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During the previous year (being the calendar year 1950) relevant to the assessment year 1951-52, the total amount received by the asses see-company in the "Dharmada Account"

as aforesaid amounted to Rs. 21,898/-; similarly during the previous year (being the calendar year 1951) relevant to the assessment year 1952-53 the company collected from its customers a sum of Rs. 17,242/- on account of 'Dharmada' and a sum of Rs. 904/- for the same purpose from the brokers and interest was also credited to this account amounting to Rs. 4,010/-, while during the previous year (being the calendar year 1952) relevant to the assessment year 1953-54 the assessee received a sum of Rs. 19,490/- as Dharmada' from its customers and a sum of Rs. 4578 was also credited on account of interest in the "Dharmada Account". IN the assessment proceedings for the assessment years 1951-52, 1952-53 and 1953-54 the assessee claimed that the aforesaid amounts Lying to the credit of the "Dharmada Account" were held in trust by it and were ear-marked for charity and as such they were not its income from business liable to tax and in support of this contention reliance was placed upon the resolution passed by the Board of Directors on January A 15, 1945 and the Deed of Declaration of Trust dated October 3, 1950. The Income-Tax officer rejected the contention and added the said amounts to the assessable income of the assessee-company in all the years. The appeals before the Appellate Assistant Commissioner at the instance of the assessee-company proved unsuccessful. Further appeals to the Appellate Tribunal also proved futile. Before the Tribunal it was contended on behalf of the assessee that each customer who paid the 'Dharmada' amount was a settlor of the trust, that there were as many settlors as there were customers and that the assessee had receive(' these amounts under an obligation to utilise the same for charity; it was pointed out that the resolution of the Board of Directors dated January 15, 1945 was merely a confirmation of the fact that the, amounts were held in trust by the assessee and that the deed dated October 3, 1950 was merely a declaration of the acceptance of the trust by the two trustees mentioned therein; in other words, it was contended that the customers of the assessee created a trust by paying the amounts as 'Dharmada' and the amounts having been ear-marked for charitable purpose only they were not the assessee's income liable to tax. The Tribunal negatived the claim of the assessee on two grounds, first, that the amounts in question could not be regarded as having been received or held by the assessee under a trust for charitable purposes, the trust being void for vagueness and uncertainty and, secondly that the realisations partook of the character of trading receipts. At the instance of the assessee the matter was carried to the High Court by way of two References, Income- tax Reference No. 329/1964 being in relation to the amounts concerned in the two assessment years 1951-52 and 195753 and Income-tax Reference No. 454/1965 being in relation to the amount concerned in the assessment year 1953-54. In the former Reference the High Court approached the question not from the angle of deciding whether the assessee could claim exemption from tax under s. 4(3) (i) of the Act in respect of the impugned amounts but whether the impugned amounts could be regarded as the profits or gains of the business carried on by the assessee under s. 10(l) to the Act; in other words in the opinion of the High Court the dispute related to the initial character of the receipt itself and the question was whether the amount paid by the customers ear-marked for charity were the assessee's income at all and following an earlier decision of a Division Bench of that very Court in the case of Agra Bullion Exchange Ltd. v. Commissioner of Income tax,(l) the High Court held that the impugned amounts we never the income of the assessee at all and that the assessee was merely acting as a conduit pipe or clearing house for passing on the amounts (1) (1961) 41 I.T.R. 472.

It may be stated that with a view to give effect to the popular concept of the word 'Dharma' a Bill was introduced (being Bill No. 10 of 1938 published in the Gazette of India Part V. dated 17.9.1938) but it was presumably dropped as it fell under "Religious and Charitable Endowments" in List II of the Government of India Act, 1935, which was a Provincial subject. Thereafter the State of Bombay enacted(l Bombay Public Trust Act being Act No. XXIX of 1950 which is now in operation in the States of Maharashtra and Gujarat. By title Explanation to s. 1() it has been enacted that a public trust created for such objects as "Dharma, Dharmada, Punyakarya or punyadan" shall not be void only on the ground that the objects for which it is created are unascertained or unascertainable; in other words, in the areas where legislation similar to the Bombay Public Trust Act would be in operation bequests or gifts for religious or charitable purposes, expressed in terms for "Dharma, Dharmada, Punyakarya, punyadan, etc." would not fail on ground of vagueness or uncertainty. However, in areas where such legislation is not in force bequests or gifts to 'Dharma' simpliciter would continue to be void on ground of vagueness or uncertainty.