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2014 (5) TMI 1031 - AT - Income TaxCapital receipt or Revenue receipt - Corpus fund - Held that:- The capital fund of a charitable society is built-up mainly by the life membership fee. This is more true in respect of associations like assessee. The assessee is a society of practising anaesthesiologists. Therefore, among other items, the life membership fee contributed by the members is also capital fund of the society. There should not be any doubt that the life membership fee always remains as contribution to the corpus fund of the society. The amount received by the society towards award fund is a specific fund. The contribution received to that specific fund is accumulated as capital fund in the accounts of the assessee-society and interest income arising out of that fund is used by the society for giving awards. Therefore, it is to be seen that contribution made towards award fund is not a voluntary donation conceived under section 12, but, corpus donation explained in section 12(1) of the Income-tax Act, 1961. - The said award fund stands separate and even though technically not termed as corpus fund, it is in the nature of capital fund and by virtue of that nature, it always stands in pari passu with capital fund of the assessee-society. This is the same case with the amounts received towards IJA fund and WSJA fund. Those funds are specifically created for procuring journals, books and other professional materials for the development of practising anaesthesiologists. - all the four items objected to by the Assessing Officer are essentially part of the capital fund and therefore, have to be considered as corpus of the assessee-society. These are all specific funds for fulfilling specific objectives. Further, all those funds always remain as capital funds and those funds are used only for the purpose of fulfilling the objectives for which those separate funds are constituted. - lower authorities have grossly erred in treating the above stated four funds as voluntary contributions in the nature of income as provided under section 12 of the Income-tax Act, 1961. We set aside the findings of the lower authorities. We direct the Assessing Officer to treat the four funds as capital funds and exclude them from the computation of income for the impugned assessment year. - Decided in favour of assessee.
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