COMMISSIONER OF INCOME TAX Vs. CHUDGAR RANCHHODLAL JETHALAL

JUDGEMENT

(1.) THE following question is referred to us for our opinion:

(2.) A few facts need be noticed in order to appreciate in proper perspective the contentions urged in respect of the above question. The assessee is a registered firm of six partners having business in cotton with head office at Ahmedabad and branches, amongst various places, at Murkhed within Aurangabad District in Maharashtra. In this branch the assessee used to collect along with the sale price of cotton a sum termed "laga receipt" at the rate of 8 annas per Rs. 100 of the price of the cotton sold through them. A contention was advanced before the ITO that the amount of laga receipt collected by the assessee was not liable to tax as it was held by way of trust for application to charitable purposes. The ITO was not impressed by this contention and added the amount of laga receipt in each of the years to the assessee's income. Accordingly, for the asst. yrs. 1967 68, 1968 69 and 1969 70, Rs. 3,976, Rs. 5,801 and Rs. 9,408, respectively, were added to the income of the assessee.

(3.) AT the instance of the Department, an appeal was preferred before the Tribunal. It was contended in the course of hearing of the said appeal on behalf of the Revenue that the assessee retained dominion over the amount collected by it, and no trust was created and, therefore it amounted to the assessee's income. The Tribunal rejected this contention of the Department and confirmed the order passed by the AAC after following the decision of a Full Bench of the Allahabad High Court in Thakur Das Shyam Sunder vs. Addl. CIT ( 1974) 93 1TR 27. The Tribunal, after setting out the facts of the case before the Full Bench of the Allahabad High Court, quoted the following passage from the said decision (p.35):