Dwarka Prasad Gupta, J.
1. These two reference applications arise in similar circumstances and raise similar questions between the same parties and as such they are being disposed of by a common order.
2. These are two applications under Section 256(2) of the Income-tax Act, 1961 (hereinafter referred to as 'the Act'), filed by the Commissioner of Income-tax, Rajasthan, Jaipur, praying that the Income-tax Appellate Tribunal, Jaipur Bench, Jaipur, be directed to refer the following question of law arising out of its order dated August 31, 1978, to this court for its opinion :
'Whether, in the facts and circumstances of the case, the Tribunal was right in holding that double relief in respect of the amount collected by way of sales tax was not granted to the assessee and the Revenue has not been able to satisfy that any direction has been given involving excessive relief to the assessee ?'
3. The facts which have given rise to these applications may be briefly stated. M/s. Assam Roller Flour Mills, Jaipur (hereinafter referred to as 'the assessee'),is a registered firm dealing in wheat flour, suji and maida. The Income-tax Officer, while dealing with the assessment matters of the assessee relating to the , assessment years 1973-74 and 1974-75, found that the assessee had collected a sum of Rs. 82,610 and Rs. 56,283 respectively from its customers in respect of sales of maida and suji by way of deposit against sales tax. A question then arose as to whether the amounts collected by the assessee from its customers represented revenue receipts and could be assessed to tax According to the assessee, the said amounts represented deposits against sales tax which the assessee had collected under the apprehension that in case the sales tax may have to be eventually paid on the sale of maida and suji, the same may be paid out of the said deposits and thus, according to it, the said amounts did not constitute part of revenue receipts. The Income-tax Officer did not accept the contention advanced by the assessee and included the amounts as trading receipts in the assessments made in respect of the assessment years 1973-74 and 1974-75. On appeal, the Appellate Assistant Commissioner maintained the additions made to the taxable income of the assessee. On further appeal by the assessee, the Income-tax Appellate Tribunal, Jaipur Bench, Jaipur, by its order dated April 29, 1978, held that the aforesaid amounts represented deposits against sales tax and as such they could not be considered as the trading receipts of the assessee. It was held by the Tribunal that the sales tax liability was deductible in the computation of the assessee's income from business and the amounts collected by the assessee were merely in the nature of security deposits.
4. The Department filed an application for rectification before the Appellate Tribunal and urged that as credit on account of sales tax deposits was accepted by the Tribunal and no addition could be made on account of such credits in the tax liability of the assessee for the assessment years 1973-74 and 1974-75, the assessee should not have been made further entitled to deductions on account of sales tax liability for both the assessment years. The application for rectification was dismissed by the Appellate Tribunal by its order dated August 31, 1978. It was observed that the Tribunal had taken the view in the appeals arising out of assessment orders that the sum of Rs. 82,610 and Rs. 56,283 collected by the assessee in the assessment years 1973-74 and 1974-75 did not represent the trading receipts of the assessee and on that very ground the assessee has claimed deductions as business expenditure in respect of the very same amounts. Thus, there was no question of giving any excessive or double relief to the assessee. The Tribunal held that, there was no mistake apparent on the face of the record and as such the application for rectification was not maintainable. In these circumstances, the present applications under Section 256(2) of the Act were filed on behalf of the Revenue.
5. We have heard learned counsel for the Revenue and the learned counsel for the assessee.
6. In our view, the applications for rectification were merely filed under a misconception. There was no question of granting any double relief to the assessee by the Tribunal. The Income-tax Officer had directed the addition of the amounts of Rs. 82,610 and Rs. 56,283 in the total income of the assessee, in respect of the assessment years 1973-74 and 1974-75, holding that the afore said amounts represented trading receipts, but the Income-tax Appellate Tribunal came to the conclusion that the said amounts represented collections made by the assessee from its customers by way of security deposits in respect of eventual sales tax liability and that in case the amounts were not to be paid by way of sales tax, then the same were refundable to the customers. Thus, the Tribunal having held that the said amounts did rot represent the revenue receipts of the assessee during the two assessment years referred to above, directed the deduction of the said amounts from the total income of the assessee, which have the effect of nullifying the additions which had been made by the Income-tax Officer. The Appellate Tribunal appears to be justified in holding that there was no question of granting any double relief. Moreover, in case the Income-tax Officer subsequently finds that the sales tax has not been paid and was not payable and the amount has not been refunded by the assessee to the customers, then under Section 41 of the Income-tax Act, it would be open to him to make the addition of the said amounts in the receipts from business in the very assessment year.
7. We are, therefore, of the view that no question of law arises out of the order passed by the Income-tax Appellate Tribunal dated August 31, 1978. Both the applications for making a reference are dismissed.