Law:

Section:

Section 254 of the I ncome-tax Act, 1961 - Appellate tribunal - Orders of - Assessee - Firm had received certain money from its customers for purpose of a charity and claimed it to be not taxable as such - ITO disallowed claim - on appeal AAC upheldITO's order observing that for earlier assessment year he (AAC) had held that from amounts collected for charity, assessee had paid large amounts to personal friends of its partners and, therefore, they were not used for purposes of charity - O n second appeal, tribunal, without investigating into finding of AAC as regards misutilisation of said funds, accepted assessee's claim and reversed AAC' s order -Whether matter was to be referred back to tribunal for fresh consideration - H eld, yes Facts In respect of the assessment year 1971-72, the assessee-firm claimed a certain sum as not taxable on the ground that this sum was collected from its customers for the purpose of a charity. The ITO disallowed the claim and the amount was added to the assessee's income. On appeal, the AAC also upheld the ITO's order observing that in the earlier year it had been pointed out by him (the AAC) that, in fact, large amounts had been paid by the assessee to personal friends of the partners which was evidence in itself that there was no claim upon the assessee that was legally binding in the matter of disposal of the so-called charity collections. On second appeal, the Tribunal, however, held, without referring to the above finding of the AAC, that the said money collected for charity was not part of the Income of the assessee, and, therefore, no tax could be levied thereon. On reference: Held The mere fact that money had been collected supposedly for charity would not mean that such amount did not become part of the income. The question would be as to whether income had accrued. Income does result, whatever be the label under which money is collected, if what is collected is treated as income. It is not the label that decides the question, but the character of the money collected. If what is supposedly collected as charity, by using that label, is in fact utilised by the assessee for purposes other than charity, then such…

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