9911796707
TMI Blog2000 (8) TMI 3X X X X Extracts X X X X X X X X Extracts X X X X ..... urt, the following question of law referred by the Income-tax Appellate Tribunal to the High Court (see [1995] 216 ITR 602) under section 256(1) of the Income-tax Act, 1961, has been answered in the negative, i.e., in favour of the Revenue and against the assessee : "Whether, on the facts and in the circumstances of the case, the Appellate Tribunal is right in law in upholding the order of the Commissioner of Income-tax deleting Rs. 14,96,130 being the excess realisation over and above the authorised price on sale of sugar ?" The aggrieved assessee has come up in appeal. The appellant-company manufactures sugar and other items. It follows the mercantile system of accounting. In the assessment year 1972-73, the levy price of sugar was ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he opinion of the High Court at the instance of the Revenue. The High Court answered the question in the negative as already stated. The writ petition preferred by the appellant before the High Court of Andhra Pradesh came to be dismissed on February 18, 1971. With the dismissal of the writ petition, the interim order passed by the High Court came to be vacated automatically. It is pertinent to note that neither the interim order of the High Court had specifically cast a liability on the appellant-company to refund the amount to the purchasers of the sugar from whom the excess amount was realised in the event of the petition being dismissed nor did the final order of the High Court direct the appellant to refund the amount. All that the i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nt-company being dismissed by the High Court and, therefore, it was a liability of the appellant-company. The Income-tax Officer and the High Court have erred in treating the excess amount as trading receipt of the company. Dr. Gauri Shankar, learned senior counsel for the Revenue, has, on the other hand, submitted that the excess amount was realised by the appellant-company as price of the sugar sold by it during the course of its trading activities and, therefore, it has been rightly held by the High Court to be a trading receipt of the appellant-company. We will refer to the law laid down in a few cases by this court. In Chowringhee Sales Bureau P. Ltd. v. CIT [1973] 87 ITR 542 (SC), the appellant as an auctioneer effected sales of fur ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... holesalers. The Government devised a scheme entitling the distillers to charge the wholesalers a price for the bottles in which the liquor was supplied, at the rates fixed by the Government which price was bound to be repaid on return of the bottles. The distiller collected from the wholesalers certain amount as security deposits though not authorised by the Government scheme. This security deposit was also returned as and when the bottles were returned. This additional sum was entered by the assessee under the heading "Empty bottles return deposit account". A question arose whether the assessee could be assessed to tax on the balance of the amounts of these additional sums left with the assessee after the refunds were made. This court held ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... year 1968-69 was concerned the amounts collected in the name of "rusum" constituted business receipts of the appellant. In the case at hand, the excess amount of Rs. 14,96,130 was realised by the appellant-company in the ordinary manner of its business activities and as the price of sugar sold by it. The amount was retained by the assessee as price of the sugar sold by it though the right of the appellant-company to realise the amount was the subject of dispute. The interim order of the High Court, looking to the phraseology employed therein, would not make any difference in the nature of receipts by the assessee. Though learned senior counsel for the appellant submitted that the excess amount was retained in a separate account, that wou ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ding in the High Court and the High Courts had passed different interim orders pursuant to which the respective assessees were collecting the excess price. Though the interim orders of the High Courts are differently worded in the three cases, one common feature of all the orders is that the realisation of the excess price by the respective assessees was hedged by several conditions one of which was that the assessee shall refund the amount received in excess of the price fixed in the event of the pending dispute being decided adversely to the assessee by the court. Thus the receipt of the amount by the assessee was clearly associated with a liability to refund the amount, which liability was ascertainable and quantified. Such is not the ca ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
