TMI Blog1996 (8) TMI 37X X X X Extracts X X X X X X X X Extracts X X X X ..... lkem Private Limited, Udaipur, is a private limited company, which carries on the business of exploiting calcite and wollastonite mines and sells the same after converting them into powder. In the year under review, the assessee had credited its profit and loss account on account of excise duty refund of Rs. 35,696.66 and Rs. 1,61,836 received by it. The assessee initially had shown it as an income in its return of income filed in the Department. During the course of assessment proceedings, the assessee raised its claim that the refund of excise duty is not liable to be taxed as income and placed reliance on the decisions in CIT v. Alchemic Pvt. Ltd. [1981] 130 ITR 168 (Guj) and CIT v. Nathuabhai Desabhai [1981] 130 ITR 238 (MP). In CIT v. Alchemic Pvt. Ltd. [1981] 130 ITR 169 (Guj), the assessee was served with a notice for payment of excise duty paid by it, a part of which was recovered from its constituents. The assessee contended before the excise authorities that the duty was not payable by it and obtained a refund of the amount from them in a particular calendar year. The assessee credited this amount to its profit and loss account and claimed it as exempted on the ground t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... fy the chargeability or otherwise of a particular item of income. It is imperative that the question itself arise out of the Tribunal's order and this is possible, only if all the necessary facts on which the order is based have been placed before the Tribunal. If those facts are not present, the Tribunal cannot refer to them and in such a case no question outside the parameter of the case as presented before the Tribunal can be enquired into. Unless it is proved that an allowance or deduction has been made in the assessment in any previous year in respect of loss, expenditure or trading liability, it is not open to the Revenue to refer to section 41(1), for charging tax on the receipt by the assessee by refund or otherwise of such expenditure in a subsequent year. In CIT v. Nathuabhai Desabhai [1981] 130 ITR 238 (MP), the assessee had collected sales tax from its constituents during certain assessment years and paid the same to the State Government. Later, the amount was refunded to the assessee during the previous year relevant to the assessment year as the levy was found to be illegal and unconstitutional. The Income-tax Officer assessed the amounts of refund of sales tax as i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the customers, the same was to be allowed in respect of the years. The order of the Commissioner of Income-tax (Appeals) not having satisfied the assessee, it took the matter before the Income-tax Appellate Tribunal. The Tribunal found that the process of conversion according to the excise authorities was chargeable to excise duty. Against this contention of the assessee that it is outside the ambit of excise duty laws, the assessee along with its rate chart mentioned the terms and conditions for the sale which make it clear that "applicable excise duty and sales tax will be charged extra", excise duty was recovered along with the sale value of merchandise separately, excise duty so collected was credited to an account titled "Central Excise Duty Deposit Account", all amounts that were paid to the excise authorities under protest were debited to this account. This treatment was started some time in March 1976, and continued till December 1978, and in the years under reference, the excise authorities came to the conclusion that the products dealt with by the assessee were exempt from the excise duty levied and consequently refunded the excise duty so deposited. While refunding the a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o tax under section 28(iv) as regards cash amount ; (ii) it could not be taxed under section 41(1) ; (iii) there existed a liability to repay various customers and the receipt does not bear the character of income. The Tribunal expressed its opinion that the apprehension of the Department that most of the claim may not be paid, could not really form the basis for taxing the said refund as income of the assessee. The Tribunal found that the term "income" was not exhaustively defined, but then it had to be seen as to whether the receipt really did bear the character of income or not, and ultimately reached a conclusion that the refund of excise duty was not liable to be taxed and, hence, its inclusion was accordingly deleted. The assessee-respondent in its reply has already contended that the question formulated by the applicant was not a question of law, it being a pure question of fact. The Tribunal appreciated the evidence on record and on such appreciation, came to the conclusion that the impugned amount was trust money with the assessee and was refundable to the dealers. It was not an income of the assessee. The Tribunal being the final fact finding body could arrive at a conc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... satisfied that the statements were sufficient to enable it to determine the question raised thereby, it might refer the case to the Appellate Tribunal for the purpose of making such additions thereto or alterations therein, as it might direct in that behalf but this submission really is not called into play in such matters. The Supreme Court in Lakshmiratan Cotton Mills Co. Ltd. v. CIT [1969] 73 ITR 634 (SC), held that the power under section 66(4) of the old Act might be exercised to call for a supplementary statement, only when the court is satisfied that the statements in a case referred under section 66(1) and (2) were not sufficient to enable it to determine the question raised by the statement. Section 66(4), now section 258, did not confer a power to raise any additional questions or to call for a statement of case on questions not referred by the Tribunal. The Supreme Court in C. P. Sarathy Mudaliar v. CIT [1966] 62 ITR 576, held that in a reference under section 66 the High Court can exercise advisory jurisdiction and it does not sit in appeal over the judgment of the Tribunal. If the High Court finds that the material facts are not stated in the statement of the case or ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... red to it for its opinion. The High Court's power under the Act is only to give its opinion on the questions of law referred to it by the Tribunal. It cannot take into consideration the questions of law which have not been referred to it for its opinion. The observations of the Supreme Court that if the High Court thought that the question referred to it did not bring out the real point in issue, it was open to it to call for a fresh statement of the case and direct the Tribunal to submit for its opinion the real questions arising for decision which are indeed there, but such an exercise of jurisdiction is to be sparingly done. The decision of the Punjab and Haryana High Court in Mahabir Parshad v. CIT [1983] 144 ITR 447, as relied on by Mr. Shishodia, is also inapplicable on the facts of the present case and the principles enunciated in that case are not called into play. In that case, the Tribunal had forwarded the question which was wide enough and general in nature and the High Court was of the opinion that the questions of law referred to the court cannot be decided on the facts found by the Tribunal and it would be necessary to ask the Tribunal to submit a supplementary sta ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Pavoo Kakku [1986] 160 ITR 88 (Ker) ; (i) CIT v. East Asiatic Co. India Pvt. Ltd. [1996] 217 ITR 347 (Mad) ; (j) CIT v. Tara Chand Suraj Mal [1996] 217 ITR 315 (All). Making of entry in the books of account or transferring to profit and loss account for the assessment year 1980-81 was an unilateral action, which has no consequences of its own and in this perspective, we rely upon the decisions in Sutlej Cotton Mills Ltd. v. CIT [1979] 116 ITR 1 (SC), J. K. Chemicals Ltd. v. CIT [1966] 62 ITR 34 (Bom), CIT v. Sadabhakti Prakashan Printing Press (P.) Ltd. [1980] 125 ITR 326 (Bom), CIT v. Sugauli Sugar Works P. Ltd. [1983] 140 ITR 286 (Cal), CIT v. A. V. M. Ltd. [1984] 146 ITR 355 (Mad), CIT v. B. N. Elias and Co. (P.) Ltd. [1986] 160 ITR 45 (Cal), CIT v. Sadul Textiles Ltd. [1987] 167 ITR 634 (Raj) and CIT v. Combined Transport Co. Pvt. Ltd. [1988] 174 ITR 528 (MP). Diversion at source on account of overriding title, where the deposit was of the nature of trust fund, does not really amount to revenue receipt. The liability for payment to the Central excise and/or to return to the customer, really take the entire matter to the perspective of a financial transaction and it doe ..... X X X X Extracts X X X X X X X X Extracts X X X X
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