Corpus Contributions to Section 12A Registered Trust Not Taxable, Treated as Capital Receipts: ITAT

ITAT Mumbai ruled that corpus contributions to Section 12A-registered trusts qualify as capital receipts, not taxable income. The bench distinguished between regular donations (revenue receipt) and corpus funds given for specific capital purposes like building construction. The case involved a ₹2.1 crore contribution explicitly earmarked for creating hospital infrastructure. The tribunal rejected the department's argument that all trust receipts are inherently revenue in nature, citing Supreme Court precedents on capital-revenue distinction. This provides clarity to thousands of charitable institutions receiving large one-time grants for specific projects. Trusts must ensure proper documentation showing donor intent for corpus creation through written agreements or board resolutions. The ruling also clarifies that interest earned on corpus funds retains the capital character if utilized for the specified purpose. This decision will significantly impact how trusts structure large donations and report them in tax filings.