ORDER
Siddhartha Nautiyal, Judicial Member. – These appeals have been filed by the Assessee against the order passed by the Ld. Commissioner of Income Tax (Appeals), (in short “Ld. CIT(A)”), National Faceless Appeal Centre (in short “NFAC”), Delhi vide order dated 27.11.2024 passed for A.Ys. 2016-17 & 2017-18.
2. The assessee has raised the following grounds of appeal:
ITA No. 202/Ahd/2025 (A.Y. 2016-17)
“1.1 The order passed by U/s.250 passed on 27.11.2024 for AY 2016-17 by NFAC, [CIT(A)], Delhi (for short CIT(A) ” upholding the activity of sale of semen doze by the appellant trust was covered under proviso to Sec. 2(15) being the object of general public utility, the exemption u/s 11&12 were not admissible and sec. 13(8) was applicable as well as treating the corpus donation amounting to Rs. 7,45,56,979/- as revenue receipt so that sec.11(1)(d) was not applicable, is wholly illegal, unlawful and against the principles of natural justice.
2.1 The ld. CIT(A), has grievously erred in law and or on facts in applying the proviso to sec.2(15) and thereby denying the exemption u/s 11 & 12 by invoking sec. 13(8). The ld. CIT(A) ought not to have held that the appellant trust was covered under the last limb of “General Public Utility” and as such the proviso was applicable to the activities carried on by it treating them as trade, commerce or business.
2.2 That in the facts and circumstances of the case as well as in law the ld. CIT(A) ought not to have confirm that the appellant trust was covered under the last limb of sec. 2(15) and the proviso was applicable to the activities carried on by it.
3.1 The ld., CIT(A) has erred in law and or on facts in computing the total taxable income by disallowing exemption u/s 11 & 12 as well as treating the corpus donation as revenue receipt.
3.2 That in the facts and circumstances of the case, the decision of ITAT Ahmedabad Bench of AY 2014-15 was distinguishable on facts and in law for the year under appeal.
3.3 Without prejudice to the above and in the alternative the total income determined by the tax authorities is highly excessive and the commercial principles ought to have been applied.
It is therefore, prayed that the additions upheld by the CIT(A) may kindly be deleted”.
ITA No. 203/Ahd/2025 (A.Y. 2017-18)
“1.1 The order passed by U/s. 250 passed on 27.11.2024 for AY 2017-18 by NFAC, (CIT(A)], Delhi (for short CIT(A)” upholding the activity of sale of semen doze by the appellant trust was covered under proviso to Sec. 2(15) being the object of general public utility, the exemption u/s 11 & 12 were not admissible and sec. 13(8) was applicable as well as treating the corpus donation amounting to Rs. 7,55,08,302/- as revenue receipt so that sec.11(1)(d) was not applicable, is wholly illegal. unlawful and against the principles of natural justice.
2.1. The ld. CIT(A), has grievously erred in law and or on facts in applying the proviso to sec.2(15) and thereby denying the exemption u/s 11 & 12 by invoking sec. 13(8). The Id. CIT(A) ought not to have held that the appellant trust was covered under the last limb of “General Public Utility” and as such the proviso was applicable to the activities carried on by it treating them as trade, commerce or business.
2.2 That in the facts and circumstances of the case as well as in law the ld. CIT(A) ought not to have confirm that the appellant trust was covered under the last limb of sec. 2(15) and the proviso was applicable to the activities carried on by it.
3.1 The ld., CIT(A) has erred in law and or on facts in computing the total taxable income by disallowing exemption u/s 11 & 12 as well as treating the corpus donation as revenue receipt.
3.2 That in the facts and circumstances of the case, the decision of ITAT Ahmedabad Bench of AY 2014-15 was distinguishable on facts and in law for the year under appeal.
4.1 The ld., CIT(A) has erred in law and or on facts in not allowing statutory deduction at 15% of the corpus donation treated as revenue receipt as in the past.
4.2 Without prejudice to the above and in the alterative the total income determined by the tax authorities is highly excessive and the commercial principles ought to have been applied.
It is, therefore, prayed that the additions upheld by the CIT(A) may kindly be deleted”.
3. The brief facts of the case are that the assessee filed its return of income on 03.10.2016 declaring total income at Rs. Nil for A.Y. 2016-17. The case was selected for the Assessing Officer issued notices calling for various details regarding the activities of the trust, its entitlement to exemption under sections 11 and 12 of the Act and the nature of corpus donations claimed under section 11(1)(d) of the Act. The Assessing Officer held that the assessee trust was engaged in activities that fell within the residual limb of “advancement of any other object of general public utility”” and that the main source of its revenue was the sale of frozen semen doses, which he held to be an activity in the nature of trade, commerce or business. By invoking the proviso to section 2(15) and section 13(8), the Assessing Officer denied the exemption under sections 11 and 12 of the Act. The Assessing Officer further held that the corpus donation of Rs. 7,23,87,393/- received from milk supplying societies was not a voluntary contribution but a compulsory levy linked to the quantity of milk fat supplied and hence did not qualify as a corpus donation under section 11(1)(d). He therefore brought the amount to tax as income under section 2(24)(iia) and completed the assessment at total income of Rs. 6,41,81,500/-.
