Compulsory Levies from Milk Societies Not Corpus Donations: ITAT

Case: Dudhsagar Research and Dement Association v. Deputy Commissioner of Income-tax, Exemption

Court: Ahmedabad

Assessment Year: 2016-17 and 2017-18

ITA No.: 202 & 203 (AHD) 2025

Date of Order: November 17, 2025

Brief Facts:

• The assessee was a charitable trust registered under section 12A(a) since 1975.

• It was engaged in activities such as medical relief to animals, progeny testing, vaccination, artificial insemination, bull rearing, and dairy education.

• For A.Ys. 2016-17 and 2017-18, the assessee claimed that contributions received from various milk supplying societies were “corpus donations” with specific directions and therefore exempt under section 11(1)(d).

• The Assessing Officer held that these receipts were compulsory levies linked to the fat content of milk supplied, not voluntary contributions, and hence taxable as income under section 2(24) (iia).

• The CIT(A) confirmed this view by following earlier year’s decisions.

• The assessee appealed before the ITAT.

Observations of the Tribunal:

The Tribunal observed that:

• The issue was already decided against the assessee in its own case for A.Y. 2014-15, wherein the Tribunal held that such contributions were compulsory collections, not voluntary donations.

• The contributions were levied at a fixed rate per kg of milk fat, determined by a resolution of the assessee trust, leaving no discretion to donor societies.

• Since the contributions were compulsory and lacked any specific direction for corpus, they failed the legal requirements of section 11(1)(d).

• The Tribunal reaffirmed that these receipts must be treated as revenue income.

• However, in line with earlier decisions in assessee's own cases, once treated as revenue receipts, the assessee becomes eligible for 15% statutory accumulation under sections 11 and 12.

• Accordingly, CIT(A)’s allowance of the 15% deduction was upheld.

Hence, the ITAT held that contributions received from milk supplying societies were not voluntary contributions with specific directions and therefore could not be treated as corpus donations under section 11(1)(d). These receipts were correctly taxed as revenue income under section 2(24)(iia). Nevertheless, following earlier binding precedents, the assessee was entitled to the statutory deduction of 15% on such revenue receipts. As a result, the appeals were partly allowed, affirming taxability while granting the permissible deduction.