| Case ID |
f929d117-d69b-488b-8f20-291c7bea0c88 |
| Body |
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| Case Number |
INCOME-TAX REFERENCE No. 77 OF 1966 |
| Decision Date |
Jun 18, 1968 |
| Hearing Date |
|
| Decision |
The High Court ultimately decided that the amount of Rs. 32,986 collected as sales tax did not constitute part of the assessee's business income. The ruling emphasized that the sales tax was a liability of the seller and not an income of the auctioneer. The Tribunal's finding that the auctioneer collected the sales tax merely for the purpose of passing it on to the State, and thus it should not be considered as trading receipts, was upheld. The decision reinforces the principle that the nature of a receipt is determined at the time of its collection, and the auctioneer's role as an agent of the vendor was crucial in this determination. |
| Summary |
This case revolves around the taxation of sales tax collected by an auctioneer, Chowringhee Sales Bureau P. Ltd., which was being assessed under the Income-tax Act. The primary issue was whether the sum of Rs. 32,986, collected from auction purchasers as sales tax, should be included as part of the auctioneer's income for the assessment year 1960-61. The Income-tax Officer initially included this amount in the total income, considering it part of the sale price. However, the Appellate Assistant Commissioner ruled that the auctioneer should not be liable for sales tax as the High Court had previously decided that the auctioneer was not a dealer under the Sales Tax Act. The Tribunal affirmed this position, stating that the auctioneer collected the sales tax not as income but as a liability to be transferred to the State. The case highlights the distinction between trading receipts and liabilities in tax assessments, particularly in the context of sales tax collected by auctioneers. The court's decision clarified that amounts collected under the guise of sales tax do not constitute income unless they are definitively established as such, reinforcing the auctioneer's role as an agent rather than a seller liable for sales tax. This ruling is significant for auctioneers and similar entities in understanding their tax obligations and the nature of receipts collected in the course of their business activities. |
| Court |
Calcutta High Court
|
| Entities Involved |
|
| Judges |
Sankar Prasad Mitra,
K. L. Roy
|
| Lawyers |
B.L. Pal,
Chakraborty
|
| Petitioners |
Commissioner of Income Tax
|
| Respondents |
Chowringhee Sales Bureau P. Ltd.
|
| Citations |
1969 SLD 98,
(1969) 71 ITR 131
|
| Other Citations |
Chowringhee Sales Bureau Private Ltd. v. State of West Bengal [1961] 12 STC 535,
Bata Shoe Co. Ltd. v. Member, Board of Revenue, West Bengal [1938-50] 1 STC 193,
Punjab Distilling Industries Ltd. v. Commissioner of Income-tax [1959] 35 ITR 519 (SC),
Staynor & Co. v. Commercial Tax Officer [1951] 2 STC 111,
Badri Narayan Balkishan v. Commissioner of Income-tax [1965] 57 ITR 752,
State of Bombay v. Ratilal Vadilal & Bros. [1961] 12 STC 18
|
| Laws Involved |
Income-tax Act, 1922,
Bengal Finance (Sales Tax) Act
|
| Sections |
Not available
|