COMMISSIONER OF INCOME TAX Vs. INTERNATIONAL SPICE CO

JUDGEMENT

(1.) THIS reference is at the instance of the Revenue. The assessment year with which we are concerned is 1972 73. The question of law referred is :

(2.) THE assessee is a firm doing business in hill produce on commission basis. It was collecting a small percentage of the sale proceeds from thecustomers in addition to the sale price. This was credited to an account called the " Laga account ". Certain items of charities were debited to this account. The total receipts during the year amounted to Rs. 13,220. The ITO treated this as assessable income. On appeal, the AAC, differing from the ITO, accepted the assessee's contention that the collections were in accordance with the custom prevailing in the Mattancherry bazaar for specific disbursements to charities. He accordingly deleted the addition. The Revenue preferred an appeal to the Tribunal. The Tribunal followed certain prior decisions of its own finding that a custom existed in Mattancherry bazaar with respect to hill produce market for the collection of laga. It held that the assessee collected money only as the agent for distribution as charities. The Tribunal was of the view that the collections would not constitute the assessee's trading receipts. The Department's appeal was dismissed.