JUDGMENT Gulati, J. - This is a reference under section 256(1) of the Income-tax Act, 1961 (hereinafter referred to as the Act).
2. The assessee is a registered partnership firm. It is engaged in the business of commission agency. The assessment year involved is 1969-70. During the relevant previous year the assessee charged from its customers a customery levy called "Dharmada" and credited it in the Ramji and Gaushala account. The total amount to collected was Rs. 10,593/-. Income-tax Officer held that the amount in question was a trading receipt and, as such, a part of the profits of the assessee firm. He accordingly included it in the total income and levied tax thereon. The assessees appeal before the Appellate Assistant Commissioner of Income-tax failed. On second appeal the Income-tax Tribunal has allowed the assessees claim holding that Dharmada has been charged from the customers under a custom prevalent in Uttar Pradesh and relying upon a decision of this Court in Bijli Cotton Mills Ltd. vs. Commissioner of Income-tax (76 I.T.R. 194) held that the amount in question was not a revenue receipt. The Commissioner is aggrieved and at his instance the following question of law has been referred to us :-
"Whether on the facts and in the circumstances of the case, Dharmada receipts of Rs. 10,593/- could be included in the total income of the assessee relating to assessment year 1968-69 ?"
3. In Thakur Das Shyam Sunder vs. Addl. Commissioner of Income-tax (93) I.T.R. 27 a Full Bench of this Court after reviewing all the case law on the point has held that if Dharmada is collected for purposes of charity in accordance with customs its disposal is equally governed by the obligation created by that custom, i.e. the amount has to be sent only for some charitable purposes. It has been further held that merely because the charities are not specified and the discretion has been left with the assessee to spend the money according to his own choice also does not militate against his holding the money in trust for charitable purposes. In other words, it has been held that where a customery levy is collected by an assessee from its customers earmarked for being spent for charitable purposes the receipt never partakes of the nature of income. The assessee holds the amount in trust for charity and his position is that of a trustee.
4. The facts of the present case are completely analogous to the facts of the case before the Full Bench. Here also the Tribunal has found that the Dharmada is collected under custom prevalent in Uttar Pradesh. This finding of the Tribunal has not been challenged by the Department. In the circumstances it was to be held that the Dharamada collection was not the income of the assessee and, as such, no tax leviable upon it.
5. The case of Sinclaire Murray & Co. vs. Commissioner of Income-tax, Calcutta (1975 U.P. Tax Cases 159) is distinguishable. There an assessee charged sales tax from its customers. The amount of sales-tax so collected was neither paid to the Government nor refunded to the customers and the Supreme Court on these facts held that the sales-tax realised was a part of the trading receipt and any surplus left in that account was liable to be treated as income liable to tax. Now in that case the sales tax was charged alongwith the sale price without there being any obligation to pay it to the Government. So far as the customers were concerned the sales-tax was a part of that sale price. If the assessee paid some amount out of it to the Government or refunded it to the customers it would be an out-going liable to be deducted out of total income but any surplus left would clearly be a revenue receipt. The assessee was not holding the amount of sales-tax realised in trust for any body.
6. For the reasons stated above, we answer the question in the negative in favour of the assessee and against the Department. The assessee is entitled to costs which we assess at Rs. 200/-.