LexCOMMISSIONER OF INCOME TAX, (CENTRAL) DELHI, NEW DELHI versus BIJLI COTTON MILLS (P) LTD., HATHRAS DISTT., ALIGARH
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.. 241 COMMIS.SIONER OF INCOME TAX, (CENTRAL) DELHI, A NEW DELHI v. BULI COTTON MILLS (P) LIB., HATHRAS DISTT., ALIGARH November 7, 1978 [P. N. BHAGWAT! AND V. D. TuLZAPURKAR, JJ.] Indian Income Tax A.ct. 1922 s. ~(3)(i) & s. 10(1)-Assessee colleoted moneys on sale of goods und~r t.he htad "D/larmada"-Kept the amount in a separate account-Created a trust-Utilised the fnoney for charitable purposes- --.--- Whether amount realised cowld be regarded as assessee's income-"Dhannadci' C Trust whether void as Val?Ut Qnd uncertain. ; ·-'\ Words & Phrases-"D•armada"-meaning of. The assessee reali3ed certain amounts of money on account of Dharmada (charity) from its customers on sale of yarn and bales of cotton which was its principal business. The amounts so realised were shown in a separate column headed '"Dharmada" in the bills issued to customers. Without taking them into its trading account, the assessce, credited these amounts to a separate account known as "Dhrmada" account. The Board of Directors of the company created a trust and declared that all moneys standing in the "Dharmada Account", and realised on this account in future should be treated as trust fund and utilised by the trustees for such religious and charitable purposes as may be decided by them. For the assessment years 1951-52, 1952-53 and 1953-54 the Income Tax Officer adt'ed the lnnounts realised under the head "Dharmada" to the assessable income of the iissessce. The assessce's appeals to the Appellate Assistant Com- missioner ·were dismissed. On further appeal the Appellate Tribunal held that the trust was void for vagueness and uncertainty and that the realisations par· took of the character of trade receipts. On reference, the High Court held that the amounts were never the income of the assessee, that the assossee was merely acting as a clearing house for pass- ing the amount to the trust, that the fact that it was a compulsory levy did not make it a trade receipt, that "Dharmada" was a customary levy prevailing in some parts of the country and' where it was paid by the cutomers to a trading concern, the amount was not paid ai. a price for the commodity sold to the D E F customer. G In appeal to this Court it was contended on behalf of thC Revenue that the realisations being a compulsory levy, they mast be regarded as a part of the consideration or price of the goods purchased by the buyers and that gift for • -,. .. Dharm:1da" was void for vaguenetls and uncertainty. Dismissing ti.e appeals, HELD : I. The impugned realisations made by the assessee from its cus- tomers for "Dharmada" being entirely earmarked for religious or charitable H 242 SUPREME COURT REPORTS [1979] 2 S.C.R. A purposes would not be regarded as the assessee's income chargeable to income tax. [256FJ 2. A gift to the "Dharmada" or "Dharmadaya'' both in common parlance as well as the cusotmary meaning attached thereto among the commercial and trading community cannot be regarded as void or invalid on account of vague- ness or uncertainty. When the customers or the brokers paid the impugned B amounts to the assessee earmarking then1 for "Dharmada" these payments were validly earmarked for charitable purposes. In other words right from the inception these amounts were received and held by the assessee under an ob1iga- tion to spend the same for charitable purposes only, with the result that these receipts could not be regarded as forming income of the assessee. c D E F G H [253H-254B] Though there is some justification for holding that a gift to "Dharma" simpli- citer would be invalid on grounds of vagueness and uncertainty, a gift ta "Dharmada" would be definite, the object being certain viz., for religious or chartiable purposes. In common parlance the expression "Dharmada" or "Dha- ramadaya" cannot be said to be vague or uncertain and as such a gift to- "Dharmada" (Dharmadaya) would not be invalid for vagueness or uncer- tainty. [251 E·FJ 3. While the word "Dharma" is indefinite and equivocal, the word 'Dharma- daya" is quite definite. The former means either law or virtue or legal duty or moral duty, the latter means an endowment or gift for religious or charitable purpose. Similarly while the expression "Dharma" is idefinite and equivocal the expression "Dbarmarth" has only one meaning viz., anything given for chari- table or pious purposes. [251C·DJ 4. Apart from the fact that the concept of: "Dha
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