has become final. We do not see any reason to take a view different from that taken by the other High Courts and with respect we follow the same.
9. We answer the question in the affirmative and in favour of the assessee. There will be no order as to costs.
Mukul Gopal Mukherji, J.
10. I agree.