| Case ID |
262ab139-c33e-400c-9bf2-fb1cd4425c03 |
| Body |
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| Case Number |
IT REFERENCE No. 24 OF 1971 |
| Decision Date |
Aug 02, 1972 |
| Hearing Date |
|
| Decision |
The Punjab High Court ruled in favor of the revenue, determining that the amount received by the assessee, including sales tax, constitutes a trading receipt and is thus subject to income-tax. The court indicated that the nature of the transaction dictates that sales tax is an integral part of the consideration for the sale of goods, regardless of whether the seller is liable to remit that tax to the authorities. The court upheld the finding that the assessee firm had collected this amount in the ordinary course of business and it formed part of the revenue for the assessment year 1963-64, leading to its inclusion in taxable income. |
| Summary |
The case of Commissioner of Income Tax v. Saraswati Industrial Syndicate Ltd. addresses the tax implications of sales tax collected by a business. The Punjab High Court examined whether the amount of sales tax collected by the assessee constituted a taxable trading receipt under Section 28(i) of the Income-tax Act, 1961. The court emphasized that even when the amount of sales tax is shown separately, it remains part of the total consideration for the goods sold. The judgment reiterates the principle that the seller's liability to pay sales tax does not alter the legal character of the transaction. This case is particularly relevant for businesses navigating tax obligations related to sales tax and highlights the importance of correctly classifying receipts in financial records. Tax professionals should take note of the court's interpretation of 'trading receipts' and the implications for compliance with income tax regulations. This ruling serves as a precedent for future cases involving the treatment of sales tax in taxable income calculations. |
| Court |
Punjab High Court
|
| Entities Involved |
Commissioner of Income Tax,
Saraswati Industrial Syndicate Ltd.
|
| Judges |
Prem Chand Pandit,
Bhopinder Singh Dhillon
|
| Lawyers |
D.N. Awasthy,
B.S. Gupta,
H.L. Sibal,
S.C. Sibal
|
| Petitioners |
Not available
|
| Respondents |
Saraswati Industrial Syndicate Ltd.
|
| Citations |
1973 SLD 610 = (1973) 91 ITR 501
|
| Other Citations |
Badri Narayan Balakishan v. CIT [1965] 57 ITR 752 (AP),
Chhatrasinhji Kesarisinhji Thakore v. CIT [1966] 59 ITR 562 ; [1966] 2 SCR 440 (SC),
CIT v. Sinclair Murry & Co. (P.) Ltd. [1970] 75 ITR 494 ; 25 STC 233 (Cal.),
George Oakes (Private) Ltd. v. State of Madras [1961] 12 STC 476; [1962] 2 SCR 570; AIR 1962 SC 1037,
Ikrahnandi Coal Co. v. CIT [1968] 69 ITR 488 (Cal.),
Punjab Distilling Industries Ltd. v. CIT [1969] 35 ITR 519 ; [1959] Supp. 1 SCR 683 (SC),
State of Mysore v. Mysore Spinning & Mfg. Co. Ltd.[1960] 11 STC 734 (SC),
Tata Iron & Steel Co. Ltd. v. State of Bihar [1958] 9 STC 267; [1958] SCR 1355; AIR 1958 SC 452
|
| Laws Involved |
Income-tax Act, 1961
|
| Sections |
28(i)
|