1992 (11) TMI 15

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..... the Supreme Court from the Poona Municipal Corporation did not constitute trading receipt and was not taxable income ? 2. Whether, on the facts and in the circumstances of the case, the Tribunal ought to have in any case held that the transaction in filing the suit for refund of octroi duty, obtaining a decree and recovering the decretal amount along with interest was an adventure in the nature of trade?" The assessee is a legal heir of one deceased, M. M. Bhapkar, who was carrying on business as partner of a partnership firm in the name and style of N. L. Bhapkar and Co. The partnership carried on business as carting agent. After the original assessment for the assessment year 1961-62 had been completed, the Revenue issued notices unde .....

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..... ready stated. The Income-tax Officer, in the assessment proceedings, held that the amount refunded by the Poona Municipal Corporation to the assessee was a trading receipt which would be liable to be included as income in its hands. This view was reversed by the Appellate Assistant Commissioner in appeal. On further appeal, the Tribunal confirmed the view of the Appellate Assistant Commissioner and held that the assessee had received the said amount from the said corporation merely as an agent or trustee of persons on whose behalf it acted as an agent and that there was no element of trading receipt involved in the receipt of the said amount on the part of the assessee. In arriving at this decision, the Tribunal followed the earlier decis .....

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..... 55, the Poona Municipal Corporation became obliged to refund the ten per cent. of the octroi amount retained in its hands. The question arose in the income-tax proceedings as to whether the refunded amount was assessable as trading receipt or income in the hands of the agent. The Revenue having failed in the proceedings at the level of the Tribunal, two questions were referred for the opinion of this court and the questions are more or less similar to the questions that have been referred in the present case also. In Smt. Lilavati F. Shah's case [1990] Tax LR 946, the court opined that the amount refunded by the Municipal Corporation and received by the assessee could not be held to be a trading receipt liable to tax as income. The second q .....

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