Trading receipts include sales tax collected in business, even when separately billed and held in a separate account.

Sales tax amounts collected by an auctioneer from purchasers were treated as trading receipts because their character was determined when received in the course of the auction business. Separate billing, separate accounting, or the possibility of later payment to the State or refund to purchasers did not change their commercial character at receipt. The amounts were therefore includible in business income, and the taxability of the disputed collections was upheld against the assessee.

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Issues: Whether sales tax amounts collected by an auctioneer from purchasers, though shown separately in the bills and kept in a separate account, formed part of the assessee's trading receipts and were includible in business income.

Analysis: The receipt had to be judged by its character at the time it was received. The amounts were collected by the assessee in the course of its auction business and were an integral part of the commercial transaction. The fact that the amounts were entered separately, or that their ultimate destination might be payment to the State or refund to purchasers, did not alter their character when received. The Court rejected the view that the sums retained the character of sales tax merely because they were separately credited or remained unpaid.

Conclusion: The amounts collected as sales tax were trading receipts of the assessee and were includible in its business income. The question was answered against the assessee and in favour of the Revenue.

Final Conclusion: The reference failed on the merits, and the taxability of the disputed collections was upheld.

Ratio Decidendi: A receipt is taxable according to its character when received; amounts collected in the course of trading as part of a commercial transaction are trading receipts even if separately described or held pending further liability or refund.

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