Pr. Commissioner Of Income Tax, Shimla v. M/S H.p. Excise & Taxation Technical Service Agency

IN THE HIGH COURT OF HIMACHAL PRADESH, SHIMLA. ITA No. 85 of 2018 alongwithconnected mattes. Judgment reserved on 28.11.2018 Date of decision: December 07, 2018 (1) ITA No. 85/2018. Pr. Commissioner of Income Tax, Shimla. ......Appellant.VersusM/s H.P. Excise & Taxation Technical Service Agency .…Respondent.(2) ITA No. 86/2018.Pr. Commissioner of Income Tax, Shimla. ......Appellant.VersusM/s H.P. Excise & Taxation Technical Service Agency .…Respondent.(3) ITA No. 87/2018.Pr. Commissioner of Income Tax, Shimla. ......Appellant.VersusM/s H.P. Excise & Taxation Technical Service Agency .…Respondent.(4) ITA No. 91/2018.Pr. Commissioner of Income Tax, Shimla. ......Appellant.VersusM/s H.P. Excise & Taxation Technical Service Agency .…Respondent. (5) ITA No. 92/2018. Pr. Commissioner of Income Tax, Shimla. ......Appellant. Versus M/s H.P. Excise & Taxation Technical Service Agency .…Respondent. (6) ITA No. 93/2018. Pr. Commissioner of Income Tax, Shimla. ......Appellant. Versus M/s H.P. Excise & Taxation Technical Service Agency .…Respondent. Coram: The Hon’ble Mr. Justice Surya Kant, Chief Justice.The Hon’ble Mr. Justice Ajay Mohan Goel, Judge.Whether approved for reporting?[1] Yes. For the appellant(s):Mr. Vinay Kuthiala, Sr. Advocate withMr. Diwan Singh Negi, Advocate. For the respondent(s):M/s Vishal Mohan, Aditya Sood and Praveen Sharma, Advocates. Surya Kant, Chief Justice. This order shall dispose of the above captioned Appeals preferred by the Revenue, challenging a commonorder dated 30.11.2017, passed by the Income Tax AppellateTribunal, Division Bench ‘A’ Chandigarh (hereinafter referred to as ‘the Tribunal’), whereby the Tribunal has allowed the1 Whether the reporters of Local Papers may be allowed to see the judgment? Assessee’s appeals in part whereas Cross-Appeals filed by the Revenue have been dismissed in respect of the AssessmentYears 2007-2008 to 2011-2012 and 2013-2014. 2.The substantial question of law sought to be raised in these Appeals is as follows: “Whether on the facts and in the circumstances of thecase, the ITAT is right in law in holding that the incomeof the assessee, which was paid to the Govt. as per the byelaws of the assessee society, is not taxable, inspite of thefact that the assessee had debited such payment to itsP&L Account and had claimed it as a revenueexpenditure though the assessee is not registered u/s12AA of the Act and nor its income is exempt under anyof the provisions of the Act” 3.Before adverting to the question formulated above, it would be useful to give a brief synopsis of the facts. TheAssessee-Society, hereinafter referred to as ‘the respondent-Assessee’, was registered under the Societies Registration Act, 1860 (hereinafter referred to as ‘the 1860 Act’) on 27.8.2002.The object of the Society as incorporated in its Memorandum ofAssociation, inter alia, includes: “To facilitate the general public dealers carryinggoods and crossing the barriers established by the StateGovt. and also to diffuse awareness amongst thegeneral public/dealers about the sales tax laws. To utilize the information technology for deepersystematic reforms in tax administration by creation ofa separate entity properly geared to provide supportiverole to the Department in creation of data bank (dealerwise/commodity wise, Circle wise and Barrier wise), intransmission of information and establishment of clientserver environment. To back up the computerization requirement ofthe Department of Excise & Taxation Department andfor this purpose develop infrastructure therefore both interms of software as well as hardware. To facilitate adoption of ST-XXVI-A form in acomputer friendly format and generate funds byrendering this services to the dealers so as to make it aself sustaining activity. To utilize the information technology for deepersystematic reforms in tax administration by creation ofa separate entity properly geared to provide supportiverole to the Department in creation of data bank (dealerwise/commodity wise, Circle wise and Barrier wise), intransmission of information and establishment of clientserver environment. To back up the