TMI Blog1995 (3) TMI 43X X X X Extracts X X X X X X X X Extracts X X X X ..... the course of assessment proceedings, the Income-tax Officer found that the assessee-company had no income from any trading activity during the relevant previous year and that the income consisted of miscellaneous receipts of Rs. 2,56,997 and other receipts by way of interest, profit on sale of assets, income from investments, etc. The Income-tax Officer held that the assessee had not been carrying on any business and, therefore, he did not allow any administrative expenses though the assessee claimed a sum of Rs. 3,05,968 on this account. Aggrieved by such assessment, the assessee appealed to the Appellate Assistant Commissioner contending that the assessee had been carrying on business and that the losses of earlier years should have therefore been adjusted and that in any case, the Income-tax Officer was not correct in assessing Rs. 2,39,470 consisting of items Nos, (i) to (iii) out of the miscellaneous receipts of Rs. 2,56,997 brought to tax under the head "Sundry income" on the ground that there was no cessation of liability in respect thereof. The Appellate Assistant Commissioner did not accept the assessee's contentions and rejected the appeal. The matter was taken up in ap ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er agreeing with the reasoning given by him and dismissed the Departmental appeal. Aggrieved by the same, at the instance of the Commissioner of Income-tax, the above reference has been made before this court. Mr. N. V. Balasubramaniam, learned counsel for the Revenue, submitted that the miscellaneous receipts amounting to Rs. 2,39,470 received by the assessee-company by way of refund of sales tax ought to be brought to tax for the assessment year 1972-73. In support of the said contention, learned counsel for the Revenue referred to the following rulings : (i) It was held by the Madhya Pradesh High Court, in Addl. CIT v. Chandrahant D. Patel [1983] 139 ITR 233, as follows (at page 237) : " ... the amount of sales tax was deposited by the assessee in the years in which it was realised by him from the purchasers. Thereafter, he filed a suit for refund of the said amount paid contending that the levy of sales tax was invalid. Eventually, the Supreme Court by its decision on April 5, 1968, held that the levy of sales tax was invalid and the decree passed by the trial court for refund of the sales tax was restored after setting aside the decree passed by the High Court. In thes ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e interest to a separate account called 'the Interest Suspense Account'. The appellant claimed that, having regard to the bad and deteriorating financial condition of the parties concerned as well as the history of their accounts, the recovery of even the principal amounts of the debts had become improbable and doubtful and as such the interest thereon, though debited to the respective debtors, was taken to the 'Interest Suspense Account' to avoid showing inflated profits by including hypothetical and unreal income, and such interest on 'sticky' advances was not real income and was not taxable in its hands.... The concept of real income could not be so read as to defeat the object and the provision of the statutory enactment. Even if in a given circumstance, the amount might be taken to the interest suspense account for accounting purposes, that would not affect its taxability as such. The interest on 'sticky' advances was rightly treated as income which had accrued to the appellant. " On the other hand, learned counsel for the assessee-company submitted that there is no error of law in the order of the Appellate Tribunal holding that the miscellaneous receipts amounting to Rs. 2 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... case an assessee transferred an amount to its profit and loss account in the previous year relevant to the assessment year and that though the amount was not income when it was realised, when it was not claimed by the customers and the assessee chose to treat the items as its income, it could not be said that the income-tax authorities committed an error in accepting the statement of the assessee. (iii) In CIT v. Combined Transport Co. Pvt. Ltd. [1988] 174 ITR 528 (MP), the Madhya Pradesh High Court held as follows (headnote) : " While making the assessment for the assessment year 1974-75, the Income-tax Officer found that the assessee had written off a certain amount on account of salary which was claimed and allowed as a deduction in the earlier years. The Income-tax Officer held that there was a cessation of the liability and the benefit which accrued was liable to tax under section 41(1) of the Income-tax Act, 1961. The Tribunal held that the Income-tax Officer was not justified in adding the amount on account of salary written off and allowed the appeal of the assessee. On a reference : Held, affirming the decision of the Tribunal, that the amount was written off as a r ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e that a finding regarding the invalidity of a levy need not automatically result in a direction for a refund of all collections thereof made earlier. The declaration regarding the invalidity of a provision and the determination of the relief that should be granted in consequence thereof are two different things and, in the latter sphere, the court has, and must be held to have, a certain amount of discretion. It is a well-settled proposition that it is open to the court to grant, mould or restrict the relief in a manner most appropriate to the situation before it in such a way as to advance the interests of justice. In the instant case, the octroi duty paid by the petitioner-company would naturally have been passed on to the consumers. Therefore, there is no justification to claim the same at this distance of time and the court in its discretion can reject the same. " In the instant case, the findings of the Appellate Assistant Commissioner and as confirmed by the Appellate Tribunal are that, the excess sales tax collection is made in the years 1968 and 1969, the assessees' liability to refund continues even though the amount of refund of sales tax has not been passed on to t ..... X X X X Extracts X X X X X X X X Extracts X X X X
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