2018 (3) TMI 526 - HC - Income Tax

Additions made on account of Cane Development Fund, Area Development Fund, Small Savings, Hutment Fund, C.M. Fund, Mewad Relief Fund - Held that - Amounts collected by the society towards Cane Development Fund shall be treated as income of the assessee and no claim for deduction shall be entertained and decided by the Tribunal. As regards Area Development Fund, the matters were remitted to the Tribunal. The Tribunal has to consider the case put forth by the assessee of utilising the said amount for the purpose for which it was collected. Considering the judgment in the case of Siddheshwar S.S.K. Ltd., Vs. Commissioner of Income Tax (2004 (9) TMI 6 - SUPREME Court) it would be necessary to remit the matter back to the Tribunal for considering the aspects in respect of Cane Development Fund, Area Development Fund, Small Savings, Hutment Fund, C.M. Fund and Mewad Relief Fund, afresh in light of the judgment in case of Siddheshwar S.S.K. Ltd., Vs. Commissioner of Income Tax (Supra). The impugned judgment is set aside. The matter is remitted to the Tribunal for deciding afresh

Summary

Issues involved:
Whether the Tribunal was right in deleting the additions made on account of Cane Development Fund, Area Development Fund, Small Savings, Hutment Fund, C.M. Fund, Mewad Relief Fund?

Analysis:
The High Court heard the appellant's counsel, Mr. Alok Sharma, as the respondent did not appear during the proceedings. The central question of law pertained to the Tribunal's decision on the additions related to various funds. The Tribunal had ruled in favor of the assessee citing a previous judgment of the High Court in a specific case. However, Mr. Sharma referred to a Supreme Court judgment related to a similar matter involving a different entity.

The Supreme Court judgment stated that amounts collected by a society towards Cane Development Fund should be treated as income without allowing any deduction. Regarding the Area Development Fund, the matter was remitted back to the Tribunal for further consideration. The Tribunal was directed to assess whether the collected amounts were utilized for their intended purposes. In light of the Supreme Court's ruling, the High Court decided to set aside the impugned judgment and remit the matter back to the Tribunal for a fresh assessment of the various funds involved.

Conclusively, the High Court partially allowed the appeal, setting aside the previous judgment and instructing the Tribunal to reevaluate the issues concerning the Cane Development Fund, Area Development Fund, Small Savings, Hutment Fund, C.M. Fund, and Mewad Relief Fund based on the observations made in the Supreme Court judgment referenced during the proceedings. No costs were awarded in this matter.