whether receipt of donation in kind is Income for a trust

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Aditya (Querist)
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01 December 2010 Whether receipt of Donation in Kind like jewellwery etc. by a registered trust can be treated as INCOME u/s 2(24) of the Income Tax Act,1961.

Bhaskaran Chackrapani Warrier

Bhaskaran Chackrapani Warrier (Expert)
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01 December 2010 Yes it is income u/s 2(24)(iia).Its value has to be found out and that amount shall be taken as income.

Aditya

Aditya (Querist)
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01 December 2010 can u cite a case law related to it......
But how can dat be
as 2 (24)(iia) relates to voluntary contribution...which includes only money and not other assets....
reply.....

CA PARAS BAFNA

CA PARAS BAFNA (Expert)
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02 December 2010 Income doesn,t mean "money" only. If other assets got some monetary value then their monetary valuation has to be taken into account. For Example- Perquisites are not money but certain perquisites are taxed on valuation basis.

CA.ViVeK M ACA

CA.ViVeK M ACA (Expert)
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03 December 2010 Contribution in kind also to be treated as income of the trust and hence taxable

Aditya

Aditya (Querist)
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03 December 2010 @ vivek sir....do u hv any case law related to it....

Aashok Kumar Sharma online

Aashok Kumar Sharma online

(Expert)
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03 August 2025 Yes, this is a subtle and important issue in the taxation of charitable or religious trusts under the Income Tax Act, 1961.

Let’s break it down first and then provide a case law reference.

✅ Legal Position:
🔹 Section 2(24)(iia) of the Income Tax Act:
"Income" includes voluntary contributions received by a trust created wholly or partly for charitable or religious purposes.

Many interpret this to refer only to monetary donations, but courts and tax authorities have clarified that donations in kind (e.g. jewellery, land, shares, paintings) are also covered, if they have a determinable monetary value.

✅ CBDT Clarification:
The Central Board of Direct Taxes (CBDT) in Circular No. 580 dated 14 September 1990 clarified that donations in kind are also to be treated as income, and should be accounted for at fair market value (FMV).

✅ Case Law Support:
📌 CIT v. Thanthi Trust [(2001) 247 ITR 785 (SC)]:
The Supreme Court acknowledged that voluntary contributions, regardless of whether in cash or kind, are income under Section 2(24)(iia).

Though this case didn’t directly deal with “in kind” contributions, it reinforces that income includes all voluntary contributions.

📌 CIT v. Divine Light Mission [(2005) 278 ITR 132 (Del)]:
The Delhi High Court held that voluntary contributions in kind, like furniture and equipment, constitute income.

The court emphasized that what matters is the value of the benefit, not its form.

📌 DIT (Exemption) v. Ramoji Foundation [(2013) 356 ITR 467 (AP)]:
The Andhra Pradesh High Court ruled that donations in kind, such as land, constitute income.

It reiterated that valuation should be at FMV as of the date of receipt.

✅ Conclusion:
Aspect Treatment under law
Donation in kind (e.g., jewellery, land, shares) Treated as income under Section 2(24)(iia)
Valuation Based on Fair Market Value (FMV) at time of receipt
Disclosure Must be shown in accounts and return as income
Application of income Can be claimed if used for charitable purposes

So yes — donations in kind are income of a registered trust if they are voluntary contributions, and must be disclosed and valued appropriately.

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