2025 (2) TMI 574 - AT - Income Tax

Life and institutional membership fees received by trust are not voluntary contributions under section 11(1)(d)

Council of Architecture C/o. S.N. Panda, Advocate Versus ITO Exemption, Ward-1 (3), New Delhi

Council of Architecture C/o. S.N. Panda, Advocate Versus ITO Exemption, Ward-1 (3), New Delhi - TMI The issues presented and considered in the legal judgment are as follows:1. Whether one-time membership fees as non-corpus funds are eligible for exemption under section 11(1)(d) of the Income Tax Act.2. Whether the one-time life membership fees received by the Assessee can be treated as corpus donation or are revenue in nature.The detailed analysis of the issues is as follows:Relevant legal framework and precedents:The Court considered the provisions of section 11(1)(d) of the Income Tax Act and relied on the judgment of the Jurisdictional High Court in the case of CIT Vs. Divine Light Mission (278 ITR 659).Court's interpretation and reasoning:The Court analyzed whether the membership fees or subscriptions received by a trust/society from its members can be considered as voluntary contributions under section 11(1)(d). It distinguished between voluntary contributions and subscriptions, emphasizing that subscriptions are not to be treated as voluntary contributions. The Court also referred to previous judgments to support its interpretation.Key evidence and findings:The Court noted that the Assessee failed to appear despite multiple notices, and only the Ld. Departmental Representative presented arguments. The Court considered the assessment orders, submissions of the appellant, and the judgment in the case of CIT Vs. Divine Light Mission.Application of law to facts:The Court applied the legal framework to the facts of the case, specifically focusing on whether the one-time membership fees were voluntary contributions or revenue receipts. It concluded that the fees were not voluntary contributions and were to be considered as income derived from property held under trust.Treatment of competing arguments:The Ld. Departmental Representative argued that the membership fees were revenue receipts and should be added to the Assessee's income. However, the Assessee did not present any arguments or contrary judgments to challenge this position.Significant holdings:The Court upheld the decision of the Ld. CIT(A) to dismiss the appeals of the Assessee, based on the findings that the membership fees were not voluntary contributions and should be added to the Assessee's income. The Court relied on the judgment in the case of CIT Vs. Divine Light Mission to support its conclusion.In conclusion, the Court dismissed the appeals of the Assessee based on the interpretation of the relevant legal provisions and precedents, emphasizing that the membership fees were not exempt under section 11(1)(d) of the Income Tax Act.