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TMI Blog2006 (9) TMI 142X X X X Extracts X X X X X X X X Extracts X X X X ..... circumstances, it was not required to recover any excise duty from any purchaser, then, it should not have recovered and should have felt content with a bank guarantee in its favour, but, once it proposes to recover the tax or the excise duty, then, the said recovery would amount to trade receipt in its hand and it would not be entitled to exemption u/s 43B of the Act if it does not actually pay the amount. The Tribunal was unjustified in law and on facts in holding that the trader was entitled to the benefits u/s 43B and not to be charged on the amount recovered under the head of excise duty. The reference is answered in favour of the Revenue. The order passed by the Tribunal is set aside. The reference stands allowed. - HON'BLE R. S ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sessee and the Government, the High Court of Gujarat had stayed its payment, the provisions of section 43B of the Act were not attracted. The submission made by the assessee did not find favour with the Assessing Officer. Placing reliance upon the judgments of the Supreme Court in the case of Chowringhee Sales Bureau P. Ltd. v. CIT [1973] 87 ITR 542, and in the case of Sinclair Murray and Co. P. Ltd. v. CIT [1974] 97 ITR 615, the Assessing Officer held that the excise duty so collected was part of the trading receipt and as such, that should be part and parcel of the assessee's income. The Assessing Officer disallowed Rs. 6,55,595/-. Before him it was claimed by the assessee that an amount of Rs. 1,20,060/- was refunded to one of the pa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ar that whenever the assessee-trader recovers any amount towards sales tax, then, that would be treated to be part of the sale price and if the said sales tax is not paid by the said trader to the concerned Department, then, the sales tax, which is part of the sale price, would be included in the income and, therefore, likewise, the price in the present case which is inclusive of the excise duty would be the sale price for all practical purposes and if the trader does not pay the said money to the concerned Department, then, it would be the trade receipt, inclusive in the income, and under such circumstances, because of non-payment of the said amount, the provisions of section 43B of the Act would apply with full force. 3.1 She has also pla ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ceipts; (ii) that the fact that the appellant credited the amount received as sales tax under the head Sales tax collection account did not make any material difference. The Supreme Court further observed that 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. If a receipt is a trading receipt, the fact that it is not so shown in the account books of the assessee would not prevent the assessing authority from treating it as trading receipt. However, the court also observed that in case the assessee is required to pay the amount to the Government, then, the assessee would, of course, be entitled to claim deduction of the amount as and when it is so paid. T ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... inghee Sales Bureau P. Ltd. [1973] 87 ITR 542 would apply to the facts of the said case. While parting with the case, the court observed that in the said case, if and when the said appellant pays the sum of Rs. 7,14,398/- or any part thereof either to the State Government or to the purchaser, the said appellant would be entitled to claim deduction of the sum so paid. 6. In the matter of Mugat Dyeing and Printing Mills [2007] 290 ITR 282 (Guj), the Division Bench of this court has observed that the words actually paid have been employed in section 43B of the Act, therefore, in view of the non obstante clause contained in section 43B, it would not be permissible to refer to the expression paid , as defined under section 43(2) of the Act or un ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ng that the excise duty recovered from the purchaser was kept with the assessee as deposit. If the assessee was of the opinion that under the circumstances, it was not required to recover any excise duty from any purchaser, then, it should not have recovered and should have felt content with a bank guarantee in its favour, but, once it proposes to recover the tax or the excise duty, then, the said recovery would amount to trade receipt in its hand and it would not be entitled to exemption under section 43B of the Act if it does not actually pay the amount. 10. The Tribunal was unjustified in law and on facts in holding that the trader was entitled to the benefits under section 43B and not to be charged on the amount recovered under the head ..... X X X X Extracts X X X X X X X X Extracts X X X X
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