TMI Blog1971 (2) TMI 25X X X X Extracts X X X X X X X X Extracts X X X X ..... . The Pioneer Consolidated Company of India, Ltd., New Delhi, is the assessee. The assessment year is 1962-63. The accounting year was the financial year 1961-62. The assessee is a public limited company carrying on the business of clearing and forwarding agents, selling agents and commission agents. During the course of its business the company received various amounts from its constituents for incurring expenses for and on behalf of the constituents, and towards commission of the company for services rendered to the constituents. From the various amounts received by the company from a number of constituents a total sum of Rs. 29,643 was lying in the books of the company to the credit of those constituents up to 1960-61 Those amounts wer ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... g two questions of law to this court : " 1. Whether, on the facts and in the circumstances of the case, the Tribunal was justified in holding that the sum of Rs. 29,643 being the credit balance written off was income of the assessee chargeable to income-tax ? 2. Whether, on the facts and in the circumstances of the case, the Tribunal was justified in coming to the conclusion that the deduction of Rs. 8,679 was not allowable to the assessee in the assessment year 1962-63 because the selling agency in respect of which the amount was payable had ceased to exist in the assessment year 1955-56 ? Firstly, we take up question No. 1 relating to the sum of Rs. 29,643. It is significant that the assessee itself credited this amount to its profi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ould not be the income for the accounting year 1961-62. It is possible that the claims of the constituents against the company for certain sums were barred by time some time before the financial year 1961-62. But the material on the record does not disclose the exact time, when those claims became barred by time. It further appears that the company chose to indicate the various amounts in its books as deposits outstanding in favour of the constituents. So long as those sums represented deposits in favour of the constituents, the sums could not be treated as income of the assessee. It was only during the relevant accounting year that the sum of Rs. 29,643 was transferred from the deposit account to the profit and loss account. It was at this ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the accounting year, the profits of the business received in the accounting year cannot be taxed because the source of income does not exist in the accounting year at all. " That passage has reference to discontinuance of the business of the assessee. In the present case there is no indication that the assessee's commission business discontinued after 1955-56. All that happened was that the relationship of principal and agent between Messrs. Turpentine and Subsidiary Industries Ltd. and the assessee-company ceased in the year 1955-56. But that does not imply that the assessee's commission business ceased. In the statement of the case it was stated by the Tribunal that the "assessee is a public limited company carrying on business of clea ..... X X X X Extracts X X X X X X X X Extracts X X X X
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