TaxTMI 
TaxTMI 
1983 (4) TMI 29
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....ncome of the assessee for the accounting year by the ITO, is, inter alia, the significant question to be determined in this bunch of four writ petitions (Nos. 883, 2196, 2367 and 2376 of 1976). Messrs. Sirsa Industries, Sirsa, the petitioner-firm, is engaged in the business of cotton ginning and pressing factory at Sirsa, whereas the second petitioner-firm, M/s. Haryana Cotton Corporation, Sirsa, is doing business in cotton on commission basis. Both the firms are liable to pay Central sales tax on the sales of cotton. They have been collecting Central sales tax from their constituents on the sales of bales of cotton in the accounting years in dispute, but did not pay the same to the State Government. Both the petitioner-firms follow and ....
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....6 of 1976. Similarly, two notices under ss. 147 and 148 of the Act regarding the years 1972-73, 1973-74 and 1974-75 were issued to M/s. Haryana Corporation, Sirsa (hereinafter called " petitioner No 2. It has filed Civil Writ Petitions Nos. 2367 and 2376 of 1976 for quashing these notices. On the authority of the decision of the final court in Indermani Jatia v. CIT [1959] 35 ITR 298 (SC), Mr. P. S. Jain, the learned counsel for the petitioners, has contended that the mercantile system of accounting is substantially different from the cash system of book-keeping. Under the former system, profits and gains are credited whenever they accrue even if they are not actually received. Similarly expenditure items for which legal liability has be....
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.... a perusal of the balance-sheets submitted by the petitioners Nos. 1 and 2 that the amounts collected by them on account of Central sales tax were shown on the liabilities side for each year like any other trading liability towards the creditors of petitioners Nos. 1 and 2. The money was thus inextricably mixed up with the other amounts of the petitioners Nos. 1 and 2 and was thus being utilized by the assessee in their trading and business. The Central sales tax was part of the trading receipt which entirely went into the business of petitioners Nos. 1 and 2, who have realized Central sales tax from their constituents. However, they have not paid this tax to the State Government. These amounts have been mixed up with the other trading rece....
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....tax was received by the assessee in its character as an auctioneer, the amount should be held to form part of its trading or business receipt and as such liable to be included in his business income. He could claim the deduction only when he paid it to the Government. It is the true nature and the quality of the receipt and not the head under which it is entered in the account books as would prove decisive. If a receipt is a trading receipt, the fact that it is not so shown in the account books of the assessee would not prevent the assessing authority from treating it as trading receipt ". It is sought to be urged by Mr. Jain that the assessee in Chowringhee Sales Bureau's case [1973] 87 ITR 542 (SC), did not follow the mercantile system....