Trading receipt character depends on receipt date; sales tax collections formed taxable income despite being described as deposits.

Amounts collected by a commission agent from customers as sales tax deposits were treated as trading receipts because their character was fixed when received. A sum forms part of taxable trading income if it is received as part of the commercial price in a trading transaction, even if the books describe it as a deposit and even if it may later be refundable. The later treatment of the money is irrelevant. As the collections were taken in each sale transaction and were inseparable from the trading activity, they were liable to income-tax as trading receipts.

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Issues: Whether amounts collected by a commission agent from customers, described as sales tax deposits and kept in a separate account, constituted trading receipts liable to income-tax.

Analysis: The decisive test was the character of the receipt at the time it was received. A sum is a trading receipt if it is part of the price of the goods or is so linked to each commercial transaction that it has a profit-making character, even if the books describe it as a deposit and even if it may later be refundable. The later treatment of the money is immaterial; what matters is whether, when received, it forms part of the trading transaction. Applying that principle, the collections in question were made in each sale transaction in an amount equivalent to the sales tax likely to be payable, were charged to customers as part of the price, and were therefore inseparable from the trading receipts of the business.

Conclusion: The amounts collected as and by way of sales tax were trading receipts and were liable to tax.

Ratio Decidendi: Where a sum is received as part of the commercial price in a trading transaction, its description as a deposit does not alter its character as a taxable trading receipt; the relevant character is fixed when the money is received.

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