Madhya Pradesh H.C : Whether the reference in MCC No. 668 of 1993 decided by the Division Bench on 16th July, 1996 in the case of Lilasons Breweries (P) Ltd. v. CIT is good law in the light of the pronouncement of the apex Court in CIT v. Bijli Cotton Mills (P) Ltd. (1979) 8 CTR (SC) 1 : (1979) 116 ITR 60 (SO)?

ORDER

R.S. Jha, J. – This reference to a Full Bench has been made to decide the correctness of the decision of a Division Bench of this Court in the case of Lilasons Breweries (P.) Ltd. v. CIT in MCC No. 668 of 1993, decided on 16th July, 1996, in the light of a decision of the Supreme Court, in the following terms :

“Whether the reference in MCC No. 668 of 1993 decided by the Division Bench on 16th July, 1996 in the case of Lilasons Breweries (P) Ltd. v. CIT is good law in the light of the pronouncement of the apex Court in CIT v. Bijli Cotton Mills (P) Ltd. (1979) 8 CTR (SC) 1 : (1979) 116 ITR 60 (SO)?”

2. The learned counsel for the applicant submits that the applicant/assessee M/s Lilasons Breweries Ltd. is a limited company and collects a sum of Rs. 20 per Rs. 1,000 of the bill amount as dharmada which is kept and maintained in a separate account. It is submitted that as the amount collected by the assessee towards dharmada was included as revenue receipt and assessed to tax by the AO for the asst. yrs. 1981-82 and 1984-85 to 1986-87, therefore, on the instance of the assessee the following along with another question of law was referred to this Court for its opinion :

“Whether, on the facts and circumstances of the case, the Tribunal was justified in holding that the sum of Rs. 42,649 in the asst. yr. 1981-82, Rs. 76,870 in the asst. yr. 1984-85, Rs. 1,18,179 in the asst. yr. 1985-86 and Rs. 1,67,588 in the asst. yr. 1986-87 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 these assessment years ?”

3. It is submitted that the aforesaid question was answered by this Court by order dt. 16th July, 1996 passed in Lilasons Breweries (P.) Ltd.’s case (supra) in the following terms :

“4. The facts relating to the second question are that the assessee was charging dharmada @ 2 per cent in the bills from the purchaser. The assessee had maintained a separate dharmada account to which the amounts so realised were credited. The assessee claimed that the said amount was calculated with the intention of realising the same for charitable purposes. The AO, however, treated the said amount as income of the assessee. The CIT(A) sustained the assessment orders against which yet another appeal was filed before the Tribunal, but the Tribunal also endorsed the finding in this respect. The Tribunal held that the assessee had failed to bring on record any material to indicate contribution on regular basis to some of the institutions. The said finding of the Tribunal purely relates to the appreciation of evidence and we find that the same does not give rise to any question of law or the question No. 2 as referred to us. Under these circumstance, the second question is also answered against the applicant-assessee and in favour of the Revenue.”

4. It is submitted by the learned counsel for the applicant that the decision in the case of Lilasons Breweries (P.) Ltd. (supra) is not good law in the light of the pronouncement of the apex Court in the case of CIT v. Bijli Cotton Mils (P.) Ltd. [1979] 116 ITR 60, wherein the Supreme Court has held that an amount collected as dharmada and deposited in a separate account, is not a revenue receipt and is, therefore, not liable to be included in the income of the assessee that is chargeable to tax. It is submitted that the aforesaid decision of the Supreme Court was not considered while deciding Lilasons Breweries (P.) Ltd.’s case (supra) and, therefore, the order passed therein deserves to be overruled and to be declared to be bad law.

5. The learned counsel for the Revenue, per contra, submits that the decision of the Division Bench in Lilasons Breweries (P.) Ltd. case (supra) was decided on its own facts and, therefore, cannot be found fault with. It is submitted that in the case of Lilasons Breweries (P.) Ltd. (supra), this Court categorically held that the question referred to it was a pure question of fact and not a question of law and, therefore, the occasion to adjudge the decision in the case of Lilasons Breweries (P.) Ltd. (supra) in the light of the decision of the Supreme Court in the case of Bijli Cotton Mills (P.) Ltd. (supra) does not arise. It is submitted that the order passed in Lilasons Breweries (P.) Ltd.(supra) was not assailed in appeal before the Supreme Court by the applicant and the same has become final and binding.

