Charitable collections held in trust are not taxable income where the recipient has no right to appropriate them.

Amounts collected by the company as dharmada or charity charges from trading members were not its trading receipts or remuneration, because the rules earmarked them for charitable expenditure and the company had no beneficial right to retain or appropriate them. They were treated in the accounts as funds held for charitable purposes, so they never accrued as income in the company's hands. The question was therefore the initial character of the receipt, not its later application, and the collections were held not to be taxable income of the company.

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Issues: Whether the sums collected by the assessee company as dharmada or charity charges from trading members constituted its income liable to tax.

Analysis: The collections earmarked as charity were received under the company's rules for charitable expenditure and were not part of the company's remuneration or trading receipt. The company had no right to appropriate those amounts for its own use, and the amounts were treated in the accounts as funds for charitable purposes rather than as its own income. The exemption provision relating to income from property held under trust was found unnecessary to resolve the matter, because the real question was the initial character of the receipt, not its subsequent application. On the facts, the charity collections never accrued as income to the assessee; the company functioned only as a conduit for their application to the stated charitable object.

Conclusion: The sums collected for charity were not income of the assessee company and were not liable to tax.

Ratio Decidendi: Amounts received by an assessee purely as earmarked charitable collections, which it has no beneficial right to retain or appropriate as its own, do not constitute taxable income in its hands.

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