Trading receipt character prevails over deposit label where collection is made to meet an eventual statutory liability.

An amount collected from motor car purchasers as part of the price structure to meet an eventual excise duty liability was treated as a trading receipt and included in income. The court applied the test of the true character of the receipt at the time of collection, holding that a conditional future refund on production of a certificate did not make the amount a mere deposit. Because the collection was linked to a statutory liability and formed part of the trading receipts, it was taxable and not excludible as a refundable deposit.

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Issues: Whether the differential excise duty amount collected by the assessee from purchasers of motor cars as a deposit was a trading receipt includible in the assessee's total income.

Analysis: The collection was made in connection with the sale of motor vehicles and was intended to meet the ultimate excise duty liability arising under the applicable concession notifications. The amount was collected as part of the price structure, with refund becoming due only if the purchaser produced the requisite certificate within the prescribed time. The decisive test was the true character of the receipt at the time of collection, not the label attached to it or the manner of accounting. A conditional obligation to refund on future compliance did not convert the receipt into a deposit simpliciter. The collection was therefore linked to a statutory liability and formed part of the trading receipts.

Conclusion: The differential excise duty collected by the assessee was taxable as part of its income and was not excludible as a mere refundable deposit.

Ratio Decidendi: Where an amount is collected as part of the price to meet an eventual statutory liability, its true character is that of a trading receipt, even if it is described as a deposit and is refundable only on the fulfilment of a later condition.

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