1. This is a reference under Section 66(2) of the Indian Income-tax Act, 1922. The assessment year involved is 1957-58.
2. The dispute relates to an aggregate amount of Rs. 18,295 made up ofthe following three items :
Claims and refund
Boboins Bills issued
3. The assessee's case was that in its capacity as a clearing and forwarding agent, he had to pay customs, export and import duties, etc., on behalf of its constituents and for this purpose a running account of the customs authorities was maintained by him to whom amounts were advanced from time to time in lump sums as and when the customs documents were presented to the assessee, the respective amount was debited to the constituents by giving a corresponding credit to the customs authorities. The amount was later on realised from the constituent by giving corresponding credit to the respective constituents. Some time it so happened that the duties and charges on a particular consignment were charged by the customs authorities in excess and for such amounts the assessee made a claim on behalf of the constituents. As and when such refunds were received the amounts were credited to the 'claim and refund account' and when the same account was debited (sic). A sum of Rs. 11,366 remained as credit balance in the said account in respect of which no claims were received from the constituents and they were not traceable. The assessee, therefore, treated it as its income and transferred it to the profit and loss account.
4. With regard to the second item of Rs. 4,778 the position is similar. The assessee used to collect from its constituents certain amounts for payment of insurance premia for transit ineurance of gpods. It did not pay the entire amount to the insurance company and the surplus was left in that account. The assessee in the relevant previous year transferred a sum of Rs. 4,778 standing in that account to its profit and loss account.
5. The third item of Rs. 2,151 is in respect of Boboins Bills issued. The assessee's case was that the said amount represented the sale proceeds of Boboins effected in the year 1950. The said amount was originally payable to the manufacturer, but subsequently an ad hoc settlement was arrived at. According to the assessee, it did not pay the said sale proceeds and treated all the purchases of Boboins as its own purchases. The sum of Rs. 2,151 represented the surplus on that account and like the other two amounts the assessee in the relevant year transferred this amount also to the profit and loss account.
6. The Income-tax Officer treated these amounts as the assessee's income. The assessee's appeal to the Assistant Commissioner of Income-tax and to the Tribunal failed. The Tribunal has at the instance of the assessee referred the following question for the opinion of this court:
'Whether, on the facts and in the circumstances of the case, the Income-tax Appellate Tribunal was right in law in treating the amount of Rs. 18,295 as the income of the assessee for the assessment year 1957-58.'
7. Clearly the amounts in qifestion were realised by the assessee in its capacity as a trader along with the remuneration payable to it for the services rendered by it. The amounts were, of course, not income when they were realised because they were the amounts for payment to others on behalf of its constituents. But when these amounts were not claimed by the persons to whom they belonged, the assessee treated them as its profit and transferred it to the profit and loss account. This was done in the previous year relating to the assessment year 1957-58. It is, therefore, not possible to accept the assessee's contention that the amounts in question represented the capital or casual gains or they did not pertain to the assessment year in question. When the assessee itself has chosen to treat these items as income of the previous year relevant to the assessment year 1957-58, it cannot be said that the income-tax authorities committed an error in accepting the statement of the assessee. We might mention here that a similar question was brought by the assessee before this court in respect of another year in Pioneer Consolidated Co. of India Ltd. v. Commissioner of Income-tax : 85ITR410(All) . There also varying amounts lying in deposit with the assessee were credited to the profit and loss account. This court held that they had rightly been held to be the profits of the assessee for the assessment year in which they were appropriated to the profit and loss account. We, therefore, find no mistake committed by the Income-tax Officer.
8. We, accordingly, answer the question in the affirmative, in favour of the department and against the assessee. The department is entitled to the costs, which we assess at Rs. 200.