CHAKRAVARTTI, C.J. - (1.) THIS reference under s. 66(1) of the IT Act raises a point which is utterly unarguable and the learned Counsel for the assessees, at the end, could not but help conceding that it was so.
(2.) THE facts are as follows : THEre are two assessees, namely, the Samnugger Jute Factory Company Limited and the Titaghur Jute Factory Company Limited, both members of the Indian Jute Mills Association. Both, we are informed, keep their accounts by the English calendar year. It appears that in the accounting year 1947, the Samnugger Jute Factory Company Limited paid a sum of Rs. 20,130 to the Indian Jute Mills Association as its contribution to the Calcutta Rehabilitation Fund, which was being administered by the Association and similarly the Titaghur Jute Factory Company Limited paid a sum of Rs. 17,940 to the same Association for the same purpose. THE Calcutta Rehabilitation Fund, we understand, was started for the purpose of giving relief to persons affected by the communal riots of 1946 and 1947. After the necessary disbursements had been made for the purposes of the Rehabilitation Fund, the Indian Jute Mills Association found itself left with a surplus of about Rs. 4,00,000. Of that sum we understand a sum of Rs. 12,078 was taken to be the share of the Samnugger Jute Factory Company Limited and a sum of Rs. 10,764 was taken to be the share of the Titaghur Jute Factory Company Limited. How these surplus amounts came to be regarded as shares of the contributories is not very clear but the proceedings before the authorities below were all had on the basis that either the amounts contributed by the various members of the Association remained their property or the surplus amounts were returned to them and thus came to belong to them again. It appears further that during the accounting year 1948-49 the Indian Jute Mills Association decided to make a contribution of Rs. 50,000 to the Gandhi National Memorial Fund and framed a scheme of obtaining that amount from its constituent members by imposing on them a subscription, based on the number of looms owned and worked by each. It is not necessary for the purposes of this case to explain what the scheme exactly was. It will be sufficient to say those mills which owned over two hundred and twenty looms were asked to pay at the rate of Rs. 70 per loom and those who owned less than two hundred and twenty looms were asked to pay at the rate of Rs. 35 per loom. To that amount were to be added the amounts which stood respectively to the credit of the members on account of the surplus left from the contribution made by them to the Calcutta Rehabilitation Fund. The total contribution made by the Samnugger Jute Factory Company Limited to the Gandhi National Memorial Fund was Rs. 1,52,988 of which Rs. 1,40,910 was contributed in the year 1948-49 and Rs. 12,078 was the amount left over from the contributions made by that company to the Calcutta Rehabilitation Fund. Similarly, the total contribution of the Titaghur Jute Factory Company Limited to the Gandhi National Memorial Fund was Rs. 1,36,344 of which Rs. 1,25,580 was actually paid in the accounting year concerned and the balance of Rs. 10,764 was the surplus standing to the credit of the company out of the contributions made by it to the Rehabilitation Fund. The present case is concerned only with the two sums of Rs. 12,078 and 10,764. The two cases have been consolidated and a single reference has been made, because the point involved is common. The inconvenience of such consolidation when the assessees are totally different bodies is patent and we hope that the procedure of such consolidation will in future be avoided.
(3.) THE assessment year with which we are concerned is 1949-50. Since the assessees keep their accounts by the English calendar year, the relevant accounting year was 1948. It appears that in the course of their assessments the assessees claimed exemption from tax under the proviso to s. 15B(2) of the Act in respect of the whole of the two sums of Rs. 1,52,988 and Rs. 1,36,344 respectively contributed by them to the Gandhi National Memorial Fund. THE ITO allowed exemption only in respect of the sums actually paid in the relevant accounting year, that is to say, he granted the Sumnugger Jute Factory Company Limited an exemption in respect of a sum of Rs. 1,40,910 and the Titaghur Jute Factory Company Limited an exemption in respect of Rs. 1,25,580. THE rest of the claim was rejected. THE whole question in the reference is whether the assessees were entitled under the proviso to s. 15B(2) of the Act to exemption in respect of the two sums to which the ITO refused to extend the privilege. THE principal provision is, however, s. 15B(1). The assessees naturally did not accept the assessments and appealed to the AAC. That officer held that the two sums of Rs. 12,078 and Rs. 10,764 had not been, as they could not have been, included in the total income for 1949-50 assessment and, consequently, no question of granting the assessees any exemption in respect of those two sums could possibly arise. He held further that those two sums had not in fact been contributed by the assessees to the Gandhi National Memorial Fund at all, because the money had previously been paid to the Calcutta Rehabilitation Fund and it was to that Fund that they belonged. On further appeal however the Tribunal held in favour of the assessees on both of these questions. The findings of the Tribunal as summarised in the statement of the case are (a) that the amounts were really paid by the assessees and not by the Indian Jute Mills Association, and (b) that it was not necessary that the amounts should have been paid out of the income of the previous years relevant to the assessments. The CIT thereupon required the Tribunal to refer the question to this Court which has been done in the following form : "Whether on the facts and in the circumstances of these cases, the assessees are entitled to claim an exemption for the sums of Rs. 12,078 and Rs. 10,764 respectively contributed towards the Gandhi National Memorial Fund under the provisions of s. 15B(1) of the IT Act ?" ;