V.G. Oak, C.J.
1. This is a reference under Section 66 of the IndianIncome-tax Act, 1922. The assessment year is 1951-52. The previous yearwas the calendar year 1950. The assessee is a private limited company manufacturing yarn. The assessee supplied yarn to a Bombay party by name Messrs. Sukh Dayal Ram Bilas. The yarn sold was worth Rs. 2,28,325. In the beginning of 1948, the Government imposed additional excise duty on yarn. The assessee apprehended that it might be required to pay additional excise duty on the yarn supplied to the Bombay party. On February 8, 1948, the assessee called upon the Bombay party to pay a sum of Rs. 74,361 towards additional levy that might be required to be paid to the Government. It was made clear in that letter that in case the amount was not paid to the Government, the amount would be refunded to the Bombay party. The Bombay party paid the assessee the sum of Rs. 74,361 in March, 1948, The assessee, however, persuaded the Government that no such additional excise duty was payable by the assessee on the yarn supplied to the Bombay party. The result was that the money remitted by the Bombay party to the assessee towards additional levy was never paid to the Government. Out of the amount lying with the assessee, a small amount of Rs. 7,239 was refunded by the assessee to the Bombay party. The balance remained with the assessee. In the calendar year 1950 the assessee credited the balance amounting to Rs. 67,125 to the capital reserve account of the assessee. For the assessment year 1951-52, the Income-tax Officer held that the sum of Rs. 67,125 represented the assessee's income during the calendar year 1950. The decision was upheld in appeal by the Appellate Assistant Commissioner. But the assessee succeeded before the Appellate Tribunal. The Tribunal held that the sum of Rs. 67,125 did not constitute the assessee's income for assessment year 1951-52. This sum of Rs. 67,125 was, therefore, deleted.
2. At the instance of the Commissioner of Income-tax, Lucknow, the Appellate Tribunal has referred the following question of law to this court:
'Whether, on the facts and in the circumstances of the case, the sum of Rs. 67,125 appropriated to the capital reserve account of the assessee in 1950 was not a business receipt assessable to income-tax in the assessment year 1951-52?'
3. In dealing with the item of Rs. 67,125 the Tribunal framed two issues. The first issue was whether the amount that was received from the Bombay party was at all a trading receipt. The second issue was whether the amount was liable to tax in the year in which it was received or in the year in which it was credited in the capital reserve account. On the first issue the Tribunal's finding was that the amount received from the Bombay party did not constitute trading receipt of the assessee. On the second issue the Tribunal held that, even on the assumption that it was a trading receipt, it was not income for the assessment year 1951-52.
4. Dr. Misra, appearing for the Commissioner, challenged the Tribunal's finding on the first issue. Dr. Misra urged before us that the receipt of Rs. 67,125 by the assessee in March, 1948, must be regarded as a trading receipt. Reference was made to the letter dated February 8, 1948, sent by the assessee to the Bombay party. A telegram sent by the assessee to the Bombay party was quoted in that letter. In that telegram the sum of Rs. 74,361 was referred to as the difference between the old price and the new price.
5. Dr. Misra also relied upon Section 64A of the Sale of Goods Act. According to Clause (a) of Section 64A, Sale of Goods Act, the seller my add so much to the contract price as will be equivalent to the amount paid or payable in respect of excise duty on goods.
6. We, therefore, find some force in Dr. Misra's contention that the receipt of Rs. 74,361 in March, 1948, was in the nature of a trading receipt.
7. But such as answer on issue No. 1 is not likely to be of much benefit to the Commissioner in the present reference. The question remains whether this was a trading receipt during the previous year relevant to the assessment year 1951-52. In Morley v. Tattersall,  22 T.C. 51;  7 I.T.R. 316 Sir Wilfrid Greene M. R. observed on page 65 that the quality and nature of a receipt for income-tax purposes is fixed once and for all when it is reserved.
8. In the instant case the sum of Rs. 74,361 was received by the assessee from the Bombay party in March, 1948. The amount remained with the assessee from March, 1948, till the end of the calendar year 1950. All that happened in 1950 was that the assessee made certain entries in its account books in the account of the Bombay party. The sum of Rs. 67,125 was credited to the capital reserve account of the assessee.
9. There was some discussion before us as to whether the adjustment was made with or without the consent of the Bombay party. The assessee contended that the Bombay party was agreeable to such adjustment. The Appellate Assistant Commissioner was not prepared to accept that position. The Tribunal has not gone into the question of the alleged consent of the Bombay party. We do not think that the alleged consent of the Bombay party would make much difference as regards the question whether there was any income of the assessee in the calendar year 1950. We have seen that the amount in question was received by the assessee as far back as March, 1948. There was no further receipt during the calendar year 1950. So, even on the assumption that there was a trading receipt during the year 1948, there was no income of the assessee during the calendar year 1950. The net result is that there was no income of the assessee for the previous year relevant to the assessment year 1951-52, The Tribunal was right in deleting this amount of Rs. 67,125.
10. Our answer to the question referred to this court is that, on the facts and in the circumstances of the case, the sum of Rs. 67,125 was not a business receipt assessable to income-tax for the assessment year 1951-52. The question is answered in the assessee's favour. The Commissioner of Income-tax, Lucknow, shall pay the assessee Rs. 200 as costs of the reference.
Question answered in favour of the assessee.