Law:

Section:

Section 28(i) of the income-tax act, 1961-Business income-Assessee-company's articles of association specifically provided for constitution of a fund for carrying out certain specified charities-payments made by customers to such fund were not voluntary-Amounts collected were kept separately and not shown as trading receipts-Whether such charity collections could be treated as assessee's trading receipts-held, on facts, No Facts The assessee-company carried on business in chit funds and at the time of auctioning the chit it invariably collected a fixed amount and credited it to charity account in its books of account. As per its articles of association, the amount so collected had to be used for charitable purposes specified therein. The amount collected as charity had been separately shown in the accounts and the amounts spent on charitable objects were debited to the same account. The amounts paid as charity by the successful bidders for the chit amount were not voluntary but were uniformly paid by all such successful bidders. The Tribunal held that the charity collections were trading receipts and liable to tax. On reference: Held The articles of association of the assessee-company had specifically provided for the constitution of a fund for the purpose of carrying out certain charities. When the customer paid towards charity, he was well aware of the purpose for which the amount paid by him would be utilised. Therefore, the customers paying the amount as charity treated the assessee as a trustee. No doubt, the payments made by the customers were not voluntary but that did not mean that the amounts paid were the trading receipts of the assessee. Further, even the amounts spent for charities had been debited against the collections which had been kept separately and were not shown as trading receipts. Accordingly, the impugned charity collections could not be treated as trading receipts of the assessee. Case review CIT v. Bijli Cotton Mills (P.) Ltd. [1979] 116 ITR 60 (SC) followed. Thakur Das Shyam Sunder v. Addl. CIT [1974] 93 ITR 27 (All.) (FB), CIT v. Gheru Lal Bal Chand [1978] 111 ITR 134 (Punj. & Har.) and CIT v. Coimbatore Cotton Mills Ltd.[1983]…

Deprecated: trim(): Passing null to parameter #1 ($string) of type string is deprecated in /home/digixyei/sldsystempk.com/view/master-layout/view_case.php on line 492