following this decision the high companyrt answered the question raised in the latter reference also in favour of the assessee.
during the previous year being the calendar year 1950 relevant to the assessment year 1951 52 the total amount received by the asses see company in the dharmada account as aforesaid amounted to rs.
subsequently oh october 3 1950 the said two directors executed a deed of declaration of trust wherein it was stated that a sum of rs.
right from the inception it used to reales certain amounts on account of dharmada charity from its customers on sales of yarn and bales of companyton.
the assessee did number credit the amounts of dharmada so realised by it in its trading account but it maintained a separate account knumbern as the dharmada account in which realisation on account of dharmada were credited and payments made out were debited from time to time.
18.11.69 and 21.1.70 of the allahabad high companyrt in income tax reference number.
the income tax officer rejected the contention and added the said amounts to the assessable income of the assessee company in all the years.
in the assessment proceedings for the assessment years 1951 52 1952 53 and 1953 54 the assessee claimed that the aforesaid amounts lying to the credit of the dharmada account were held in trust by it and were ear marked for charity and as such they were number its income from business liable to tax and in support of this companytention reliance was placed upon the resolution passed by the board of directors on january a 15 1945 and the deed of declaration of trust dated october 3 1950.
the commissioner of income tax delhi central new delhi has challenged the aforesaid view of the high companyrt before us in these appeals.
66 a of the indian income tax act 1922.
the assessee is a private limited companypany having been incorporated in the year 1943.
17242/ on account of dharmada and a sum of rs.
4578 was also credited on account of interest in the dharmada account.
of yarn and two annas per bale of companyton.
in this view of the matter the high companyrt answered the questions in favour of the assessee and against the revenue.
to the objects of charity.
civil appellate jurisdiction civil appeal number.
the appeals before the appellate assistant companymissioner at the instance of the assessee company proved unsuccessful.
further appeals to the appellate tribunal also proved futile.
1328 and 1329/73 2059/71.
s. agarwal r. a. gupta s. k. jain g. s. chatterjee and k. c. dua for the respondent in ca 1328 1329/73.
320/64 and 454 131 of 1965 .
4010/ while during the previous year being the calendar year 1952 relevant to the assessment year 1953 54 the assessee received a sum of rs.
from the judgments and orders dt.
the tribunal negatived the claim of the assessee on two grounds first that the amounts in question could number be regarded as having been received or held by the assessee under a trust for charitable purposes the trust being void for vagueness and uncertainty and secondly that the realisations partook of the character of trading receipts.
at the instance of the assessee the matter was carried to the high companyrt by way of two references income tax reference number 329/1964 being in relation to the amounts concerned in the two assessment years 1951 52 and 195753 and income tax reference number 454/1965 being in relation to the amount companycerned in the assessment year 1953 54.
19490/ as dharmada from its customers and a sum of rs.
85000 had accumulated in the charity fund maintained by the trustees and it was declared that the amount did number belong to any individual but it was trust money of which the executants were trustees and it will be utilised by them for altruistic religious or charitable purposes.
it carries on the business of manufacturing and selling yarn.
in the former reference the high companyrt approached the question number from the angle of deciding whether the assessee companyld claim exemption from tax under s. 4 3 i of the act in respect of the impugned amounts but whether the impugned amounts could be regarded as the profits or gains of the business carried on by the assessee under s. 10 l to the act in other words in the opinion of the high companyrt the dispute related to the initial character of the receipt itself and the question was whether the amount paid by the customers ear marked for charity were the assessees income at all and following an earlier decision of a division bench of that very companyrt in the case of agra bullion exchange limited v. commissioner of income tax l the high companyrt held that the impugned amounts we never the income of the assessee at all and that the assessee was merely acting as a companyduit pipe or clearing house for passing on the amounts 1 1961 41 i.t.r.
the rate was one anna per bundle of 10 lbs.
s. agarwal r. a. gupta s. k. jain and k. c. dua for the respondent in ca 2059/71.
904/ for the same purpose from the brokers and interest was also credited to this account amounting to rs.
it appears that at a meeting of the board of directors of the assessee company held on january 15 1945 the board passed a resolution that the moneys standing in the dharmada account be treated as trust fund of which lala nawal kishore and lala ram babulal two directors of the companypany be the trustees and it was further declared that all the money realised in future by the companypany on sale of yarn from the purchasers at the rate of one anna per bale or such rate as may be decided in future be handed over to the trustees for being utilised in such altruistic religious and charitable purposes as may be decided upon by them and that the trustees shall in particular utilise such funds for the advancement of education and the alleviation of misery and sickness of the public in general as it think fit.
they raise a companymon question whether the amounts realised by the assessee company from its customers as and lor dharmada during the three assessment years 1951 52 195253 and 1953 54 are liable to be taxed as its income under the act and the question arises in the following circumstances.
in the bills issued to the customers these amounts were shown in a separate companyumn headed dharmada.
a. ramachandran and a. subhasini for the appellant.
the judgment of the companyrt was delivered by tulzapurkar j. these three appeals are preferred on certificates of fitness granted by the allahabad high companyrt under ss.
21898/ similarly during the previous year being the calendar year 1951 relevant to the assessment year 1952 53 the companypany companylected from its customers a sum of rs.
