Tied-up project grants are not voluntary contributions; restricted funds for specific events were excluded from taxable income treatment.

Grants received for identified foreign participation events, where the funds had to be kept in a separate account, used only for the sanctioned purpose, audited, and refunded with interest if unspent, were treated as tied-up project funds rather than voluntary contributions. On that basis, the receipts were not regarded as income of the trust or society for the purposes of sections 11 and 12 of the Income-tax Act. The discussion also notes that exemption could not be denied merely for want of approval under section 11(1)(c) when the amounts were not freely disposable contributions, and the earlier view taken in the assessee's later years on identical facts was followed.

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Issues: Whether grants received for specified foreign participation events were taxable income or voluntary contributions so as to attract sections 11 and 12 of the Income-tax Act, and whether the assessee's claim for exemption could be denied for want of approval under section 11(1)(c).

Analysis: The grant documents showed that the funds were sanctioned for identified events abroad, were required to be kept in a separate account, could be used only for the sanctioned purpose, were subject to audit, and any unspent amount with interest had to be returned. On these facts, the grants were not freely disposable amounts but tied-up grants received for specific purposes. Such receipts did not constitute voluntary contributions available at the assessee's discretion, and therefore were not to be treated as the assessee's income for the purpose of sections 11 and 12. The conclusion was also consistent with the view taken in the assessee's own cases for later assessment years on identical facts.

Conclusion: The addition was rightly deleted and the Revenue's challenge to the treatment of the grants failed.

Final Conclusion: The grants retained their character as earmarked project funds and were not assessable as income in the assessee's hands under the cited charitable provisions.

Ratio Decidendi: Funds received under binding conditions for a specific project, with no discretion to use them otherwise and with an obligation to refund the unspent balance, are tied-up grants and do not amount to voluntary contributions or taxable income of the recipient trust or society.

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