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Income‑tax References Nos. 43 and 18 of 1976, decided on 5th February, 1981.

Income‑tax Act (XI of 1922)‑--

‑‑--S. 4‑Assessment‑Nature and quality of receipt and not head under which entered in account books proves decisive‑Receipt in fact a trading receipt but not so shown in account books of assessee Assessing authority not prevented from treating same as trading receipt.

Amar Singh Modi Lal v. State of Haryana A I R 1972 Pb. & Hary. 356 ref: Chowringhee Sales Bureau (Pvt.) Ltd. v. C. I. T. (1973) 87 I T R 542 fol.

R. P. Sawhney for the Assessee.

D. N. Awasthy with B. K. Jhingan for the Commissioner.

S. P. GOYAL, J.‑

This judgment will dispose of income‑tax Reference' No: 43 and Income‑tax Case No. 18 of 1976 as they arise out of the same judgment of the Income‑tax Tribunal. The assessee‑firm is carrying on the business of brick‑kiln and‑Its total income for the assessment year 1971‑72 was assessed at Rs. 36,660. In the total income were added two amounts of Rs. 6,680 and Rs. 2,296, which were collected by the assessee on account of a royalty payable to the State Government. However, on a challenge by some of the brick‑kiln owners, it was held by a Full Bench decision of this Court in Amar Singh Modi Lal v. State of Haryana ((1973) 87 I T R 542), that no royalty was payable to the Government unless a certain procedure was followed. Because of that judgment, the assessee was absolved of its duty to pay the royalty and this amount was, consequently, added to the total income of the assessee.

The assessee challenged the order of the I. T. O. before the A. A; C. as well as the Tribunal on the ground that the amount question selected by the assessee from various customers during the accounting year were being held by the firm in trust for the said customers and, therefore, the same could not be treated as belonging to it or as its income. The contention of the assessee was repelled by the Tribunal relying on a Supreme Court decision in Chowringhee Sales Bureau (Pvt.) Ltd. v. C.I.T. (A I R 1972 Pb. & Hay. 356). However, on the application of the assessee, the following question eras referred to this Court under section 256(1) of the I. T. Act, 1961 :

"Whether, on the facts and in the circumstances of the case, the Tribunal was right in law in holding that the additional charge made by the assessee on account of royalty from the purchasers of bricks sold by the assessee was includible in the taxable income of the assessee "

After the decision by the Tribunal dated 30th September, 1974, the assessee moved an application for a rectification of the order on the ground that the contention raised by it that the amount in dispute could not be taken as income of the assessee during the accounting year, had not been noticed. This application was rejected by the Tribunal, vide order dated 30th January, 1975 (Annex. E), observing that the contention of the assessee before them was not that the amount in question though received during the previous year ending 30th September, 1970, became trading receipts only during the subsequent .year either as a result of the judgment of the High Court dated 25th March, 1971, in Civil Writ No. 2004 of 1970 (Amar Singh Modi Lal v. State of Haryana, or as a result of the assessee writing off the said amount in the balance‑sheet dated 7th September, 1971. It was because of this order that the prayer of the assessee in the application under section 256(1) of the Act to get the following question of law referred to was also declined:

"Whether, on the facts and in the circumstances of the case, the Tribunal was justified in law in holding that the royalty collected by the peti tioner and held not payable to the Government in view of the decision in A I R 1972 Pb. & Hay. 356 is taxable as income for the assessment year 1971‑72 "

This led to the filing of Income‑tax Case No. 18 of 1976 under section 256(2) for the issuance of a mandamus directing the Tribunal to refer the said question.

So far as the prayer for a mandamus is concerned, as is evident from the facts stated above, the question framed does not arise from the order of the Tribunal. The learned counsel for the assessee, however, urged that a question raised but not decided by the Tribunal would also be a question arising from the order of the Tribunal. There can be no dispute with this proposition, but in the present case, we are not satisfied that the question was raised before the Tribunal. The assessee moved an application for a rectification of the order of the Tribunal which was rejected with a clear finding that no such question was raised: In view of this finding, we are unable to agree with the learned counsel for the assessee that such a question was raised but not dealt with. The application for a mandamus is, con sequently, dismissed.

So far as the question referred to this Court is concerned, it is not necessary for us to deal with it in detail as in our view it stands concluded by the judgment of the Supreme Court in Chowringhee Sales Bureau Pvt. Ltd. s case. In that case, the assessee, a private company, dealing in furniture, also acted as an auctioneer. In respect of the sales effected by it as auctioneer, the appellant realised during the relevant period, in addition to the com mission, Rs. 32,986 as sales tax. This amount was credited separately in its account books under the head "Sales tax collection account". The assessee did not pay the amount of sales tax to the actual owner of the goods, nor did it deposit the amount realised by it as sales tax in the State Exchequer, because it took the position that the statutory provision creating that liability upon it was not valid, nor refund it to the persons from whom it had been collected. On these facts, it was held that the sum of Rs. 32,98 realised as sales tax by the appellant in its character as an auctioneer formed part of its trading or business receipts and 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. It was 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 and, if a receipt, is a trading receipt the fact that it is not so shown 9n the account books of the assessee would not prevent the assessing authority from treating it as a trading receipt. Except that, here, the amount in dispute was collected as a royalty, there is no point of distinction between the case before the Supreme Court and the present case.

The question referred, therefore, has to be answered in the affirmative and w order accordingly. No costs.

Question answered in affirmative,

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