computerization requirement ofthe Department of Excise & Taxation Department andfor this purpose develop infrastructure therefore both interms of software as well as hardware. To facilitate adoption of ST-XXVI-A form in acomputer friendly format and generate funds byrendering this services to the dealers so as to make it aself sustaining activity. To carry out all such activities as are envisagedin section 20 of the Society Registration Act 1860, whichare in the interest of society. To derive optimum benefits from fully networkedcomputerization in terms of providing computerizedfunctioning of Multi-purpose Barriers, issuance ofcomputerized receipts, on line networking to facilitatesharing of data between all Offices/Assessing Authorities in the Department and develop other relatedinfrastructures incidental thereto. The Society shall for this purpose, generatereceipts in lieu of providing these services at the Multi-purposes Barriers, and utilized the same to fulfill theobjectives of the Society. And in furtherance of the above objectives: (i)Develop, create, manage and maintaininfrastructure for providing such services.” 4.The primary funds of the respondent-Assesseewere to be augmented by collecting the statutory levy underSection 34 of the Himachal Pradesh VAT Act, 2005(hereinafter referred to as ‘the VAT Act, 2005’), whereunderthe State Government was empowered to establish check-post(s) or erect barriers with a view to preventing or checkingevasion of tax under the VAT Act, 2005. Sub-Section (2) ofSection 34 of the Act requires the owner or person in-charge ofa goods carriage or vessel to carry with him the goods carriagerecord, a trip sheet or a log-book and tax invoice diary as wellas a delivery note containing such particulars as may beprescribed and to produce the same before the officer in-chargeof a check-post or barrier and to submit in triplicate a ‘Declaration’ containing particulars of the goods in theprescribed form. Initially, the cost of ‘Declaration’, as per Rulesset-up by the Government of Himachal Pradesh was Rs.5/-.The respondent-Assessee, as may be noticed from the object ofits formulation, was entrusted with the responsibility ofcollection of VAT at the above-stated prescribed rate and uponcollection of the same, Re.1/- was to be deposited immediatelyin the Government Treasury and thereafter, in terms of Bye-Law 10.2 of the Society, the remaining amount had to betransferred to the State Government in ‘Sales Tax’ Head, aftermeeting out the expenditure incurred by the Society. 5.It would also be relevant to reproduce at this stagethe extracts of ST-XXVI-A as prescribed in Clause 8 of theBye-Laws of the Society read with Clause 10.2 thereof, whichare to the following effect: “8. ACCOUNT OF ST XXVI-A FORM 1.The computer generated STXXVI-A form bearing serialnumber shall be issued at the Barrier(s) and the E.T.O/In chargeBarrier shall maintain proper account of the said forms under thesupervision of concerned Assistant Excise and TaxationCommissioner of the District. 7 2.E.T.O./In charge barrier will deposit Rs. 1/- per form (outof the amount of Rs. 5/- per form as at present or as per ratesprescribed from time to time in respect of computerized ST-XXVI-Aform/services rendered)/ in the relevant receipt head of theDepartment as per practice hitherto fore. 3.The balance amount after depositing Rs. 1/- per form willbe credited to the Funds of the Society and deposited on day to daybasis in a Saving Bank Account to be opened in respect of eachbarrier(s) with the nearest Scheduled Bank/Cooperative Bank. 7 2.E.T.O./In charge barrier will deposit Rs. 1/- per form (outof the amount of Rs. 5/- per form as at present or as per ratesprescribed from time to time in respect of computerized ST-XXVI-Aform/services rendered)/ in the relevant receipt head of theDepartment as per practice hitherto fore. 3.The balance amount after depositing Rs. 1/- per form willbe credited to the Funds of the Society and deposited on day to daybasis in a Saving Bank Account to be opened in respect of eachbarrier(s) with the nearest Scheduled Bank/Cooperative Bank. 4.Keeping in view the requirement of the funds, theExecutive Committee can authorize the Assistant Excise andTaxation Officer/In charge Barrier concerned to invest the amountin excess of their requirement in Short Term deposit lest there beany loss of interest. 