4. The Id. CIT(Appeals) confirmed the action of the Assessing Officer on both the issues. While following his predecessor’s orders for earlier years, he held that the receipt termed as “corpus donation” was in substance a cess and therefore a revenue receipt not entitled to exemption under section 11(1)(d). Regarding the denial of exemption under sections 11 and 12, the ld. CIT(Appeals) noted that the activities of the assessee were not charitable in view of the proviso to section 2(15). However, following the order of the Hon’ble ITAT in the assessee’s own case for A.Y. 2014-15, he allowed the statutory deduction of 15% on the corpus receipts treated as revenue income. In result, the appeal was partly allowed.
5. The assessee is in appeal before us against the order passed by the CIT(Appeals) dismissing the main grounds of the assessee and treating the corpus donation as revenue receipt and also upholding the applicability of proviso to section 2(15) of the Act.
6. Before us, the ld. counsel for the assessee submitted that the assessee trust is registered under section 12A(a) since 1975 and is engaged in activities of medical relief to animals, progeny testing, vaccination, artificial insemination, bull rearing, and education in dairy technology. The ld. counsel for the assessee submitted that the activities of the assessee fall squarely within “medical relief’ and “education” and therefore the proviso to section 2(15) of the Act cannot be invoked. He placed reliance on the orders of CIT(A) for A.Y. 2014-15 and on the fact that the Revenue had not filed any appeal against that finding. It was also submitted that for A.Y. 2017-18 the Department itself has accepted the assessee as a trust carrying on “medical relief’ and “education”. On the corpus donation issue, the ld. counsel submitted that the contributions were made with the specific object of meeting the cost of Dairy Science and Food Technology College and other capital projects of the trust. The resolution of the donor societies and the confirmation certificates issued by the assessee clearly establish that the donations were for the corpus. The ld. counsel for the assessee placed reliance on Loknayak Jaiprakash Narayan Leprosy Eradication Trust v. ITO (Mumbai – Trib.)DIT v. Sri Ramakrishna Seva Ashram (Karnataka)/[2013] 357 ITR 731 (Karnataka), CIT v. Bharathiya Sanskriti Vidhyapith Trust (Karnataka)/(ITA 278/2007), ACIT v. Balaji Educational and Charitable Trust (Madras)/[2011] 48 SOT 281 (Madras)(Mad), and Gujarat Cricket Association v. JCIT (Ahmedabad – Trib.). It was further submitted that in the alternative, if the corpus donation is treated as revenue receipt, the assessee is eligible for exemption under sections 11 and 12 as held by ITAT in assessee’s own case for A.Y. 2014-15 vide order dated 17-01-2024 in Dudhsagar Research & Development Association v. ACIT (Exemption) [ITA No. 1147(Ahd) Of 2018, dated 17-1-2024].
7. We have heard the rival contentions and perused the material on record. Since the primary issue of corpus donation has already been adjudicated by the Ahmedabad Bench in the assessee’s own case for A.Y. 2014-15 in Dudhsagar Research & Development Association v. ACIT (Exemption) (Ahmedabad – Trib.) [11-10-2022], it is necessary to reproduce the relevant findings contained therein:
“10. We have heard the rival contentions and perused the material on record. It would be useful to reproduce the Copy of Resolution passed by the assessee titled ‘to discuss regarding donation received on per kg fat’:
Dt: 15/10/2012 No.
DURD:559
Dudhsagar Research and Development Association, Mehsana Seal Copy of resolution passed at 45th Annual Ordinary General Meeting held on 24.06.2012:-
Resolution No. 4: To discuss regarding donation received on per kg fat (in milk content).
