Back
1953 Supreme(Cal) 126
High Court of Calcutta
Chakrabarti, Lahiri, JJ.
Commissioner of Income Tax – Appellant
Versus
Samnugger Jute Factory Co. Ltd. – Respondent
IT Ref. No. 45 of 1952
Decided On : Jun 11, 1953
B.L. Pal, B.C. Mitter, N.C. Talukdar
Exemption from tax under s. 15B(1) of the IT Act is available only for sums that are included in the assessable income for the year.
Headnote:
INCOME TAX - Exemption - Contribution to Gandhi National Memorial Fund - Whether exemption can be claimed for sums not included in assessable income - Held, no.
Fact of the Case:
The assessees, two jute companies, contributed to the Calcutta Rehabilitation Fund in 1947. In 1948, the Indian Jute Mills Association, of which the assessees were members, decided to contribute to the Gandhi National Memorial Fund. The assessees' contributions to the Gandhi National Memorial Fund included the surplus amounts left from their contributions to the Calcutta Rehabilitation Fund. The assessees claimed exemption from tax under the proviso to s. 15B(2) of the IT Act in respect of the entire contributions made to the Gandhi National Memorial Fund. The ITO allowed exemption only in respect of the sums actually paid in the relevant accounting year.
Finding of the Court:
The Tribunal held in favor of the assessees on both questions, finding that the assessees had actually paid the contributions and that it was not necessary for the amounts to have been paid out of the income of the previous years relevant to the assessments.
Issues: Whether the assessees were entitled to claim an exemption for the sums contributed towards the Gandhi National Memorial Fund under the provisions of s. 15B(1) of the IT Act.
Ratio Decidendi: The court held that the sums contributed to the Gandhi National Memorial Fund were not entitled to exemption under s. 15B(1) of the IT Act because they were not included in the assessable income for the year. The court found that the language of s. 15B clearly indicates that the exemption applies only to sums that are assessable to tax. The court also found that the Tribunal's interpretation of the section was erroneous and that the Tribunal had made a confusion between sums that are not to be included in the total income of an assessee at all and sums that are includible in the assessable income but are declared exempt from tax.
Final Decision: The court answered the question referred in the negative, holding that the assessees were not entitled to claim an exemption for the sums contributed towards the Gandhi National Memorial Fund under the provisions of s. 15B(1) of the IT Act.
CHAKRAVARTTI, C.J.
1. THIS reference under s. 66(1) of the IT Act raises a point which is utterly unarguable and the learned Counsel for the assessees, at the end, could not but help conceding that it was so.
2. THE facts are as follows : There are two assessees, namely, the Samnugger Jute Factory Company Limited and the Titaghur Jute Factory Company Limited, both members of the Indian Jute Mills Association. Both, we are informed, keep their accounts by the English calendar year. It appears that in the accounting year 1947, the Samnugger Jute Factory Company Limited paid a sum of Rs. 20,130 to the Indian Jute Mills Association as its contribution to the Calcutta Rehabilitation Fund, which was being administered by the Association and similarly the Titaghur Jute Factory Company Limited paid a sum of Rs. 17,940 to the same Association for the same purpose. THE Calcutta Rehabilitation Fund, we understand, was started for the purpose of giving relief to persons affected by the communal riots of 1946 and 1947. After the necessary disbursements had been made for the purposes of the Rehabilitation Fund, the Indian Jute Mills Association found itself left with a surplus of about Rs. 4,00,000. Of that sum we understand a sum of Rs. 12,078 was taken to be the share of the Samnugger Jute Factory Company Limited and a sum of Rs. 10,764 was taken to be the share of the Titaghur Jute Factory Company Limited. How these surplus amounts came to be regarded as shares of the contributories is not very clear but the proceedings before the authorities below were all had on the basis that either the amounts contributed by the various members of the Association remained their property or the surplus amounts were returned to them and thus came to belong to them again. It appears further that during the accounting year 1948-49 the Indian Jute Mills Association decided to make a contribution of Rs. 50,000 to the Gandhi National Memorial Fund and framed a scheme of obtaining that amount from its constituent members by imposing on them a subscription, based on the number of looms owned and worked by each. It is not necessary for the purposes of this case to explain what the scheme exactly was. It will be sufficient to say those mills which owned over two hundred and twenty looms were asked to pay at the rate of Rs. 70 per loom and those who owned less than two hundred and twenty looms were asked to pay at the rate of Rs. 35 per loom. To that amount were to be added the amounts which stood respectively to the credit of the members on account of the surplus left from the contribution made by them to the Calcutta Rehabilitation Fund. The total contribution made by the Samnugger Jute Factory Company Limited to the Gandhi National Memorial Fund was Rs. 1,52,988 of which Rs. 1,40,910 was contributed in the year 1948-49 and Rs. 12,078 was the amount left over from the contributions made by that company to the Calcutta Rehabilitation Fund. Similarly, the total contribution of the Titaghur Jute Factory Company Limited to the Gandhi National Memorial Fund was Rs. 1,36,344 of which Rs. 1,25,580 was actually paid in the accounting year concerned and the balance of Rs. 10,764 was the surplus standing to the credit of the company out of the contributions made by it to the Rehabilitation Fund. The present case is concerned only with the two sums of Rs. 12,078 and 10,764.
3. THE two cases have been consolidated and a single reference has been made, because the point involved is common. THE inconvenience of such consolidation when the assessees are totally different bodies is patent and we hope that the procedure of such consolidation will in future be avoided.
4. THE assessment year with which we are concerned is 1949-50. Since the assessees keep their accounts by the English calendar year, the relevant accounting year was 1948. It appears that in the course of their assessments the assessees claimed exemption from tax under the proviso to s. 15B(2) of the Act in
