Judgment :- CHITRA VENKATARAMAN, J 1. The assessee is on appeal against the against the order of the Income Tax Appellate Tribunal raising the following substantial questions of law relating to the assessment year 1991-92. 1. Whether on the facts and in the circumstances of the case, the Tribunal is right in law in holding that the sum of Rs.22,35,231/-being the refundable contingency deposit collected by the appellant is liable to be included as a 'trading receipt' constituting income but not liable to be deducted in computing the total income ? 2. Whether on the facts and in the circumstances of the case, the Tribunal is right in law in rejecting the appellant's claim for deduction of Rs. 59,113/-in computing the income for the assessment year 1991-92 ? 3. Whether on the facts and in the circumstances of the case, the Tribunal is right in law in confirming the levy of interest under section 234B of the Income Tax Act ? 2. The question as to the treatment to be meted out to refundable contingency deposit as trading receipt and whether it is to be included in the total income is a common question arising in the Tax Case Appeals 890 to 894 of 2005. Apart from this there are other questions raised in each one of these tax case appeals which would be considered in the course of the judgment separately. 3. The assessee herein is a company engaged in the manufacture and sale of overhead Travelling cleaners, D.C.Motors, Clearer Roller Cleaners. While declaring the income in respect of the assessment year under consideration, the assessee contended that the amount of Rs.36,03,604/- shown as refundable contingency deposit was not to be treated as a trading receipt as it represented sales tax collected in respect of disputed transactions. Pending decision before the various authorities the amount collected as sales tax was kept as contingency deposit. It is stated that ultimately the issue was decided in favour of the assessee before the High Court. Hence the amount thus collected was to be refunded to the purchasers. The assessing authority pointed out that as on the date of passing of the order, the assessee had not refunded the said amount to the parties. It is stated that ultimately the issue was decided in favour of the assessee before the High Court. Hence the amount thus collected was to be refunded to the purchasers. The assessing authority pointed out that as on the date of passing of the order, the assessee had not refunded the said amount to the parties. Since the amount collected was very much part of the trading receipt the said amount is assessable as per the decision of the Apex Court reported in 87 ITR 542 (Chowringhee Sales Bureau P. Ltd., V. Commissioner of Income Tax). Aggrieved by the said order, the assessee went on appeal before the Commissioner of Income Tax Appeals. Before the Commissioner of Income Tax (Appeals), the assessee took the contention that what was collected was not sales tax but a caution deposit for a possible liability towards sales tax in case the matter pending before the High Court were against the assessee. The Commissioner of Income Tax (Appeals) pointed out that the amount collected by the assessee was with respect to the sales effected by it and the same was not collected otherwise as a fixed deposit or caution deposit or earnest money deposit. In any event, irrespective of the nomenclature therein, the amount collected not being remitted to the State the same was to be assessed as a trading receipt. Aggrieved by the said order, the assessee went on appeal before the Tribunal, which confirmed the view of the Commissioner of Income Tax (Appeals). The Tribunal pointed out that 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 would not make any difference. The said amount formed part of the assessee's income. The manner in which the assessee had treated the trading receipt in its account would not be a determining character and would not prevent the assessing authority from considering the same in the course of assessment. The Tribunal pointed out that the assessee had collected tax at 10% on the goods sold by it but remitted 4% to the Government keeping the balance with it. The amount so collected was part and parcel of the trading receipt. In the circumstances, the Tribunal rejected the claim of the assessee. Aggrieved by the same, the assessee is on appeal before this Court. 4. The amount so collected was part and parcel of the trading receipt. In the circumstances, the Tribunal rejected the claim of the assessee. Aggrieved by the same, the assessee is on appeal before this Court. 4. The respective assessment years were all considered by the common order by the Tribunal and the facts are one and the same. So far as the claim of the assessee in this aspect is concerned, learned counsel for the assessee vehemently contended that what was collected was only a deposit in respect of the disputed items pending before the High Court, being the contingency deposit, the same could not be characterised as trading receipt for the purpose of including the said amount in the assessment. She further pointed out that the Tribunal came to the conclusion that the assessee had collected sales tax @ 10% on the goods sold by it and paid 4% to the Government keeping the balance with it. The said retained amount had not been used in the day-to-day business of the assessee. Reiterating the contention that there are no materials for the assessing authority to hold that the receipt was a trading receipt, she submitted that the character of the receipt had to be judged with reference to the reasons for collection. Since the amount was collected on a disputed issue and kept as a security deposit, the said deposit could not be treated as a trading receipt. 5. On the contrary, learned Standing Counsel placed reliance on the decision of the Apex Court reported in 245 ITR 421 ( KCP Limited Vs. Commissioner of Income Tax) and submitted that irrespective of the nomenclature given to the said deposit kept in the separate account, when the amount collected by the asseessee formed part of its income and the amount had not been utilised even towards its liability and had been kept by the assessee for dealing with it, the Tribunal rightly rejected the assessee's claim. Thus, in the light of the law declared by the Apex Court, it is submitted that no exception could be taken to the order of the Tribunal. 6. We heard the learned counsel appearing for the assessee and the learned standing counsel appearing for Revenue. 7. Thus, in the light of the law declared by the Apex Court, it is submitted that no exception could be taken to the order of the Tribunal. 6. We heard the learned counsel appearing for the assessee and the learned standing counsel appearing for Revenue. 