TMI Blog1979 (11) TMI 8X X X X Extracts X X X X X X X X Extracts X X X X ..... to this reference, as set out in the statement of the case, are these. The assessee is a firm consisting of three partners having equal shares. It deals in tobacco, which is also imported from other States. The accounting period relevant to the assessment year ended on Diwali 1968, i.e., October 21, 1968. The system of accounting followed by the assessee is mercantile. The assessee-firm came into existence on February 18, 1964, and was assessed for the first time for the assessment year 1965-66. Prior to this, the business belonged to one of the partners, Shri Dhulabhai, individually, who was the sole proprietor of the business, and in that capacity the first assessment was made on him for the year 1950-51. Dhulabhai paid sales tax on the t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the assessee for the assessment year 1969-70. At the instance of the Commissioner, the Tribunal has referred the aforesaid question of law for the opinion of this court. We have heard the learned counsel for the parties. The learned counsel for the Department contended that even if s. 41(1) of the Act was not attracted, the refund of the sales tax, being a trading receipt, was taxable in the accounting year in the normal course as profits and gains of business. The learned counsel for the assessee supported the view taken by the Tribunal. Following the decision of the Supreme Court in Chowringhee Sales Bureau P.Ltd. v. CIT [1973] 87 ITR 542, the Tribunal held that the sales tax refund was in the nature of a trading receipt. However, it ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... year. The facts of the Supreme Court case in [1971] 82 ITR 624 were quite different. In that case, the assessee's husband carried on business as sole selling agent of M/s. Mohanlal Hargovindas. The assessee succeeded to the business on the death of her husband in February, 1960. M/s. Mohanlal Hargovindas had recovered certain amounts towards sales tax from the assessee's husband relating to the period January 26, 1950, to March 31, 1951. In an appeal filed by the said firm, the Commissioner of Sales Tax remitted the sum of Rs. 24,341 so recovered by the firm from the assessee's husband. Consequently, M/s. Mohanlal Hargovindas refunded that amount to the assessee by means of a draft dated October 31, 1961. On these facts, the ITO sought to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed by the assessee and, therefore, it should have been taxed at the earliest point of time, in accordance with the settled principles of taxation and it was not taxable in the assessment year in question. For this view, the Tribunal placed reliance upon, the decision of the Supreme Court in Chowringhee Sales Bureau P. Ltd. v. CIT [1973] 87 ITR 542 . We are of the opinion that the view taken by the Tribunal is not correct. It cannot be deduced from the said decision of the Supreme Court in [1973] 87 ITR 542, that in the present case, the refund of sales tax constituted a trading receipt at its inception when the amount of sales tax was recovered by the assessee in the respective years. In the aforesaid Supreme Court case, the assessee, who w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in the nature of revenue receipt in the year in which the Supreme Court eventually upheld the claim of the assessee and it did not constitute any receipt, much less revenue receipt, in the years in which the amount of sales tax was recovered by the assessee from the purchasers because in those years the amount so recovered by the assessee was deposited by him as sales tax in the State Treasury and nothing remained with him which may be called as receipt. We are, therefore, of the opinion that the Tribunal erred in law in holding that the amount of refund of sales tax in question was not liable to be taxed in the assessment year in question. The learned counsel for the assessee also tried to argue that the amount of sales tax was recovere ..... X X X X Extracts X X X X X X X X Extracts X X X X
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