2006 (2) TMI 127

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....inakaran J.-The above tax case appeal is directed against the order of the Income-tax Appellate Tribunal dated April 29, 1999 made in I.T.A. No.1 2971/Mds/1992, raising the following substantial question of law. "(a) Whether, on the facts and circumstances of the case, the Appellate Tribunal was right in law in deleting the addition of Rs. 1,57,133 being the amounts collected towards sales tax ....

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....wringhee Sales Bureau P. Ltd. v. CIT [1973] 87 ITR 542 on the ground that the assessee collected-sales tax on job work, that it did not keep the money as a separate deposit but used it as its own assets for the purposes of its own business. The crediting of sales tax collected under a separate head called "Contingency deposit" will not alter the character or nature of collection. On further app....

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....s passed on to the State Government or refunded to the purchasers, the assessee would be entitled to claim deduction of the sum when so paid or refunded-vide K.C.P. Ltd. v. CIT [2000] 245 ITR 421 (SC). In the decision relied on by the learned senior counsel, viz., CIT v. Southern Explosives Co. [2000] 242 ITR 107 (Mad), the true character of a receipt was vividly discussed, as to when it would ....

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....e Government, it would still have been open to the assessee to seek refund if the assessee wished to claim such refund on the ground that the tax had been levied at a higher rate than the rate permissible. The fact that the assessee had chosen to adopt the device of labelling a part of the amounts collected towards its sales tax liability as "contingency deposit", could not make a difference. The ....