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TMI Blog1971 (2) TMI 25X X X X Extracts X X X X X X X X Extracts X X X X ..... usiness the company received various amounts from its constituents for incurring expenses for and on behalf of the constituents, and towards commission of the company for services rendered to the constituents. From the various amounts received by the company from a number of constituents a total sum of Rs. 29,643 was lying in the books of the company to the credit of those constituents up to 1960-61 Those amounts were not claimed by the respective constituents. During the relevant accounting year the assessee-company transferred the amount of Rs. 29,643 to the credit of its profit and loss account. The Income-tax Officer treated this amount of Rs. 29,643 as income of the assessee-company during the year 1961-62. The assessee-company urged b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... bunal was justified in coming to the conclusion that the deduction of Rs. 8,679 was not allowable to the assessee in the assessment year 1962-63 because the selling agency in respect of which the amount was payable had ceased to exist in the assessment year 1955-56 ? Firstly, we take up question No. 1 relating to the sum of Rs. 29,643. It is significant that the assessee itself credited this amount to its profit and loss account. Mr. M. P. Mehrotra appearing for the assessee contended that mere entry in the accounts of an assessee does, not create a liability to tax. That is true. But an entry in the accounts of a company indicating a receipt is, prima facie, evidence of income. The assessee advanced a number of pleas in support of its co ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the company chose to indicate the various amounts in its books as deposits outstanding in favour of the constituents. So long as those sums represented deposits in favour of the constituents, the sums could not be treated as income of the assessee. It was only during the relevant accounting year that the sum of Rs. 29,643 was transferred from the deposit account to the profit and loss account. It was at this stage that the amount assumed the character of income of the assessee. The Tribunal was right in holding that the sum of Rs. 29,643 represented income of the assessee for the assessment year 1962-63. Next we have to consider the sum of Rs. 8,679 mentioned in question No. 2. The income-tax authorities gave different reasons for disallo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ntinued after 1955-56. All that happened was that the relationship of principal and agent between Messrs. Turpentine and Subsidiary Industries Ltd. and the assessee-company ceased in the year 1955-56. But that does not imply that the assessee's commission business ceased. In the statement of the case it was stated by the Tribunal that the "assessee is a public limited company carrying on business of clearing and forwarding agents, selling agents and commission agents." That observation clearly implies that the commission business of the assessee continued even after the year 1955-56. At one time the assessee was an agent of Messrs. Turpentine and Subsidiary Industries, Ltd. In connection with that agency, the assessee-company incurred a ce ..... X X X X Extracts X X X X X X X X Extracts X X X X
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