1. This appeal relates to the assessment year 1978-79. The assessee, which was assessed in the status of an 'AOP', being a charitable trust, had filed a return in compliance with the notice under Section 148 of the Income-tax Act, 1961 ('the Act'). The ITO, with reference to the income and expenditure statements for the year ended 31-3-1978, stated that the assessee had received income by way of donations and the prescribed percentage of income of the trust had not been utilised for the charitable purposes. The amount of donation was Rs. 56,256 and the amount of interest received was Rs. 4,120. The assessee had pleaded that the donations received were all for the corpus of the trust and, therefore, was exempt under the provisions of Section 12 of the Act.
The ITO did not agree to this and in his assessment order, he set out an extract from the letter of the Commissioner, dated 15-9-1980. He, therefore, made an assessment on the assessee. The assessee appealed and the AAC stated that it was essential for a donation towards the corpus that the consent of the donors in writing has to be obtained and this was not done in the present case. Therefore, there were no specific directions that the donations were towards the corpus of the trust. Hence, exemption under Section 12, according to the AAC, was not available. As far as the application of the prescribed percentage was concerned, the AAC held that the application was only to the extent of Rs. 39,209 out of the donation of Rs. 56,256 and, therefore, the application was not to the extent of 75 per cent. The trust was assessed on a total income of Rs. 60,160 and the AAC directed statutory allowance of 25 per cent to be given. Thus, partial relief was allowed to the assessee.
2. The assessee is aggrieved and in the appeal before us the learned counsel submitted that it was categorically stated in the receipts issued to the various donors that the donations given were towards the corpus. He produced before us the counterfoils of | receipts where there was a rubber stamp 'towards corpus only' in each of the receipts.
According to him, therefore, the requirements of Section 12 were satisfied.
3. The learned departmental representative, on the other hand, submitted that there had to be a specific direction given by each of the donors prior to the making of the donation. In the present case, he submitted, there was no such direction and the description in the receipt, even if it existed, would not constitute specific direction as envisaged by Section 12 that the donations were exclusively towards the corpus of the trust. He also submitted that as far as the application of income was concerned, no further relief was due.
4. We have considered the rival submissions. The provisions of Section 12 read as under ; Any voluntary contributions received by a trust created wholly for charitable or religious purposes or by an institution established wholly for such purposes (not being contributions made with a specific direction that they shall form part of the corpus of the trust or institution) shall for the purposes of Section 11 be deemed to be income derived from property held under trust wholly for charitable or religious purposes and the provisions of that section and Section 13 shall apply accordingly.
What we have to decide in the present case is whether the contributions in question had been made with a specific direction that they shall form part of the corpus of the trust. The counterfoils of the receipts in question were produced before us and they bear rubber stamp 'towards corpus only'. The ITO in framing the assessment has relied on the letter of the Commissioner dated 15-9-1980 addressed to the assessee.
The relevant portion as set out in the assessment order reads : Your contention that the donations received after 1-4-1973 do not form part of the total income of the trust under Section 12, cannot be accepted because a mere resolution passed by the trustees will not amount to directions by the donors. The fact that the receipts given for various donations mention that this is part of the corpus of the trust will not also amount to a direction by the donors within the meaning of Section 12. Certain certificates produced by you now from some of the donors are unacceptable because these certificates cannot in any way be considered as directions by the donors at the time of giving the donations. In the circumstances, as the prescribed percentage of the income of the trust has not been utilised for charitable purposes during the relevant previous years, the income of the trust is not exempt under Section 11.
The aforesaid would show that the fact that receipts given for various donations mentioned that the same were part of the corpus of the trust, does not stand refuted. The above observations also show that in addition certain certificates had been produced from some of the donors but they were also considered unacceptable because the certificates could not be considered as directions by the donors at the time they made the donations. There was, therefore, as found by the revenue itself, independent corroboration in the form of certificates, regarding the statements in the receipts. The issue, therefore, boils down to decide whether the statement in the receipts granted by the assessee that the donations were towards the corpus only, would be sufficient to hold that the contributions in question were made with a specific direction that they shall form part of the corpus of the trust. In CIT v. Bijli Cotton Mills (P.) Ltd.  116 ITR 60 (SC), the question arose whether certain amounts received by the assessee and shown in the bills issued to the customers in a separate column headed 'Dharmada', represented the income of the assessee or not. On the legal effect of the manner of recording such collections the Supreme Court observed as under : Having regard to the above discussion, we are clearly of the view that a gift to dharmada or dharmadaya both in common parlance as well as by the customary meaning attached thereto among the commercial and trading community cannot be regarded as void or invalid on account of vagueness or uncertainty, and it is, therefore, clear that when the customers or brokers paid the impugned amounts to the assessee earmarking them for dharmada it must be held that these payments were validly earmarked for charitable purposes. In other words, right from inception these amounts were received and held by the assessee under an obligation to spend the same for charitable purposes only with the result that these receipts cannot be regarded as forming any income of the assessee.
In the present case also, since when the receipts were handed over on collection of donations, there was a categorical mention that the amounts were towards the corpus only, it is clear that from the inception the amounts were received by the assessee and held by the assessee under an obligation to appropriate the same towards the corpus of the trust alone. That being so, it has to be construed that the contributions were made with a specific direction that they shall form part of the corpus of the trust. The requirements of Section 12 are, therefore, satisfied and the assessee is entitled to exemption. There will, therefore, be no assessment to tax in relation to this assessment year.
5. In the view that we have taken above, we do not go into the aspect of application of income.