St. Joseph’s Development Trust v. The Income Tax Officer, 2026:MHC:3373, T.C.A. No. 124 of 2026, 17 August 2026.

The Madras HC held that ₹94.66 lakh of interest earned on bank fixed deposits by a charitable trust was taxable revenue income. The trust argued that the funds were received for micro-credit and revolving loan programmes for Self-Help Groups and that the interest should form part of the corpus. The Court rejected this claim because S. 11(1)(d) of the Income-tax Act, 1961 requires a specific written direction from the donor at the time of contribution for a contribution to qualify as corpus. Since there was no express direction that the interest earned on the deposits would become part of the corpus, the interest was treated as taxable income.

The Court also held that the trust’s obligation to use or return the funds to the SHGs amounted to application of income and not diversion of income at source. It further noted that the trust had claimed TDS credit on the interest income, which supported treating the interest as its income.

Last Updated on 4 September, 2026