AMBIKA TRADING COMPANY Vs. COMMISSIONER OF INCOME-TAX

JUDGEMENT

(1.) THIS appeal is directed against the order of Income-tax Appellate Tribunal (in short 'the Tribunal') whereby it has remanded the case to the Assessing Officer for the assessment by applying Section 44-AC of the Income-tax Act, 1961 (hereinafter referred to as 'the Act' ).

(2.) THE facts need to be stated are that the appellant, a registered firm, deals with the business of 'tendu' leaves. For the assessment year 1991-92 it filed its return of income declaring total income of Rs. 5,92,280/- along with return trading account, profit and loss account and balance-sheet etc. During course of assessment proceedings it was contended by the assessee that during the previous year relevant to the assessment year under appeal the assessee had traded in the business of forest produce that is purchase and sale of Tendu' leaves. The provision contained in Section 44-AC of the Act was referred to show that profit of 35% of total sales of Rs. 16,92,227/- being Rs. 5,92,280/-had been offered for taxation, though as per trading and profit and loss account net taxable profit came to Rs. 9,37,452/ -. The assessing officer after considering the submissions of the assessee adopted the taxable profit of Rs. 5,92,280/- as per provisions contained in Section 44-AC of the Act. However, he picked up income from other sources, namely, interest and bank commission and income from plying vehicles, i. e. , motorcycles and jeeps etc, totalling to Rs. 1,25,779/-and added the same to the income of Rs. 5,92,280/- which was accepted under Section 44-AC of the Act. Thus, total income came to Rs. 7,18,059/ -.

(3.) BEING dissatisfied with the aforesaid order passed by the assessing officer assessee preferred an appeal before the Appellate Authority challenging inclusion of interest amount on short deposit of idle money. It was putforth before the Appellate Authority that when the income was assessed under Section 44-AC for purchase and sale of 'tendu' leaves but the interest received amounting to Rs. 1,12,335/- on short deposit of idle money no separate addition could have been made in the income declared under Section 44-AC of the Act. The C. I. T. (Appeals) deleted the aforesaid sum.