7. As far as the claim on the contingency deposit which was treated as trading receipt, as already noted, the assessee took the stand that what was collected from the customers represented the disputed liability. Before the Commissioner of Appeals, the authorised representative of the assessee contended that what was collected was not sales tax but a caution deposit for the possible liability towards sales tax in the disputed cases pending before the High Court. In respect of such a claim, in the decision reported in 87 ITR 542 (Chowringhee Sales Bureau P. Ltd., V. Commissioner of Income Tax), the Apex Court had occasion to consider a similar question. It was pointed out therein that the assessee had neither paid the amount collected as sales tax to the actual owner of the goods auctioned nor deposited the amount realised by it as sales tax to the State exchequer on the ground that the statutory provision creating the liability upon it was not valid. Taking note of the fact that the assessee had not refunded the said amount to the persons from whom it was collected, the Apex Court held that the said amount represented the trading receipt of the business of the assessee. Applying the said decision reported in 245 ITR 421 (K.C.P. Ltd., Vs. Commissioner of Income Tax), the Supreme Court held that the mere retention of the excess amount collected in a separate account by the assessee, by itself, would not make any difference and it would not be conclusive of a question as to the nature of the receipt of an amount as a trading receipt or otherwise. The Apex Court pointed out that merely maintaining a separate account under the heading given by the assessee would not alter the nature of the receipt if it is actually a trading receipt. The Apex Court found that nothing was available to show in what manner and how a separate account was maintained by the assessee. The Apex Court pointed out that merely maintaining a separate account under the heading given by the assessee would not alter the nature of the receipt if it is actually a trading receipt. The Apex Court found that nothing was available to show in what manner and how a separate account was maintained by the assessee. On the facts of the case, the Apex Court held that the amount received by the assessee by way of excess amount on levy price of sugar and subsequent transfer to Sugar Equalisation Account was a trading receipt assessable as income of the assessee. 8. Applying the said decision to the facts of the case herein we find that except the contention that the amount was collected as a contingency deposit, there is nothing on record to show as to how the assessee had maintained the said deposit. In fact, it was pointed out by the Assessing Authority that when the break-up details were called for, it was ascertained that what was collected was sales tax in terms of certain disputed items which were pending on appeal before the High Court and there was a stay order obtained by the assessee. However, the assessee was collecting sales tax on the same disputed items on a contingency basis. This was not paid to the Government neither under protest nor refunded to the parties from whom it was collected. Even though learned counsel for the appellant would suggest that subsequently the amount had been refunded to the parties concerned on the High Court dismissing the appeals and directing refund of the amount collected as contingency deposit, yet we find no such refund made even long after the assessment year under consideration. 9. It may also be relevant to note herein that in the decision reported in (2000) 242 ITR 107 ( Commissioner of Income Tax Vs. Southern Explosives Co.,), as regards the part of the sales tax liability retained by the assessee as a deposit, this court held that when the liability is a statutory liability which the assessee had to meet, if the same is not remitted to the State, by calling the retained portion of the amount as a deposit, the assessee could not constitute itself as a trustee. This Court further held that even though the amounts collected by the assessee were meant to be utilised by the assessee for meeting its tax liability, the fact that the assessee had chosen to adopt the device of labelling a part of the amount collected towards its sales tax liability as deposit could not make a difference. Thus the said amount formed part of the assessee's income. Thus applying the said decision to the facts of the case herein, irrespective of the labelling, the deposit either as contingency deposit or security deposit, the fact remains that the assessee had collected sales tax towards disputed items and retained part of the amount with it. There are no materials forthcoming from the asseesee to show that the said contingency deposit was never dealt with by the assessee as part of the trading receipt. In the circumstances, we confirm the order of the Tribunal as regards the first substantial question of law. 10. It may be noted herein that the assessee had placed materials before this court that the sales tax collected subsequently were refunded to the parties. Even though the materials were placed, on perusal it is seen that those amounts relate to the assessment year 1995-96. In the circumstances, while treating the receipt as a trading receipt in respect of the assessment years under consideration before this Court, we hold that on the assessee producing the proof before the Assessing Officer as regards the refund of the said amount to the parties, it is open to the assessee to make such a claim for deduction of the amount so refunded. 11. On the disallowance of Rs. 59,113/-, the said amount relates to the prior year expenses. The Assessing Authority pointed out that the assessee had not made out a case as to how these could be allowed as an expense for earning the business profits of the year in question. The Commissioner of Income Tax (Appeals) considered the said issue only to reject the said claim. The Commissioner of Income Tax (Appeals) pointed out the appellant had omitted to claim the expenses in the concerned assessment years. The details as regards the expenses were not provided before the said authorities so as to contend that these bills were received for the supplies only during the assessment year 1991-92. The Commissioner of Income Tax (Appeals) pointed out the appellant had omitted to claim the expenses in the concerned assessment years. The details as regards the expenses were not provided before the said authorities so as to contend that these bills were received for the supplies only during the assessment year 1991-92. In the absence of any materials, rightly the Commissioner of Income Tax (Appeals) confirmed the order of the assessing officer. On further appeal before the Tribunal, once again the Tribunal confirmed the said finding by pointing out that it was not the case that the assessee received the bills after the end of the previous year relevant to the assessment year but the assessee omitted to claim the expenditure in the relevant assessment year which means the liability towards the expenses crystalised in the earlier previous years only. Hence it cannot be allowed in this year, as each assessment year is an independent and separate assessable unit. The assessee has not placed any materials before this court to dispute the said finding. In view of the above, the second substantial question of law raised also stands rejected. As far as the question of levy of interest under Section 234B is concerned, considering that the first two substantial questions of law are rejected, the third substantial question of law which is consequential and the levy mandatory, the same is also rejected. 12. In the result, the tax case appeal stands dismissed. No costs.