5.Notwithstanding any thing contained above, the amountcollected shall be available for being utilized in the entire State forthe purposes set out and as per approval of the Governing Body. xxxxxxxxxxxxxxxxxxxxxx 10.2After meeting the expenses towards the objectives for theapproved purposes listed above and accounting for the liabilitiesaccrued and projected, the surplus amount, if any, shall bedeposited in the receipt head 0040 Sales Tax on yearly basis onapproval of the Governing Body.” 6.The respondent-Assessee, thus, has been maintaining all such multipurpose barriers in the State ofHimachal Pradesh from where all goods get in or get out of the State and which are required to be declared at themultipurpose barrier as per Section 34 of the VAT Act, 2005 read with Rules 61 and 62 of Himachal Pradesh VAT Rules,2005 (hereinafter referred to as ‘the VAT Rules, 2005’). A formbearing No. ST-XXVI-A was to be issued to the persondeclaring the goods at a cost of Rs.5/- per form till the levy wasfurther enhanced to Rs.10/- w.e.f. 18.5.2009. 7. As noticed above, in terms of Clause 8.2 of theBye-Laws, the respondent-Assessee used to deposit Re.1/- per‘Declaration’ with the Government Treasury out of the Rs.5/-till the year 2009 which was later enhanced to Rs.2/- after thetax amount was increased from Rs.5/- to Rs.10/- per‘Declaration’. It is also a matter of record that the respondent-Assessee applied for registration under Section 12AA of theIncome Tax Act 1961 (hereinafter referred to as ‘the IT Act1961’) to the Commissioner of Income Tax, Shimla, whorejected the application on 29.11.2013 holding that theactivities carried out by the respondent-Assessee did notbenefit the general public rather those were meant to providethe infrastructural facilities to the Excise and TaxationDepartment of Government of Himachal Pradesh. 8.The respondent-Assessee has, in its Income Expenditure Statements, been showing the surplus of incomeover expenditure. The Assessing Officer, therefore, issuednotice under Section 148 read with Section 147 of the ITAct,1961 on 8.1.2014 for taxing the excess of the income overexpenditure, the amount ranging from Rs.64,20,238/-(Assessment Years 2007-2008) to Rs.1,29,37,365/- (AssessmentYears 2010-2011) and supplied the copy of reasons recorded forthe re-opening of the cases. 9.The respondent-Assessee contested the notice(s)and its precise case was that no surplus income accrued to itas all the surplus income was payable to the StateGovernment and therefore, it had earned no taxable income.The Assessing Officer turned down the plea and ‘excess incomeover expenditure’ was computed for the purpose of respondent-Assessee’s tax liability. 10.The respondent-Assessee filed Appeal before theCommissioner, Income Tax (Appeals), who after going throughits activities held that 20% of the tax amount collected andpaid to the State Government could not be treated as ‘income’ 9.The respondent-Assessee contested the notice(s)and its precise case was that no surplus income accrued to itas all the surplus income was payable to the StateGovernment and therefore, it had earned no taxable income.The Assessing Officer turned down the plea and ‘excess incomeover expenditure’ was computed for the purpose of respondent-Assessee’s tax liability. 10.The respondent-Assessee filed Appeal before theCommissioner, Income Tax (Appeals), who after going throughits activities held that 20% of the tax amount collected andpaid to the State Government could not be treated as ‘income’ of the respondent-Assessee, as it was paid directly to theGovernment Treasury. As regard to the remaining 80% of thetax collection, it was held to be a part of character of income,as according to the Commissioner, Income Tax (Appeals), therespondent-Assessee had the freedom to utilize the saidamount for the objective(s) of the Society. 