COMMISSIONER OF INCOME-TAX VS SHREE AMRIT COLD STORAGE
1999 P T D 3132
[229 I T R 641 ]
[Allahabad High Court (India)]
Before Om Prakash and R.K. Gulati, JJ
COMMISSIONER OF INCOME-TAX
Versus
SHREE AMRIT COLD STORAGE
Income-tax Reference No. 95 of 1981, decided on 09/07/1997.
Income-tax---
----Income---Accrual of income ---Assessee collecting storage charges for potatoes stored at contractual rate---Government by notification fixing maximum storage charges per quintal of potatoes at a lesser rate than the contractual rate charged by assessee---Validity of notification challenged before High Court---High Court passing interim orders directing assessee to keep difference in storage charges collected in separate account and to be pledged with District Magistrate ---Assessee had no access or control over amount---Amount not assessable in hands of assessee.
The assesee had collected storage charges for potatoes stored in its cold storage plant at the contractual rate of Rs.15 per quintal. The Government of Uttar Pradesh issued a notification under the provisions of the U.P. Regulation of Cold Storage Ordinance, 1975, fixing the maximum storage charges at Rs.12.50 per quintal for the season 1975. The validity of the said notification was challenged by the owners of some cold storage plants before the High Court which passed interim orders allowing the owners to charge the contractual rate of Rs.15 per quintal, but directed them to keep the difference between Rs.12.50 per quintal and Rs.15 per quintal in a separate account within three days of the realisation, which was to be pledged with the District Magistrate. The difference amount in the case of the assessee came to Rs.52,632. The assessee did not include this amount in its gross receipts and transferred the same to the Potato Rent Reserve Account as per the order of the High Court. The assessee claimed that the said amount was not includible in its income. The assessing authority rejected the claim of the assessee and brought the amount to tax in the hands of the assessee. On appeal, the Appellate Assistant Commissioner held that though the assessee had collected the amount, yet it had not become legally entitled to receive that income, that no such income could be said to have accrued or arisen to the assessee during the relevant assessment year and, therefore, deleted the addition of Rs.52,632. On further appeal, the Appellate Tribunal upheld the order of the Appellate Assistant Commissioner. On a reference:
Held, affirming the decision of the Tribunal, that the amount collected was handed over to the District Magistrate and the assessee had no access to it nor had any control or jurisdiction over that amount. Therefore, the amount of Rs.52,632 was not assessable in the hands of the assessee.
CIT v. Jahanganj Cold Storage (1989) 178 ITR 490 (All.) fol.
JUDGMENT
The following question is referred for the opinion of this Court by the Income-tax Appellate Tribunal for the assessment year 1976-77 for which the accounting year ended on January 31, 1976:
"Whether, on the facts and in the circumstances of the case, the Tribunal was justified in upholding the deletion of Rs.52,632 from the total income of the assessee?" The facts as gleaned from the statement of the case are that in Part III of its return, the assessee-firm disclosed an amount of Rs.52,631.77, which was claimed to be exempt. The particulars of this amount, as disclosed in Part III of the return, are as follows:
"Potato rent kept in reserve as per the High Court's order in Writ Petition No. 11066 of 1975 against the Cold Storage Regulation Ordinance, 1975, of the Uttar Pradesh Government."
The Tribunal stated in para.3 of the statement of case that it appears that the assessee had charged storage charges for potatoes stored in' February, 1975, at Rs.15 per quintal. On October 6, 1975, the Government of Uttar Pradesh issued a notification under the provisions of the Uttar Pradesh Regulation of Cold Storage Ordinance, 1975, fixing the maximum storage charges at Rs.12.50 per quintal for the season 1975, i.e., up to October, 1975. The validity of the said notification was challenged by the owners of some of the cold storages before this Court and then this Court passed interim orders allowing the petitioners to charge the contractual rate of Rs.15 per quintal, but directed them to keep the difference of Rs.12.50 per quintal and Rs.15 per quintal in a' separate account within three days of the realisation, which was to be pledged with the District Magistrate. The reference amount in the case of the assessee came to Rs.52,632. The assessee did not include this amount in its gross receipts and transferred the same to the Potato Rent Reserve Account. The assessee claimed that the said amount was not includible in its income.
The assessing authority rejected the contention of the assessee and brought the amount of the reserve account to tax in the hands of the assessee.
On appeal, the Appellate Assistant Commissioner observed that though the assessee had collected the amount, yet it had not become legally entitled to receive that income. The Appellate Assistant Commissioner held that no such income could be said to have accrued or arisen to the assessee during the assessment year 1976-77. He, therefore, deleted the addition of Rs.52,632.
On further appeal, the Appellate Tribunal upheld the order of the Appellate Assistant Commissioner.
In CIT v. Jahanganj Cold Storage (1989) 178 ITR 490 (All) also the facts were almost the same. In that case the amount collected was handed over to the District Magistrate and the assessee had no access to it nor any control or jurisdiction over that amount. In that situation this Court on a reference held that the amount was not assessable.
The decision in the case of Jahanganj Cold Storage (1989) 178? ITR 490 (All), is squarely applicable to the case at hand. Following the said authority, be uphold the view taken by the Appellate Tribunal.
The aforementioned question is, therefore, answered in the affirmative, i.e., in favour of the assessee and against the Revenue.
M.B.A./3064/FC ??????????????????????????????????????????????????????????????????????????????? Reference answered.