TMI Blog1999 (2) TMI 54X X X X Extracts X X X X X X X X Extracts X X X X ..... is not liable to be taxed as revenue receipt in the hands of the assessee for the assessment year in question ?" The respondent-assessee was dealing in the business of manufacture and sale of steel furniture and other allied items. The assessee was, therefore, required to recover sales tax on sales on behalf of the State and Central Government. The amount collected by way of sales tax in all came to Rs. 3,79,070. The assessee in maintaining the accounts ignored the total collections as income and payment as expenditure. Upon assessment, the concerned Income-tax Officer took the view that the total collection of amount of sales tax by the assessee forms part and parcel of sale transaction and, therefore, it is trading or revenue receipt. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ted whereas the remaining amount of Rs. 2,40,513 was disallowed. Thus, the said amount was brought to tax being an integral part of a commercial transaction and also forming sales price or consideration. However, the Appellate Assistant Commissioner reversed the view of the Income-tax Officer which also came to be confirmed by the Tribunal. It was contended on behalf of the Revenue that the assessee was rightly taxed by the Income-tax Officer on the amount of net sales tax collection of Rs. 2,40,513 which remained in the hands of the assessee and wrongly reversed by the appellate authorities. In that, it was further submitted that since the net sales tax collection was Rs. 3,79,070 and only an amount of Rs. 1,38,557 was deposited with t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tax should be held forming part of its trading or business receipt. However, it was clearly further observed that the assessee would be entitled to claim deduction of the said amount as and when it pays to the State Government or is paid to the original owner. The view propounded by the apex court, clearly, supports the view which we are inclined to take in this reference. In Punjab Distilling Industries Ltd. v. CIT [1959] 35 ITR 519 (SC), it was also held by the apex court that certain amount received by the assessee and giving the nomenclature of security deposits and also trading it and entering in a separate ledger termed "empty bottles return security deposit account" it was found and held that the amount which came to be named as s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ails the part of total receipt of business. During the course of submission, it was stated at the Bar that no specific provision has been made in the relevant legislations which would indicate that when the dealer or the seller collects any amount of tax, the said amount cannot form part of consideration for the item sold. Even in case of Sinclair Murray and Co. P. Ltd. v. CIT [1974] 97 ITR 615 (SC), the apex court has taken the same view. This court in a Division Bench decision in Motilal Ambaidas v. CIT [1977] 108 ITR 136 (Guj) has followed the principles laid down in the aforesaid decisions of the apex court. Even in a case of refund of sales tax being the excess amount of the tax liability and which was recovered by the seller, was ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t of tax recovered by the dealer or the seller when it forms an integral part of the commercial transaction of the sale, it is nothing but a trading receipt. It is the nature and the quality of the receipt and not head under which it is taken or entered in the account of the assessee would be determinative and decisive. In view of the aforesaid clear proposition of law supporting the view which we are taking in this reference and in the light of the facts of the present case, the questions referred to us are required to be answered in the negative. Accordingly, we answer questions Nos. 1 and 2 in the negative, that is to say, in favour of the Revenue and against the assessee. The reference, therefore, shall stand disposed of with no order ..... X X X X Extracts X X X X X X X X Extracts X X X X
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