TMI Blog1993 (7) TMI 110X X X X Extracts X X X X X X X X Extracts X X X X ..... essment year 1980-81, as the assessee decided to charge storage charges @ Rs. 15 per bag; that the potato-growers were reluctant to pay this rate and approached the State Government to fix the rates; that the State Government restricted the cold storage owners to charge above Rs. 11.50 per bag; that amount of Rs. 50,754.47p. represented the difference between storage charges of Rs. 15 per bag and Rs. 11.50 per bag fixed by the Government, that the amount of Rs. 50,754.47p. had not so far been paid to the parties concerned. 3. The ITO issued letter dated 24-12-1982 to the assessee asking its objection as to why the amount of Rs. 50,754 should not be assessed as its income for the assessment year under consideration. The assessee furnished its objection vide letter dated 4-1-1983 which is produced by the ITO in his order in paragraph 4. The ITO rejected the objection of the assessee and he included the amount of Rs. 50,754 in the income of the assessee for the reasons that the writ petition filed by the assessee was dismissed with cost on 25-4-1980 as stated by the assessee in his letter dated 5-6-1982; that the assessee had not yet refunded the amount to the potato-growers who sto ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... CIT v. A.V.M. Ltd. [1984] 146 ITR 355 (Mad.); (3) CIT v. Thirumalaiswamy Naidu Sons [1984] 147 ITR 657 (All.); (4) Beni Prasad Sidh Gopal v. CIT [1984] 148 ITR 760 (All.); (5) Ravalgaon Sugar Farm Ltd. v. ITO [1984] 7 ITD 57 (Bom.). 7. In rebuttal Shri S.S. Sud, learned departmental representative, contends that on account of specific facts of this case the Revenue has proved that the amount in dispute is revenue receipt; as the assessee itself has shown it so in the books of account. Reliance is placed on the order of the ITO. He further contends that the order of the ITO to be restored and that of the CIT (A) to be set aside. 8. We have heard the rival submissions of the parties and have gone through the material on record before us. The order of the ITO shows that the amount of Rs. 50,754 was shown as receipt in the books of account for the period 1-4-1979 to 31-3-1980, relevant to the assessment year under consideration, which fact has not been disputed by the learned counsel for the assessee. It is also not disputed by the learned counsel for the assessee that the writ petition filed by the assessee against the order of the Government, fixing the charges per bag a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ss receipts; that the fact that the appellant credited the amount received as sales tax under the head 'sales tax collection account' did not make any material difference; that it is true nature and quality of the receipt and not the head under which it is entered in the account books as would prove decisive. If a receipt 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 trading receipt. 9. In the case of the assessee the assessee himself had shown it as trading receipt. Moreover, it is the difference of amounts representing the excess charges from the potato-growers for storing their potatoes in the cold storage. Therefore, it is manifestly the trading receipt which fact is not disputed by the learned counsel for the assessee. The plea of the learned counsel for the assessee is that it has to be returned to the potato-growers and therefore, the amount in dispute represents debt, which plea has to be rejected in view of the fact that the assessee is entitled to deduction in the year in which the assessee pays to the potato-growers. Therefore, the aforesaid case of the Hon'ble S ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eceipt. The assessee ran a Cold Storage. The quantum of storage charges of potatoes to be charged from farmers is a matter of dispute. Whereas the assessee considered Rs. 15 per bag to be a reasonable charge the potato-growers were reluctant to pay this rate and approached the State Government to fix the rates. As a result, the Punjab Government passed the Punjab Cold Storage Order, 1979 and fixed the cold storage charges for potatoes at Rs. 11.50 per bag for a bag up to 85 Kgs. This Order was promulgated and enforced on 3-3-1979. The accounting year of the assessee-firm, relevant to the assessment year 1980-81, started on 1-4-1979 and ended on 31-3-1980. In this entire accounting year, the Punjab Cold Storage Order, 1979 was operative. Several cold storages contested the vires of the Order passed by the Punjab Government and of a similar Order passed by the Haryana Government where too the affected parties contested. The assessee along with nine others moved a writ petition before the Punjab and Haryana High Court and prayed for the staying of the Order till the decision of the writ. The High Court by its order dated 31-8-1979 granted a stay on the same lines as in the case of CWP ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on will be whether the amount of Rs. 50,754 was in the nature of deposit and not a trading receipt liable to be taxed. A number of authorities were cited on behalf of the assessee in this case and in the other case of similar nature referred to earlier. These are: CIT v. M.P. State Agro Industries Development Corpn.[1983] 139 ITR 312 (MP), A.V.M, Ltd.'s case, Thirumalaiswamy Naidu Sons' case, Beni Prasad Sidh Gopal's case and three decisions of Benches of the Income-tax Appellate Tribunal in Ravalgaon Sugar Farm Ltd.'s case, Shri Someshwar Sahakari Sakhar Karkhana Ltd. v. ITO [1985] 11 ITD 335 (Pune) (SB) and Wolkem (P.) Ltd. v. ITO [1986] 50 CTR (Trib.) 8 (JP). Further heavy reliance was placed on the reports of refusal of the SLPs of the revenue by the Supreme Court against the decisions of Andhra Pradesh and Delhi High Courts dealing with a similar situation in respect of levy sugar as reported in 145 ITR 5 (St.) and 150 ITR 79 (St.). 