Trading receipts in auction business include sales tax collections, even if kept separately and liability remains disputed.

Amounts collected by an auctioneer from purchasers as sales tax were treated as trading receipts and included in business income because the receipts arose in the course of the auction business and formed part of the commercial transaction. The character of the receipt was fixed at the time of collection, and neither the assessee's dispute over liability nor the maintenance of a separate account changed that character. The amount was not held merely as a custodian for vendors, and any later payment to the State or refund to purchasers did not alter its taxable nature when received. The reference was answered against the assessee.

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Issues: Whether the amount collected by an auctioneer from purchasers as sales tax, and retained in a separate account pending determination of liability, formed part of its business income and was taxable as trading receipts.

Analysis: The amount was collected in the course of the assessee's auction business and formed an integral part of the commercial transaction. The character of the receipt had to be determined at the time of receipt. Even though the assessee disputed its liability to pay sales tax and kept the amount in a separate account, that circumstance did not alter the nature of the receipt. The amount was not collected merely as a custodian for the vendors, but as an amount realised by the assessee in its trading capacity. The possibility of later payment to the State or refund to purchasers did not prevent the amount from being a trading receipt when received.

Conclusion: The sum of Rs. 32,986 was rightly included in the assessee's business income and the exclusion was not justified; the answer to the reference was against the assessee.

Final Conclusion: Amounts collected by an auctioneer as sales tax from purchasers, when received in the course of business, constitute taxable trading receipts notwithstanding separate accounting or pending disputes as to ultimate liability.

Ratio Decidendi: The character of a receipt for income-tax purposes is fixed when it is received, and amounts realised in the course of business as part of a commercial transaction are trading receipts even if they are later claimed to be refundable or payable to another authority.

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