Trading receipts become taxable income when unclaimed amounts are appropriated to profit and loss account

Amounts initially received for payment to others in the course of trading were not income when received, but their character changed when they remained unclaimed and the assessee transferred them to the profit and loss account as its own profit. That treatment supported taxation in the relevant assessment year, because the receipts had become part of the assessee's income by the time of appropriation. The sums could not be treated as capital receipts or casual gains on those facts, and the amount was rightly assessed as income for assessment year 1957-58.

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Issues: Whether the sum of Rs. 18,295, being amounts retained from claims and refunds, insurance collections, and surplus on Boboins bills, constituted the assessee's income for the assessment year 1957-58.

Analysis: The amounts were originally received by the assessee for payment to others in the course of its trading activities and were not income when received. However, when the amounts remained unclaimed and the assessee itself transferred them to the profit and loss account as its own profit in the relevant previous year, the character of the receipts changed. The assessee's own treatment of the sums as income for that year supported the departmental view that they were taxable in the assessment year 1957-58. The amounts could not be treated as capital receipts or casual gains in the circumstances.

Conclusion: The amount of Rs. 18,295 was rightly treated as the assessee's income for the assessment year 1957-58, and the answer was against the assessee.

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