COMMISSIONER OF INCOME TAX Vs. MEERUT BIRI FACTORY

JUDGEMENT

(1.) PURSUANT to the order passed by this Court under S. 256(2) of the IT Act, 1961 (briefly, the Act), the Tribunal referred the following questions for opinion of this Court :

(2.) SO far as question No. 1 arising out of ITA Nos. 113, 114 and 115 of 1979 is concerned, learned Standing Counsel states that the same is covered by the decision of Supreme Court in CIT vs. Bijli Cotton Mills (P) Ltd. (1979) 8 CTR (SC) 1 : (1979) 116 ITR 60 (SC) : TC 13R.297, in which the Court held that when the customers or brokers paid the amounts to the respondent earmarking them for "Dharmada", those payments were validly earmarked for charity; in other words, right from the inception those amounts were received and held by the respondent under an obligation to spend them for charitable purposes only, with the result that those amounts were not its trading receipts; and therefore, they could not be brought to tax. Similar view was taken by the Tribunal. Following the said authority we answer the question in the affirmative i.e. in favour of the assessee and against the Revenue. Question No. 1 arising from ITA Nos. 116 and 117 is identical to the aforementioned question which too is answered in the affirmative i.e. in favour of the assessee and against the Revenue on the basis of the aforementioned Supreme Court decision.