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TMI Blog2002 (12) TMI 45X X X X Extracts X X X X X X X X Extracts X X X X ..... time of booking of the motor cars by the purchaser and the amounts so collected were used for the purpose of day-to-day business by the assessee. Accordingly, he brought to tax the sum of Rs. 2,78,938. The Commissioner of Income-tax (Appeals), however, took a different view and held that the amounts collected were deposits and not income in nature. He also found that the assessee had furnished the names of the customers from whom the amounts were collected by way of deposits, that the deposits were refundable as and when the requisite certificates were produced and the assessee has given the reason for not refunding the amounts. Thus, he held that the addition made to the income of the assessee was not sustainable in law. The Commissioner of Income-tax (Appeals) accepted the contention that the differential excise duty amounts were kept with the assessee and it executed indemnity bond in favour of the manufacturer agreeing to refund the amount to the customers as and when they produce evidence showing the registration of the vehicles as taxis. He, therefore, held that the deposit of excise duty represented either refundable to the customer or payable to the manufacturer in case o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ating the same as part of the trading receipts of the assessee. Mr. P.P.S. Janardhana Raja, learned counsel for the assessee, on the other hand, submitted that the amounts received by the assessee represented only deposits as there was an obligation on the part of the assessee to refund the amount to the customer on production of the necessary evidence that the vehicles purchased were registered as taxis and, therefore, the amount collected by the assessee was only a deposit and not income of the assessee. Learned counsel further submitted that the assessee has collected the amount to ensure that the assessee is not burdened with the liability in case of failure of the purchaser of the vehicle to produce necessary certificate to show that the vehicle was registered as a taxi. He, therefore, submitted that the money was collected only as an abundant caution to protect the interest of the assessee in case of failure on the part of the customer to produce necessary certificate and the intention of the assessee was not to treat the amount received as part of the trading receipts. Learned counsel relied on the decision of the Supreme Court in K.C.P. Ltd. v. CIT [2000] 245 ITR 421 and t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... concerned, the assessee is a dealer of the motor vehicle and it is found on evidence that the assessee had collected not only the price of the motor vehicle, but also the entire normal excise duty payable on a motor car and remitted the excise duty at concessional rate to Hindustan Motors Limited and retained the balance amount as deposit and gave an indemnity to remit the balance if the purchaser fails to produce the necessary certificate within a period of three months, We are of the view, that the assessee had collected the amount as part of its trading receipt as the amount was collected for meeting ultimately the duty liability of the manufacturer. The reason for the collection of the amount towards excise duty was to meet the statutory liability of the manufacturer and not as a deposit simpliciter. If the purchaser of the assessee did not produce the necessary certificate within the requisite period, the assessee has to make over the amount collected to the manufacturer, who in turn has to pay to the Government by way of excise duty. It is no doubt true that the assessee may have to refund the amount to the customer, if the customer produces the necessary certificate from th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and for meeting which it was by the statutes or authorities permitted to collect the amount required from its customers, the true character of the collection is a trading receipt. By calling a portion of the amount as deposit, it cannot be said that the assessee had constituted itself as a trustee, and therefore, the amounts received were not required to be regarded as part of its trading receipt. Had the assessee been unsuccessful in its claim that his goods were not to be treated as chemicals there is no doubt that the amounts though collected as deposit, would have been paid over to the State Government as the amounts had been collected for payment to the State Government as sales tax in the event of the goods being treated as chemicals". As far as the decision of the Supreme Court in K.C.P. Ltd. v. CIT [2000] 245 ITR 421 is concerned, the decision of the Supreme Court supports the case of the Revenue as the assessee has collected the amount as part of the price of the motor car though the assessee had undertaken to return the amount to the customer on production of the necessary certificate. Learned counsel for the assessee relied upon the following observations of the Supreme ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... excise duty it is liable to be treated as income of the assessee. It is no doubt true that there is force in the submission of Mr. Janardhana Raja, learned counsel that the effective rate of excise duty on the motor car purchased for the use as a taxi is the concessional rate, and whatever is collected over and above the concessional rate would be deposit and would not form part of excise duty. However, the levy of excise duty at concessional rate is dependent on the production of the necessary certificate from the Regional Transport Officer, and the assessee collected the differential amount, as part of the price of the vehicle sold to the customer. Though counsel for the assessee submitted that to insulate against the possible liability, in the event the purchaser of the car had failed to produce the necessary certificate within the prescribed period and also failed to pay the balance amount, the deposit was collected, we are of the view that the amount was collected as part of the sale price of the vehicle. The fact that it was collected at the time of sale with an undertaking to return the amount subject to fulfilment of certain conditions would not change the nature of the rec ..... X X X X Extracts X X X X X X X X Extracts X X X X
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