The resolution to collect donation of 0.50 paise more per kg fat from current financial year at Rs. 2/- in place of Rs. 1.5 made by Milk Producers Co operative Societies to Dudhsagar Research and Development Association (DURDA) to meet the cost of Dairy Science and Food Technology College as well new programmes was placed before general body to seek their approval. Accordingly, from the current year it is hereby resolved to collect fund from the Milk Producer Societies per kg fat (content of milk collection)
True copy
-sd-
Secretary
Dudhsagar Research and Development Association Mehsana
11. The contents of the above resolution clearly show that the contributions are not ‘Voluntary’ in nature. The assessee has suo moto passed a resolution to ‘collect’ donation form the Milk Producers, which goes contrary to the assertion made by the assessee that contributions are ‘Voluntary’ in its character. Apparently, the Milk producers do not have any choice or say in the matter whatsoever. Merely producing a receipt which states that the amount has been paid towards the corpus fund of the appellant cannot lead us to accept that the contribution qualifies as a ‘Corpus donation ‘ when notably these receipts do not even state the specific purpose that they are being given for. Moreover, as noted above, the donations are clearly not ‘voluntary ‘. The quantum of the cess, as well as the mode of computation thereof, has been decided by the Assessee and the Donor have no discretion or say in the matter. In Russel v. Vestry of St. Giles 3E & B 416, Lord Campbell observed ‘voluntary contributions’ here do not mean annual subscriptions paid for value received or expected to be received by the party paying, but means a gift made from disinterested motives for benefit of others. In Society of Writers v. I.R. 2 TC 257, the Court held that the entrance fees and subscriptions paid by entrants to a society or institution as a condition precedent to their membership and as the price of admission to the privileges and benefits of the society or institution are given under a contract and are not voluntary. The Delhi High Court in the case of CIT v. Divine Light Mission (Delhi) held that membership fee and subscription amounts received by trust/society from its members cannot be characterized as voluntary contribution within meaning of expression ‘fund’ in Section 12. While holding so, High Court made the following observations: ‘Voluntary contribution is an act not coupled with compulsion. One may contribute or one may not contribute. Therefore, it is rightly said that it is in the nature of a gift. But so far as subscription is concerned, it is with some compulsion. If one wants to become a member of a trust and if he is required to pay subscription, as in the instant case, then it amounts to compulsion. ‘
12. Again, the Bombay High Court in the case of CIT v. Gem & Jewellery Export Promotion Council , on the nature of voluntary contributions:
It was well known that the grants-in-aid were made by the Government to provide certain institutions with sufficient funds to carry on their charitable activities. On reading the conditions on which those grants-in-aid were given, it was obvious that the institutions or associations to which the grant was made had no right to ask for the grant and it was solely within the discretion of the Government to make grants to institutions of a charitable nature. Again, the Government did not expect any return for the grants given by it to such institutions and there was nothing which was required to be done by these institutions for the Government, which could be considered as consideration for the grant. Therefore, none of the conditions attached to the grant affected the voluntary nature of the contribution. Hence, the impugned grant was exempt under section 12.
13. The concept of voluntary contribution has been explained by N.D. Ojha C.J. speaking for the Division Bench (as his Lordship then was), in the case of CIT v. Madhya Pradesh Anaj Tilhan Vyapari Mahasangh (M.P.) as (page 680):
‘The contributions, in order to be voluntary, had to be made willingly and without compulsion and the money was to be gifted or given gratuitously without consideration. ‘
14. In the case of DIT (Exemption) v. Jaipur Golden Charitable Clinical Laboratory Trust [2009] 311 ITR 365 (Delhi), on the voluntary nature of donations, made the following observations:
‘From the perusal of the above clause, it is clear that it was optional for the consulting doctors to contribute donations which are also apparent from the fact that only 61 doctors opted for such arrangement out of 141 doctors working for the assessee. The above mentioned clause neither binds nor forces the doctors. It only gives the option to give or arrange donations in case he wants less deduction from the professional fee payable to him. Considering this condition it can be said that the donations by the doctors have been given of its own volition and without any force ‘
15. In view of the above discussion, we find no infirmity in the order of Ld. Assessing Officer and Ld. CIT(A) and we are of the view that the assessee is not eligible for claim of deduction under Section 11(1)(d) of the Act. In the result, the appeal of the assessee is dismissed. “
8. In the present appeal, we find that the issue regarding the nature of donations received by the assessee stands squarely covered by the above decision of the Coordinate Bench in assessee’s own case for A.Y. 2014-15 in Dudhsagar Research & Development Association (supra). The factual matrix for the year under consideration is identical. Respectfully following the binding precedent, we uphold the finding of the Assessing Officer and the ld. CIT(Appeals) that the donations received from milk supplying societies, being compulsorily collected and linked to the quantity of milk fat supplied, do not satisfy the condition of being “voluntary contributions” with “specific direction” as required under section 11(1)(d) of the Act and therefore cannot be treated as corpus donations. Thus, the ground of the assessee on this issue is dismissed. However, on the alternative claim raised by the assessee, we find that this issue is also covered in favour of the assessee by the decision of the Coordinate Bench in assessee’s own case in Dudhsagar Research & Development Association (supra) wherein the Tribunal held that once the corpus donation is treated as revenue receipt, the said receipts are liable to be governed by the provisions of sections 11 and 12 of the Act and the assessee is eligible for deduction in accordance with law. The ld. CIT(Appeals) has already followed this decision and allowed the statutory deduction of 15%.
9. Since the facts for the year are identical and the issue is squarely covered in favour of the assessee by the Coordinate Bench, we hold that the assessee is eligible for statutory deduction at 15%, and the Assessing Officer is directed to grant such exemption in accordance with law.
10. Accordingly, following the above two orders of the Ahmedabad ITAT in the assessee’s own case for A.Y. 2014-15, the appeal of the assessee is partly allowed in terms of observations made in above paragraphs. So far as assessee’s reliance on judicial precedents cited before us is concerned, we are of the view that the same have been rendered on their own particular set of facts and as discussed above, the issue for consideration before us is directly covered by the decision in assessee’s own case for A.Y. 2014-15.
11. In the result, the appeal of the assessee is partly allowed.
12. Since the facts and issues for consideration are common to both the years before us, both appeals are decided accordingly.
13. In the result, both the appeal of the assessee are partly allowed in light of the above observations.