- (1.) This is a reference under section 256(1) of the Income-tax Act, 1961 (hereinafter referred to as the Act).
(2.) The assessee is a registered partnership firm. It is engaged in the business of commission agency. The assessment year involved is 1969-70. During the relevant previous year the assessee charged from its customers a customery levy called "Dharmada" and credited it in the Ramji and Gaushala account. The total amount to collected was Rs. 10,593/-. Income-tax Officer held that the amount in question was a trading receipt and, as such, a part of the profits of the assessee firm. He accordingly included it in the total income and levied tax thereon. The assessees appeal before the Appellate Assistant Commissioner of Income-tax failed. On second appeal the Income-tax Tribunal has allowed the assessees claim holding that Dharmada has been charged from the customers under a custom prevalent in Uttar Pradesh and relying upon a decision of this Court in Bijli Cotton Mills Ltd. vs. Commissioner of Income-tax, 1970 76 ITR 194 held that the amount in question was not a revenue receipt. The Commissioner is aggrieved and at his instance the following question of law has been referred to us :- "Whether on the facts and in the circumstances of the case, Dharmada receipts of Rs. 10,593/- could be included in the total income of the assessee relating to assessment year 1968-69 ?"
(3.) In Thakur Das Shyam Sunder vs. Addl. Commissioner of Income-tax, 1974 93 ITR 27 a Full Bench of this Court after reviewing all the case law on the point has held that if Dharmada is collected for purposes of charity in accordance with customs its disposal is equally governed by the obligation created by that custom, i.e. the amount has to be sent only for some charitable purposes. It has been further held that merely because the charities are not specified and the discretion has been left with the assessee to spend the money according to his own choice also does not militate against his holding the money in trust for charitable purposes. In other words, it has been held that where a customery levy is collected by an assessee from its customers earmarked for being spent for charitable purposes the receipt never partakes of the nature of income. The assessee holds the amount in trust for charity and his position is that of a trustee.;