2006 (7) TMI 99

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....ances of the case, is not the order of the Tribunal for the assessment year 1987-88, one supporting the case of the Revenue for the assessment year 1986-87 ? 3. Whether, on the facts and in the circumstances of the case and in the light of the finding of the Tribunal in the order relating to the assessment year 1987-88 that the amount deposited in the treasury cannot form part of trading receipts and the balance remaining unpaid has to be treated as trading receipts should not the Tribunal have upheld the order of the assessing authority of the assessment year 1986-87 ?" 2 The assessee is a firm of auctioneers in cardamom having its principal place of business at Santhanpara. The assessment year relates to 1986-87. Original assessment was....

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....-87. Reliance was placed on the decision of the apex court in Chowringhee Sales Bureau P. Ltd. v. CIT [1973] 87 ITR 542; [1973] 31 STC 254 and Sinclair Murray and Co. P. Ltd. v. CIT [1974 97 ITR 615 ; [1974] 35 STC 142. 4 The assessee, aggrieved by the order of assessment, took up the matter in appeal before the Commissioner of Income-tax (Appeals). Before the Commissioner on behalf of the assessee reference was made to the order of the Income-tax Appellate Tribunal, Cochin Bench in I. T. A. No. 765ICoch./ 91, dated April 28, 1994, in respect of the assessment year 1987-88. The Commissioner (Appeals) partly allowed the appeal holding that the amount deposited by the assessee out of the sales tax collection in the cardamom auction is an al....

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.... Rs. 14,254 has to be treated as trading receipt and hence income of the assessee for this year as the assessee has hot deposited the same till date." 6 As far as the present case is concerned, the assessee had not deposited the entire amount collected. Counsel referred to the assessment order and submitted that out of the sales tax collected only an amount of Rs. 3,23,138.37 was paid over to the Sales Tax Department. Similarly out of the additional sales tax amount collected only an amount of Rs. 46,593.73 was paid over to the Sales Tax Department and thus there is a credit balance of Rs. 4,23,180.83. The assessee had collected a sum of Rs. 59,705.54 towards handling charges and the actual amount of handling charges paid during the year w....

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....receipt and not the head under which it is entered in the account books would prove decisive. 9 The collection of sales tax, additional sales tax and handling charges are taxable as trading receipts. The deduction of sales tax is governed by section 43B of the Income-tax Act. As per section 43B deduction is permissible only in the year in which such sums are actually paid over to the Government account. The sales tax realised by an assessee along with the sale price would be part of the trading receipts. The amount of sales tax, additional sales tax, handling charges and surcharge on sales tax collected by the assessee should have been credited in the accounts a income and deduction should have been claimed for the amount actually paid ove....