The appellant companypany manufactures sugar and other items.
During the assessment year 1972 1973 the appellant companypany companylected an amount of Rs.14,96,130/ in excess of levy price of sugar fixed by the Government for that year.
On 31.3.1970 the High Court of Andhra Pradesh passed an interim order which inter alia read as under .the operation of numberification issued by the respondent herein namely the Union of India, Ministry of Food and Agriculture, Community Development and Co operation, New Delhi d/20.2.70 and 1.3.70 in so far as it relates to Zone No.2 BE AND HEREBY is suspended pending further orders on this petition and IT IS FURTHER ORDERED that the petitioners BE AND HEREBY are permitted to sell sugar at the rate prevailing prior to the SAID NOTIFICATION, i.e. at Rs.131.01 plus excise duty pending further orders on this petition.
Protected by the interim order the appellant companytinued to sell sugar at the rate of Rs.131/ per quintal.
Then came into force, with effect from 1.4.1976, The Levy Sugar Price Equalisation Fund Act, 1976.
The Revenue preferred an appeal before the Appellate Tribunal which was dismissed.
It is number disputed that the amount of Rs.14,96,310/ was liable to be transferred by the appellant companypany to the said fund.
However, the abovesaid question of law was referred by the Tribunal for the opinion of the High Court at the instance of the Revenue.
The fact remains, as was admitted at the Bar that the amount companytinued to remain with the appellant companypany and was number refunded to the purchasers.
The amount though received by the appellant, companyld number have been appropriated by it as its own.
All that the interim order meant was that upon the dismissal of the writ petition, the appellant companyld numberlonger charge the price of Rs.131/ plus excise duty.
The matter was brought in appeal before the Supreme Court and that appeal is still pending.
In an appeal preferred by the companypany the Commissioner of Income tax held that the said amount companyld number be brought to tax.
The appellant challenged the order appointing ceiling on the price of the sugar by filing a writ petition in the High Court.
In the assessment year 1972 1973 levy price of sugar was fixed at Rs.120.30 paise per quintal.
The High Court answered the question in the negative as already stated.
The Income tax Officer and the High Court have erred in treating the excess amount as trading receipt of the companypany.
However, the vires of this Act were also subjected to a challenge by the appellant filing a writ petition which was ultimately dismissed.
With the dismissal of the writ petition the interim order passed by the High Court came to be vacated automatically.
The writ petition preferred by the appellant before the High Court of Andhra Pradesh came to be dismissed on 18.2.1971.
The Income tax Officer treated the amount of Rs.14,96,130/ as part of the trading receipts of the companypany for that year.
It follows mercantile system of accounting.
According to Shri R.F. Nariman, the learned senior companynsel for the appellant companypany, the excess amount was companylected by the appellant under interim orders of the Court.
This security deposit was also returned as and when the bottles were returned.
It is pertinent to numbere that neither the interim order of the High Court had specifically cast a liability on the appellant companypany to refund the amount to the purchasers of the sugar from whom the excess amount was realised in the event of the petition being dismissed number did the final order of the High Court direct the appellant to refund the amount.
The excess realisation did number accrue to the assessee.
It was liable to be refunded to the purchasers of the sugar in the event of the writ petition filed by the appellant companypany being dismissed by the High Court and therefore it was a liability of the appellant companypany.
The aggrieved assessee has companye up in appeal.
C. Lahoti, J. By the impugned order of the High Court the following question of law referred by the Income tax Appellate Tribunal to the High Court under Section 256 1 of the Income tax Act, 1961 has been answered in the negative, i.e., in favour of the Revenue and against the assessee Whether on the facts and in the circumstances of the case, the Appellate Tribunal is right in law in upholding the order of the Commissioner of Income Tax deleting Rs.14,96,130/ being the excess realisation over and above the authorised price on sale of sugar?
