- (1.) This appeal is preferred against the judgment and order of the Punjab and Haryana High court dismissing an application filed by the Revenue under Section 256 (2 of the Income Tax Act. The question which the Revenue wanted to raise reads thus: "Whether on the facts and in the circumstances of the case, the tribunal was right in holding that the receipt of Rs. 1,38,577. 00 realised @ 1. 00 per bilty per customer through the bills and credited to a separate account called 'dharmada' was not assessable to tax as revenue receipt -
(2.) The case of the Revenue briefly stated is to the following effect: the assessee is a private limited company engaged in the business of transport. During the accounting period ending 31/01/1970 relevant to the assessment year 1970-71, the respondent collected an amount of Rs. 1,38,577. 00 on account of 'dharmada'. The Income Tax Officer called upon the respondent-assessee to explain why the said amount should not be treated as its trading receipt. The respondent's case was that according to the custom prevailing in the transport business, he collected Re 1 per bilty for spending on charitable purposes. He stated that out of this amount collected, a major portion was spent on charity and that the balance of Rs. 8,871. 00 was carried over in the separate account kept for 'dharmada'. His case was that this amount was never credited to his income account and it always constituted a distinct account. This explanation was not accepted a by the Income Tax Officer who included the said amount of Rs. 1,38,577. 00 in the business income of the respondent. On appeal, the Appellate Assistant Commissioner accepted the respondent's contention and deleted the said addition. The tribunal confirmed the same. However, says the counsel, the true state of affairs is disclosed from the assessees' own letter extracted in the assessment order. When called upon to explain the collection of the said amount and its purpose, the assessee submitted a reply in writing stating as under: "1.It is customary in the Transport business to collect/charge 'dharmada', at the rate of Re 1 per Bilty. Not only this but also all the Transport Companies, charge/collect this customary 'dharmada'. 2. This amount is meant for distribution to the poor relatives of labourers working in the business premises and also to give at the time of marriages of girls in their families. This is just to get full cooperation from them. 3. The company has nothing to do with this collection as it has to distribute the same. "
(3.) It is thus evident, says the counsel for the Revenue, that the amount though collected in the name of 'dharmada' was neither meant for charity nor was it ever spent on charitable purposes. Distribution of the said money among the "poor relatives of the labourers working in the business premises (of the assessee) and also to give at the time of marriages of girls in their families" cannot be called a charitable purpose. Indeed, according to the respondent himself, these amounts were distributed among them with a view "to get full cooperation from them". According to learned counsel, the assessee is really using the money collected in the name of 'dharmada' for his own business purposes. In the above circumstances, says the counsel, the High court ought to have directed the tribunal to state the aforesaid question under Section 256 (2 of the Act;