TMI Blog1984 (2) TMI 69X X X X Extracts X X X X X X X X Extracts X X X X ..... s sold. The surplus deposits, if any, are generally refunded to the customers. The assessee is occasionally unable to refund some of the excess deposits because of various reasons such as non-availability of the current addresses of the customers, etc. For the relevant assessment year 1969-70, such excess deposits which the assessee was unable to refund to its customers, amounting to Rs. 17,691, were written off in the books of the assessee-company by transferring them to the profit and loss account. It was the assessee's contention that the amount of Rs. 17,691 does not represent a taxable receipt. The ITO negatived this contention and held that these were trading receipts and were taxable accordingly. In the appeal before the AAC, it ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... case were covered by three different arrangements. Under one arrangement, the assessees had, two accounts for each constitutent, viz., a contract deposit account and a current yarn account. The advance money received from the customers was first shown in the contract deposit account and was later on transferred to the yarn account in adjustment of the price of the yarn supplied. The amounts so received by the assessees were held by the Supreme Court to be taxable as advance payment of price and not as borrowed money. Under the second arrangement, the advance payments made to the assessees by their constituents were taken as contract advance fixed deposits and these amounts were refunded when the goods were supplied and the price was paid i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d High Court was required to consider case where the assessee transferred an amount of Rs. 18,259 to its profit and loss account. This amount was mainly composed of refunds of customs and other duties paid on behalf of its customers and the surplus remaining after paying transit insurance of the customers. The assessee had collected amounts for the payment of customs and other duties and insurance, and the excess had not been claimed by the customers, who had originally paid them. The Allahabad High Court held that though the amount was not income when it was realised, it became assessable as income when it was not claimed by the customers and the assessee chose to treat these amounts as its income. In the case of CIT v. Motor and General ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ies which were cited before us. Mr. Patil, learned counsel for the respondents, however, strongly relied upon a decision of the Allahabad High Court in the case of Bijli Cotton Mills (P.) Ltd. v. CIT [1971] 81 ITR 400. In that case, under an order of the Textile Commissioner, manufacturers were required to recover from the wholesale dealers the wholesale price of yarn at the controlled rate and to pay to certain quota-holders to whom the manufacturers would have originally sold the yarn that part of the sum which represented the excess over the mill price, the sale being for this purpose deemed to have been made by the manufacturers on behalf of the quotaholders. The Allahabad High Court held that the amount which was in the hands of the ma ..... X X X X Extracts X X X X X X X X Extracts X X X X
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