Donations for Leprosy Care Qualify as Corpus | ITAT

Case Details: Loknayak Jaiprakash Narayan Leprosy Eradication Trust v. Income Tax Office, Exemption - [2025] 176 taxmann.com 922 (Mumbai - Trib.) 

Judiciary and Counsel Details

• Pawan Singh, Judicial Member
• Anand Desai, CA for the Appellant.
• Mahesh Dattatraya Londhe, Sr. DR for the Respondent.

Fact of the Case

The assessee was a charitable trust/institution engaged in the medical treatment of leprosy, particularly in the Adivasi and farmer communities. The assessee was registered with the Charity Commissioner, Mumbai, and also had registration under section 12A. The assessee filed the return and claimed a corpus donation of Rs. 10.21 lakhs in AY 2013-14.
During the assessment, the Assessing Officer (AO) noted that the assessee had not furnished any direction letter from the donor stating that they had given such a donation as a corpus donation. Thus, AO treated such corpus donation as a general donation and added the same to the total income of the assessee. On appeal, CIT(A) confirmed the action of AO, and the matter reached the Mumbai Tribunal.

TRIBUNAL Held

The Tribunal held that the dispute involved in the case was whether the donation received by the assessee was a general or a capital receipt for the corpus of the assessee’s trust. During the assessment, the AO treated the donation as a general donation due to the lack of a letter of direction from the donor. However, during the first appellate stage, the assessee furnished a direction letter from various donors. On perusal of such letters/directions, it was found that the majority of the donation was given for the contribution to the treatment of leprosy patients, which was the ultimate object of the assessee.
The Tribunal further held that if a contribution is made with a specific direction, it shall be treated as the capital of the assessee trust for carrying out its activities, and such income shall fall under section 11(d) and is not liable to tax. It is held explicitly that a voluntary contribution doesn’t need to be made with the specific direction to treat it as ‘corpus’. Suppose the donor intends to give the money to a trust that they will keep in a trust account and use for carrying on a particular activity. In that case, it satisfies the definition part of the ‘corpus’ and the assessee would be entitled to the benefit of exemption from payment of tax.
Thus, the impugned donation was to be treated as a ‘corpus donation’, which was not liable to tax.

List of Cases Reviewed

• DIT v. Sri Ramakrishna Seva Ashrama [2012] 18 taxmann.com 37/205 Taxman 26/[2013] 357 ITR 731 (Kar) (para 7) followed

List of Cases Referred to

• Sri Dwarkadheesh Charitable Trust v. ITO [1975] 98 ITR 557 (All) (para 2),
•  CIT v. Bharatiya Sanskriti Vidyapeeth Trust [IT Appeal No. 278 of 2007, dated 13-11-2011] (para 4),
• CIT v. Shri Plot Swetamber Murti Pujak Jain Mandal [1995] 211 ITR 293 (Guj) (para 4) and
•  DIT v. Sri Ramakrishna Seva Ashrama [2012] 18 taxmann.com 37/205 Taxman 26/[2013] 357 ITR 731 (Kar) (para 7).