Conditional refundable receipts kept under court order were not treated as taxable trading income for the assessment year.

Excess collections kept in a suspense account under an interim court order were held to remain conditional and refundable, because the amount was liable to be repaid if the assessee failed in the writ proceedings. The decisive test was the true nature and quality of the receipt, not its accounting treatment. As the refund liability was ascertainable and quantified, the amount did not acquire the character of an accrued trading receipt or taxable income for the relevant assessment year, and the issue was answered in favour of the assessee.

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Issues: Whether the excess collection retained in suspense account, being subject to refund depending on the result of the writ proceedings and quantified liability to refund, constituted taxable income or trading receipt for the relevant assessment year.

Analysis: The amount was collected under an interim court order and was expressly liable to be refunded if the assessee failed in obtaining relief. The decisive factor was the true nature and quality of the receipt, not merely its treatment in the books of account. Since the liability to refund was ascertainable and quantified, the receipt retained the character of a conditional and refundable amount rather than an accrued trading receipt.

Conclusion: The receipt was not taxable as income of the assessee for the year and the question was answered in favour of the assessee.

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