Assessee treated subscription receipts as income. However the receipts in question were capital receipts and not income. Tribunal decided the issue in favour of the assessee. High Court reversed the order of the Tribunal . On appeal the Court held that the primary liability and onus is on the Dept to prove that a certain receipt is liable to be taxed-.Deposits collected by a finance company are capital receipts and not revenue receipts-.The fact that the deposits are credited to the profit and loss account is irrelevant-.The true nature of the receipts have to be seen and not the entry in the books of account . Order of High Court is set aside and order of the Tribunal is affirmed . ( CA No 1265 of 2007,dt.09.07.2019) ( AY. 1985 -86 , 1986 -87)
Peerless General Finance and investment Co. Ltd. v. CIT( 2019) 416 ITR 1/ 265 Taxman 413/ 309 CTR 321/180 DTR 97 (SC), www.itatonline.org.Editorial : From the judgement in CIT v Peerless General Finance and investment Co. Ltd ( 2006) 282 ITR 209/ 204 CTR 198 (Cal) (HC)
S. 4 : Charge of income-tax -Deposit -Subscription receipt -The primary liability and onus is on the Dept to prove that a certain receipt is liable to be taxed-.Deposits collected by a finance company are capital receipts and not revenue receipts-.The fact that the deposits are credited to the profit and loss account is irrelevant-.The true nature of the receipts have to be seen and not the entry in the books of account .[ S.145 ]