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TMI Blog2008 (4) TMI 374X X X X Extracts X X X X X X X X Extracts X X X X ..... n., 2008, 28th Feb., 2008 and 1st April, 2008. Therefore, after hearing both the parties, the request for adjournment was rejected. Ground Nos. 1 to 4 1. The order of the learned CIT(A) is contrary to law and facts of the case. 2. The CIT(A) is not justified in deleting the addition of Rs. 16,71,092 being charity collections. 3. The CIT(A) has failed to appreciate the fact that if the assessee is given deduction of 100 per cent of collection of charity, the provisions of s. 80G can be rendered redundant. 4. The decision of Honourable Supreme Court [CIT vs. Bijli Cotton Mills (P) Ltd. (I979) 8 CTR (SC) 1 : (I979) 116 ITR 60 (SC)] never intended such a benefit which may render the provisions of s. 80G as redundant and hence the rati ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mind to the rival contentions. It is a fact that the appellant has collected charity during the course of business. However, Suguna Charitable Trust is a separate entity to which such collections have been handed over. This fact has not been disputed by the AO. Therefore the limited issue before me is whether or not the charity collections constitute trading receipts includible in the hands of the appellant in spite of the fact that there is a separate charitable trust. On the given facts it is clear that the collections for charity are made in the course of business and kept in a separate account which were handed to Suguna Charitable Trust. The case therefore is squarely covered by the decision of the Hon'ble Supreme Court in the case of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e trust being void for vagueness and uncertainty and that the realisations partook of the character of trading receipts. The High Court, on a reference, held that the amounts in question were not the assessee's income liable to tax, as the amounts were paid by its customers specifically on account of Dharmada, the amounts were never treated by it as trading receipts or surcharge on the sale price, and that the "Dharmada" was a customary levy prevailing in certain parts of the country and where it was paid by the customers to a trading concern the amount was not paid as a price for the commodity sold to the customer, and that the assessee was merely acting as a conduit pipe or clearing house for passing on the amounts to the objects of chari ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d by the assessee, were making any separate payment in respect of charity, over and above the price of the pumps that they were buying. It is here that the distinction lies between the facts of the case of Bijli Cotton Mills (P) Ltd., and that of the present case. 7.1 In the case of Bijli Cotton Mills (P) Ltd., certain amounts on account of "Dharmada" were collected from the customers, on sales of yarn and cotton, and in the bills issued to the customers these amounts were shown in a separate column headed "Dharmada". But in the present case, there is nothing on record to show that the customers made any separate payment on account of 'charity', over and above the price of the product that they were buying. 7.2 In the sale bills/cash me ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... facts the assessee has not incurred the expenses of Rs. 5,40,000 during the asst. yr. 2003-04. 5.2 It is seen, the provision has been reversed on 1st April, 2003, if it is so, the assessee was aware of the fact that an excess claim of Rs. 5,40,000 was made for asst. yr. 2003-04 even before filing of the return of income and it could have offered the same in the return of income. Therefore, on facts, there is no case to allow the claim of expenditure which was correctly added by the AO. 8. The assessee had claimed Rs. 5,40,000 under the head "Sales promotion expenses" which was disallowed by the AO. He noted in his order that the assessee had not incurred these expenses during the year, that the entry of provision had been reversed on 1 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssessee was following the mercantile system of accounting, and that the assessee had correctly made the provision keeping in view the business exigencies, that there was no justification for the AO to make the impugned disallowance of Rs. 5,40,000. 10.1 We find it difficult to agree with the conclusions reached by the CIT(A). There is no material on record to show that a liability of Rs. 5,40,000 had, in fact, accrued during the year in question. The explanation given on behalf of the assessee, before the CIT(A) and before us, is too vague and general in nature and has no merit. It is not known as to how the alleged liability was worked out at Rs. 5,40,000. The order of the CIT(A) is reversed and that of the AO is restored. The ground No. ..... X X X X Extracts X X X X X X X X Extracts X X X X
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