9911796707
TMI Blog1983 (4) TMI 31X X X X Extracts X X X X X X X X Extracts X X X X ..... me account. The ITO, while completing the assessment originally for the year 1967-68, did not include the said charity. Later, he reopened the assessment under s. 147(a) of the I.T. Act, 1961, hereinafter referred to as " the Act ", on the ground that the charity collections amounting to Rs. 1,704 had escaped assessment. He then completed the reassessment by including the income of Rs. 1,704 treating it as a trading receipt. The assessee appealed to the AAC, who held that the receipts by way of charity have to be assessed to tax as a trading receipt but at the same time the necessary relief under s. 80G will be given for the expenditure, if the assessee satisfies the necessary conditions. He, however, held on merits that the conditions ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... l the tests laid down in CIT v. N. S. Pandaria Pillai [1969] 73 ITR 457, have not been satisfied, the amount should be taken to be only as a trading receipt and as part of the assessee's profits. Aggrieved by the decision of the Tribunal, the assessee has sought and obtained a reference to this court on the following question of law for its opinion : " Whether, on the facts and in the circumstances of the case, the charity collections amounting to Rs. 1,704 were trading receipts so as to constitute the income of the assessee and liable to tax The basic and relevant facts as found by the Tribunal are that the business of the assessee-company is governed by the articles of association and one of the articles of association provided that t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r a specific purpose, the collections would not form part of the income of the collector ; but if the payment made by the customers is not voluntary and not intended as a gift to charity, the collection would form part of the income of the person, who received the same, notwithstanding that the same was shown separately in the bills as part of the bargain, as it would only indicate his intention to create a trust. In that case, emphasis has been laid (1) on the intention to create a trust, and (2) on the voluntary nature of the contribution. In Thakur Das Shyam Sunder v. Addl. CIT [1974] 93 ITR 27, a Full Bench of the Allahabad High Court had held that customary collections by a commission agent from the persons, whose goods are sold by him ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... was held to be acting more or less as a trustee of such amounts and as such those amounts were not includible in the dealer's assessable income. In CIT v. Bijli Cotton Mills (P.) Ltd. [1979] 116 ITR 60 (SC), while considering a similar question, the Supreme Court has approved the decision of the Full Bench of the Allahabad High Court in [1974] 93 ITR 27 and the decision in [1978] 111 ITR 134 (Punj). In an earlier decision, namely, CIT v. Tollygunge Club Ltd. [1977] 107 ITR 776 (SC), a race club conducting horse races with amateur riders charged fees for admission into the enclosures of the club at the time of the races. A resolution had been passed by the race club earlier at the general body meeting of the club for levying a surcharge of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , and the amounts spent for charities are debited to that account, the said collections cannot be taken to he trading receipts. (2) The fact that the contributions have not been made voluntarily will not make the collections straightaway a trading receipt. (3) The fact that the assessee had retained to himself a wide discretion regarding the manner in which the amounts are to be spent for charitable purpose will not also make the collection part of his trading receipts. In CIT v. Coimbatore Cotton Mills Ltd. [1983] 140 ITR 562, a Division Bench of this court dealt with the nature of the " mahimai " collection from the assessee who is a yarn dealer. The assessee claimed that the amount collected did not form part of his trading receipts. T ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ll aware of the purpose for which the amount paid by him will be utilised. Therefore, the customer paying the amount as charity treats the assessee as a trustee it is no doubt true, the payment made by the customer is not voluntary. But that does not mean that the amounts paid are the trading receipts of the assessee. In this case, the amounts collected have been kept separately and they have not been shown as trading receipts. Even the amounts spent for charities have been debited against the collections which have been kept separately from the trading receipts. We have to hold, therefore, that the view taken by the Tribunal is not correct and the question is to be answered in the negative and against the Revenue. The assessee will have th ..... X X X X Extracts X X X X X X X X Extracts X X X X
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