9911796707
|
Home
Issues Involved:
The issue involves the question of whether the Appellate Tribunal was correct in upholding the deletion of an addition made in the assessment for the assessment year 1980-81, concerning the amount transferred to the 'molasses storage fund' from the sale proceeds of the molasses. Summary: The court considered the provisions of the Income-tax Act, 1961, specifically focusing on the diversion of funds to the 'molasses storage fund' as mandated by the Molasses Control Order issued by the Government of India. The assessee argued that the amount transferred to the fund was not part of its income due to the statutory obligation to keep it separate and utilize it only as directed by the government. The Income-tax Officer initially rejected this argument, but the first appellate authority and the Appellate Tribunal accepted it, leading to a reference at the instance of the Revenue. The court emphasized that the amount in question could not be claimed by the assessee as its own, as it was subject to specific directions from the government for utilization. Drawing a parallel with a previous case related to contribution to an education fund under the Co-operative Societies Act, the court held that funds diverted at the source by statutory obligation cannot be included in the assessee's income. Therefore, the court agreed with the view that the amount transferred to the 'molasses storage fund' was not part of the assessee's income. Consequently, the question was answered in the affirmative, against the Revenue. This judgment highlights the importance of statutory mandates in determining the tax treatment of funds earmarked for specific purposes, emphasizing that amounts diverted at the source by legal obligations do not form part of the assessee's taxable income.
|
