SAMPLE CHAPTER
9
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Scope of Income Under Section 11
9.1 CHAPTER SUMMARY (a) For section 11, the term ‘income’ assumes significance for the purposes of determining the income subject to application and exemptions. (b) The word ‘income’ in section 11(1)(a) must be understood in a commercial sense. [Cir. No. 5-P(LXX-6) Dated 19th June, 1968] and five heads of income as per section 14 are not applicable. (c) The applicability of sections 60 to 63 is summarised as under: (i) The income belonging to a charitable organisation would be included in the total income of the transferor if such income is subject to the provisions of sections 60 to 63. (ii) Under section 60, if any person transfers income without transferring the ownership of the asset, then such income will be considered as a part of the taxable income of the transferor. (iii) Section 61 provides that income arising to any person by a revocable transfer of assets shall be chargeable to income tax as the income of the transferor and shall be included in his total income. (d) Voluntary contributions (i) Voluntary contributions have been considered as a part of the income of charitable organisations. section 12(1) provides that voluntary contributions should be considered as income for the purposes of section 11(1). (ii) Voluntary contribution being receipt without consideration is more like a legal obligation without any condition rather than income. But by virtue of section 12(1), it is a deemed income for charitable organisations. (iii) Voluntary contributions have to be made solely for charitable or religious purposes and if a portion is for other purposes, then such contributions will not be exempt. It may be noted that the taxability of voluntary contribution under section 12(1) does not imply forfeiture of income under various provisions of section 13. (iv) It has been held that the membership fees/subscriptions paid by members of organisations cannot be considered as payments 136