Dharmada collections earmarked for charity are not trading receipts when separately collected and accounted for.

Customary dharmada collections, when expressly earmarked for charitable purposes, are sufficiently certain to create an enforceable obligation to apply the receipts only to charity. Such amounts are not void for vagueness merely because they differ from the broader notion of dharma. Where the payments are separately collected and separately accounted for, and are not credited to the trading account or treated as part of the sale price, they are not consideration for goods and do not constitute trading receipts. The Supreme Court therefore treated the dharmada amounts as valid charitable receipts and not taxable income of the trader.

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Issues: (i) Whether amounts collected as dharmada were void for vagueness or uncertainty and hence incapable of being held under a valid charitable obligation; (ii) Whether such dharmada collections were part of the sale price or a surcharge thereon and therefore taxable trading receipts.

Issue (i): Whether amounts collected as dharmada were void for vagueness or uncertainty and hence incapable of being held under a valid charitable obligation.

Analysis: The expression dharmada, in common parlance and in commercial usage, denotes a payment or endowment for religious or charitable purposes and is distinct from the more indefinite concept of dharma. A customary levy of dharmada collected by traders is understood as being earmarked exclusively for charity. On that footing, the receipt of such amounts creates an obligation to apply them only to charitable purposes and the charitable object is sufficiently certain.

Conclusion: The earmarking of the amounts for dharmada was valid and the receipts were impressed from inception with an obligation to be used for charitable purposes.

Issue (ii): Whether such dharmada collections were part of the sale price or a surcharge thereon and therefore taxable trading receipts.

Analysis: A payment made by a purchaser in addition to the price of goods does not become part of the price merely because it is compulsory. The decisive question is whether it is taken as consideration for the goods or as a separate payment for charity. Here the dharmada amounts were separately collected and separately accounted for, and they were not credited to the trading account or treated as part of the sale price. They were therefore not trading receipts.

Conclusion: The dharmada collections were neither part of the sale price nor a surcharge on it and were not assessable as the assessee's income.

Final Conclusion: The impugned receipts were validly earmarked for charity and did not form taxable income of the assessee; the appeals failed.

Ratio Decidendi: A customary payment expressly earmarked for charitable purposes, and kept under an obligation to be applied only for that purpose, is not a trading receipt merely because it is collected in connection with sales and may be compulsory in practice.

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