Law:

Section:

Section 28(i) of the Income-tax Act, 1961 - Business income - Assessee used to range sales of coal by different collieries to purchasers and deliveries were made from collieries by rail for which freight was to be paid by purchasers - Purchasers were often charged extra freight due to fact that quantity of coal received by them was less than that on which freight was charged and paid - On demand from purchasers, assessee used to refund same to purchasers - In assessment year in question impugned excess freight credited to 'undercharges account' was transferred by assessee to profit and loss account - Whether impugned excess freight collected by assessee was its trading receipt - Held, on facts, no Section 28(iv) of the Income-tax Act, 1961 - Value of Perquisite Arising from Business or Exercise of Profession - Whether in view of facts mentioned under heading 'Business income', impugned excess freight transferred by assessee to profit and loss account was taxable under section 23(iv) being intimately connected with assessee's business - Held, no FACTS The assessee-company used to arrange sale of coal by different collieries to the purchasers. The deliveries were made from the collieries to the purchasers by rail and the freight charges was to be paid by the purchasers. 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. 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'. In the relevant assessment years certain amounts being unclaimed credit balance in the said 'undercharges account' were transferred to the profit and loss account of the assessee. The ITO treated the said…

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