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2012 (5) TMI 204 - HC - Income TaxInterpretation of Section 11(1)(a) - Application of income - treatment of payment of taxes under the Voluntary Disclosure of Income Scheme, 1997 – revenue contested taxes paid are not to be treated as application of income of the trust - Held that:- In the case of a business undertaking held under trust, its 'income' will be the income as shown in the accounts of the undertaking - the expenditure incurred by a charitable trust by way of payment of tax out of the current year's income has to be considered as application for charitable purposes because such payment has to be made to preserve the corpus, the existence of which is absolutely necessary for the trust - The issue whether the word "income" used in Section 11(1)(a) of the Act must be assigned the same meaning as the words "total income" as defined in Section 2(45) of the Act cannot be accepted as confirmed by circular No. 5 dated 19.06.1968 - the payment of taxes under the VDIS is to be deducted before arriving at the commercial income of the assessee-trust that is available for application to charitable purposes – in favour of assessee. Expenditure incurred outside India on events/activities held in connection with the exhibition – Held that:- The provision as it existed after the amendment made in Section 11(1)(a) w.e.f. 1.4.1952 makes a reference to application or accumulation for application of the income of the trust "to such religious or charitable purposes as relate to anything done within the taxable territories" - even if relocate the words "in India" in the manner in which assessee suggests in the definition , it would make no difference to the -meaning to be ascribed to the group of words - the amount spent by the assessee-trust cannot be considered as application of the income of the trust in India - against assessee. Non Applicability of Section 28(iii) on trust - non-refundable admission fee from its members as well as annual subscription charges – Held that:- The annual subscription fees is a "recurring receipt, receivable by the assessee-trust by mere efflux of time irrespective of whether any services are rendered or not to the members - what is contemplated in Section 28(iii) is the receipt of fees from particular members to whom specific services have been rendered by the trust - in the absence of any evidence to show that the assessee receives fees from the members for specific services rendered to them the Tribunal was correct in holding that the annual subscription fees was not assessable under the section - in favour of the assessee. Corpus donation received by the assessee – Held that:- The finding of fact recorded by the Tribunal that the members who paid the one-time admission fee were aware that it can be spent by the assessee only for the purposes of acquiring a capital asset and, therefore, the amount must be held to be a corpus donation, not taxable as income - in favour of assessee.
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