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TMI Blog1993 (4) TMI 5X X X X Extracts X X X X X X X X Extracts X X X X ..... ribunal was legally correct in holding that the sums of Rs. 12,80,428 and Rs. 2,23,480 were not rightly included in the total income of the assessee ? " The High Court answered the question in the negative and against the assessee. The appellant-assessee (Agro Corporation) entered into a contract with the State Trading Corporation of India (Trading Corporation) for the sale of tractors imported by the Trading Corporation. The Agro Corporation, under the terms of the contract, were not to charge from the customers/ purchasers of the tractors price more than the ceiling price as approved by the Trading Corporation. During the accounting year ending March 31, 1972, relevant for the assessment year 1972-73, the Agro Corporation sold p a num ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... before the Tribunal was, however, allowed on the following reasoning (at page 604): "After considering the above facts, we hold that on the basis of the mercantile system of accounting followed by the assessee and the contract with the S.T.C. dated 10-9-1970, the sums of Rs. 12,80,428 and Rs. 2,23,480 were not rightly included as income of the assessee during the year and, therefore they are deleted." The Tribunal concluded that the excess amount charged by the assessee was not its trading receipt. It is on these facts that the reference under section 256(2) came to be made before the High Court for its opinion. The High Court reversed the findings of the Tribunal and came to the conclusion that the Income-tax Officer and the Appellate ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ding Corporation merely invited the attention of the Agro Corporation to the fact that it had acted in derogation of the contract entered into with it and called upon the Agro Corporation to refund the excess amount. But then it does not mean that because the Trading Corporation had called upon the Agro Corporation to refund the excess amount, the purchasers could enforce the direction contained in the letter and claim refund of the excess price paid by them. If, to begin with, there was no legal enforceable liability to refund the amount, the same certainly was not created by the letter dated August 5, 1971. No other material was brought to our notice whereunder such a liability to refund the amount had been created in the year in question ..... X X X X Extracts X X X X X X X X Extracts X X X X
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