KUNJPURA KILN CO Vs. COMMISSIONER OF INCOME-TAX

JUDGEMENT

(1.) THIS judgment will dispose of Income-tax Reference No. 43 and Income-tax Case No. 18 of 1976 as they arise out of the same judgment of the Income-tax Tribunal. The assessee-firm is carrying on the business of brick-kiln and its total income for the assessment year 1971-72 was assessed at Rs. 36,660. In the total income were added two amounts of Rs. 6,680 and Rs. 2,296, which were collected by the assessee on account of a royalty payable to the State Govt. However, on a challenge by some of the brick-kiln owners, it was held by a Full Bench decision of this court in Amar Singh Modi Lal v. State of Haryana, AIR 1972 P and H 356, that no royalty was payable to the Government unless a certain procedure was followed. Because of that judgment, the assessee was absolved of its duty to pay the royalty and this amount was, consequently, added to the total income of the assessee.

(2.) THE assessee challenged the order of the ITO before the AAC as well as the Tribunal on the ground that the amount in question collected by the assessee from various customers during the accounting year were being held by the firm in trust for the said customers and, therefore, the same could not be treated as belonging to it or as its income. The contention of the assessee was repelled by the Tribunal relying on a Supreme Court decision in Chowringhee Sales Bureau P. Ltd. v. CIT [1973] 87 ITR 542. However, on the application of the assessee, the following question was referred to this court under Section 256 (1) of the I. T. Act, 1961: " Whether, on the facts and in the circumstances of the case, the Tribunal was right in law in holding that the additional charge made by the assessee on account of royalty from the purchasers of bricks sold by the assessee was includible in the taxable income of the assessee ? "

(3.) AFTER the decision by the Tribunal dated 30th September, 1974, the assessee moved an application for a rectification of the order on the ground that the contention raised by it that the amount in dispute could not be taken as income of the assessee during the accounting year, had not been noticed. This application was rejected by the Tribunal, vide order dated 30th January, 1975 (annex. E), observing that the contention of the assessee before them was not that the amount in question though received during the previous year ending 30th September, 1970, became trading receipts only during the subsequent year either as a result of the judgment of the High Court dated March 25, 1971, in Civil Writ No. 2004 of 1970 (Amar Singh Modi Lal v. State of Haryana, AIR 1972 P and H 356) or as a result of the assessee writing off the said amount in the balance sheet dated September 7, 1971, It was because of this order that the prayer of the assessee in the application under Section 256 (1) of the Act to get the following question of law referred was also declined : " Whether, on the facts and in the circumstances of the case, the Tribunal was justified in law in holding that the royalty collected by the petitioner and held not payable to the Government in view of the decision in AIR 1972 P and H 356 is taxable as income for the assessment year 1971-72?"