Income-tax exemption for disciples' offerings failed where receipts were treated as personal income, not trust-based religious or charitable funds.

Amounts received as offerings from disciples were held not to qualify for exemption under section 4(3)(i) of the Indian Income-tax Act, 1922 because the assessee had complete control over the receipts, they were not derived from property held under trust or other legal obligation, and they were not shown to be set apart for religious or charitable purposes. They also failed to qualify under section 4(3)(ii) because the offerings appeared to be personal receipts and were not proved to be applicable solely to religious or charitable purposes. The referred question was therefore answered against the assessee.

---

---

Issues: Whether the amounts received as offerings by the assessee from disciples were exempt from tax under section 4(3)(i) or section 4(3)(ii) of the Indian Income-tax Act, 1922.

Analysis: For exemption under section 4(3)(i), the income must be derived from property held under trust or other legal obligation wholly for religious or charitable purposes, or income applied or set apart for such purposes. The evidence showed that the assessee had complete control over the offerings and could spend them as he liked, so the amounts were not required to be set apart for religious or charitable purposes and were not derived from property held under trust or other legal obligation. For section 4(3)(ii), the income must be that of a religious or charitable institution derived from voluntary contributions and applicable solely to religious or charitable purposes. The offerings appeared to have been made to the assessee personally, and the amounts were not shown to be applicable solely to religious or charitable purposes.

Conclusion: The receipts did not qualify for exemption under either clause (i) or clause (ii) of section 4(3); the answer to the referred question was against the assessee.

---