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Commissioner of Income-tax Vs. Karam Chand Thapar and Bros. (Coal Sales) Ltd. - Court Judgment

LegalCrystal Citation
SubjectDirect Taxation
CourtKolkata High Court
Decided On
Case NumberIncome-tax Reference No. 157 of 1977
Judge
Reported in(1986)53CTR(Cal)38,[1987]163ITR40(Cal)
ActsIncome Tax Act, 1961 - Section 28
AppellantCommissioner of Income-tax
RespondentKaram Chand Thapar and Bros. (Coal Sales) Ltd.
Appellant AdvocateB.R. Naha, Adv.
Respondent AdvocateD. Pal and ;M. Seal, Advs.
Excerpt:
- .....out of the assessment of karara chand thapar & bros. (coal sales) ltd., the assessee, in the assessment years 1969-70 and 1970-71, the corresponding accounting periods being the years ending on june 30, 1968, and june 30, 1969.2. in the relevant assessment years, the assessee arranged sales of coal by different collieries to the purchasers who were also the consumers. the deliveries were made from the collieries to the consumers by rail, the freight charged to be paid by the purchasers.3. it is found as a fact that the purchasers who were the consignees were often charged extra freight where the quantity of coal received by them was less than that on which the freight was charged and paid.4. the excess freight charged, known in the trade as 'undercharges', used to be collected.....
Judgment:

D.K. Sen, J.

1. This reference arises out of the assessment of Karara Chand Thapar & Bros. (Coal Sales) Ltd., the assessee, in the assessment years 1969-70 and 1970-71, the corresponding accounting periods being the years ending on June 30, 1968, and June 30, 1969.

2. In the relevant assessment years, the assessee arranged sales of coal by different collieries to the purchasers who were also the consumers. The deliveries were made from the collieries to the consumers by rail, the freight charged to be paid by the purchasers.

3. It is found as a fact that the purchasers who were the consignees were often charged extra freight where the quantity of coal received by them was less than that on which the freight was charged and paid.

4. The excess freight charged, known in the trade as 'undercharges', used to be collected later from the sellers, the collieries, by the assessee as the agent of the purchasers, independent of any demand from the purchasers and the proceeds were credited in an account known as the 'undercharges account'. 'On demand from the purchasers, the assessee used to refund the amounts recovered on the account of the former and in many cases where there was no demand, the amount remained credited in the said 'undercharges account'

5. In the assessment years involved, two amounts being unclaimed credit balances in the said 'undercharges account' were transferred to the profit and loss account of the assessee.

6. The Income-tax Officer treated the said amounts as trading receipts of the assessee and brought them to tax. The order of the Income-tax Officer was upheld by the Appellate Assistant Commissioner on appeal.

7. On a further appeal by the assessee, the Tribunal, following its earlier decision in the assessment years 1953-54, 1956-57 to 1962-63, 1964-65 to 1966-67 in the case of the same assessee, deleted the additions of the said amount from the taxable income of the assessee.

8. On an application by the Revenue under Section 256(1) of the Income-tax Act, 1961 ('the Act'), the Tribunal has referred the following question as a question of law arising out of its order for the opinion of this court:

'Whether, on the facts and in the circumstances of the case, the Tribunal was right in holding that the amounts of Rs. 1,00,514 and Rs. 1,43,826 being the unclaimed credit balances in the undercharges account, transferred to the profit and loss account of the relevant previous years, did not constitute trading receipts and could not be assessed as the income of the assessee in the assessments for the assessment years 1969-70 and 1970-71, respectively?'

At the hearing, the learned advocate for the Revenue submitted that though in the assessment years 1953-54 and 1956-57 to 1962-63, where the same question arose and was answered in favour of the assessee by this court in the case of the same assessee in CIT v. Karam Chand Thapar & Bros. (Coal Sales) Ltd. : [1979]117ITR621(Cal) , yet in the assessment year 1955-56, the same question was answered by this court against the assessee and the decision is Karam Chand Thapar & Bros. (Coal Sales) Ltd. v. CIT : [1983]140ITR939(Cal) . He submitted that the matter should be sent back to the Tribunal for ascertainment of relevant facts.

9. It was submitted further that in the assessment years involved in this reference, the assessee had also made claims for bad debts arising out of supply of coal. This was a new fact which was not raised nor considered in CIT v. Karam Chand Thapar & Bros. (Coal Sales) Ltd. : [1979]117ITR621(Cal) .

10. The learned advocate for the Revenue referred to decisions of other High Courts where, on similar facts, a different view has been taken.

11. It was also faintly argued that the receipt of undercharges by the assessee being intimately connected with its business, the same should be taxable under Section 28(iv) of the 1961 Act.

12. The learned advocate for the assessee contended, on the other hand, that the same question had come up before this court and was answered in favour of the assessee in the subsequent assessment years 1964-65 to 1966-67, in I.T. Reference No. 410 of 1974. The same question was also answered in favour of the assessee by this court in the assessment years 1967-68 to 1968-69 and 1971-72. In the assessment year 1973-74, an application of the Revenue under Section 256(2) of the Income-tax Act, 1961, seeking to raise the same question was rejected by this court.

13. It was contended that the matter was concluded so far as this court was concerned.

14. The controversy raised in the question referred has been dealt with and answered by this court in more than one reference as noted earlier. In all the cases, the controversy has been resolved in favour of the assessee except in the assessment year 1955-56 where, as the findings of fact by the Tribunal had not been challenged as perverse, the question was answered in favour of the Revenue.

15. In the instant case, the Tribunal has found in favour of the assessee. There is no difference between the facts of this case and the facts in the earlier assessment years where this court has held in favour of the assessee. We see no reason to differ from the earlier decisions. The views of the other High Courts on similar questions are not binding on us.

16. The contention of the Revenue that the amounts in dispute were taxable under Section 28(iv), in our view, is of little substance. It has been consistently held that the amounts involved reached the hands of the assessee not as a benefit or perquisite of business but on account of the consumers to whom the amounts really belonged and that the assessee was accountable for the same.

17. For the reasons above, we answer the question referred in the affirmative and in favour of the assessee.

18. There will be no order as to costs.

G.N. Ray, J.

19. I agree.


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