Capital receipt treatment for share issue entrance fees excludes the amount from taxable income under income tax principles.

Entrance fees collected on issue of new shares were treated as an accretion to the company's capital structure and not as trading or banking receipts, so the amount was capital in nature and not assessable as income. In the alternative, the receipt did not arise from business operations and was casual and non-recurring, bringing it within the exemption for such receipts. On either footing, the amount was not taxable under the Indian Income-tax Act.

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Issues: Whether the sum of Rs. 10,000 collected as entrance fees on issue of new shares constituted income assessable under the Indian Income-tax Act, or was a capital receipt and, in any event, exempt as casual and non-recurring income.

Analysis: The receipt arose from the issue of additional share capital and was not generated by the assessee's banking operations. It was an accretion to the capital structure of the company, analogous to a premium on shares, and therefore partook of the character of capital rather than trading receipts. Even on the alternative footing that it was not capital, the receipt did not arise from business and was of a casual and non-recurring nature, bringing it within the exemption for such receipts.

Conclusion: The sum of Rs. 10,000 was not assessable as income under the Indian Income-tax Act and was not taxable.

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