14. Considering the above facts and the circumstances of the case and the principles about the accrual of income as per mercantile system of accounting, it is difficult for me to hold that when an Order of the Government limiting storage charge ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 50,754, we refer the case to the President of the Appellate Tribunal in accordance with section 255(4) of the Income-tax Act, 1961." 2. The relevant facts briefly stated are that the assessee-firm in the period from 1-4-1979 to 31-3-1980, relevant to the assessment year 1980-81, with which I am concerned, carried on business of Cold Storage and received storage charges of potatoes from the farmers. The Punjab Government passed Punjab Cold Storage Order, 1979 and fixed the cold storage charges for potatoes @ Rs. 11.50 per bag weighing up to 85 Kgs. This order was promulgated and enforced on 3-3-1979. Similar order was passed by the Haryana Government fixing storage charges but vires of the same was contested by several affected parties in the Supreme Court and operation of fixed cold charges was stayed. The assessee and several other parties filed similar Writ Petition and Hon'ble High Court by its order dated 31-8-1979 granted stay order on the lines granted by the Hon'ble Supreme Court. The High Court further directed that the assessee and the other petitioners would also provide the names and particulars of each of their customers from whom storage charges were charged in exce ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e and the same cannot be treated as the assessee's income by any stretch of imagination on the facts of the case. Accordingly, the addition of Rs. 50,754 made by the ITO on this score is deleted." 4. The Revenue then brought the issue in appeal before the Appellate Tribunal. After hearing the parties, the learned Members of the Bench differed in their approaches. According to Shri P.S. Dhillon, learned Judicial Member, the appeal of the revenue should be allowed. In his view, sum of Rs. 50,754 was shown as receipt in the books of accounts for the period 1-4-1979 to 31-3-1980 and this fact was not disputed by the learned counsel appearing for the assessee. It was further not in dispute that assessee's Writ Petition against order of Government fixing charges @Rs. 11.50 paise per bag was dismissed on 25-4-1980 and excess amount collected was not refunded to the potato-growers right up to the date of his passing of order (13-11-1985). The assessee was admittedly in full control of the amount and was using the same in its own business. All the aforesaid facts in the view of the learned Judicial Member showed that the amount under consideration was a revenue receipt and was to be taxed ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ount being under the control of the assessee or the money credited to the accounts of customers remaining in the custody of the assessee or the amounts not having been refunded to the farmers after the order of the High Court dismissing the writ petitions, in his opinion irrelevant considerations for deciding the question in hand. These considerations convert a receipt into receipt of income nature when in the eye of law and according to accepted principles it is not an accrued income. The learned Accountant Member accordingly dismissed the appeal of the Revenue. 6. The difference having arisen between the learned Members, the matter has been referred to me by the Hon'ble President under section 255(4) of the IT Act. 7. I have heard the parties at length and further considered the relevant material on record. There is no dispute that order issued by the Punjab Government fixing collection charges @ Rs. 11.50 per bag was stayed by the Hon'ble Punjab and Haryana High Court on a writ filed by the assessee and other Cold Storage owners and the following order was passed: 'The main case may be listed after the decision of CWP 922 of 1979. Meanwhile, stay in the same terms as grant ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... g on the business of manufacture and sale of sugar. It wanted a higher price for sugar than that fixed by the Government and filed a writ petition. The assessee was allowed to collect a higher price but subject to the condition that he should deposit the difference between the price fixed by the Government and the price claimed by him in the suspense account in the name of the District Magistrate in the State Bank of India. For the assessment year 1973-74, it claimed that the amount kept in the suspense account was not assessable but the Tribunal accepted the claim. On a reference: Held, that the Tribunal was legally correct in holding that the extra amount realised on enhanced price of sugar had not accrued in the assessment year 1973-74 and as such did not form part of the income of the assessee for that year." In the second decision, the Court held as under: "Amounts received by the assessee in excess of the price fixed by the Government and kept in a suspense account pending the disposal of a writ petition filed by the assessee against the fixation of the price of levy sugar by the Government, and which, on the dismissal of the writ petition, became liable to be refunded, ..... X X X X Extracts X X X X X X X X Extracts X X X X
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