1983 (1) TMI 8

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....ies Registration Act and later under the Indian Companies Act. According to cl. 4 of the articles of association of the Yogam, the membership fee is Rs. 5 per member. Clause 9 of the articles provides that the subscriptions are to be remitted to the head office and the head office is enabled to pay back such amounts to the branches for utilising the same for permanent institutions. Every year the Yogam enrols members, from each of whom, a prescribed fee of Rs. 5 is collected as membership fee. Clause 56 of the bye-laws framed by the Yogam indicating the sources of income mentions the receipts from membership fee as one of its sources of income. For the assessment years 1973-74 and 1974-75, the Yogam had received Rs. 25,853 and Rs. 33,030 as....

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....73-74 and 1974-75, respectively ? " The counsel for the assessee raised two submissions: (1) that the membership fee is collected only once from a member; and it not being a recurring receipt, cannot be treated as income ; and (2) that the amount is meant for the expenditure for permanent institutions as provided in clause 9 of the articles of association and, therefore, the receipt must be treated as capital and not revenue. Counsel for the assessee relies on a decision of the Privy Council in CIT v. Shaw Wallace, AIR 1932 PC 138, where it was held that income has got a necessary attribute of recurring regularity, and in the absence of such recurrence, a receipt cannot be income and it would, therefore, be a capital receipt. Th....

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....recurring receipts can be income, and all non-recurring receipts should always be capital in nature. In the present case, even though it is true that a member pays membership fee only once, receipts of this nature come in every year. Counsel for the Revenue referred us to the following observations in CIT v. Shree Jari Merchants Association [1977] 106 ITR 542 (Guj), to reiterate the submission that subscriptions received from members in the present case are really income taxable under the Act and not capital receipts (p. 554) : " Therefore, the pertinent question which arises to be considered is whether the receipt of subscription by the assessee from its members amounts to the receipt of 'income'. While considering the question, it s....