11.The aggrieved Assessee filed appeals before theAppellate Tribunal against confirmation of 80% of its collectionas taxable income whereas the Revenue also filed Cross-Appeals against the deletion of 20% of the fee amount. TheTribunal has, vide order under appeals, dismissed theRevenues’ Appeals whereas that of the respondent-Assessee’shave been allowed in part. 12.The Tribunal has gone in extenso into theMemorandum of Association of the respondent-Assessee aswell as the details of its background, functional requirements,operation and model, accounting structure and ultimatepayment to the exchequer of the Government. It also wentinto the composition of the Governing Body, organizationalstructure, funds and operation of the accounts of the respondent-Assessee, as enumerated in its Bye-Laws andreproduced in the order(s) under appeal. 13.The Tribunal, with an intent to analyze the functioning of the respondent-Assessee viz-a-viz provisions ofthe VAT Act 2005, has also dwelled upon Section 34 of the said Act read with Rules 61 and 62 of the VAT Rules, 2005 framedthere under. 14.The Tribunal has thus concluded that: “28. On a comprehensive examination of the purpose ofregistering the society in the name of H.P. Excise andTaxation Technical Service Agency, the organizationalstructure and conducting of its functions, Rules &Regulations of the society, Receipts & Payment Account ofthe society, details of the collections on account of tax andamounts paid to Government, relevant provisions of H.P.VAT Act 2005, Establishment of Check Posts of Barrier andinspection of goods in transit, the following points emergedas under: 1. The checkpost or barriers and inspection of goods intransit were established as per the HP VAT Act 2005. 2. The Assessee Society was floated to look after the affairsand tax collection at the check post and barriers. 3. The governing body of the Assessee Society consists ofChairman and six members along with a member secretarywho are all from the excise and taxation department except aTechnical Director from NIC and MD of Electronic Development Corporation who mainly aid in providingrequired information technology inputs. 4. The executive committee of the Assessee Society compriseof 8 members along with one Member Secretary who are allofficials of Excise and Taxation Department. 5. The Assessee Society is involved in collection and depositof receipts from STXXVI-A Forms. 6. Out of the collected amount 20% is paid immediately tothe Government. 7. The remaining amount is kept in the short term deposits. 8. The surplus amount shall be deposited in the receipthead 0040-Sales Tax Account on yearly basis.head 0040-Sales Tax Account on yearly basis. 9. The accounts are audited by the IFU of the Sales TaxDepartment which will compile the final account theAdditional Excise and Taxation Commissioner (HeadQuarter) is the Authorized Signatory.” 15.The Tribunal, on examination of the financial 4. The executive committee of the Assessee Society compriseof 8 members along with one Member Secretary who are allofficials of Excise and Taxation Department. 5. The Assessee Society is involved in collection and depositof receipts from STXXVI-A Forms. 6. Out of the collected amount 20% is paid immediately tothe Government. 7. The remaining amount is kept in the short term deposits. 8. The surplus amount shall be deposited in the receipthead 0040-Sales Tax Account on yearly basis.head 0040-Sales Tax Account on yearly basis. 9. The accounts are audited by the IFU of the Sales TaxDepartment which will compile the final account theAdditional Excise and Taxation Commissioner (HeadQuarter) is the Authorized Signatory.” 15.The Tribunal, on examination of the financial affairs of the respondent-Assessee and after going through its income and expenditure statements for the relevantAssessment Years, has further concluded that: “32.Thus, after going through the entire affairs of theassessee we hold that the surplus of income over expenditurealso belongs to the Government which has been dulydeposited in the state exchequer cannot be the income of theassessee. 33.Before us the assessee has submitted statementreflecting the payment of balance amount of the 80% of the fee collected has also been paid to the Treasury of the StateGovernment. 34.The Assessing Officer is hereby directed to examinethe Challans paid by the assessee into the Governmentaccount under the receipt head 0040 Sales Tax Account assubmitted by the assessee and give due benefit for theamounts paid into the Government exchequer.” 