whether receipt of donation in kind is Income for a trust
This query is : Resolved
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.
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.
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.....
But how can dat be
as 2 (24)(iia) relates to voluntary contribution...which includes only money and not other assets....
reply.....
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.
03 December 2010
Contribution in kind also to be treated as income of the trust and hence taxable
03 December 2010
@ vivek sir....do u hv any case law related to it....
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.
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.
You need to be the querist or approved CAclub expert to take part in this query .
Click here to login now
Click here to login now
Similar Resolved Queries
Unanswered Queries
- Unregistered suppliers utility
- Difference between Date of Payment and Date of Deduction?
- TDS CREDIT MISMATCHING
- Buy back of shares u/s69
- Tax Audit Applicability – Newly Formed Partnership Firm with Profit Below 6%/8%
- Journal entry of busniess expenses
- Same demand raised for original as well as rectification request return
- Sale of property held jointly with a non resident Indian
- ITR 4 and Bank transactions
- URGENT-Eligible leaves being shown as 24 days for 3 years Articleship instead of 156 days in 108
- The TDS balance for March 26 shows a mismatch between the books and the portal; what should be done
- CALCULATION OF DEFFERED TAX - OP BL IS DTL & CURRET IT DTA
- LLP audit under companies act
- Experienced CA recommendation from Kolkata for FNO return filing
- Interest Reporting in Form 168
- Sales of goods of amount Rs77 lakhs to a party
- Tax Demand of ₹4,650 for AY 2026-27
- Concept of Vendor and customner reconciliation
- Mistake in e-invoice identified after 24 hours
- EXPORT PAYMENT
Trending Online Classes
-
DT & Audit (Exam Oriented Fastrack Batch) - For May 26 Exams and onwards Full English
CA Bhanwar Borana & CA Shubham Keswani
Subscribe to Pro
Join an elite circle of professionals
CAclubindia
