TMI Blog2008 (11) TMI 69X X X X Extracts X X X X X X X X Extracts X X X X ..... ppellant. V.J. Balachander for M/s. S. Sridhar for the respondent. JUDGMENT The judgment of the court was delivered by Mrs. PRABHA SRIDEVAN, J.- The question raised in these appeals is whether in the facts and circumstances of the case, the Income Tax Appellate Tribunal was right in holding that the contingency deposit collected towards tax liability would not form part of the income. The assessment years relate to 1992-93 and 1993-94 respectively. 2. The assessee is a company engaged in offset printing. For the assessment years 1992-93 and 1993-94, the assessee filed its return. The assessee had collected an amount of Rs.3,38,586/- (Assessment Year 1992-93) and Rs.4,42,448/- (Assessment Year 1993-94) as contingency d ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and Tata Iron Steel Co. Ltd. v. State of Madras (1954) 5 STC 382 (Mad). 4. Learned counsel appearing for the assessee submitted that pursuant to the 42nd Amendment, Section 3B was introduced in the Tamil Nadu General Sales Tax Act. Rules 6A and 6B prescribed the method to determine the taxable turnover since the assesse was advised to collect 5.4% on 70% of the value of the works contract. Writ petitions were filed. The challenge to the constitutionality of the Act was accepted and the act was amended. If the tax becomes payable, then it would be paid out of the contingency deposit, if not, the amount would be refunded. This was the understanding on which it was collected. There was no unjust enrichment. In fact, in the subseque ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... whether the amounts received would be" collection by way of tax under the provisions of the Mysore Sales tax Act. R.S. Joshi, STO v. Ajit Mills Ltd . [1977] 40 STC 497 (SC) was regarding the vires of Bombay Sales Tax Act too. In CST v. R.M.D.S. Press Pvt. Ltd. [1999] 112 STC 307, the question was the taxability of ink, which is used in the job of printing. This decision may also not be applicable here because in that case, the question was whether there is transfer of property in the ink in execution of job work of printing, whether it is taxable and whether tax had to be paid on the ink so used. Since here the question whether the contingency deposit is to be treated as income for the relevant year or as trading receipt is to be d ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e to do so subject to certain conditions. This court held that it could not be characterized as trading receipt. The issue whether the collection of sales tax which is kept in a contingency deposit has been decided in C.I.T. v. Southern Explosives Co. [2000] 242 ITR 107 (Mad). This decision is directly on the point since only in this case, the issue as to the collection of sales tax kept in a contingency deposit has been dealt with. Almost all the decisions that are on the point have been considered in the above case and that is why in Sundaram Finance Ltd. v. Dy. C.I.T./Jt. CIT [2008] 303 ITR 364 (Mad), it has been held that this is not longer a debatable issue. 7. In Dalmia Cement (Bharat) Ltd. v. Dy. CTO [1989] 73 STC 16 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... IT v. South India Sugar Ltd. [2001] 248 ITR 92 ((Mad), the assessee was permitted by orders of Court to collect the excess amount, but this permission was hedged by conditions. Similarly in CIT v. Hindustan Housing and Land Development Trust [1986] 161 ITR 524 (SC), the amount was deposited in Court and the assessee was permitted to withdraw it on furnishing a bank guarantee. The case on hand is totally different. The orders of the Court referred to by the learned counsel are orders of stay of assessment order. In the case on hand, it is stay of the penalty. The retention of the amounts by the assessee was not by virtue of orders of court. 9. Since the facts are not in dispute, it is enough if we deal with the question of law a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... stituted itself as a trustee, and therefore, the amounts received were not required to be regarded as part of its trading receipt. Had the assessee been unsuccessful in its claim that his goods were not to be treated as chemicals there is no doubt that the amounts though collected as deposit, would have been paid over to the State Government as the amounts had been collected for payment to the State Government as sales tax in the event of the goods being treated as chemicals." 10. In CIT v. South India Sugars Ltd. [2001] 248 ITR 92 (Mad) also, the same question was raised and this Court, relying on CIT v. Southern Explosives Co. [2000] 242 ITR 107 (Mad), had observed as follows : "... the amounts collected by the assessee were ..... X X X X Extracts X X X X X X X X Extracts X X X X
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