16.It is in this backdrop, coupled with a firm findingof fact to the effect that the surplus of income overexpenditure of the respondent-Assessee belongs to the StateGovernment and has been duly deposited in the publicExchequer that the question which falls for determination is-whether 80% of the balance amount duly deposited by therespondent-Assessee in the Government Treasury, afterdeducting the expenses incurred by it, amounts to ‘taxableincome’ under the IT Act, 1961, more so when the respondent-Assessee is not registered under Section 12AA of the said Act? 17.We have heard Mr. Vinay Kuthiala, learned SeniorAdvocate, on behalf of the appellant-Revenue and Mr. VishalMohan, Advocate, on behalf of the respondent-Assessee at aconsiderable length and gone through the record. 18.It was urged on behalf of the appellant-Revenuethat the respondent-Assessee is a ‘juristic person’ fallingwithin the ambit of Section 2 (31) of the IT Act, 1961. Therespondent-Assessee has been formed for manning all themultipurpose barriers to charge the goods which cross thebarriers whether coming into or going out of the State ofHimachal Pradesh. All such goods have to be declared at themultipurpose barriers in accordance with Section 34 of theVAT Act, 2005 read with VAT Rules, 2005 for which theassessee sells the ‘Declaration Form’ and derives ‘income’therefrom. 19.The respondent-Assessee applied for exemptionunder Section 12AA of the IT Act, 1961 but its application wasrejected as the activities that it carried out were not of generalpublic utility but were for providing infrastructural facilities tothe Excise and Taxation Department of the State of HimachalPradesh. On this premise, it was urged that the respondent-Assessee was ‘earning income’ at the multipurpose barriers bysale of Forms etc., and was preparing the income andexpenditure statements in which it has been showing surplus 19.The respondent-Assessee applied for exemptionunder Section 12AA of the IT Act, 1961 but its application wasrejected as the activities that it carried out were not of generalpublic utility but were for providing infrastructural facilities tothe Excise and Taxation Department of the State of HimachalPradesh. On this premise, it was urged that the respondent-Assessee was ‘earning income’ at the multipurpose barriers bysale of Forms etc., and was preparing the income andexpenditure statements in which it has been showing surplus of income over expenditure in its Returns. The respondent-Assessee was depositing excess of income over expenditure inthe Government Treasury for payment to the StateGovernment and was debiting these amounts in the incomeand expenditure statements and claiming it as revenueexpenditure. This payment, according to the learned SeniorCounsel for the Revenue, is only a diversion of income and isnot related to any business activity of the respondent-Assessee. He argued that under Section 14 of the HimachalPradesh Societies Registration Act, 2006, a Society is a bodycorporate and a separate legal entity and in view of Section 8of the said Act, the Society can have neither profit motive norits profit can be distributed amongst the Members. Thus, itwas apparent that the mandate of law prohibits distribution ofincome of the Society and the excess revenue over expendituretherefore, constitutes as ‘income of the Society’ and is liable tobe taxed as envisaged by Section 4 read with Section 2 (24) ofthe IT Act, 1961. 20.Learned Senior Counsel for the Revenue relied upon CIT versus Sunil J. Kinariwala, 259 ITR 10 (SCC)wherein the Hon’ble Supreme Court has ruled as follows: “When a third person becomes entitled to receive theamount under an obligation of an assessee evenbefore he could lay a claim to receive it as his incomethere would be a diversion by overriding title, butwhen after receipt of the income by the assesse it ispassed to on a third person in discharge of theobligation of the assessee, it will be case ofapplication ofincome by the assesse and not ofdiversion of income by overriding title.” 