M K THAKKER Vs. COMMISSIONER OF INCOME TAX

JUDGEMENT

(1.) THE two question referred under the provisions of the income-tax Act, 1961, read thus :

(2.) THE relevant facts and the history of the case require to be stated a bit elaborately. THE assessee-firm deals in cotton. Messrs. Chunnilal Prajivandas and Co., Hubli (for short, "Chunnilal") was purchasing cotton from the assessee. THEre was some doubt about the liability under the Central Sales Tax Act, arising out of those transactions; hence the parties entered into an agreement dated September 1, 1968. As per this agreement, Chunnilal was to retain a part of the sale price, as deposit, with interest thereon at bank rates for a period of five years; in case sales tax had to be paid out of the deposit; if no sales tax was payable, the amount held in deposit shall be refunded to the assessee, after five years from the date of the year in which sale of cotton took place. Consequently, during the several assessment years, the sale price received by the assessee was equated to the actual amount received by the assessee (de hors the amount held in deposit by Chunnilal).

(3.) THE Appellate Commissioner upheld this order by holding that, in the earlier order of the Appellate Commissioner, there is a clear finding that the receipt in question was taxable during the assessment year 1975-76 and, therefore, section 153(3) of the Act came into play. It is not clear whether this finding was in connection with the saving of limitation or as a direction given to the Income-tax Officer by the Appellate Commissioner. THE Appellate Tribunal affirmed the application of section 153(3) to the reassessment order. Before considering other questions involved in this reference, we may straightaway reject the Revenue's reliance on section 153(3).