CHUNNILAL ONKARLAL HUF Vs. COMMISSIONER OF INCOME TAX

JUDGEMENT

(1.) BY this reference under Section 256(1) of the I.T. Act, 1961 (hereinafter referred to as "the Act"), the Income-tax Appellate Tribunal, Indore Bench, Indore, has referred the following question of law for the opinion of this court :

(2.) THE facts giving rise to this reference as set out in the statement of the case are as follows : While examining the books of accounts of the assessee for the assessment year 1973-74 relevant to the accounting period ending Diwali, 1972, the ITO found that in the balance-sheet there was an account in the name and style of Dharmada, THE opening balance of this account was Rs. 34,245 and the closing balance was shown at Rs. 42,127.

(3.) SHRI G.M. Chaphekar, learned counsel for the assessee, contended that the Tribunal committed an error of law in holding that the amounts in question were the income of the assessee. He contended that the amounts in question were not referable to any business activity of the assessee. The amounts in question were initially paid by the Hukumchand Mills Ltd. to the different institutions out of the amount received by the mills as Dharmada and institutions, in their turn, made over a certain percentage of the amount received by them from the mills to the assessee for being spent by the assessee for charitable purposes and the amounts were specifically received by the assessee for that purpose and were credited in a separate Dharmada account and the assessee held the said amounts in trust for utilising the same for charitable purposes and it cannot be said that the said amounts were business receipts of the assessee includible in the income of the assessee. He placed reliance upon a decision of the Supreme Court in CIT v. Bijli Cotton Mills (P.) Ltd. [1979] 116 ITR 60. The learned counsel for the revenue supported the order of the Tribunal.