21.Learned counsel for the respondent-Assessee, on the other hand, countered the appellant’s claim urging thatthe concept of taxation under the IT Act, 1961 is relatable tothe ‘real income’ which actually belongs to the Assessee. 22.In the instant case, ‘statutory levy’ under the VATAct, 2005 is being collected by virtue of the powers entrustedby the State Government to the respondent-Assessee. Sincethe entire collection is deposited in the Government Treasuryof the State after deducting the actual expenditure incurred by the respondent-Assessee, no ‘real income’ accrues to theSociety. 23.Learned counsel has relied upon the decision in Commissioner of Income Tax Bombay City-II versusSitadas Tirathdas, 41 ITR, 367 SC, in which Hon’bleSupreme Court has ruled that what is to be subjected fortaxation is only and only real income over which the assesseepossesses a right and not any other thing. He cited SomiayaOrgeno Chemicals Ltd. versus CIT, 216 ITR, 291Bombay,where the issue considered was-whether the cess collected andkept in a separate bank-account as per the statutory order andto be utilized for a particular purpose, was ‘income’ in thehands of assessee? It was held that the ‘statutory levy’ couldnot be equated as the ‘real income’ of the assessee. RajkotDistrict Gopalak Co-operative Milk Producers Union ltd.versus CIT 204 ITR, 590 Gujarat, was cited where thequestion which fell for consideration was-whether income ofthe project assigned to a Co-operative Society on lease andlicense basis and profits of which were to be paid to the State Government, could be treated as ‘income’ of the assessee? Itwas held that the entire income belonged to the Governmentand it could not be treated as the income of the assessee andwas thus not taxable. Similarly, in Commissioner of IncomeTax versus Pepsu Road Transport Corporation, 253 ITR,303 P&H, the Court considered the question as to whether theamount forfeited by the employer out of the provident fundwhere it was categorically mentioned that the said amountbelonged to the Trust, was income of the assessee. Invokingthe concept of ‘real income’, the High Court held the same notto be the income of the assessee. A somewhat similar view was taken in Gujarat Municipal Finance Board versusDeputy Commissioner of Income Tax (Assessment) 221ITR, 317 Gujarat. 24.As regard to the facts highlighted on behalf of theappellant-Revenue that the respondent-Assessee had, in itsReturns of income shown surplus as payable to theGovernment, it was argued that the entries in the books ofaccount cannot, by any stretch of imagination, amount to earning of the income, as held by the Hon’ble Supreme Courtin CIT Bombay City versus Surji Ballabh Dass, 46 ITR144. 25.On an objective analysis of the rival submissions,the question which eventually arises for determination iswhether the retention of a part of the VAT collected by therespondent-Assessee till the process of determination of itsactual expenditure incurred on the collection, followed bydeposit of balance surplus amount in the GovernmentTreasury for onward transmission to the State Government,can be treated as the ‘real income’ in the hands of therespondent-Assessee for the purpose of IT Act, 1961? 26.It is true that ‘income’ has not been defined inSection 2 (24) of the IT Act, 1961 but with the addition ofexpression ‘includes’, the scope and ambit of ‘income’ standsenlarged. Various components illustrated in the definitionClause including ‘profits and gains’ are part of the ‘income’. Inview of the comprehensive definition chosen by theLegislature, something which is not expressly included inSection 2 (24), can also form part of the ‘income’. If the dictionary meaning of the word ‘income’ is to be logically andliberally construed, the ‘income’ shall include all thosebenefits, whether in terms of money or otherwise, which are tobe taken into consideration for the purpose of payment ofincome tax or professional tax. None of the receipts illustratedin Section 2 (24) except ‘profits and gains’ have been cited orapplied by the Revenue to adjudge the ‘income’ of therespondent-Assessee. The ‘profits and gains’, as ruled by theHon’ble Supreme Court in CIT versus Gold Coin HealthFood (P) Ltd., (2008) 9 SCC 622 refers to positive incomeonly. 