Law:

Section:

Section 28(i) of the Income-tax Act, 1961 - Business income - Chargeable as - Assessment year 1957-58 - Assessee collected from its constituents certain amounts for payment of customs, export and import duties and insurance premium for transit insurance of goods - Refunds from custom authorities and surplus left in insurance account was not claimed by constituents and said amounts were transferred to profit and loss account in relevant assessment year - Whether amount transferred to profit and loss account was rightly treated as assessee's income for relevant assessment year - Held, yes FACTS The assessee, in its capacity as a clearing and forwarding agent had to pay customs, export and import duties, etc. on behalf of its constituents. Sometime 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.' Certain amount 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. The assessee used to collect from its constituents certain amounts for payment of insurance premia for transit insurance of goods. It did not pay the entire amount to the insurance company and the surplus was left in that account. The assessee transferred the balance standing in that account to its profit and loss account. The assessee had to pay the sale proceeds of Boboins effected in the year 1950 to the manufacturer, but subsequently on and ad hoc settlement, it did not pay the said sale proceeds and treated all the purchases of Boboins as its own purchases. The surplus on that account was also transferred to the profit and loss account. The ITO treated these amounts as the assessee's income. The assessee's appeal to the AAC and to the Tribunal failed. On reference : HELD Clearly the amounts in question were realised by the assessee in its capacity as a trader along…

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