Charitable collections through sale bills are not trading receipts merely because they are billed with sales.

Collections made through sale bills for charitable purposes do not become trading receipts merely because they are recovered as part of the billing process. The Bombay HC rejected the view that inclusion in sale bills, by itself, made the amounts assessable as income, and applied the Supreme Court principle on dharmada and charitable collections that the form of collection is not decisive of character. The collections were therefore not liable to be taxed as the assessee's income, and the reference was answered in favour of the assessee.

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Issues: Whether collections made through sale bills on account of charity were liable to be assessed as income of the assessee.

Analysis: The collections were treated by the assessing officer as part of the sale proceeds merely because they were included in the sale bills. That approach was rejected as erroneous. Collections made ostensibly for charity do not become trading receipts merely by reason of their being recovered through sale bills. The Supreme Court authority on dharmada and charitable collections was applied to hold that the form of collection, by itself, is not decisive of its character as income.

Conclusion: The amount of Rs. 7,894 was not liable to be assessed as the assessee's income, and the answer to the referred question was in the negative, in favour of the assessee.

Ratio Decidendi: Amounts collected through sale bills for charitable purposes do not constitute assessable income merely because they are recovered from purchasers as part of the billing process.

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