Judgment :- R. JAYASIMHA BABU, J. Counsel for the assessee contends that there was liability to refund and, therefore, the order of the Tribunal holding that the amount collected towards customs duty and sales tax in the years prior to the assessment year 1973-74 retained by the assessee pending final determination of the question as to whether the agricultural machinery and accessories manufactured by the assessee are subject to the customs duty, is not to be treated as trading receipt and is not to be subjected to tax in that year. Counsel contended that the Supreme Court in the case of K.C.P. Ltd. v. CIT has made certain observations in support of the contention of the assessee. Counsel relied on the passage in the judgment, wherein the apex court, after noticing the judgment of some of the High Courts held that the decision rendered by those courts to the effect that the price of sugar realised by the sugar manufacturers in excess of the levy price included in the receipt was distinguishable, as such excess collection was permitted under interim orders made by the High Courts which was hedged by several conditions, one of which was that the assessee shall refund the amount in excess in the event of the court holding against the assessee. In this case, it is not the claim of the assessee that the moneys have been collected pursuant to any order of the court or any statutory provision, which made that collection inseparable from the liability to refund. On the other hand, it was the specific case of the assessee that it had chosen to collect those amounts from its customers, but had maintained that amount in a suspense account though a major portion of the amount so kept pending, was not given back to its customers as it was felt that it was not practicable to contact the customers after a lapse of several years, the collection having been made in the years 1966 to 1969. Thus the assessee, on its own showing, had not regarded the collection as being irrevocably accompanied by the liability to refund and it had in fact, not refunded the amounts, which it had brought into its books by changing the nomenclature and classification under which it had been held earlier.In the very case relied on by counsel, the Supreme Court, after referring to the earlier decision of that court in the case of Sinclair Murray and Co. Pvt. Ltd. v. CIT and CIT v. Bazpur Co-operative Sugar Factory Ltd., observed thus (page 425 of 245 ITR) : "In these cases it has been the consistent view of this court that if a receipt is a trading receipt the fact that it is not so shown in the account books of the assessee would not prevent the assessing authority from treating it as a trading receipt. It is the true nature and quality of the receipt and not the head under which it is entered in the account books, which is decisive." This court has further observed that eventually if the amount so collected is passed on to the State Government or refunded to the purchasers, the assessee would be entitled to claim deduction of the sum, when so paid or refunded. The fact that the assessee had chosen to keep the amount collected from its customers is not determinative of the true character of the receipt and does not make it any less a trading receipt, if in fact it is one. The amount, on the assessee's own showing, has not been refunded and will not be refunded. There can be no question that these amounts are trading receipts and are required to be treated as such. The situation here is similar to what was considered by this court in the case of CIT v. Southern Explosives Co., wherein if was observed thus (page 111) : "The fact that the assessee had chosen to adopt the device of labelling a part of the amounts collected towards its sales tax liability as deposit cannot make a difference. ... The situation here is similar to what was considered by this court in the case of CIT v. Southern Explosives Co., wherein if was observed thus (page 111) : "The fact that the assessee had chosen to adopt the device of labelling a part of the amounts collected towards its sales tax liability as deposit cannot make a difference. ... The receipt which was in its true character a trading receipt, cannot be rendered otherwise by the assessee labelling the receipt as a deposit." It was held by the court that the amount collected as deposits towards sales tax liability and which had remained with the assessee was required to be treated as trade receipts deduction being allowed in the year in which the amount was refunded to the customer, if it was at all refunded. The first question referred to us as to whether the Tribunal was right in holding that the customs duty and sales tax dues collected for earlier years and credited to the profit and loss account during the previous year relevant to the assessment year 1973-74 should not be treated as income of the assessee is answered against the assessee and in favour of the Revenue. The amounts are required to be treated as income of the assessee. The second question referred to us with regard to the correctness of the Tribunal's holding that the amount claimed as entertainment expenditure in a sum of Rs. 25, 062 was allowable is required to be answered in the assessee's favour. The Explanation to section 37(2B), as was held by the Supreme Court in the case of CIT v. Patel Brothers and Co. Ltd., is not clarificatory and is operative only prospectively. That provision was not applicable to the assessment year to which year the ceiling set out in the Explanation does not apply. That question is answered in favour of the assessee and against the Revenue.