- (1.) THE previous year relevant to the assessment year 1969-70 ended on December 31, 1968. The assessee is a "public limited company" and manufactures and sells cycles on a large scale. The assessee had received advances amounting to Rs. 3,155 from suppliers which were forfeited. The assessee claimed that this amount was not income. The ITO came to the conclusion that the forfeiture of the said amount arose entirely in the course of carrying on the assessee's business and was, therefore, taxable as income. This finding was confirmed by the AAC. A similar point having been decided by the Tribunal (Delhi Bench "d") earlier, pertaining to the assessment year 1968-69 and agreeing with the reasons stated therein, the Tribunal held that these amounts represented the income of the assessee.
(2.) THE assessee had further forfeited the following amounts: Rs. (i) Security deposits of employees forfeited 16,303 (ii) Liquidated damages for breach of contract recovered from ex-employees 6,520 22,823
(3.) THE claim of the assessee that the two items did not represent its income was negatived by the ITO. The amount of Rs. 16,303 represented the security deposits of certain employees and certain amounts outstanding to their credit at the time of their prematurely leaving the assessee's service. The assessee had provided training to these members of the staff and they had agreed to serve the company for a particular period. In the event of their prematurely leaving the service of the assessee, these persons had agreed to the forfeiture of their deposits. The assessee's claim for exemption was based on the fact that these amounts did not relate to the business of the assessee. The appeal filed by the assessee was dismissed by the AAC and also by the Tribunal.;