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2013 (6) TMI 195 - HC - Income TaxFull bench order - Dharmada charges - It is submitted that as the amount collected by the assessee towards Dharmada was included as revenue receipt and assessed to tax by the AO - It is by the applicant that the decision in the case of Lilasons Breweries Pvt. Limited is not good law in the light of the pronouncement of the Apex Court in the case of Commissioner of Income Tax vs. Bijli Cotton Mills (P) Limited, 1978 (11) TMI 1 - SUPREME Court - held that - a mere statement to that effect on the part of the assessee is not sufficient and the revenue authorities, if so required, are entitled to ascertain on the basis of the facts of each individual case as to whether the amount collected in the name of Dharmada is actually meant for a purpose which is charitable and is in fact spent for such a charitable purpose. This aspect has been clarified by the Supreme Court itself in a subsequent decision in the case of Commissioner of Income Tax (Central), Ludhiana and Others vs. Amritsar Transport Company Private Limited and Another (1993 (3) TMI 318 - SUPREME COURT). after taking into consideration the decision in the case of Bijli Cotton Mills (1978 (11) TMI 1 - SUPREME Court). The decision of the Division Bench of this Court in the case of Lilasons Breweries Pvt. Limited dated 16.7.1996 cannot be said to be bad law and the reference made to this Full Bench is uncalled for. - Decided against the assessee.
Issues involved:
1. Correctness of previous decision regarding taxation of Dharmada amount 2. Interpretation of Supreme Court judgment in relation to Dharmada collections Analysis: 1. The case involved a reference to a Full Bench to determine the correctness of a previous Division Bench decision regarding the taxation of Dharmada amount collected by the assessee. The applicant, a limited company, collected Dharmada at a fixed rate from customers and maintained it in a separate account. The issue was whether the amount collected should be considered a revenue receipt and taxed as income. The Tribunal and CIT(A) had upheld the assessment treating Dharmada amount as income. However, the Division Bench found that the issue was a question of fact and not a question of law, therefore not conflicting with the Supreme Court's decision in a similar case. 2. The applicant argued that the Division Bench decision was not in line with the Supreme Court judgment in a related case, which stated that Dharmada amounts kept in a separate account for charitable purposes should not be included in the assessee's income. The applicant claimed that the Division Bench decision did not consider this Supreme Court ruling and should be overruled. However, the revenue contended that the Division Bench decision was based on its own facts and not in conflict with the Supreme Court ruling. The revenue argued that the Division Bench correctly determined the issue as a question of fact, and since the decision was not appealed to the Supreme Court, it became final and binding. 3. The Full Bench analyzed the Division Bench decision and the Supreme Court rulings on Dharmada collections. It clarified that the Division Bench did not lay down any law or take any decision contrary to the Supreme Court judgment. The Full Bench emphasized that the Division Bench decision was based on the specific facts of the case and did not conflict with the legal principles established by the Supreme Court. The Full Bench also highlighted the importance of ensuring that Dharmada amounts are genuinely used for charitable purposes, as stated in subsequent Supreme Court decisions. 4. The Full Bench referenced another Supreme Court case, emphasizing the need for revenue authorities to verify if Dharmada amounts collected are actually utilized for charitable purposes. The Full Bench concluded that the Division Bench decision was not bad law and the reference to the Full Bench was unnecessary. The Full Bench held that there was no conflict between the Division Bench decision and the Supreme Court ruling, and the matter should be referred back to the Regular Division Bench for further proceedings in accordance with the law.
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