The only dispute before us is as to whether the receipts were, in fact, Dharmarth receipts. The assessee’s stand in this regard is that it was collecting Dharmarth in GRs and gate passes, as part of charity; that this Dharmarth collected every month was being passed on to a charitable trust; and that the receipt was neither shown as income, nor as expenditure. This stand of the assessee is entirely in line with its stand for the earlier years, right from assessment year 2001-02 to assessment year 2008-09. For all these years, in scrutiny assessments framed under section 143(3) of the Income-tax Act, 1961 (for short “the Act”), but for assessment year 2002-03, for which year, such assessment was framed under section 143(1) of the Act, the Department has never disputed such collection in GRs and gate passes and the fact that it was being passed on to a charitable trust. The objection of the authorities below in this regard, raised only for the first time, during the year 2009-10, is that the receipt is not by a charitable trust, but by the assessee company, which is doing business and trading. This, according to us, is not at all acceptable. Once the receipts are routed as such to a charitable 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.
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 Bijli Cotton Mills (P.) Ltd. (supra). Clause no. 30 of the memorandum and articles of association of the assessee company reads as follows:
“30. To donate or subscribe money for any national, charitable, benevolent or public purchase or to institutions and funds for public benefit or which have any moral and other claim on company or its members, employees or customers and to promote such institutions and funds and to give charities and donations.”
This clause 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 Commissioner (Appeals) 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 association was also to carry out charity.’
Therefore, finding merit in this grievance raised by the assessee, the same is hereby accepted. The impugned order in this regard is cancelled and the addition made is deleted.
Provisions of section 50C are not applicable to the case of a purchaser
The basic issue involved herein is as to whether the provisions of section 50C of the Act are applicable to the case of a purchaser also. If it is not so, the assessee, being the purchaser, immediately goes out of the ken of the provisions of section 50C of the Act and the addition made would become unsustainable.
A plain reading of section 50C of the Act shows that the income under the head “capital gains” is applicable to the sale of immovable property, and not to “purchase” thereof. Therefore, the provisions of section 50C(1) of the Act are not applicable to the case of a purchaser. It is well settled that the legislature chooses its words with utmost care. When the words of a particular provision are explicit, clear and unambiguous, there is no room for interpretation thereof and as such, the legislative intent qua such a provision is not required to be gone into, as has been wrongly done by the learned Commissioner (Appeals) in the present case. The section talks of ‘consideration received or accruing’. Period. ‘Consideration paid’ cannot be imported, when the legislature has itself not deemed it fit to incorporate anything to such effect in the section.
In view of the above discussion, this grievance of the assessee is also found to be justified and accepted as such. Therefore, the addition made under section 50C of the Act and sustained by the learned Commissioner (Appeals) is hereby cancelled, and the other arguments, rendered academic, are no longer required to be gone into.