Law: Income Tax Act, 1922

Section:

Income-tax---Trading apt Market fee realised by commission agent from constituents on agricultural produce brought and sold in market place Fee collected and held on behalf of Government Not part of trading receipt or income of assessee and not liable to income tax. C. I. T, v. Sltaldas Tiratadas (1961) 41 I. T. R. 367 (S C) fol. Chowringhee Sales Bureau P. Ltd, v. C. I. T. (1973) 87 I T R 542 (S C) distinguished. C. I. T. v. Bijli Cotton Mills (P.) Ltd. (1979) 116 I T R 60 (S C); C I. T. v. Tollygunge Club Ltd. (1977) 107 I T R 776 (S C) and Thakur Day Sham Sunder v. Addl. C. I. T. (1974) 93 I T R 27 (All.) ref. JUDGMENT K. N. SETH J. The assesses firm carries on business in Khand, Dane, etc., on its own account as well as on commission basis. The I. T. O. while making assessment for the assessment year 1973 74, noticed that in the balance sheet there was an account under the style, 'Amanat Khata' with a credit balance of U 29,028. This amount was realised from the constituents by the assessee and represented Krishi Utpadan Mandi Tax payable under Krishi Utpadan Mandi Act. The assessee took the stand that the amount could not be taxed as it maintained tire accounts under mercantile system and that it had to pay the balance either to Krishi Utpadan Mandi or the constituents from whom it was realised. The I. T. O. brought this amount to tax. On appeal, the A. A. C. took the view that the liability to pay Krishi Utpadan Mandi Tax had accrued in the assessee's case. He found that the assessee had received various notices of demand from Krishi Utpadan Mandi Samiti, Agra. It clearly indicated that the liability had accrued and ascertained. The addition of Rs. 29,029 was consequently deleted. On appeal by the Department the Income tax Appellate Tribunal took the view that the recovery of market foe cannot form part of the trading receipt of the commission agent and the commission agent simply held the market fee on behalf of the State Government as a trustee and the amounts recovered cannot be said to be the income of the assessee in any case and, therefore, it cannot be brought to tax. At the instance of the Commissioner of Income tax, Agra, the following question…

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