Statutory fund for a confined public purpose is not income; repeal did not defeat assessment proceedings.

A repeal that preserves pending and future proceedings can allow assessment to continue where liabilities and administration are transferred to the State and the proceedings remain effectively represented, so the absence of a formal substitution does not by itself defeat the assessment. A compulsory statutory contribution collected for a confined public purpose, and earmarked for limited statutory expenditure rather than general or commercial use, is not income or a taxable revenue receipt under the Income-tax Act, 1961. The Board's fund was therefore treated as outside the definition of income under section 2(24).

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Issues: (i) Whether the assessment proceedings could continue despite repeal of the local statute and non-substitution of the Board's nominee; (ii) Whether the Board's fund collected under the local statute was income or taxable revenue receipt under the Income-tax Act, 1961.

Issue (i): Whether the assessment proceedings could continue despite repeal of the local statute and non-substitution of the Board's nominee.

Analysis: The repeal legislation preserved pending and future proceedings arising from the pre-repeal period and vested the relevant liabilities and administration in the State Government and its officers. The Board had been constituted as a statutory body controlled by the State Government, and after repeal its affairs continued through the Administrator and Special Officer. The proceedings were throughout effectively represented, and the absence of a formal substitution did not defeat the assessment.

Conclusion: The objection based on repeal and non-substitution was rejected.

Issue (ii): Whether the Board's fund collected under the local statute was income or taxable revenue receipt under the Income-tax Act, 1961.

Analysis: The Board existed to regulate agricultural markets and performed statutory functions without any commercial or profit-making character. The fund was a compulsory statutory contribution by market committees for limited statutory purposes, namely the expenses of the Board and expenditures in the interest of market committees. A receipt earmarked for a specific public and statutory purpose, and not available for general use or trade, does not assume the character of income or revenue receipt. Applying the governing principle distinguishing trade receipts from monies received for a restricted public purpose, the fund did not fall within the definition of income.

Conclusion: The Board's fund was held not to be income within section 2(24) and was outside the tax net.

Final Conclusion: The appeal succeeded and the assessment and appellate orders were set aside, with no order as to costs.

Ratio Decidendi: A compulsory statutory receipt collected for a confined public purpose, and not available for unrestricted use or commercial exploitation, is not income or a revenue receipt liable to tax.

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