Receipts mentioning that it was towards corpus, donation assumed to be for corpus of trust

In the absence of objection by donors to receipts mentioning that donations were towards corpus, it is assumed that donations were towards the corpus of the trust – ITAT

In a recent judgment, ITAT Ahmedabad has held that when receipts categorically mentioned the fact of the donation having been received towards corpus donation and there was no objection to the donors to such receipts, it can be safely assumed that the donors accepted the donations as being towards the corpus of the trust.

ABCAUS Case Law Citation:
5022 (2026) (01) abcaus.in ITAT

In the instant case, the appellant assessee had challenged the order passed by the CIT(A)/NFAC in confirming the addition MADE by denying the exemption u/s 11(1)(d) of the Income Tax Act, 1961 (the Act) towards corpus donation.

The assessee was a trust formed for educational and charitable purposes registered u/ss 12AA of the Act and also u/s 80G of the Act.  During the impugned year, the assessee had inter alia received foreign voluntary contribution forming part of corpus which was claimed as exempt u/s 11(1)(d) of the Act. 

During assessment proceedings, the assessee failed to file any details with regard to the said corpus donation and, accordingly, the AO denied the assessee’s claim of exemption to the said donations and added the same to the income of the assessee.

The Tribunal observed that the CIT(A) had confirmed the addition made finding that the assessee had failed to establish the identity of the actual donors and no written direction from any donor specifying that the amount was for corpus fund had been produced.

Before the Tribunal, the assessee submitted that the trust was duly registered under Foreign Contribution (Regulation) Act, 2010 (FCRA).  However, the AO noted the assessee failed to submit any letter or correspondence from the donor to prove that the foreign donation received was in the nature of corpus donation. However, such donations were received from outside India and donation receipts of these donation had specific stamp, stating that ‘This donation is given for specific direction that it shall be form part of Trust Corpus.’

It was further submitted that the AO failed to appreciate that such donations were directly credited in FCRA Saving Bank Account which showed that it was a foreign donation and letter/correspondence from the donor was not possible at the time of assessment scrutiny. And the same had not be asked by the AO while issuing letter during remand proceeding. Further, during remand proceeding, appellant had duly submitted bank statement of FCRA account, duly highlighting such donation.

On the other hand, Revenue argued that to qualify as corpus donation the donor must give a specific written direction that the contribution shall form part of the corpus and that merely classifying the receipt as corpus in the books did not meet the statutory requirement. 

The Tribunal noted that the denial of the exemption to the foreign donation received by the assesse was admittedly for the reason that there was no correspondence from the donors directing the donation to be treated as corpus donation

The Tribunal opined that considering the fact that the receipts categorically mentioned the fact of the donation having been received towards corpus donation and there was no objection to the donors to the said receipts nor the Revenue in any way demonstrated the donors to have rejected/objected to the treatment of the receipts by the assessee towards corpus, it can be safely assumed that the donors accepted the donations as being towards the corpus of the trust.

The Tribunal held that the trust had made sufficient compliance with the condition noted by the CIT(A) of there being a specific direction that the donation should form part of the corpus of the trust to qualify as corpus donation for claiming exemption u/s 11(1)(d) of the Act. The objective being that only those donations will be treated as corpus which the donor agrees to be treated so, whether the agreement is by way of his direction given in writing or it comes out in an implicit manner through a receipt issued to him mentioning the fact of the donation having been made the corpus of the trust, the end result is the same.

As a result, the Tribunal held that trust had demonstrated sufficiently the foreign donations received by it had been made towards the corpus of the trust, and there was no reason for denying the assessee’s claim of exemption of such donation u/s 11(1)(d) of the Act to the same. 

Accordingly, the AO was directed to allow the assessee’s claim of exemption u/s.11(1)(d) of the Act of foreign donation received by it.

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