IKRAHNANDI COAL CO Vs. COMMISSIONER OF INCOME TAX

JUDGEMENT

(1.) The question in this reference is as follows: Whether, on the facts and in the circumstances of the case, the sum of Rs. 41,125 was assessable to tax as the income of the assessee for the assessment year 1958-59?

(2.) The assessment year was 1958-59 and the relevant previous year was the calender year 1957.

(3.) The assessee is a partnership firm. It supplied coal and coke as commission agents to different parties. The assessee purchased coal from collieries in West Bengal, Madhya Pradesh and other collieries outside the State of Bombay and supplied the same to parties in the State of Bombay and received commission either from the party or from the collieries or from both. Coal was usually consigned by the collieries directly to the party concerned but the bills were sent by the colliery to the assessee who in its turn made out a bill charging the party, in addition to the amount of the bill of the colliery, its commission as well as Bombay sales tax at 3 pies per rupee. In the accounts of the assessee the coal supplied by the colliery was shown as purchases and supply was shown as sales. Collections and payments of sales tax were shown in the separate account styled Bombay sales tax account. Sales tax collected from the buyers was credited by the assessee to the Bombay sales tax account while payment of sales tax to the Sales Tax Authorities of Bombay was debited to the same account and not to the sales account. The collections and payments of sales tax were not also shown in the profit and loss account with the result that in none of the preceding assessments the balance left after adjustment of payments was included in the assessee's total income.