TMI Blog2006 (7) TMI 183X X X X Extracts X X X X X X X X Extracts X X X X ..... the agent for the discharge of the liability of the principals from the payments due to the principals is a trading receipt in the hands of the appellant? 3. Whether the Tribunal is correct in law and fact in holding that as 'dealer' under the Sales Tax Act includes a commission agent also, the burden to pay turnover tax which is on the principals shifts to the appellant? 4. Whether the Tribunal has erred in not properly considering the relationship between the agent and the principals and in ignoring the fact that the agent's liability is only to the extent of the principals and that in the absence of any specific liability for the agent, the amount retained from the principal cannot be considered as a trading receipt?" The assessee ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... x Act and also the Turnover Tax Act, the term "dealer" includes a commission agent. The assessee's claim that the assessee being a commission agent cannot be treated on par with a real business person, i.e., a dealer, was not accepted. The Tribunal also placed reliance on the decision of the apex court in CIT v. Thirumalaiswamy Naidu and Sons [1998] 230 ITR 534 and took the view that the amount collected by the assessee be treated as income of the assessee. The appeal filed by the Revenue was accordingly allowed. Counsel appearing for the assessee submitted that the Tribunal has committed an error in placing reliance on the decision of the apex court in Thirumalaiswamy Naidu and Sons [1998] 230 ITR 534. Counsel submitted that the amount r ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... v. Dharamdas Hargovandas [1961] 42 ITR 427 (SC) and CIT v. G. R. Karthikeyan [1993] 201 ITR 866 (SC) etc. We are of the view that the mere fact that the liability to pay turnover tax and also the increase in the rate of rubber from 5 per cent. to 6 per cent. was disputed would not change the character of the amount received. The amount deposited by the assessee in the account by name "Contingency deposit" was nothing but collection made by the assessee for payment of sales tax and turnover tax. Sales tax collections made by the assessee forms integral part of the trading receipt and has to be treated as income of the assessee to the extent not actually spent by the assessee by way of payment of tax. Collections were made by the assessee ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... not a conclusive evidence to hold that the liability has come to an end for all. The question is not whether the liability of the assessee towards payment of tax came to an end or not. In Jonnalla Narashimharao and Co. v. CIT [1993] 200 ITR 588 (SC) the assessee was a commission agent, collected in the assessment year 1968-69 certain amounts by way of sales tax under the name "rusum". The assessee disputed the liability to pay sales tax by initiating various legal proceedings. The sales tax amount was remitted consequent to the retrospective amendment. The apex court held that the tax collected constituted business receipts for the year 1968-69. The principle in our view would squarely applicable to the facts of this case. Collections mad ..... X X X X Extracts X X X X X X X X Extracts X X X X
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