27.The word ‘profit’ means the gross proceeds of abusiness transaction minus the costs of transaction. ‘Profits’imply a comparison of the value of an asset when the asset isacquired with the value of the asset when such asset istransferred and the difference between the two values is theamount of ‘profit’ or ‘gain’ made by a person [See: TopmanExports versus CIT (2012) 3 SCC 593]. 28.To say it differently, the word ‘profit’ connotes the idea of pecuniary gain. If there is an actual gain, its quantumor amount would not be material; but such amount would becomponent of ‘income’ in terms of Section 2 (24) (i) of the ITAct, 1961. 29.The expression ‘gain’, on the other hand, is notsynonymous with the word ‘profit’, for it is not restricted topecuniary or commercial profits only as it includes otherconsiderations of value gained also. For example, anyadvantage or benefit acquired or value addition made by someactivities would amount to gain, even though the activities arenot profit motivated. 28.To say it differently, the word ‘profit’ connotes the idea of pecuniary gain. If there is an actual gain, its quantumor amount would not be material; but such amount would becomponent of ‘income’ in terms of Section 2 (24) (i) of the ITAct, 1961. 29.The expression ‘gain’, on the other hand, is notsynonymous with the word ‘profit’, for it is not restricted topecuniary or commercial profits only as it includes otherconsiderations of value gained also. For example, anyadvantage or benefit acquired or value addition made by someactivities would amount to gain, even though the activities arenot profit motivated. 30.Applying these principles to the facts of the casesin hand, it may be seen that the respondent-Assesseecontinued to receive Rs.5/- per Form till May, 2009 out ofwhich Re.1/- was straightaway deposited in the GovernmentTreasury and out of the balance of Rs.5/-, only the actualexpenditure incurred by it on collection process was deductedand the balance amount (80% as assessed by the authorities)was duly deposited in the Government Treasury to be paid to the Excise and Taxation Department of the State Government.In this entire process, the respondent-Assessee neither gainedanything nor earned any profit. The VAT amount recovered bythe respondent-Assessee was/is an entrustment of thestatutory function of the State which alone is competent tolevy VAT under Section 34 of the VAT Act, 2005. Therespondent-Assessee thus neither created any source of incomenor generated any profit or gain out of such source. TheAssessee merely performs the statutory functions under theVAT Act, 2005 and collects the tax amount for and on behalf ofthe State and transfers such collection to the GovernmentTreasury. Even if the tax collection remains temporarilyparked with the Assessee for some time, it cannot be treated as‘income’ generated by the Assessee as the said amount doesnot belong to it. 31.The Tribunal has thus rightly concluded that thesurplus of income over expenditure, as reflected in the entriesor the Returns filed by the respondent-Assessee, also belongedto the State Government which was duly deposited in theGovernment Treasury. Hence, it does not partake the character of ‘profit or gain’ earned by the respondent-Assessee. 32.The non-registration of the respondent-Assessee, under Section 12AA of the IT Act, 1961 is inconsequential,for an occasion to seek exemption from payment of tax onthe income by a Trust or Institution serving the cause ofgeneral public utility would arise only when some actualincome is derived. The respondent-Assessee though is a‘juristic person’ but in the absence of any income havingbeen earned by it through ‘profits or gains’ within themeaning of Section 2 (24) of the IT Act, 1961, therespondent-Assessee is indeed not obliged to seek exemptionunder Section 12AA of the IT Act, 1961, for it does not haveany taxable income. 33.For the reasons afore-stated, the substantialquestion of law is answered in negative against theappellant-Revenue and in favour of the respondent-Assessee. 34. As a necessary corollary, all the appeals must fail and are accordingly dismissed alongwith pendingapplications, if any. (Surya Kant) Chief Justice December 07, 2018. (cm Thakur) (Ajay Mohan Goel) Judge