M.R.SHARMA,J. - (1.) THE assessee is a registered firm consisting of four partners with equal shares in the profits and losses of the firm. The main sources of income of the firm are interest and income from commission agency. It deals in foodgrains, cotton seeds and other commodities of like nature. The firm carried on business at Abohar, Hissar and Malaut under three different names. For the assessment year 1969-70, the Income-tax Officer assessed the firm on a total income of Rs. 4,42,893 as against the returned income of Rs. 3,69,316. The assessee had claimed an allowance of Rs. 28,342 on account of expenditure incurred for maintaining a kitchen each at Abohar, Hissar and Malaut for serving meals to the constituents. The Income-tax Officer, acting under Section 37 (2a) of the Income-tax Act, 1961 (hereinafter referred to as "the Act"), divided the period covered by the relevant previous year in two parts and allowed Rs. 4,071 for the period from May 22, 1967, to September 30, 1967, and Rs. 1,662 for the period from October 1, 1967, to May 28, 1968. In all, an allowance of Rs. 5,733 was made and the balance amount of Rs. 22,609 was disallowed.
(2.) THE assessee also collected Rs. 38,063 which consisted of two items: (i) Rs. 22,518 received in Gaushala account, (ii) Rs. 15,545 received in Dharmada account. The Income-tax Officer also added back this amount of Rs. 38,063 towards the income of the assessee.
(3.) ON appeal, the Appellate Assistant Commissioner reduced the disallowance of kitchen expenses to Rs. 20,841 and gave full allowance for the sum of Rs. 38,063 received by the assessee in Gaushala and Dharmada accounts on the strength of the judgment rendered by the Allahabad High Court in Bijli Cotton Mills Ltd. v. Commissioner of Income-tax [1970] 76 ITR 194 (All), and held that this amount did not represent the income of the assessee.;