Judgement

SEN, J.:- The Income-tax Appellate Tribunal referred the following question of law arising out of its order to the High Court for its opinion :-

"Whether, on the facts and in the circumstances of the case, the Tribunal was right in holding that the amounts received by the assessee by way of undercharges, do not constitute its trading receipts, and that accordingly neither the surplus of the receipts remaining unpaid nor the amounts transferred by the assessee to the profit and loss account could be assessed as the income of the assessee in the years 1953-54, 1956-57, 1957-58, 1958-59, 1959-60, 1960-61, 1961-62 and 1962-63?"

2. At all material times, Karam Chand Thapar and others, the assessee herein, carried on business as del credere agent of the collieries and also as agent of the purchasers of coal. It acted, so to speak, as a double agent. The coal sold by the collieries were sent by wagon to various purchasers FOR. The purchasers paid for the freight. Even if the wagons were not filled to its full capacity, the practice of the railways was to charge for the full wagon-load. In other words, the purchasers did not get any rebate from the railways for the wagons not being loaded to its full capacity. In such a situation, the assessee used to claim from the colliery companies, what was described as "under-charge". These amounts were realised by the assessee even without any claim being made by the purchasers. As and when demanded by the purchasers, the assessee used to pay off their claims on account of underloading of wagons out of the moneys obtained from the colliery companies. But every year, there was an excess of receipts over-payments. The surplus amount was assessed as assesees income, year after year, till the assessment year 1953-54. For the first time in its assessment for the assessment year 1953-54, the assessee claimed that these amounts of surplus receipts on account of "under-charges" were not its income at all. The assessees contention was dealt with by the Income-tax Officer in the assessment order as under :-

"The assessee has claimed exemption in respect of Rs.50,294/-, Rs.65,994/- out of Rs.68,267/- unclaimed credit balances written off during the year. In the return exemption was claimed in respect of Rs.53,537/- but at the assessment stage, the claim was enhanced to Rs.65,994/-. This amount of Rs.65,994/- consists of credit balance in the names of various parties Rs.6,625/- credit balance in the banks Rs.4,171/- and under-charges Rs.55,197/-.It may be mentioned here that last year exemption in respect of under-charges was not pressed for at the assessment stage nor it was claimed in appeal. The assessee has written that under-charges are in respect of freight of under-loaded wagons which their customers had to pay under the railway rules in spite of the fact that the wagons in question were not loaded to their full capacity by the various suppliers. These charges it is stated were claimed on behalf of their customers which remained unclaimed with the assessee. No evidence was produced in support of this contention. The under-charges do not stand credited to the account of the customers. In the absence of any evidence it is not proved that these were not in the nature of trading receipt and the contention of the assessee-company fails....".

3. The Appellate Assistant Commissioner in appeal upheld the order of the Income Tax Officer with the following observations :-

"The appellant claims to act as brokers for supply of coal to the permit holders by placing orders thereon with the various collieries. The collieries supply the coal directly to the permit holders "with railway freight to pay" at the destination but it raised a debit note against the appellant from the permit holders. It sometimes happens, more often than not, that the collieries do not load the wagons to its full carrying capacity but the railway charges the full freight as if the wagon is fully loaded. The appellant immediately prefers