JUDGMENT R.L. Gulati, J.
1. Under Section 256(1) of the Income-tax Act, 1961, the Income-tax Appellate Tribunal, Delhi Bench "A", has submitted this statement of the case along with the following question of law for the opinion of this court:
"Whether, on the facts and in the circumstances of the case, the sum of Rs. 11,159 received as dharamshala receipts could be brought to tax under the provisions of the Income-tax Act, 1961 ?"
2. The assessee is a registered partnership firm. It is engaged in the business of manufacture and sale of bidis. During the previous year ending on October 24, 1965, relevant to the assessment year 1966-67, the assessee charged from its customers certain amount, which was credited to a separate account called dharamshala account. The charge was at the rate of certain percentage of the sale price of bidis and was separately shown in the sale vouchers issued to the customers. The total collection during the year amounted to Rs. 11,159. The Income-tax Officer called upon the assessee to show as to why the amount in question be not treated as its income. The assessee in a written reply stated that the amount in question represented the collections made for the construction of a dharamshala and, as such, was not a part of its sales. The Income-tax Officer found that there was no trust for the construction of dharamshala nor had any part of the collections been spent by the assessee during the relevant previous year on the construction of the dharamshala. He, accordingly, held the amount to be a part of the assessee's income and levied tax thereon. On appeal, the Appellate Assistant Commissioner of Income-tax upheld the order of the Income-tax Officer holding that since the collections were a part of the sale proceeds of bidis, the amount represented the income of the assessee and the fact that it was subsequently set apart for the construction of the dharamshala did not affect the tax liability of the assessee. On second appeal, the Income-tax Appellate Tribunal did not agree with the view taken by the income-tax authorities. In its opinion the money which had been realised by the assessee on account of dharamshala was the money which did not have any profit-making quality about it. It was the money which in the business sense was the money of the customers and of nobody else. The Tribunal, accordingly, allowed the assessee's appeal and held that the amount in question was not taxable as the assessee's income. The Commissioner of Income-tax is aggrieved and has brought this reference before us.
3. Now, it is clear that the amount in question was realised by the assessee in its capacity as a trader inasmuch as it was charged from the customers at a percentage of the sale price. The customers from whom the collection was made had no control over its disposal nor was there any legal obligation upon the assessee to spend it in a particular way. From the customers' point of view it was a part of the sale price of bidis. The view of the Tribunal that the money belonged to the customers is not correct. It was the assessee's money and was a part of the sale price of bidis and, as such, would go into the computation of the income arising from business. The fact that the assessee set it apart for the construction of the dharamshala, which may be said to be a charitable purpose, does not in any way alter the position. The decisive factor in such cases is not the particular use to which a receipt is put but the nature of such receipt. Once it is found that the receipt was of an income nature to begin with, subsequent disposal of the income will not exempt it from tax. Tax becomes leviable at the point when income accrues or is received. It is true that a person in the course of business may receive a certain amount which through an overriding title does not vest in him at any time, but is collected by him for and on behalf of some other person or institution in whom the ownership vests. In such cases the receipt is not income. But, if the amount is received by the assessee in his own right, its subsequent use or its treatment in the books of accounts will not alter its true nature. See Commissioner of Income-tax v. Shoorji Vallabhdas and Co. [1962] 461 ITR 144 (SC). The decision of the Supreme Court in Commissioner of Income-tax v. Thakardas Bhargava [I960] 40 ITR 301 (SC) sets out the principle applicable in cases like the present one. In that case an advocate accepted a professional engagement on the understanding that his client would pay him a sum of Rs. 40,000 for a public charitable trust which he would create. He was paid Rs. 32,000 after the trial and he created a trust of that amount after executing a trust deed. The Supreme Court held that the sum of Rs. 32,000 was the professional income of the advocate and that the desire on his part to create a trust out of the money paid to him created no trust nor did it give rise to any legally enforceable obligation. We have already noticed above that there was no trust in existence under which the assessee was obliged to hold the money so collected on trust for the purpose of spending it on the construction of the dharamshala. It was merely Ms intention to do so, but there was no legal obligation upon him.
4. Another set of cases, which would illustrate the point, deal with the collection of sales tax by dealers. Sales tax is a liability imposed upon a dealer in respect of his transactions of sale. If a dealer collects sales tax from a customer, whether he is authorised to do so or not under the Act, the tax so collected is a part of sale price and goes into the computation of his business profits. Of course, any tax paid to the Government has to b3 allowed to him as a deduction. The fact that the sales tax is separately charged in the sale vouchers and is credited to a separate account does not make any difference. See Chowringhee Sales Bureau P. Ltd. v. Commissioner of Income-tax [1973] 87 ITR 542 (SC). A similar view has been taken by this court in Commissioner of Income-tax v. Sheo Nath Prasad Hari Kishan [1974] 93 ITR 282 (All).
5. Then there are cases where a dealer charges from his customer some additional amount over and above the price of the goods sold on account of charity or dharmadha. A Full Bench of this court in Thakur Das Shyam Sunder v. Additional Commissioner of Income-tax [1974] 93 ITR 27 (All) [FB] has considered all these cases. It has been held by the Full Bench that if the collections are made on behalf of a trust or a fund and the person making the collections is obliged as a matter of law or on account of a custom to spend such collections for charitable purpose, such collections shall not be regarded as income and would be exempt from tax. In the case before the Full Bench it was found that the assessee had maintained a fund for charities and had made certain customary levies from its customers. It was held that as a result of the custom there was a legal obligation upon the assessee to spend the amount so collected on charities and, as such, . the collections could not be taxed as his income. Such is not the case here. Neither there was any trust nor any other legal obligation under which the assessee was obliged to spend the collections on the construction of dharamshala. The collections were not made on account of any customary, levy which may be said to have created a trust or a fund.
6. We are, therefore, of the opinion that the view taken by the Tribunal is not correct. We, accordingly, answer the question in the negative in favour of the department and against the assessee. The department is entitled to the costs which we assess at Rs. 200.