This is departmental appeal and cross objection by assessee against order of CIT(A) for asst. yr. 1981-82. assessee is public charitable trust. ITO while making assessment found that trust was registered under s. 12A(a) of IT Act. ITO found that trust had received certain donations with specific direction that they shall form part of corpus of trust. ITO also found that assessee trust had made certain donations to certain other trusts and while making those donations it was stated that they were also being made towards corpus of those trusts. According to ITO, wish of donors who donated to assessee towards its corpus was defeated by further donating those amounts to other trusts. According to him, trustees of trust were not competent to use corpus for giving such donations to other trusts. According to ITO, corpus should have been maintained as such by assessee trust. It is only at time of winding up of trust that its corpus could have been handed over to similar other trust. ITO further went behind purpose of such donations out of corpus. He observed that real intention behind acceptance of corpus donation is to acquire resources without having any obligation to apply as required under s.11 of IT act in view of provisions of s.12 which took such donations outside ambit of income of trust. ITO further observed that corpus could change its shape but it had to remain part of corpus and could not be spent away or given away for day to day expenses for purposes of trust. It was also observed by ITO that assessee trust had utilised corpus towards day to day and normal expenses of trust and had thus defeated character of its corpus. Reliance was placed on decision of Allahabad High Court in case of Dwarkadheesh Charitable Trust vs. ITO (1975) 98 ITR 557 (All). ITO came to conclusion that though assessee trust was charitable trust but it has no charitable activity and it had merely distributed its corpus for non-charitable purpose. Out of Rs. 4,24,301 which was its corpus fund Rs. 3,50,000 was given as corpus donation. ITO, therefore treated corpus donation as assessee's income. In fact ITO brought to tax amount of Rs. 3,82,768 on above reasoning. When matter came before CIT(A) it was pleaded that once donation was received specifically towards corpus of trust, it could not be treated as income of trust and ITO was not justified in treating it as income on ground that it had been utilised for giving donation to other charitable trust. It was found that donations received had been invested in debentures of various companies and later on these debentures were donated to corpus of other charitable trusts or institutions. Besides, decision of Allahabad High Court in case of Dwarkadheesh Charitable Trust vs. ITO (1975) 98 ITR 557(All). Reliance was placed on certain orders of Bombay Bench of Tribunal. It was further contented that if donations received were income of trust donations given to other similar charitable trusts could be application of assessee's income and would thus be excluded from taxable income of assessee. CIT(A) found force in submission of assessee and referred to certain of orders Tribunal and held that donations received with specific direction to treat them as towards corpus could not be treated as part of assessee income. assessee's appeal was, therefore, allowed. It is stated by Department that CIT (A) erred in not treating donations received by trust as its income though they had been specifically received as corpus had not been treated as corpus by trust and has been used for giving further donations to similar other trusts with similar stipulation that it would be treated as donations towards corpus. It was pointed out by departmental representative that trust came into existence in this year and it was not disputed that donations in question had been received from various parties with stipulation that they were towards corpus of trust. These donations were made between 10th July, 1980 and 30th March,1981. He however, pointed out that though on face of it, it was stated that donation was towards corpus, there was no intention of treating these amounts towards corpus of trust and amounts have not been allowed to remain as part of corpus. He pointed out that corpus of trust should remain as its corpus and could not be that swiftly scattered away by investing them into debentures and then donating those debentures towards corpus of other trust. He submitted that it could be treated as breach of trust and as intention was merely to avoid paying taxes on these amounts, these amounts, should not be treated as donations towards corpus of these amounts, should not be treated as donations towards corpus of trust. Referring to decision of Supreme Court in case of McDowel and Co. Ltd. vs. CTO (1985) 47 CTR (SC) 126: (1985) 154 ITR 148 (SC) it was submitted that whole scheme was to avoid tax and it was fraud of revenue as well as trust. reference was also made to decision of Supreme Court in case of Workmen of Associated Rubber Industry Ltd. vs. Associated Rubber Industry Ltd. and another (1985) 48 CTR (SC) 355: (1986) 157 ITR 77 (SC), where it was laid down that Court is not to be satisfied with form and leave alone and should go behind substance of transaction. It was, therefore submitted that order of CIT(A) should be reversed and order of ITO should be upheld. ld. counsel for assessee submitted that assessee trust was charitable trust and donation of Rs. 4,93,600 had been received from various parties with express direction from various parties with express direction form part of corpus of trust. He also pointed out that ITO had not suggested or established any collusion between trust and donors regarding these donations. It was pointed out that 'corpus' is not defined in any part of statute and it is not correct for Revenue to argue that corpus should remain in same form and should not be applied for any of objets of trust. He referred to terms of trust deed and submitted that there was no bar for such application of corpus donations for any of objections of trust. and trustees were