TMI Blog1970 (3) TMI 2X X X X Extracts X X X X X X X X Extracts X X X X ..... e assessee ? " The statement of the case relates to the assessment year 1959-60. The assessee is a firm which was accorded registration under the Income-tax Act, 1922, hereinafter referred to as the Act, and it carries on wholesale business in cloth. The assesssee was also a registered dealer under the U.P. Sales Tax Act and as such it collected sales tax from its customers and also paid out its liability on account of sales tax to the Government. The assessee used to maintain a separate account denominated as the " sales tax account " in which all receipts paid by the assessee's customers on account of sales tax were credited and all payments made by it to the Government debited. Up to the end of the assessment year 1957-58 there was a d ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d to the Tribunal. Before the Tribunal it was contended on behalf of the assessee that the sales tax collected by it was not a trading receipt at all. It had to pay the entire amount collected by it to the Government. It was argued that the assessee maintained its accounts in the mercantile system and even when an amount was not actually paid to the Government the liability of the assessee subsisted and the amount was really debited in the sales tax account maintained by it. It was further argued that any amount received by the assessee from its customers on account of sales tax either legally or under a colour of authority was also payable to the Government under section 8A(iv) of the U.P. Sales Tax Act, 1948, which, it may be mentioned, h ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Tribunal held that the quality and nature of a receipt for income-tax purposes are determined once for all when it was received and they did not change with time and supervening circumstances. The Tribunal observed that if the amount of sales tax collected by the assessee was not initially its income it could not become income of the assessee thereafter under circumstances which came into existence some time later. The Tribunal, therefore, concluded that sales tax collected by the assessee and credited separately in the " sales tax account " did not constitute a trading receipt and, therefore, the surplus collection of sales tax represented by the figure of Rs. 1,17,571 was not taxable as the income of the assessee. At the instance of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Act the Tribunal is required to state a case on the question of law arising from its order for the opinion of the High Court. In the case of Commissioner of Income-tax v. Scindia Steam Navigation Co. Ltd, their Lordships of the Supreme Court have indicated, at page 611 of the report, what are the questions of law which might be taken to arise out of the order of the Tribunal. Their Lordships have summarised the principles as below : " The result of the above discussion may thus be summed up : (1) When a question is raised before the Tribunal and is dealt with by it, it is clearly one arising out of its order. (2) When a question of law is raised before the Tribunal but the Tribunal fails to deal with it, it must be deemed to have bee ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d by the assessee was liable to tax, was never agitated before the Tribunal and, therefore, it cannot be deemed to be a question arising out of its order. In the circumstances, as stated above, the scope of this reference becomes very limited. We have only to decide the question whether the sum of Rs. 1,17,571 could be regarded as the taxable income of the assessee when it was not controverted that the amount was not liable initially to suffer tax. Almost an identical question came in for consideration by this court in the case of Upper India Sugar Exchange Ltd. v. Commissioner of Income-tax. It was held in that case that the taxability of an amount would depend on the nature and character of the receipts at the initial stage. If the amou ..... X X X X Extracts X X X X X X X X Extracts X X X X
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