| Case ID |
0f6ded83-5be1-4ed4-aad8-78194ee98aae |
| Body |
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| Case Number |
CIVIL APPEAL No. 222 OF 1956 |
| Decision Date |
Oct 03, 1958 |
| Hearing Date |
|
| Decision |
The Supreme Court ruled in favor of the revenue, stating that the profits earned by the assessees from the scheme were assessable to income tax. The Court clarified that the key issue was not whether income was received, but whether income had accrued to the assessees. The Court emphasized that the profits belonged to the assessees and their agreement to devote such profits to charity did not change the character of the income. The Court further held that the assessees were not entitled to tax exemption under section 4(3)(ia) as the scheme was not carried on behalf of any religious or charitable institution. |
| Summary |
In the landmark case of Commissioner of Income Tax v. Vyas and Dhotiwala, the Supreme Court of India examined the tax liabilities of the assessees under the Income-tax Act, 1961 and the Indian Income-tax Act, 1922. The case revolved around a scheme devised by the Deputy Commissioner of Amraoti to alleviate cloth shortages during a critical period. The assessees, serving as financiers and distributors, claimed that the profits from their operations were exempt from income tax due to their charitable intentions. However, the Court held that the income generated from the scheme constituted taxable income, irrespective of the assessees' intention to use the profits for charitable purposes. This decision underscored the principle that profits must be recognized as income for tax purposes, regardless of their subsequent application. The case is significant in clarifying the tax obligations of entities involved in charitable schemes and the interpretation of income under the Income-tax Act. Key takeaways include the necessity for entities to understand their tax liabilities and the implications of their agreements on income characterization, making this case a pivotal reference for tax law practitioners and entities engaged in charitable activities. |
| Court |
Supreme Court of India
|
| Entities Involved |
Not available
|
| Judges |
VENKATARAMA AIYAR,
GAJENDRAGADKAR,
SARKAR
|
| Lawyers |
C.K. Daphtary,
K.N. Rajagopala Sastri,
R.H. Dhebar,
D. Gupta
|
| Petitioners |
Commissioner of Income Tax
|
| Respondents |
Vyas,
Dhotiwala
|
| Citations |
1959 SLD 231,
(1959) 35 ITR 55
|
| Other Citations |
Not available
|
| Laws Involved |
Income-tax Act, 1961,
Indian Income-tax Act, 1922
|
| Sections |
11,
4(3)(ia)
|