BALASUBRAHMANYAN J.

This reference raises an interesting point. The assessee is a company carrying on business as a distributor of cinematograph films. The assesse gives the positive prints of films to distributors who exhibit them in their cinema houses. The consideration received from them by the assessee goes by the name of "collections". To the assessee, such collections are receipts from the assessee's trade in the distribution of films. Before or at the time of handing over the prints for exhibition to an exhibitor, the assessee received what is called a security deposit. It is said that the deposit is taken by the assessee for the due fulfilment of the terms of the agreement between the parties. The amount in deposit being for this purpose, viz., for the fulfilment of the terms of the agreement, it will not remain with the assessee in deposit when the agreement is fulfilled or completed. The deposit is thus a returnable or a refundable deposit. But, it might so happen, in the exigencies of business, that the deposit would be sometimes retained by the assessee. It would get depleted or even wholly disappear as and when the film distributor does not send the collections, but instructs the assessee to set off or adjust his security deposit as against the overdue collections, or, both the parties may agree at the time of entering into their deal, or some time afterwards to keep the deposit for the purpose of adjustment either wholly or in part as against the dues of the exhibitor towards payment of collections. It, however, may happen that even after adjustment in this manner, there might be some balance still left in deposit with the assessee.

Such was the case here. Several film exhibitors who had taken films for exhibition in their theatres had made security deposits with the assessee, in as many as 181 cases. However, even after the final settlement of their accounts with the assessee, they did not happen to take back their deposits or what was left of them. This might be either because of oversight on the part of the exhibitors concerned, or because they had hopes of countinuing their business relationship with the assessee even after the termination of the particular agreement in question. Whatever the reason be, the deposits remained with the assessee. The peculiarity of this was, that after some time, while the amounts of money deposited were still with the assessee, the assessee, however, had lost touch with those who had made those deposits. Many of them were small fry and while the assessee tried to contract them, they were not traceable. For five years or more, the assessee waited and waited, but none of them came forward to claim the deposits. In sheer desperation, the assessee decided that it had better appropriate the deposits to itself. This act might not mean that if on some future day any of them turned up and demanded the deposits back, the assessee can refuse to part with the money, for under the law, a deposit strictly so called, which is refundable to the depositor, might be regarded as creating a special kind of relationship. Sometimes, it is regarded as a fiduciary relationship, but even if it was regarded as a deposit made between two contracting parties, as in the present case between the assessee as a film distributor and the various film exhibitors, the deposit would be repayable on demand or after the particular purpose is served. Although, in one sense, a deposit creates a debtor-creditor relationship between the parties, it is not really equivalent to a borrowing or advance. The creditor, who is the depositor, can always sue for the return of the deposit and recover money within three years of the demand for its refund. Thereafter, the action may be barred, but even the bar of suit would not, as it is well known, destroy the debt; it only puts a stop to the remedy. Thus, the character of the deposit as a deposit would never get lost.What the assessee did in this case was that when it