LexCOMMISSIONER OF INCOME TAX (CENTRAL), LUDHIANA ETC. ETC. versus AMRITSAR TRANSPORT COMPANY PRIVATE LIMITED AND ANR.
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1
A
COMMISSIONER OF INCOME TAX (CENTRAL), LUDHIANA
ETC. ETC.
v.
AMRITSAR TRANSPORT COMPANY PRIVATE LIMITED AND
ANR.
"'(
B
MARCH 31, 1993
[B.P. JEEVAN REDDY AND N. VENKATACHALA, JJ.]
_..
Income tax Act, 1961:
c
Section 256(2)-Assessee col/ecti11g amounts forchariry-W11ether to be
added as revenue receipts-Question fit to be refe"ed co High CourHJirec-
)r
tio11 co Tribu11a/.
The question involved in these appeals was whether the amounts
D collected for spending on charity and kept in a separate account for
Dharmadha could be included in the business income of the assessee. The
explanation that these amounts were distributed among the poor relatives
of the labourers and to the girls in their families at the time of marriage,
was not accepted by the Income-tax Officer as a charity. He added the \-
E entire dharmadha amounts to the business income of the appellant-asses-
sees. On appeal the Appellate Assistant Commissioner deleted the said
additions, .and the Tribunal confirmed the deletions. Revenue filed ap-
plications before the High Court for reference. The High Court having ·-
dismissed the ·applications, Revenue preferred the present appeals con-
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tending that the assessees were using the amounts collected in the name
of dharmadha for business purposes.
. ....
Allowing the appeals, this Court,
HELD: 1. So far as the inclusion of amounts collected as Dharmada
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which are kept in a separate account and are utilised for charitable
purposes is concerned, there can be no dispute that they are not liable to
be included in the income of the assessee .. The Revenue's case is that ',-{
though collected in the name of Dharmada, these amounts were neither
meant for any charitable purpose nor were they spent on charitable
purposes. In these circumstances, the High Court ought to have directed
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the Tribunal to state the question under Sec.256(2) of the Income tax Act,
874
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C.I.T. v. AMRITSAR TRANSPORT CO. [REDDY, J.J
875
(" ,
1961, as to whether such amounts could be assessed to tax as revenue
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receipts. The Tribunal is directed lo do so. (877 A-C]
CIVIL APPELLATE JURISDICTION : Civil Appeal No. 3522(NT)
of 1979.
From the Order dated 24.1.1979 of the Punjab and Haryana High
Court in Income Tax Case No.50 of 1978.
WITH
(C.A. NOS. 2456(NT)/78, 5987-88(NT)/90,!368(NT)/82,1549-
B
57(NT)/93 & 1558(NT)/93.
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~
G. Vishwanatha Iyer, C. Ramesh, T.V. Ratnam and Ayyam Pcrumal
for P. Parmeswaran for the Appellants.
C.S. Aggarwal for B.V. Desai for the Respondents.
The Judgment of the Court was delivered by
B.P. JEEVAN REDDY, J. Civil Appeal No.2456(NT) of 1978.
This appeal is preferred against the judgment and order of the
Punjab and Haryana High Court dismissing an application filed by the
Revenue under Section 256(2) of the Income Tax Act. The question which
the Revenue wanted to raise reads thus:
"Whether on the facts and in the circumstances of the case,
the Tribunal was right in holding that the receipt of
Rs.1,38,577 realised @l per bilty per customer througb
the bills and credited to a separate account called
'DHARM<\DA' was not assessable to tax a<; revenue receipt?'
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D
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The case of the Revenue briefly stated is to the following effect: the
aSsessee is a private Ltd. company engaged in the businc~s of transport.
During the accounting period ending January 31, 1970 rclevam to the G
assessment year 1970-71, ·the respondent collected an amount of
y· Rs.1,38,577 on account of DHARMADA. The Income Tax Officer called
upon the respondent- assessee to explain why the said amount should not
be treated as its trading receipt. The respondent's case was that accqrding
to the custom prevailing in the transport business, he two collected Re.I H
876
SUPREME COURT REPORTS
[1993) 2 S.C.R.
A
per bilty for spending on charitable purposes. He stated that out of this
amount collected, a major portion was spent on charity and that the
balance of Rs.8,871 was carried over in the separate account kept for
DHARMADA. His case was that this amount was never credited to his
income acr~unt and it always constituted a distinct account. This ·explana-
--<
B tion was not accepted by the Income Tax Officer who included the said "(
amount of Rs.1,38,577 in the business income of the respondent. On
appeal, the Appellate Assistant Commissioneraccepted the respondent's
contention and deleted the said addition. The Tribunal confirmed the
same. However, says the counsExcerpt shown. Read the full judgment & AI analysis in Lexace.