9911796707
TMI Blog1988 (7) TMI 83X X X X Extracts X X X X X X X X Extracts X X X X ..... facts and in the circumstances of the appellant's case as well as in view of the clear language of s. 43B, the learned CIT(A) was not justified in confirming the said addition made by the ITO since the provisions of s,.43B of the IT Act are not attracted in the appellant's case. 2. In respect of the first two grounds we had an occasion to deal with them while disposing of the appeals pertaining to Asst. yrs. 1982-83 and 1983-84. In view of the detailed reasons recorded by us in our order dt. 21st July, 1988 pertaining to asst. yr. 1982-83 in ITA No. 3006/Ahd/1986 the decision of the CIT(A) in respect of these two grounds is confirmed. 3.As regards the third ground also, the matter has been discussed in detail in ourorder in ITA No. 2849/Ahd/1987 pertaining to asst.yr. 1983-84. There is not change in the facts between both the years and in any case no distinguishing features have been pointed out by the Departmental Representative in the course of his arguments. Accordingly, our decision for asst. yr. 1983-84 would apply in respect of the present assessment year as well. We are, however, setting forth the details of the claim pertaining to bad debts and this would be as per An ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... are in the nature of trading receipt collected by it during the ordinary course of business carried on by the company and therefore, it within the meaning of income which is required to be included in the computation of total income in view of provisions of s. 28 of the Act. The position of law is now well established in view of decisions of various High Court and particularly decision of Supreme Court in the case of Chowringhee Sales Bureau Pvt. Ltd. vs. CIT reported in (1973) CTR (SC) 44: (1973) 87 ITR 542 (SC)". 6. In view of the aforesaid decision of the Supreme Court, the ITO treated the sum of Rs. 4,43,76,082 as the income of the assessee. He also rejected the contention of the assessee to the effect that if the aforesaid amount was to be treated as the trading receipt then a corresponding deduction be allowed since the amount was payable to the Government. In doing so, the ITO invoked the provisions of s. 43B which had been inserted w.e.f.1st April 1984, viz. asst. yr. 1984-85. It was further observed that the deduction could be allowed to assessee only in the year in which the actual payment was made. 7. Before the CIT(A) the following arguments were advanced on behal ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . which are claimed as liability but not paid actually. It is pointed out that this unpaid Electricity Duty was not yet due for payment as per the Gujarat Electricity Duty Act, 1958 and therefore, no disallowance could be made under s.43B (the decision of Cochin Tribunal S. Govindraja Reddiar vs. ITO (1986) 19 ITD 177 (Cochin) relied upon). 8. The CIT(A) after considering these submissions made on behalf of the assessee, confirmed the action of the ITO on the following lines : I have heard the submission. I do not accept the contention of the learned. Authorised representative that the Electricity Duty is different from sales-tax. The Electricity Duty is a statutory liability like sales-tax. It is collected in the composite bill from the customer and for the customer it makes no difference since they pay the consolidated sum to the appellant company. This duty is payable to the Government as a overriding charges as per provisions of s. 4 of the Gujarat Electricity Duty Act. It is also payable as per the rules within 40 days after the expiry of the calendar month for which it is levied. Similar provision also contain in respect of sale-tax,viz, it is also collected in a compos ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r and the same is confirmed". 9. The learned counsel for the assessee in the course of his arguments reiterated submissions as made before the ITO as also the CIT(A). The following aspects of the matter, however, were highlighted: (1) That the appellant company was only a licensee acting on behalf of the Government of Gujarat for the purposes of collecting Electricity Duty from the consumers. That for performing these services it was entitled to a commission of Rs. 6000 per annum. (2) That the amount collected from time to time was credited to a separate account and all payments made thereafter to the Gujarat Government were also debited to the same account (3) That this account papered directly in the balance sheet of the appellant company and no part of it figured in the P L A/c, either in the receipt side or the payment side. (4) That the provisions of s. 43B would not be applicable since these would come into the picture only in a situation where the assessee claims something as a deduction in the Profit Loss Account. (5) That the amount of Rs. 4,43,76,082 comprised of the Electricity Duty collected from various consumers but payable to the Government A/c on ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... : (1988) 38 Taxman 272 (AP). (ii) ITO vs. Thakersi Babubhai and Co. (1986) 26 TTJ (Ahd) 517 : (1986) 18 ITD 593 (Ahd) (iii) S. Govindraja Reddiar vs. ITO (1986) 19 ITD 177 (Cochin). 13. The learned Departmental Representative on the other hand strongly supported the orders of the lower authorities. His arguments in fact were advanced on lines identical to those as had weighed with the ITO in making the addition and the CIT(A) in confirming it. According to him there was no distinction as sought to be made out by the assessee's counsel in so far as the Sales-tax and Electricity Duty were concerned. It was submitted that both of them were collected from the purchaser/consumer and in both of them the assessee was acting as an agent. It was further stated that a refund both in respect of Sales-tax as also in respect of the Electricity Duty ultimately went to the purchaser/consumer although the authority for making the refund may be different in both the cases. Another submission made by the Departmental Representative was that the payment of commission to the assessee by the Gujarat Government did not change the nature of the arrangement since its character continued to remai ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ee Sales Bureau and Sinclair Murray Co. Pvt. Ltd. would not apply to the facts of the assessee's case. The distinction drawn by the assessee counsel is correct since in both those cases the amounts were collected and had become payable to the Government account during the year under consideration but not paid and used in the business. There is no such finding in the assessee's case. 19. We also find that the amount under consideration was not due for payment to the Government a/c till the subsequent assessment year. The copies of the challans placed at pages 53 to 56 of the paper book prove this aspect of the matter since these pertain to the collections in the months of January, February and March, 1984 but paid on various dates beginning April, May, June and July, 1984. As the amount in question is not statutorily payable during the year under appeal, the three decisions relied upon by the assessee's counsel would squarely apply. For purpose of disposing of the present appeal, however we need refer to only the latest decision of the Andhra Pradesh High Court in the case of S. Subba Rao Co. Their Lordships, while disposing of the matter, made the following observations: ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ue pertaining to the distinction between the provisions of law applicable to Sales-tax and those applicable to Electricity Duty. Sec. 4 of the concerned legislation clearly brings out the difference since in respect of Electricity Duty the licensee/agent is not liable to pay the duty in cases where it is not able to recover the same from the consumer. This is not so in respect of the Sales-tax since the seller is obliged to make the payment of the same even if it is not able to recover the same from the customer. 21. In the final analysis we would hold that the provisions of s. 43B would not be applicable to the facts of the assessee's case since the amount sought to be added does not belong to the assessee but is only retained for a short time as a collecting agent or custodian and subsequently paid over to the Government account within the statutory period. On the same analogy it would fall to be considered as a trading receipt as well. We accordingly direct the ITO to delete the addition made by him and allow the necessary relief to the assessee. 22. Before we part with this appeal, we would like to refer to the amendment brought about by the Finance Act, 1987, w.e.f. 1st ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
