1980 (10) TMI 24 - HC - Income Tax

Summary

Issues involved:
1. Forfeiture of advances received by the assessee and its taxability as income.
2. Forfeiture of security deposits of employees and its treatment as revenue receipt.
3. Admissibility of an additional ground of appeal regarding expenditure incurred under the "Monsoon Gift Scheme."

Forfeiture of advances received by the assessee:
The High Court held that the amount of Rs. 3,155 representing security deposits of suppliers/purchasers forfeited by the assessee constituted revenue receipts to be included in its total income. The contracts related to the security deposits were connected with the business of the assessee, and the forfeiture of these deposits had to be considered as income. This decision was based on previous judgments and legal provisions.

Forfeiture of security deposits of employees:
The High Court determined that the sum of Rs. 22,823 forfeited on account of security deposits of employees was also considered a receipt of a revenue nature. The deposits were related to the business of the assessee, as employees had agreed to forfeit them in case of premature termination of their service. The Tribunal's decision confirming the inclusion of this amount as income was upheld.

Admissibility of additional ground of appeal:
Regarding the additional ground of appeal concerning the expenditure of Rs. 47,539 incurred under the "Monsoon Gift Scheme," the High Court ruled in favor of the assessee. The Tribunal was criticized for not admitting the additional ground, emphasizing that the Tribunal has the power to allow additional pleas and evidence to ensure substantial justice between the parties. The failure to raise the plea earlier was not considered a sufficient reason to deny the claim, especially when the expenditure was exclusively related to the business of the assessee.

In conclusion, the High Court upheld the taxability of forfeited amounts as income in the first two issues. However, it ruled in favor of the assessee regarding the admissibility of the additional ground of appeal, emphasizing the Tribunal's wide powers to ensure justice between the parties.