Law:

Section:

Section 4 of the Income-tax Act, 1961, read with sections 2 and 8 of the Indian Tolls Act, 1851 - Income - Assessable as - Assessment years 1977-78 and 1978-79 - Assessee was a State Corporation engaged in construction of bridges, roads and similar works - Whether amount collected by it on account of tolls on bridges as authorised by State Government under section 2 of Indian Tolls Act, 1851 could be treated as income of assessee - Held, no FACTS The assessee, a State Government Corporation, was engaged in the business of construction of bridges, approach roads and other types of civil works. During the accounting periods relevant to the assessment years 1977-78 and 1978-79, the assessee collected certain amount as toll in respect of the bridges of the State Government. These collections of toll had been made by the assessee pursuant to an authorisation as contained in a letter dated 3-5-197S of the State Government. On the basis of aforesaid letter where it was mentioned that the tolls collected by the assessee would be its income, the ITO held that the aforesaid collections were the income of the assessee and assessed it accordingly. On second appeal, the Tribunal after examining the provisions of the Indian Tolls Act, 1851, various communications between the State Government and the Corporation, notifications of the State Government and reports of the directors of the Corporation, etc., held that the tolls collected by the assessee were not its income but constituted state revenues. On reference at the instance of the revenue, the revenue contended that the letter dated 3-5-1975 created an overriding title in favour of the assessee but the assessee contended that it had acted only as an agent of the Government for collection of tolls. HELD The indications made in the letter of the State Government to the effect that the tolls collected would be considered to be the income of the assessee per se could not be of much consequence in determining the issue involved since by now it is well settled that the name given to a transaction or receipt by the parties concerned does not necessarily decide the nature thereof. Despite any such name given to a transaction or…

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