M/S Lilasons Breweries Ltd. Bhopal v. Commissioner Of Income Tax, Bhopal

09/04/2014 Shri A.P.Shrivastava, learned counsel for the appellant.Shri Sanjay Lal, learned counsel for the respondent. This reference has been admitted for considering the following substantial question of law : “Whether on the facts and circumstances of the case, the Income Tax Appellate Tribunal was justified in holding that the sum of Rs.1,95,144/- received from the various customers through bills and credited to the Dharmada Account was in the nature of revenue receipt and, hence liable to be taxed as the income of the Assessee during the assessment year 1987-88 ?” The reference has been made by the revenue. The Assessee M/s Lilasons Breweries Ltd. (hereinafter referred to as the 'Assessee') is a limited company. During the assessment year 1987-88, it had collected a sum of `1,95,144/- from various customers by way of Dharmada. It is said that the Assessee maintained a separate account known as Dharmda Account, in which, the amount so realized from the customers on the basis of the bill prepared was credited. It was the case of the Assessee that the Dharmada was charged at the rate of `20/- per `1,000/- of the bill amount. The Assessing Officer, the Commissioner Appeals and the Tribunal found that the amount has been collected and kept in a separate account. It disallowed the exemption mainly on the ground that the Assessee has failed to prove that the amount was used for charitable purpose. It was held that this amount as Dharmda was paid by the customers voluntarily but as the Assessee failed to prove utilization of the amount for Dharmda, the exemption has been disallowed. It is found that with regard to the same Assessee, for the previous years also, certain amounts were claimed on the same account and it has been rejected. Accordingly, all the authorities have rejected the exemption and included the amount as income of the Assessee for the year in question. The Assessee filed an application under Section 256 (1) of the Income Tax Act and the reference has been made. Even though, learned counsel for the Assessee placing reliance on a judgment of the Supreme Court in the case of Commissioner of Income Tax Vs. Bijli Cotton Mills (P) Limited (1979) 116 ITR 16 SC, emphasized that the amount collected towards Dharmada cannot be added to the income of the Assessee for the purpose taxation and the findings recorded by the authorities are not correct, records indicate that taking note of various factors and an earlier order of a Division Bench of this Court deciding the issue in the case of the present Assessee M/s Lilasons Breweries Ltd. itself in M.C.C.No.668/1993, a question of law was framed for reconsideration by a Full Bench and a Division Bench of this Court on 6.10.2010 formulated the following question : “Whether the reference in MCC no.668/93 decided by the Division Bench on 16.7.1996 in the case of Lila sons Breweries Pvt. Limited, Bhopal Vs. Commissioner of Income Tax, Bhopal is a good law in the light of the pronouncement of the Apex Court in Commissioner of Income Tax Vs. Bijli Cotton Mills (P) Limited (1979) 116 ITR 60 (SC) ?” I.T.R.No.38/1995 This question was referred to the Full Bench and a detailed order has been passed by the Full Bench on 7.3.2013. “Whether the reference in MCC no.668/93 decided by the Division Bench on 16.7.1996 in the case of Lila sons Breweries Pvt. Limited, Bhopal Vs. Commissioner of Income Tax, Bhopal is a good law in the light of the pronouncement of the Apex Court in Commissioner of Income Tax Vs. Bijli Cotton Mills (P) Limited (1979) 116 ITR 60 (SC) ?” I.T.R.No.38/1995 This question was referred to the Full Bench and a detailed order has been passed by the Full Bench on 7.3.2013. The Full Bench in it's order found that in the light of the law laid down by the Supreme Court in the case of Bijli Cotton Mills (Supra), if the amount is collected as Dharmada and deposited in a separate account, it is not a revenue receipt, the same is, therefore, not liable to be included in the income of the Assessee i.e. chargeable to tax. However, in the light of the order passed on 6.10.2010 in the case of the present Assessee M/s Lilasons Breweries Ltd. itself in M.C.C.No.668/1993, the Full Bench found that as far as utilization of the amount for a particular cause i.e. issue of Dharmada is concerned, it is a finding of fact and if the Assessing Officer finds that even though, the amount is collected for a particular purpose and it is not used for the purpose, it was collected, the Full Bench held that it can be assessed for tax, the Hon'ble Bench found that there is no conflict in the matter. The Full Bench answered the reference made by holding that there is no conflict in the decision rendered by a Division Bench of this Court earlier in M.C.C.No.668/1993 on 16.7.1996 (M/s Lilasons Breweries Ltd.) and the judgment in the case of Bijli Cotton Mills (Supra) and directed for placing the matter before this Court for reconsideration. Accordingly, the question now is, as to whether, the addition made by the revenue i.e. a sum of `1,95,144/- as income said to have been collected by the Assessee by way of Dharmada is proper or not ? In the light of the law laid down by the Supreme Court in the case of Bijli Cotton Mills (Supra), there is no iota of dispute that an amount if collected for Dharmada and is kept in a separate account is not liable for payment of tax. However, an actual utilization of the amount towards Dharmada is a question to be decided in each case in accordance with the facts and circumstances and if on enquiry, it is found that the amount is not used for the purpose it was collected, that the amount become income of the assessee for the year in question. As far as the present case is concerned, it is seen that the Assessing Officer in his assessment order Annexure-A, the Appellate Authority in his appellate order Annexure-B and the Tribunal in it's order Annexure-C have recorded concurrent findings to say that even though the Assessee is shown to have collected the amount towards Dharmada, but it was never used for the purpose, for which, it was collected and, therefore, the amount has been added in the income of the Assessee. It has been found by the Assessing Officer that for the previous year also, the same system was followed and the amount was disallowed and added to the income of the Assessee. It is held that in the light of the previous order, the decision is taken. The tribunal evaluated the entire matter and came to the conclusion that the Assessee has collected the amount and the utilization of the amount, for the purpose, it was collected, is not established and disallowed the amount. Infact, the Assessing Officer, Commissioner Appeals and the Tribunal have recorded concurrent findings, i.e. even though the amount is collected for the purpose of Dharmada but the same is not utilized for the nd M/s Lilasons Breweries Ltd. Bhopal Vs. Commissioner of Income Tax, Bhopal purpose, for which it is collected and, therefore, the amount is to be added in the income of the Assessee. The tribunal evaluated the entire matter and came to the conclusion that the Assessee has collected the amount and the utilization of the amount, for the purpose, it was collected, is not established and disallowed the amount. Infact, the Assessing Officer, Commissioner Appeals and the Tribunal have recorded concurrent findings, i.e. even though the amount is collected for the purpose of Dharmada but the same is not utilized for the nd M/s Lilasons Breweries Ltd. Bhopal Vs. Commissioner of Income Tax, Bhopal purpose, for which it is collected and, therefore, the amount is to be added in the income of the Assessee. A finding of fact based on due appreciation of the material available on record is made by all the authorities and we see no reason to interfere with such concurrent findings. That apart, the findings, concurrent in nature, are recorded by all the three authorities, based on similar considerations made for the same Assessee for the previous two assessment years. Accordingly, we answer the question framed by holding that even though the amount of `1,95,144/- is said to have been received by the Assessee on account of Dharmada but as the said amount was not utilized for the purpose of charity or the purpose, for which it was collected, the Assessing Officer has not committed any error in adding it in the income of the Assessee. Accordingly, the reference is answered against the Assessee and is disposed of. (Rajendra Menon) (Anil Sharma) Judge Judge