TMI Blog2015 (8) TMI 77X X X X Extracts X X X X X X X X Extracts X X X X ..... ts has been pointed out by the authorities to have come about during the year under consideration. That Dharmarth receipts are not taxable, has been laid down as law by the Hon'ble Supreme Court, way back in the year 1979, in the case of 'CIT Vs. Bijli Cotton Mills (P) Ltd.' (1978 (11) TMI 1 - SUPREME Court). Clause of no. 30 of memorandum and articles of association of the assessee company clearly shows that one of the objectives of the assessee company is charity. The learned CIT(A) has remained oblivious of this specific clause in the memorandum and articles of association of the assessee company, while holding that 'the appellant could not establish before me that the objectives of the company as per memorandum and articles of assoc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d both before the AO and the Ld. CIT(A). 2.6. That proviso existed in the Memorandum and Articles of Association of the company regarding making charity. 2.7. That since Dharmarth is not a trading receipt, it is prayed that addition of ₹ 13,35,707/- be deleted. 3. The assessee craves leave to add or amend the grounds of appeal. 2. The brief facts of the case are that the assessee collected an amount of ₹ 13,35,707/- on account of Dharmarth receipts from its customers which in fact, were not declared in the profit loss account. It was observed by the AO that these receipts are collected in lieu of services rendered during normal course of business of transportation of goods. The explanation of the assessee was not ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... relied upon the orders of the authorities below. 6. We have heard the rival contentions and perused the facts of the case. The undisputed facts in the impugned order are that the assessee has collected Dharmarth in GRs and gate passes as part of charity. Dharmarth is collected every month and is being passed to a charitable trust. The receipt is neither shown as income nor as expenditure. The payment to the charitable trust is not claimed as an expenditure. This accounting practice is being followed consistently since assessment year 2001-02 to assessment year 2009-10 and also in the impugned year. All the assessments since 2001-02 to assessment year 2009-10 have been made under section 143(3) of the Act except for the assessment year 20 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t on charity. 5. The learned CIT(A), while upholding the addition, observed that the assessee had remained unable to establish that the object of the company, as per its memorandum and articles of association, was also to carry out charity; that its objective was commercial and there was no reason to collect Dharmarth from its clients; and that, therefore, the Assessing Officer had rightly treated this receipt as a trade receipt. 6. Before us, the learned counsel for the assessee has contended that similar receipts were allowed in earlier years, which are as follows: S. No. Asstt. Year Amount Recd. Remarks 1. 2001-02 1 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on of the assessee company [copy at APB 34, relevant portion at APB 34(d)]. 8. The learned DR has placed strong reliance on the impugned order, contending that the objective of the assessee company is commercial and there was no reason to collect Dharmarth from its clients; and that the assessee has not been able to establish that the objective of the assessee company was to carry out charity. 9. It is not disputed that Dharmarth receipts are not taxable. This is as per the CBDT Circular (supra), as also the following decisions: i. CIT Vs. Bijli Cotton Mills (P) Ltd., (1979) 116 ITR 60 (SC) ii. CIT Vs. Gheru Lal Bal Chand, (1978) 111 ITR 134 (P H) iii. Addl. CIT Vs. Channoo Lal Damodar Dass, (1978) 113 ITR 759 (All.) iv. A ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ble trust by the assessee company and the nature of that trust has not been questioned, we hold that the receipts are Dharmarth receipts and nothing else. The consistent acceptance of such receipts by the Department itself, for as many as eight earlier assessment years, mandates the acceptance of such receipts of the assessee during the year under consideration also as Dharmarth receipts, when no change in facts has been pointed out by the authorities to have come about during the year under consideration. 11. That Dharmarth receipts are not taxable, has been laid down as law by the Hon'ble Supreme Court, way back in the year 1979, in the case of 'CIT Vs. Bijli Cotton Mills (P) Ltd.' , (1979) 116 ITR 60 (SC). Clause no. 30 of ..... X X X X Extracts X X X X X X X X Extracts X X X X
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