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TMI Blog2012 (6) TMI 412X X X X Extracts X X X X X X X X Extracts X X X X ..... m of Rs.22,35,231/- being the refundable contingency deposit collected by the appellant is liable to be included as a 'trading receipt' constituting income but not liable to be deducted in computing the total income ? 2. Whether on the facts and in the circumstances of the case, the Tribunal is right in law in rejecting the appellant's claim for deduction of Rs. 59,113/- in computing the income for the assessment year 1991-92 ? 3. Whether on the facts and in the circumstances of the case, the Tribunal is right in law in confirming the levy of interest under section 234B of the Income Tax Act ? 2. The question as to the treatment to be meted out to refundable contingency deposit as trading receipt and whether it is to be included in the t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... took the contention that what was collected was not sales tax but a caution deposit for a possible liability towards sales tax in case the matter pending before the High Court were against the assessee. The Commissioner of Income Tax (Appeals) pointed out that the amount collected by the assessee was with respect to the sales effected by it and the same was not collected otherwise as a fixed deposit or caution deposit or earnest money deposit. In any event, irrespective of the nomenclature therein, the amount collected not being remitted to the State the same was to be assessed as a trading receipt. Aggrieved by the said order, the assessee went on appeal before the Tribunal, which confirmed the view of the Commissioner of Income Tax (Appe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to the Government keeping the balance with it. The said retained amount had not been used in the day-to-day business of the assessee. Reiterating the contention that there are no materials for the assessing authority to hold that the receipt was a trading receipt, she submitted that the character of the receipt had to be judged with reference to the reasons for collection. Since the amount was collected on a disputed issue and kept as a security deposit, the said deposit could not be treated as a trading receipt. 5. On the contrary, learned Standing Counsel placed reliance on the decision of the Apex Court reported in 245 ITR 421 (KCP Limited Vs. Commissioner of Income Tax) and submitted that irrespective of the nomenclature given to the s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Taking note of the fact that the assessee had not refunded the said amount to the persons from whom it was collected, the Apex Court held that the said amount represented the trading receipt of the business of the assessee. Applying the said decision reported in 245 ITR 421 (K.C.P. Ltd., Vs. Commissioner of Income Tax), the Supreme Court held that the mere retention of the excess amount collected in a separate account by the assessee, by itself, would not make any difference and it would not be conclusive of a question as to the nature of the receipt of an amount as a trading receipt or otherwise. The Apex Court pointed out that merely maintaining a separate account under the heading given by the assessee would not alter the nature of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... deration. 9. It may also be relevant to note herein that in the decision reported in (2000) 242 ITR 107 (Commissioner of Income Tax Vs. Southern Explosives Co.), as regards the part of the sales tax liability retained by the assessee as a deposit, this court held that when the liability is a statutory liability which the assessee had to meet, if the same is not remitted to the State, by calling the retained portion of the amount as a deposit, the assessee could not constitute itself as a trustee. This Court further held that even though the amounts collected by the assessee were meant to be utilised by the assessee for meeting its tax liability, the fact that the assessee had chosen to adopt the device of labelling a part of the amount col ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t a case as to how these could be allowed as an expense for earning the business profits of the year in question. The Commissioner of Income Tax (Appeals) considered the said issue only to reject the said claim. The Commissioner of Income Tax (Appeals) pointed out the appellant had omitted to claim the expenses in the concerned assessment years. The details as regards the expenses were not provided before the said authorities so as to contend that these bills were received for the supplies only during the assessment year 1991-92. In the absence of any materials, rightly the Commissioner of Income Tax (Appeals) confirmed the order of the assessing officer. On further appeal before the Tribunal, once again the Tribunal confirmed the said find ..... X X X X Extracts X X X X X X X X Extracts X X X X
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