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TMI Blog2011 (7) TMI 112X X X X Extracts X X X X X X X X Extracts X X X X ..... rounds enumerated below : 1. The order of the CIT(A) is opposed to law and facts of the case. 2. On the facts and circumstances of the case and in law, the CIT(A) has erred in deleting the addition of Rs. 14,33,000 being excess dividend recovered by the assessee during the year which was not refunded to the rightful owners. 3. For these and other grounds that may be urged at the time of hearing, the decision of the CIT(A) may be set aside and that of the Assessing Officer restored." 2. The assessee is a Non-Banking Finance Company as defined by the Reserve Bank of India, under the category "investment company". In the course of its business, the assessee sold shares which it held as investments. The transfer of shares had taken place in the earlier assessment years. The transfer of names of the transferee was not recorded in the register of members of the company whose shares were transferred by the assessee. Therefore dividend declared by the companies on those shares was paid to the assessee. The assessee received a sum of Rs. 14.33 lakhs during the previous year in this regard. The same was shown as part of sundry creditors under the heading "Excess Dividend ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he State Exchequer, because it took the position that the statutory provision creating that liability upon it was not valid. The assessee also did not even refund the Sales Tax to the persons from whom it had been collected. In the cash memos issued by the assessee to the purchasers in the auction sales, the assessee was shown as the seller. On the above facts, the Hon'ble Supreme Court held that : (a) An Auction Sale would have to be considered to be a sale for the purpose of the Sale of goods Act. (b) An Auctioneer, who carries on the business of selling goods and who has in the customary course of business authority to sell goods belonging to the principal, should be included within the definition of the word 'dealer'. (c) As the amount of Sales Tax was received by the appellant in its character as an Auctioneer, the amount, in the view of the Supreme Court, should be held to form part of its trading or business receipt. (d) It is the true nature and quality of the receipt and not the head under which it is entered in the account books as would prove decisive. The assessee pointed out that in its case, it has received dividend on shares which are no longer part ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... res which the assessee had already transferred. He also submitted that the claim of the assessee that the shares on which the dividend in question were received by the assessee, were held as Investment has not been examined. According to him, the claim of the assessee without proof of the above basic facts should not have been accepted by the CIT(A). In this regard, it was also submitted by the learned D.R. that even if Assessing Officer had not raised dispute on the above aspects, it was the duty of the CIT(A) to have examined the same. It was further submitted by him that the principle of consistency which was one of the basis on which the CIT(A) deleted the addition made by the Assessing Officer, would not be applicable because the principle of res judicata is not applicable in Income-tax proceedings. It was further submitted that dividend received by the assessee was part of trading receipts though assessed under the head "Income from other sources" under section 56 of the Income-tax Act, 1961 (the Act). He placed strong reliance on the decision of the Hon'ble Supreme Court in the case of Chowringhee Sales Bureau Ltd. (supra). 6. The learned counsel for the assessee reiterate ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... uestion were dividend which are lawfully payable to the transferees of shares by the assessee is correct. 8. The law is well settled that all receipts are not income. Only those receipts which are in the character of income can be assessed to tax. The definition of 'Income' as given in the Act, under section 2(24) is an inclusive definition. Anything which can properly be described as income, is taxable under the Act unless expressly exempted. The expression "Income" has to be understood in its natural meaning. Its natural meaning embraces any profit or gain, which is actually received. The idea behind providing an inclusive definition in section 2(24) is not to limit it's meaning but to widen its net. The charging section viz., section 4 of the Act, refers to the charge of Income-tax being on the total income of the previous year of every person. Section 5 defines scope of total income and it talks of income from whatever source derived which is received or deemed to be received in India or which accrues or arises or is deemed to accrue or arise in India. The income bears its quality as income only if it is received by the assessee, or it has accrued or has arisen to the assesse ..... X X X X Extracts X X X X X X X X Extracts X X X X
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