1978 (4) TMI 64

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..... um of Rs. 45,845 being a part thereof in the sales tax account was liable to be added in the assessment of the assessee for the assessment year 1962-63 ? " The facts found and/or admitted in these proceedings may shortly be stated as follows : At the income-tax assessment of Kumardhubi Engineering Works Ltd., Calcutta, in the assessment year 1962-63 (the corresponding previous year having ended on the 30th November, 1961), the Income-tax Officer found that the assessee maintained a separate sales tax account to which receipts were credited and payments debited. The Income-tax Officer held that the sales tax receipts formed part of the sale price and the payments (except to the extent paid out of the untaxed receipts of earlier years), con .....

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..... r with the Accountant Member that the amounts collected on account of sales tax did not form part of the sale price or had the character of a deposit. He found that the deduction claimed in respect of sales tax collected was disallowable because the receipt of the amounts thereof was coupled with a corresponding liability of an equal amount ascertained and due under the sales tax law. He found that the assessee was under a legal obligation to realise the sales tax due and make over the same to the Government and this liability of the assessee was independent of any realisation by it from its customers and was determined purely with reference to the sales. The controversy in the present reference is, in our opinion, settled by the decisions .....

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..... ablished by the decision of the Supreme Court in the case of Kedarnath Jute Manufacturing Co. Ltd. v. Commissioner of Income-tax [1971] 82 ITR 363. If that is the position, in order to determine that liability where the assessee had not paid the amount, it must be, according to the scheme of the Sales Tax Act, an estimate of the assessee. In a particular case, however, where there are materials to show that the estimate is either frivolous or false or the estimate is disputed, other considerations might arise ............ Therefore, for an assessee who was maintaining accounts under the mercantile system of accounting the liability has arisen and if the assessee has estimated his liability, that liability the assessee is entitled to deducti .....

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