Voluntary contributions to an employees welfare trust were treated as gratuitous receipts, not taxable income.

Voluntary contributions received by an employees welfare trust were held not to be income chargeable to tax where the payments were discretionary, not receivable as of right, and were applied for the trust's objects. The receipts were not shown to be corpus contributions, but the trust was non-charitable, so the inclusive definition of income in section 2(24)(iia) for charitable trusts did not apply. The amounts were treated as gratuitous receipts rather than periodical monetary returns from a definite source, and therefore did not fall within the concept of income under section 56(1). The assessee succeeded.

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Issues: Whether voluntary contributions received by an employees welfare trust, not earmarked for corpus, constituted income chargeable to tax under the Income-tax Act, 1961.

Analysis: The trust was not entitled as of right to demand the payments, and the firm was under no legal obligation to make them. The payments were made at the discretion of the contributor and were applied for the objects of the trust. The inclusive definition of income in section 2(24)(iia) dealt with voluntary contributions to a trust created wholly or partly for charitable purposes, but the receipts in question were from a non-charitable employees welfare trust and were not shown to be corpus contributions. Voluntary contributions of this nature were treated as gratuitous receipts and not as periodical monetary return from a definite source so as to answer the concept of income under section 56(1).

Conclusion: The receipts were not income chargeable to tax, and the assessee succeeded.

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