TMI Blog1985 (3) TMI 52X X X X Extracts X X X X X X X X Extracts X X X X ..... circumstances of the case, the sum of Rs. 66,109 as sales tax refund lying undisbursed with the assessee did partake of the nature of a trading receipt and was, therefore, income chargeable to tax ? (2) Whether, on the facts and in the circumstances of the case, the amount of Rs. 1,49,945 under the head 'Indian Sugar Syndicate Ltd. account' did partake of the nature of a trading receipt and hence assessable to tax as income ? The assessee is a sugar factory. It had collected Rs. 1,75,548 from dealers as Central Sales Tax and deposited them in the Government treasury. These collections had been made in accordance with ss. 14A and 20A of the Bihar Sales Tax Act. Subsequently, the two sections were declared ultra vires by the Supreme Cour ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the collections on behalf of the Indian Sugar Syndicate were not trading receipts, but were liabilities and did not partake the nature of income. The Department being aggrieved by the order of the Tribunal prayed for making a reference to this court which the Tribunal did. Hence, the present reference. The question referred to us must be held to be finally settled by the decision of the Supreme Court in Chowringhee Sales Bureau (P.) Ltd. v. CIT [1973] 87 ITR 542. That was a case where the assessee was an auctioneer and in that capacity, it had realised certain sums as sales tax. This amount had been credited separately in its books under the head " sales tax collection account ". This sum was neither paid over to the State Exchequer nor w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ceipt is a trading receipt, the fact that it is not so shown in the account books of the assessee would not prevent the assessing authority from treating it as a trading receipt. We may in this context refer to the case of Punjab Distilling Industries Ltd. v. Commissioner of Income-tax [1959] 35 ITR 519. In that case, certain amounts received by the assessee were described as security deposits. This court found that those amounts were an integral part of the commercial transaction of the sale of liquor and were the assessee's trading receipt. In dealing with the contention that those amounts were entered in a separate ledger termed 'empty bottles return security deposit account', this court observed : `So the amount which was called secur ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... customs and other duty and which had not been refunded to customers were assessable as income of the assessee. The above should have set matters at rest, but learned counsel for the assessee placed reliance upon Addl. CIT v. Nagireddy Co. [1976] 105 ITR 669 (AP). The reliance is entirely misplaced. That was a case where the assessee maintaining account books on mercantile system had collected sales tax of Rs. 17,000 odd and got a refund of Rs. 8,000 odd from the Sales Tax Department. That was accounted as a trading receipt. In the course of assessment for the assessment year 1968-69, the assessee contended that the entire sales tax amount is shown as liability in the account books as it was a statutory liability and the dispute pertaini ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... TR 238 (MP), is equally misplaced. The core question before the Bench of the Madhya Pradesh High Court was whether the sales tax refund was taxable in the assessment year 1970-71. The emphasis was on the year in which the sums received by the assessee could be assessed. That is an entirely different matter which need not bother us. Learned counsel for the assessee contended that the assessee having credited the sums in its hands in liability account, it could not be treated as its trading receipts. The submission has only got to be stated to be rejected. The dictum of the Supreme Court in Chowringhee Sales Bureau (P.) Ltd. v. CIT [1973] 87 ITR 542, at paragraph 13, is a complete answer to this submission. For all the reasons stated abov ..... X X X X Extracts X X X X X X X X Extracts X X X X
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