authorised in their discretion to apply corpus apart from income to any charitable purpose including donations to other charitable institutions. specific reference was made to proviso to cl. 3 of trust deed where it was provided that income as well as corpus of trust fund shall be applied only towards public charitable purposes and this point was further clarified in cl. 4 of trust deed. In this clause residue of income as well as corpus of trust fund could be applied by trustees towards one or many of objects of trust. In cl. 6 of cl (a), one of object is subscription or donation to any charitable trust or firms or institutions for promotion of any of object of this trust. He, therefore, submitted that there was ample authority for trustees to utilise income as well as corpus towards donation to similar trusts. He, therefore, submitted that there was no question of any breach of trust or any collusion or fraud as far as trustees were concerned and atleast there was no suggestion to that effect in order of ITO. It was only manner of utilisation of trust funds for specific charitable purpose. ld. counsel further submitted that in case Department was treating donations received as income of this trust donation made to similar other trusts could be application of that income and could not be brought to tax under provisions of s. 11 of IT Act. In this connection, reliance was placed on some orders of Tribunal, where similar issue had been considered. In ITA No. 2918/Bom/1977-78 Bombay Bench considered meaning of expression 'corpus' and it was held that understanding of Department that corpus was like capital fund was misconception of law and it was part of trust funds and that could be utilised for purposes of trust. Bench observed as under: "In my view, conception of ITO that corpus donation of particular amount has to be held as such in capital fund is based on misconception of law. Indian Trusts Act of 1882 also does not prohibit spending from 'trust property' towards objects of trust. That being so, ITO cannot interpret provisions of s. 12 of IT act, to assign it meaning which is neither expressly present there nor is present thereby necessary implications. In my view, there is no authority vested in ITO, to treat voluntarily contribution with clear direction from donor that contribution should form corpus. of trust, as income of trust, even if there has been any spending towards objects of trust, from such corpus donations especially when under terms of trust deed trustees are permitted to make spending towards objects of trust, from trust fund or corpus of trust. If legislature wanted to have certain constraints on spending from corpus donations surely they could have had it making provision in Act, but in absence of such provision, scope of Act cannot be enlarged further." It was pointed out in that case also that trust deed had authorised trustees to utilise trust fund towards objects of trust and stipulation that donations were towards corpus could not come in way of trustees in applying that fund or amount in meeting any of objects of Trust. Further reliance was placed on another case of Bombay Bench in trust of Shri ABC Memorial Trust, Bombay, ITA No. 1970(Bom)/1978-79, where similar view had been taken. Reliance was also placed on order of Third Member in case of Shri Qam Memorial Foundation in ITA No. 2039(Del/1981. On basis of these submissions ld. counsel contended that CIT(A) rightly deleted addition made by ITO. He also submitted that donations received were from charitable trusts which had been registered under s. 12A(a) of IT Act. We have considered facts of case and we have perused orders relied upon by parties before us. Though s. 12 refers to donation towards corpus, there is no definition of expression corpus' in Act or any of connected law. It is not possible to accept contention of Department that corpus donation has to remain permanent part of trust fund and it cannot be applied by trustees towards objects of trust. There is no material in order of Tribunal to suggest that any collusion or any fraud in receipt of donations or in making of trust. It is not denied that donations have been received from various parties with specific direction that they were towards corpus of trust and according to provisions of s. 12A, such receipts do not constitute income of trust for purpose of s.11. Thus, these donations have to be excluded in beginning itself while computing income of trust. If for argument's sake, they are included as income of trust, there is no justifiable reason to hold that donations made by this trust to similar other charitable institutions or trust could not be treated as application of income towards objects of trust. That is taxable under s.11 is income which remains unapplied provided it is excess of particular limit. When donations received have been fully applied, question of bringing to assessment in hands of this trust any amount received by this trust would not arise. We see no justification for argument that while receipt of donation should be included as income of trust, further donation given to this trust should not be treated as application of trust fund. On any considerations of matter and on basis of reasons indicated by Revenue we do not find either any breach of trust or any fraud so as to apply principles laid down by Supreme Court in case of Mc Dowell's case (supra). matter has been considered in several orders of Tribunal and it has been clearly brought out that firstly such donations would not be treated as income in view of provisions of s.12 of IT Act and secondly if they are treated as income, further donation to similar trust have to be treated as application of that income for charitable purposes. We, therefore, see no reason to interfere with order of CIT(A). departmental appeal is dismissed. In cross-objection assessee has merely raised alternative argument discussed above and merely supports order of CIT(A). cross objection is, therefore, disposed of as infructuous. *** INCOME TAX OFFICER v. ABHILASH KUMARI PUBLIC CHARITABLE TRUST