- (1.) THE assessee is a private limited company and during the accounting period July 12, 1953, to July 1, 1954, relevant to the assessment year 1955 -56, it functioned as the sole selling agent of the Muir Mills Company Ltd. On the sale of each bale, the assessee realised a sum of six annas towards charity and it is said that that was shown separately in the bijak. It appears that the sums so collected were credited in separate account in the assessees books which was styled as the "Marwari Society Charitable Account." During the relevant account year this amount stood at Rs. 9,809. In assessment proceedings for the year 1955 -56, the assessee claimed that the amount or Rs. 9,809 was not part of the sale price of the bales sold by it and could not be treated as a part of its income. The Income Tax Officer rejected the claim and included the amount in the income of the assessee.
(2.) THE assessee also claimed a deduction of a sum of Rs. 9,560 on account of repairs to the premises employed by it for the purpose of its business. The premises did not belong to the assessee. It paid rent in respect of it. The sum of Rs. 9,560 was claimed to have been spent by the assessee on the conversion of some manual latrines into flush latrines and on the replacement of the tiled roofs by cement roofs in some of the labourers quarters The claim of the assessee was laid under Sec. 10(2) (ii) of the Indian Income tax Act, 1922. It was rejected by the Income Tax Officer, who added the amount to the returned income. In respect of both the claims, the assessee proceeded in appeal to the Appellate Assistant Commissioner and, thereafter, before the Income Tax Appellate Tribunal, but was unsuccessful. At the instance of the assessee, the Tribunal has now referred the following two questions to this court for its opinion. "1. Whether, in the facts and circumstances of the case, the sum of Rs. 9,809 realised by the assessee from its customers towards charity and credited to the account Marwari Charitable Society was the income of the assessee liable to be included in its total income ? 2. Whether, in the facts and circumstances of the case, the sum of Rs. 9,560, spent in converting the latrines and the labourers quarters was allowable as a deduction under the provisions of Sec. 10(2) (ii) ?"
(3.) REGARDS the first question, it appears that the same question had been raised by the assessee for the assessment year 1954 -55 and before the Tribunal it was conceded on behalf of the assessee that it was entirely at the discretion of the assessee to deal as it liked with the amount collected towards charity and that the amount could be spent according to the pleasure of the assessee. The Tribunal accordingly found that the amount was not held under any trust or binding obligation requiring the assessee to apply that amount to any charitable purpose. When the appeal for the assessment year 1955 -56 came on for hearing before the Tribunal, the assessee was unable to place any further material before the Tribunal and to persuade it to a different view. Shri M. P. Mehrotra learned counsel for the assessee, points out that the Tribunal applied the doctrines of res judicata and declined to go into the question whether the amount of Rs. 9,809 was liable to be included in the income of the assessee for the assessment year 1955 -56 it having found against the assessee on a similar claim for the proceeding assessment year. He urges that the doctrine of res judicata cannot be invoked in Income Tax proceedings. Upon a perusal of the appellate order before us, we are not satisfied that the Tribunal applied the doctrine of res judicata. What the Tribunal intended to say was that the matter before it appeared to be not different from that arising in the preceding assessment year, and there was no reason why upon the facts and circumstances it should not take the same view in the instant assessment year, specially when there was no fresh or further material before it to warrant a different opinion. It is clear from the finding of the Tribunal that, although the amount was raised by the assessee from its customers apparently on the ground of charity and although the amount was said to be credited to the account "Marwari Charitable Society", the disbursement of the amount was entirely within the desecration of the assessee, and the assessee was not bound to devote any part of that amount to the assessee was not bound to devote a part of that amount to the Marwari Charitable Society. It is not a case where the amount was paid by the customers specifically towards a charitable purpose and the amount was held in trust by the recipient so that there was a binding obligation to apply that amount to the charitable purpose. Indeed, Shri Mehrotra states that the case is not one where receipt of the amount results in a trust or enforceable obligation. The plea on the contrary is that the amount did not constitute part of the sale price and, therefore, could not be included in the assessees income. ;