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TMI Blog2006 (10) TMI 142X X X X Extracts X X X X X X X X Extracts X X X X ..... tax Act, 1961, the Appellate Tribunal erred in law in holding that the balance which remained outstanding in the sales tax account after the payment of sales tax assessed did not amount to any allowance or deduction and that they could not be validly brought to tax under section 41(1) of the Income-tax Act, 1961, and, therefore, the order of the Assessing Officer could not be set aside by the learned Commissioner under section 263 ?" 2. The assessee was engaged in the sale of vanaspati and during the previous years relevant to the assessment years 1978-79 and 1979-80, the assessee collected sales tax and Central sales tax and credited the same to a separate account. The amounts so collected were later found to be in excess of the amounts ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ounts books. The same view has also been taken by the hon'ble Supreme Court in Chief CIT v. Kesaria Tea Co. Ltd. [2002] 254 ITR 434, Polyflex (India) P. Ltd. v. CIT [2002] 257 ITR 343 and Sinclair Murray and Co. P. Ltd. v. CIT [1974] 97 ITR 615 ; [1975] 35 STC 142. This view has also been followed by the Gujarat High Court in Motilal Ambaidas v. CIT [1977] 108 ITR 136 and CIT v. Bharat Iron and Steel Industries [1993] 199 ITR 67 (Guj). The said decisions were also followed by the Rajasthan High Court in Wolkem P. Ltd. v. CIT [2003] 259 ITR 430. 6. We have also dealt with the issue in ITR No. 12 of 1988 (CIT v. Modern Farm Services [2009] 311 ITR 356 (P & H)) decided on October 18, 2006, wherein it was observed (pages 360 and 361) : ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... character, the amount changes its character when the amount becomes the assessee's own money because of limitation or by any other statutory or contractual right. When such a thing happens, common sense demands that the amount should be treated as income of the assessee.' A plea of the assessee in the present case that the amount had not been transferred to profit and loss account, did not make a difference on principle. If no liability accrued during the year, the amount could not be kept in suspense account. The same has to be treated as income. It is a different matter that if at any time later, any expenditure is to be incurred on that account, the same can be treated as permissible expenditure. In CIT v. Thirumalaiswamy Naidu and S ..... X X X X Extracts X X X X X X X X Extracts X X X X
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