Corpus donations as capital receipts remain exempt where receipts are earmarked for corpus and retain their specific character.

Hundi receipts recorded as donations with a specific direction to form corpus are treated as capital receipts, not regular income, where the surrounding material supports their corpus character. The analysis notes that the relevant state endowments law regards donations in cash or kind as capital contributions and not income of the institution, and that no material showed the receipts lost their capital character merely because they were later used for institutional expenditure. Applying the principle that special provisions prevail over general provisions, the text states that there was no repugnancy between the state law and income-tax law, and that exemption under section 11(1)(d) was available.

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Issues: Whether hundi receipts received as corpus donations for the temple trust were capital receipts not liable to be treated as regular income, and whether exemption under section 11(1)(d) was available.

Analysis: The receipts were recorded as donations with a specific direction towards corpus, and the relevant state endowments law treated donations in cash or kind as contributions to capital as not constituting income of the institution. The lower authorities had not disbelieved the nature of the receipts as hundi donations for corpus, and there was no material to show that the receipts lost their capital character merely because they were utilised for institutional expenditure. The principle that special provisions prevail over general provisions was applied, and no repugnancy between the state law and the income-tax law was found.

Conclusion: The hundi receipts were corpus donations constituting capital receipts and were entitled to exemption under section 11(1)(d); the addition was unsustainable and was directed to be deleted, in favour of the assessee.

Final Conclusion: The appeal succeeded and the assessee obtained full relief against the treatment of corpus hundi receipts as taxable income.

Ratio Decidendi: Donations received with a specific direction to form corpus retain their character as capital receipts and cannot be taxed as regular income absent material showing that the receipts are general income or that the special statutory treatment is displaced.

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