6. We have heard the learned counsel for the parties at length. From a bare perusal of para 4 of the decision in Lilasons Breweries (P.) Ltd. (supra), it is abundantly and apparently clear that this Court, while deciding the question of law referred to it under s. 256(1) of the IT Act (hereinafter referred to as ‘the Act’), has clearly stated that the finding recorded by the Tribunal purely relates to appreciation of evidence and it does not give rise to any question of law and has answered the question accordingly. It is, therefore, clear that the Division Bench did not decide the issue at all nor did it lay down any law in respect of the issue of dharmada but simply stated that the finding of the Tribunal and the issue raised before it was a question of fact and no question of law arises for decision. In other words, this Court in the case of Lilasons Breweries (P.) Ltd. (supra) has not laid down any law or taken any decision which can be said to be contrary to or in derogation of the law laid down by the Supreme Court in the case of Bijli Cotton Mills (P.) Ltd. (supra).

7. At this stage, we are also constrained to observe that there can be no cavil about the law laid down by the Supreme Court in the case of Bijli Cotton Mills (P.) Ltd. (supra) to the effect that an amount collected as dharmada which is kept in a separate account and is utilized for charitable purposes, is not liable to be included in the income of the assessee. However, a mere statement to that effect on the part of the assessee is not sufficient and the Revenue authorities, if so required, are entitled to ascertain on the basis of the facts of each individual case as to whether the amount collected in the name of dharmada is actually meant for a purpose which is charitable and is in fact spent for such a charitable purpose.

8. This aspect has been clarified by the Supreme Court itself in a subsequent decision in the case of CIT v. Amritsar Transport Co. (P.) Ltd. [1993] 201 ITR 816/68 Taxman 56, after taking into consideration the decision in the case of Bijli Cotton Mills (P.) Ltd. (supra). In the case of Amritsar Transport Co. (P.) Ltd. (supra), the matter was taken up before the Supreme Court by the Revenue on the rejection of their application under s. 256(2) of the Act by the High Court to call for a similar question of law and it was held that :

“4. So far as inclusion of amounts collected as ‘dharmada’ which are kept , in a separate account and are utilised for charitable purposes is concerned, there can be no dispute that they are not liable to be included in the income of the assessee vide CIT v. Bijli Cotton Mills (P) Ltd. (1979) 8 CTR (SC) 1 : (1979) 116 ITR 60 (SC), but the Revenue’s case herein is that though collected in the name of ‘dharmada’, these amounts were neither meant for any charitable purpose nor were they spent on charitable purposes. In support of the same they rely upon the aforesaid written reply of the respondent-assessee itself.

5. In our opinion, this was a proper case where the High Court ought to have directed the Tribunal to state the said question under s. 256(2) of the Act. We do not think it necessary to say more than this on this occasion, lest it may prejudice the case of the parties at the hearing of the reference.

6. The appeal is accordingly allowed, the judgment and order of the High Court is set aside and the application filed by Revenue under s. 256(2) is allowed. The Tribunal shall state the aforesaid question for the opinion of the High Court under s. 256(2) of the Act. No order as to costs.”

9. Apparently, the decision in the case of Amritsar Transport Co. (P.) Ltd. (supra) was not brought to the notice of the Court while referring the matter to this Full Bench. We consciously refrain from saying anything more on this issue as it may prejudice the decision in the reference.

10. In conclusion, we are of the considered opinion that as the decision in the case of Lilasons Breweries (P.) Ltd. (supra) was based on the peculiar facts of that case and as the question of law referred to it was not answered by laying down any law contrary to the law laid down by the Supreme Court in the case of Bijli Cotton Mills (P.) Ltd.(supra) and in fact nothing in that regard was actually decided therein nor is there any conflict or contradiction between them, therefore, the decision of the Division Bench of this Court in the case of Lilasons Breweries (P.) Ltd.(supra) cannot be said to be bad law and the reference made to this Full Bench is uncalled for.

11. The question referred to this Full Bench is answered accordingly. The matter may now be placed before the regular Division Bench for decision in accordance with law.

[Citation : 356 ITR 671]