Business income treatment of unclaimed credit balances confirmed where surplus from under-charges was transferred to profit and loss account.

Amounts recovered as under-charges in the course of business and retained in credit balances, with the surplus transferred to the profit and loss account, were treated as business income and included in total income. The High Court also noted that a different factual view taken in another assessment year did not justify remand or fresh evidence, because income-tax proceedings are year-specific and there is no res judicata between assessment years. On those facts, the referred question was answered in the affirmative and against the assessee.

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Issues: Whether the amount of unclaimed credit balances written off during the relevant previous year, representing under-charges recovered in respect of freight on coal supplies, was liable to be included in the assessee's total income for the assessment year 1955-56.

Analysis: The Tribunal's findings for the relevant assessment year showed that the assessee recovered the under-charges in the course of its business, retained them in a credit balance, paid claims as and when made by permit holders, and transferred the surplus to its profit and loss account as miscellaneous receipts. The Court held that no ground was made out for remand or for taking fresh evidence merely because a different view had been taken on facts in another assessment year. It further held that there is no res judicata in income-tax proceedings and that findings in one assessment year do not control another year.

Conclusion: The amount was correctly treated as business income and was includible in the assessee's total income. The answer to the referred question was in the affirmative and against the assessee.

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