TMI Blog2012 (9) TMI 373X X X X Extracts X X X X X X X X Extracts X X X X ..... iability. - ITAT treated it as assessee's income - Held that:- It is now well settled that in determining whether a receipt is liable to be taxed, the taxing authorities cannot ignore the legal character of the transaction which is the source of the receipt - As in the present case, the assessee received Rs. 36,47,585/- in the assessment year 1998-99 and as per his own statement in Court the said sum was not kept in a separate interest bearing bank account but it formed part of the business turnover. - In view of the said statement no reason to interfere with the impugned judgment constituting the addition to the income. - The said amount was part of the turnover. The said amount was collected from the customers. The said amount was collec ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... .2010 in the case of Southern Technologies Ltd. v. Joint Commissioner of Income Tax (320 ITR 577). The only question which this Court is required to answer is whether the Tribunal was right in treating the amount of Rs. 36,47,585/- collected by the assessee as contingent deposit, as income of the assessee under Section 28 of the Income Tax Act, 1961? Assessee is engaged in the business of hire purchase financing, equipment leasing and allied activities. The only question which this Court needs to answer is whether the aforestated contingent deposit is income of the assessee. Assessee has been collecting certain sums as "contingent deposit" from the leasing/hire purchase customers with a view to protect themselves from sales tax liab ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... osits" and hence not taxable in the year of receipt but is taxable only in the year in which the liability to refund the sales tax ceases (in case the assessee fails in the pending sales tax appeals). It is now well settled that in determining whether a receipt is liable to be taxed, the taxing authorities cannot ignore the legal character of the transaction which is the source of the receipt. The taxing authorities are bound to determine the true legal character of the transaction. In the present case, the assessee received Rs. 36,47,585/- in the assessment year 1998-99. As per the statement made by learned counsel for the assessee in Court on 6.09.2012 (which statement is ordered to be taken on record and marked "X"), the said sum of ..... X X X X Extracts X X X X X X X X Extracts X X X X
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