TaxTMI 
TaxTMI 
2003 (11) TMI 57
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.... them into income was a regular trading activity of the assessee liable to tax under the Income-tax Act? Whether the Income-tax Appellate Tribunal was justified in holding that the entire deposit received by the assessee was capital receipt when in the terms and conditions of the application form itself, there is a condition that a part of the deposit will be deducted as administrative and process charges if prematurity payment is taken by the depositor? Whether the Income-tax Appellate Tribunal was justified in treating the deposits as of capital nature when in the cases of CIT v. Karam Chand Thapar [1996] 222 ITR 112 and CIT v. Lakshmi Vilas Bank Ltd. [1996] 220 ITR 305, the apex court has held that any amount deducted/ retained/for....
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....company?" Heard Shri Sambhu Chopra, learned counsel for the Income-tax Department, and Shri Soli Dastur, Shri Percy Pardiwalla and Shri S. D. Singh for the assessee. The assessee is a company registered under the Indian Companies Act. It does the business of collecting deposits from the public under different finance schemes. The relevant assessment year is 1991-92. In respect of this assessment year, the assessee had declared a loss of Rs. 6,24,147 but the Assessing Officer completed the assessment on an income of Rs. 26,00,650. It appears that during this assessment year the sum of Rs. 17,64,054 was collected by the assessee from the depositors, and in the profit and loss account of the assessee a sum of Rs. 3,17,529 was credited....
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....stion as the income of the assessee. The Assessing Officer took 15 per cent. of the opening balance and 30 per cent. collection of the year as the income of the assessee vide the order of the Assistant Commissioner of Income-tax dated March 22, 1994, annexure 1 to the application under section 256(2) filed before us. In appeal the Commissioner of Income-tax (Appeals) modified the order of the Assistant Commissioner of Income-tax, and he took the income of the assessee as 30 per cent. of the collection during the year. In other words he deleted 15 per cent. of the opening balance from the income. However, on further appeal, the Tribunal held in favour of the assessee by observing that no part of the deposits was income of the assessee but....
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....India [1992] 75 Comp Cas 12, the Supreme Court on similar facts held that the deposits were capital receipts and not revenue receipts (vide paragraphs 67 and 68 of the aforesaid judgment). That case also pertains to a finance company which used to collect deposits, and credited part of its deposits to the profit and loss account, as in the present case. Hence, the ratio of the said decision, in our opinion, applies to this case also. It is well settled in income-tax law that book keeping entries are not decisive or determinative of the true nature of the entries as held by the Supreme Court in CIT v. India Discount Co. Ltd. [1970] 75 ITR 191 and in Godhra Electricity Co. Ltd. v. CIT [1997] 225 ITR 746 (SC). It has been held in those deci....