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Issues:
1. Determination of whether the balance in the suspense account is part of the sale price or amounts repayable to parties. 2. Deciding ownership of the balance in the suspense account collected from purchasers. 3. Entitlement of the assessee to deduction of amounts refunded to parties after treating the balance amount in the suspense account as income of the year. Issue 1: The case involved the assessment of whether the balance in the suspense account, amounting to Rs. 21,33,069, was to be considered as part of the sale price or as amounts repayable to parties upon demand. The Tribunal held that the amount collected by the assessee was indeed part of the consideration for the sale of arrack and constituted a trading receipt. The Tribunal rejected the argument that the excess amount collected was not a trading receipt due to being credited in a separate suspense account. The High Court endorsed the Tribunal's view, emphasizing that the nature and quality of the receipt as sale proceeds of arrack were crucial, regardless of the accounting treatment. Issue 2: Regarding the ownership of the balance in the suspense account collected from purchasers, the assessee claimed that the amounts were collected separately and were meant to be refunded after a price revision by the Government. The Commissioner of Income-tax (Appeals) accepted this argument, citing precedents. However, the Tribunal disagreed, asserting that the amount collected was part of the price of what was sold and constituted a trading receipt for the assessee. The High Court concurred with the Tribunal, emphasizing that the nature of the receipt as part of the sale price was significant, irrespective of subsequent refunds to customers. Issue 3: The question of whether the assessee was entitled to deduction of amounts refunded to parties after treating the balance in the suspense account as income of the year was also examined. The Assessing Officer had added the amount to the total income, considering it a trading receipt. The Commissioner of Income-tax (Appeals) and the Tribunal differed on this matter, with the Tribunal ruling in favor of the Revenue. The High Court upheld the Tribunal's decision, stating that the assessee could claim deduction in subsequent years when refunds were made to customers, thereby endorsing the view that the amount collected was part of the sale price and constituted a trading receipt for the assessee. In conclusion, the High Court ruled in favor of the Revenue on all issues, emphasizing that the excess amount collected by the assessee from the sale of arrack was indeed a trading receipt, constituting part of the price of what was sold. The nature and quality of the receipt as sale proceeds of arrack were deemed crucial, regardless of accounting entries, and the assessee could claim deductions in subsequent years when refunds were issued to customers.
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