9911796707
TMI Blog1993 (10) TMI 37X X X X Extracts X X X X X X X X Extracts X X X X ..... ount of Rs. 5,000 odd arrived at after deducting the amount of Rs. 1,95,877 referred to in question No. (1) above from the disputed liability of Rs. 2,09,044 represented statutory liability and as such it should be allowed?" The assessee has collected a sum of Rs. 1,95,877 on account of sales tax which was credited to the account styled as "Deposits against Rajasthan Sales Tax Account". The Income-tax Officer came to the conclusion that the amount was collected against the sales tax liability and as such it is a part of the trading receipt and since the same has not been paid to the Government or refunded to the customers from whom it was collected, the amount could be included in the income and deduction could be claimed in the year in wh ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ished principle of law that a collection by way of sales tax is a trading receipt in the hands of a trader and hence is to be included in the total income of the assessee. In Chowringhee Sales Bureau P. Ltd. v. CIT [1973] 87 ITR 542 (SC), it was held by the apex court that the amount of Rs. 32,986 was collected as sales tax and it was credited in the books of account under the head "Sales tax collection account". The assessee had not paid the amount to the Sales Tax Department nor had refunded the said sales tax amount to the person from whom it was collected and a stand was taken that it is a statutory provision creating the liability. It was observed by the apex court that the head of account under which it is credited did not make any m ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tion of granting any double relief to the assessee by the Tribunal. The Income-tax Officer had directed the addition of the amounts of Rs. 82,610 and Rs. 56,283 in the total income of the assessee, in respect of the assessment years 1973-74 and 1974-75, holding that the aforesaid amounts represented trading receipts, but the Income-tax Appellate Tribunal came to the conclusion that the said amounts represented collections made by the assessee from its customers by way of security deposits in respect of eventual sales tax liability and that in case the amounts were not to be paid by way of sales tax, then the same were refundable to the customers. Thus, the Tribunal having held that the said amounts did not represent the revenue receipts of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... not justified in coming to the conclusion that the assessee is entitled to the deduction claimed. The amount which has been collected by the assessee was on account of the business which was carried on and is a trading/business receipt and, therefore, is the income of the assessee. Simply because the amount has been credited in a separate account, it would not change the character of the initial collection. The amount after collection has neither been refunded to the customers nor had been paid to the Government and it could not be considered that there was any crystallized liability or ascertained liability which could even be allowed on the ground of maintenance of books of account on the mercantile system. We may also observe that the cl ..... X X X X Extracts X X X X X X X X Extracts X X X X
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