Kerala H.C : the profit of terminated kuries could be included in the previous year relevant to the asst. yr. 1985-86 ?

High Court Of Kerala

CIT vs. Trichur Kuri Syndicate Ltd.

Section 256(2)

Asst. Year 1985-86

T.L. Viswanatha Iyer & Mrs. K.K. Usha, JJ.

OP No. 13429 of 1991

27th September, 1994

Counsel Appeared

N.R.K. Nair, for the Petitioner : G. Sivarajan, for the Respondent


This petition being at the instance of the Revenue, seeks reference of three questions of law, namely :

“1. Whether, on the facts and in the circumstances of the case,—

(i) the profit of terminated kuries could be included in the previous year relevant to the asst. yr. 1985-86 ?

(ii) the receipt had no income nature at all and, therefore, it could not be brought to tax and the Tribunal is right in holding so ?

Whether, on the facts and in the circumstances of the case, the Tribunal is right in law and fact in holding that “these are excess receipts from subscribing members who for some reason or the other had overpaid”, “the assessee is bound to return this amount” and are not the above findings wrong, perverse, unsupported by any material and based solely on presumptions and assumptions by the Tribunal ?

Is not the above approach of the Tribunal based solely on presumption, wrong, unsupported by any material and, hence, vitiated and illegal ?”

The assessee who is running chitties, was alleged to have not disclosed surplus income from chitties which had terminated during the accounting period corresponding to the asst. yr. 1985-86. This alleged surplus was brought to assessment by the ITO, which was confirmed in appeal by the CIT. The Tribunal deleted the alleged surplus, in the appeal by the assessee.

The assessee’s Explanation in relation to this amount was that subscribers sometimes used to make excess payments towards instalments due from them. When the chitty was terminated and the surplus was lying to the credit of the subscribers, the assessee treated them as amounts due to the subscribers, liable to be refunded to them on their demand and accordingly waited for a period of three years within which the subscribers could seek refund of the excess payment. As and when any amount remained unrefunded at the end of the three year period, they were disclosed for the assessment for that year and assessed. The amounts of surplus were thus amounts due in credit to the various subscribers who had paid in excess and did not constitute income of the assessee during the relevant year when the chitties stood terminated. The Tribunal accepted this plea of fact and Explanation offered by the assessee in relation to the surplus amounts. On that basis it was held that the amounts partook of amounts lying in credit to the subscribers and did not have the character of income in the hands of the assessee. This finding of fact entered by the Tribunal though sought to be challenged by the Revenue as wrong, perverse and unsupported by any material, is really one based on the materials available in the case. Nothing has been brought to our notice which shakes the finding of the Tribunal about the real character of the surplus amount. There is nothing to show that the amounts were actually income and not surplus amount due to the subscribers as contended by the assessee.

If this be the true position regarding the surplus amount, the finding of the Tribunal that the amounts really stood to the credit of the subscribers and did not constitute the assessee’s income during the relevant year has only to be accepted. No purpose will, therefore, be served by referring any question for the decision of this Court as sought by the Revenue.

We do not, therefore, find any merit in this petition. It is accordingly dismissed.

[Citation : 211 ITR 365]

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