COMMISSIONER OF INCOME TAX Vs. DEVATHA CHANDRAIAH AND SONS

JUDGEMENT

(1.) THE question which has been referred for the answer at the instance of the Revenue is whether, on the facts and in the circumstances of the case, the Income-tax Appellate Tribunal is justified in holding that the sales tax collections made by the assessee are not income of the assessee and not liable to be assessed in their hands and, in any event, liable to be deducted in computing the income.

(2.) THE undisputed facts are : THE assessee is a registered firm dealing as commission agent in several agricultural commodities and it was acting as the commission agent on behalf of the agriculturists, that is to say, the agriculturists bring their produce to the assessee for sale and it sells it on behalf of the agriculturists to various parties. Under the A.P. General Sales Tax Act, the commission agent, i.e., the assessee, is liable for sales tax if it is not able to prove that the sale made by it were not on behalf of the agriculturist principals. However, if it proved that it was acting on behalf of the agriculturist principals, then such goods will be exempted from tax. THE assessee, at the point, when it was dealing on behalf of the agriculturists, was not in a position to know as to how the transaction would be viewed by the sales tax authorities at the time of assessment. THE assessee admitted the method adopted by it as follows :

(3.) WHILE so, the learned Judicial Member held that the sales tax collections are not the income of the assessee and not liable to be assessed in their hands.