ORIENT TRADING CO Vs. INCOME TAX OFFICER
INCOME TAX APPELLATE TRIBUNAL
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R.P. Garg, Accountant Member -
(1.) THESE two appeals are by the assessee one against an order of the CIT(A) for assessment year 1984-85 and the other against an order of the CIT under Section 263 for the assessment year 1985-86. Since there is common dispute they are disposed of by this common order for the sake of convenience.
(2.) The first common issue is against the disallowance of sales tax outstanding by applying provisions of Section 43B. The assessee's case is that it was acting only as a distributor/commission agent for a fixed rate of commission and has not claimed the sales tax as a deduction. Therefore, there was no question of disallowing the same. The ITO did not accept the assessee's contention and applying the ratio of the Supreme Court decision in the case of Chowringhee Sales Bureau (P.) Ltd. v. CIT  87 ITR 542 treated the sales tax collected as part of assessee's trading receipts and held that whatever was paid during the year form part of profit and loss on trading account and whatever surplus was left was required to be taxed in the hands of the bearer. In this case he observed that the assessee was a commission agent and therefore responsibility of the sales tax so collected lay with the assessee till the payment was made to the Government and because of special provision of Section 43B the sales tax collected but not paid was required to be added back. According to him it was an obligation on the part of the assessee in view of the aforesaid Supreme Court decision to show the sales tax as part of trading receipts and also the payments as part of trading or profit and loss account. He accordingly added a sum of Rs. 2,40,251 in assessment year 1984-85. The addition was justified by the CIT(A) by placing reliance on the following cases:--
1. George Oakes (P.) Ltd. v. State of Madras  12 STC 476 (SC)
2. Chowringee Soles Bureau (P.) Ltd.'s case (supra)
Kedarnath Jute Mfg. Co. Ltd. v. CIT  82 ITR 363 (SC)
(3.) MYSORE Kirloskar Ltd. v. Union of India  160 ITR 50 (Kar.);
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