Judgment

V. D. TULZAPURKAR, J. :- These three appeals are preferred on certificates of fitness granted by the Allahabad High Court under S. 66-A of the Indian Income-tax Act, 1922. They raise a common question whether the amounts realised by the assessee-company from its customers as and for Dharmada during the three assessment years 1951-52, 1952-53 and 1953-54 are liable to be taxed as its income under the Act and the question arises in the following circumstances.

2. The assessee is a private limited company having been incorporated in the year 1943. It carries on the business of manufacturing and selling yarn. Right from the inception it used to realise certain amounts on account of Dharmada (charity) from its customers on sales of yarn and bales of cotton. The rate was one anna per bundle of 10 lbs. of yarn and two annas per bale of cotton. In the bills issued to the customers these amounts were shown in a separate column headed Dharmada. The assessee did not credit the amounts of Dharmada so realised by it in its trading account but it maintained a separate account known as the Dharmada Account in which realisations on account of Dharmada were credited and payments made out wer