In CIVIL APPEAL NO. 1265 OF 2007, THE PEERLESS GENERAL FINANCE AND INVESTMENT COMPANY LTD. vs COMMISSIONER OF INCOME TAX, the question raised in this appeal is as to whether receipts of subscriptions in the hands of the assessee-Company for the previous years relevant to the assessment years 1985-86 and 1986- 97 should be treated as income and not capital receipts inasmuch as the assessee has in its books of accounts shown this sum as income.
On appeal, the Supreme 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
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