COMMISSIONER OF INCOMETAX Vs. UNITED CARDAMOM AUCTIONERS

JUDGEMENT

(1.) COMMISSIONER of Income-tax has come up with this appeal under Section 260 A of the Income-tax Act. Following are the questions of law raised for consideration. 1) Whether, on the facts and in the circumstances of the case, cannot the amount of Rs 4,23,681/- collected by the assessee and remaining unpaid towards sales tax be disallowed under Section 43 B of the income-tax Act? 2) Whether, on the facts and in the circumstances of the case, is not the order of the Tribunal for the assessment year 1987-88 one supporting the case of the Revenue for the assessment year 1986-87? 3) Whether, on the facts and in the circumstances of the case and in the light of the finding of the Tribunal in the order relating to the assessment year 1987-88 that the amount deposited in the treasury cannot form part of trading receipts and the balance remaining unpaid has to be treated as trading receipts should not be Tribunal have upheld the order of the assessing authority for the assessment year 1986-87?

(2.) ASSESSEE is a firm of auctioneers in cardamom having its principal place of business at Santhanpara. Assessment year relates to 1986-87. Original assessment was completed on 29. 10. 1987 accepting the return of income of Rs. 78,027/- Subsequently, a notice under section 148 of the Act was issued on 22. 3. 1980 and the assessee filed a return on 17. 11. 1992 declaring the income originally assessed. However, the Income-tax Officer added an amount of Rs. 4,23,180. 83 towards sales tax, Rs. 65,354/- towards additional sales tax, rs. 33,167/- towards handling charges and Rs. 1,688/- towards surcharge. During the assessment year 1986-87 assessee collected a sum of Rs. 7,46,319. 20 as sales-tax and Rs. 11,947. 89 as additional sales-tax. ASSESSEE filed objections to the additions made. So far as this case is concerned, we are mainly concerned with the collection of sales tax and additional sales tax. It was noticed that during the year assessee had collected a sum of Rs. 7,46,319. 20 as sales tax and Rs. 1,11,947. 89 as additional sales tax, out of which an amount of rs. 3,23,138. 37 was paid over to Sales Tax Department. Similarly, out of he additional sales tax collected only an amount of Rs. 46,593. 73 was paid to the sales Tax Department. Thus there is a credit balance of Rs. 4,23,180. 83 outstanding under sales tax account and Rs. 65,354. 16 under additional sales tax account as at the close of the accounting year.

(3.) SRI P. K. Ravindranatha Menon, counsel appearing for the Revenue submitted that the Commissioner (Appeals) has committed an error in applying the decision of the Tribunal in ITA 765/coch/91. Counsel referred to the following part of the order of the Tribunal. ". . we hold that since the assessee has deposited the amount collected as per the direction of the Government as contained in its letter dated 12. 10. 83, in the Government Treasury, the assessee has not derived any benefit therefrom. Hence, the amount of Rs 3,88,791/- deposited in the govt. Treasury out of the total collection of Rs 4,03,045/- cannot be treated as part of the trading receipt and income of the assessee for this year. The balance of Rs 14,254/- has to be treated as trading receipt and hence income of the assessee for this year as the assessee has not deposited the same till date". As far as the present case is concerned, the assessee had not deposited the entire amount collected. Counsel referred to the assessment order and submitted that out of the sales tax collected only an amount of Rs 3,23,138. 37 was paid over to the Sales Tax Department. Similarly out of the additional sales tax amount collected only an amount of Rs 46,593. 73 was paid over to the Sales Tax Department and thus there is a credit balance of Rs 4,23,180. 83. Assessee had collected a sum of Rs 59,705. 54 towards handling charges and the actual amount of handling charges paid during the year would come to Rs 26,538. 39. According to the counsel, the same would amount to part of the trading receipt. We find force in the contention of the counsel for the revenue.