Abdul Majid Paramjit Singh vs Commissioner of Income Tax

At the instance of the assessee, the following question of law has been referred for our opinion:

Whether, on the facts and in the circumstances of the case, the Tribunal was justified in law in holding that the sum of Rs. 56,910 was assessable as income in the assessment year 1973-74 ?

It appears that the assessed was carrying on the business of excavation of sand from the Yamuna river-bed. After excavation, the sand was stored and later on sold.

The Municipal Corporation of Delhi (''the Corporation'') set up a claim that the sand was being imported by the assessed from Uttar Pradesh and Therefore, the assessed was liable to pay terminal tax. It seems that in view of this and by way of abundant precaution, the assessed collected terminal tax from its customers but did not deposit it with the Corporation.

For the accounting year relevant to the assessment years 1969-70 and 1970-71, the assessed made Collections of above Rs. 53,000 and Rs. 3,000. The total collections were to the extent of Rs. 56,909.52. These amounts were carried forward by the assessed in the accounting year relevant to the assessment years 1971-72 and 1972-73.

It appears that the assessed had filed a civil suit in the court of the sub-Judge, First Class, Delhi contesting the claim of the Corporation regarding the levy of terminal tax. The sub-Judge by his judgment and decree 22-5-1979 came to the conclusion that the sand was being excavated from within the Union Territory of Delhi and, Therefore, the assessed was not liable to pay terminal tax.

The Corporation filed an appeal which came to be dismissed on 19-7-1971.

After the dismissal of the appeal filed by the Corporation, the assessed issued advertisements in some of the local newspapers intimating its customers that they could collect the terminal tax from the assessed on the production of the sale bills/cash memos. It appears that no one came forward to collect the terminal tax amount.

Learned Counsel for the assessed contended that the amount of terminal tax collected by the assessed ought to be taxed in the asst. yrs. 1969-70 and 1970-71, the years in which the amounts were collected. According to the revenue, the amount is liable to be taxed in the assessment year1972-73 in view of the fact that the appeal filed by the Corporation was dismissed on 19-7-1971.

We find that the contention of learned Counsel for the revenue is quite correct. However, to counter the view taken by the revenue , learned Counsel for the assessed relied upon two decisions. The first one is Laxmipat Singhania Vs. Commissioner of Income Tax, U.P., . Learned Counsel for the assessed contends that in this decision it was held that the amount(collected towards terminal tax) can be taxed in the year in which it is received by the assessed from its customers. It has also been held that the same amount cannot be taxed twice. We are of the view that this decision is not at all applicable.

There is no question of double taxation arising in this case. Moreover, even though the assessed had collected the amount in the accounting year relevant to the assessment years 1969-70 and 1970-71 the liability of the assessed to return the amount to its customers arose only when the appeal filed by the Corporation was dismissed on 19-7-1971. In fact, even the assessed understood the legal position in this manner and that is why, after the dismissal of the appeal filed by the Corporation, the assessed issued advertisements intimating its customers that they could collect the terminal tax deposited by them on the production of the sale bills/cash memos.

Learned Counsel also relied upon Tirunelveli Motor Bus Service Co. Vs. Commissioner of Income Tax, Madras, . In this case, the annual bonus payable to the employees for the assessment year 1950-51 was sought to be taxed by the assessing officer in the assessment year 1957-58. The Supreme Court came to the conclusion that whether an allowance had been granted or a deduction made in respect of a trading liability had to be decided by referring to the order relating to the assessment year 1950-51 and it could not be determined by drawing inferences in respect of the earlier years. We are unable to appreciate the relevance of this decision in the facts of the present case when admittedly the assessed had collected the terminal tax for the assessment years 1969-70 and 1970-71 but the liability of handing over the amount to the Corporation ceased only when the appeal filed by the Corporation was dismissed by an order dated 19-7-1971.

No other ground was urged before us.

In view of the above, we are of the opinion that the question of law referred to us is required to be answered in the affirmative, in favor of the revenue and against the assessee.

The reference is disposed of accordingly.