THE COMMISSIONER OF INCOME TAX vs. M/S PURE DRINKS LTD.

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ITA/228/2002HC Punjab & HaryanaPHHC01052456200229 April 2013Author: MR. JUSTICE HEMANT GUPTA,MS. JUSTICE RITU BAHRI2 pages
AI SummaryDismissed

What did the High Court hold?

The Punjab & Haryana High Court held that the excess of 'security deposits' over 'refunds' received by the assessee on the sale of bottles is not a trading receipt. This decision was based on the reasoning provided in a separate, contemporaneously decided case, ITR No.30 of 1994 titled 'The Commissioner of Income Tax (Central), Ludhiana Vs. Munjal Gases, Hero Nagar, Ludhiana'. The High Court answered the substantial question of law against the Revenue and in favour of the assessee, following the precedent set in the Munjal Gases case. The operative direction is that the appeal filed by the Revenue is dismissed, upholding the ITAT's order.

What were the facts?

This appeal under Section 260A of the Income Tax Act, 1961, concerns Assessment Year 1988-89. The appellant is the Commissioner of Income Tax, Patiala, and the respondent is M/s Pure Drinks (New Delhi) Ltd. The appeal challenges an order passed by the Income Tax Appellate Tribunal (ITAT) on May 16, 2002. The core of the dispute revolves around whether the excess of 'security deposits' over 'refunds' received by the assessee upon the sale of bottles constitutes a trading receipt. The High Court is deciding this appeal based on a separate order passed on the same day in a similar case.

What were the issues?

1. Whether, in the facts and circumstances of the case, the ITAT was right in law in holding that the excess of 'security deposits' over 'refunds' received by the assessee on sale of bottles is not a trading receipt? (Question of law, turning on the definition of trading receipt and its inclusion in taxable income). Assessee's Contention: The judgment does not record specific arguments made by the assessee before the High Court. However, the ITAT's decision, which is being upheld, implies that the assessee argued that these excess amounts are not trading receipts. Revenue's Contention: The Revenue contended that the excess of security deposits over refunds received by the assessee on the sale of bottles should be treated as a trading receipt and thus taxable income. The Revenue is challenging the ITAT's finding on this point.

Which sections of the Income-tax Act were involved?

Section 260A

AI-generated summary — verify with the full judgment below

IN THE PUNJAB & HARYANA HIGH COURT AT CHANDIGARH

ITA No.228 of 2002

Date of Decision: 29.04.2013

The Commissioner of Income Tax, Patiala

…Appellant Versus M/s Pure Drinks (New Delhi) Ltd., New Delhi

…Respondent

CORAM: HON’BLE MR. JUSTICE HEMANT GUPTA

HON’BLE MS. JUSTICE RITU BAHRI

Present: Ms. Savita Saxena, Advocate, for the appellant.

M/s Akshay Bhan & Aalok Mittal, Advocates, for the respondent.

HEMANT GUPTA, J. (ORAL)

Present appeal under Section 260A of the Income Tax Act, 1961 (for short ‘the Act’) arises out of an order passed by the learned Income Tax Appellate Tribunal (for short ‘the Tribunal’) on 16.05.2002 in respect of Assessment Year 1988-89. The Revenue has raised the following substantial question of law: “Whether in the facts and circumstances of the case, the ITAT was right in law in holding that excess of ‘security deposits’ over ‘refunds’ received by the assessee on sale of bottles is not a trading receipt”

The said question of law is answered against the Revenue and in favour of the assessee by this Court vide separate order of today passed in ITR No.30 of 1994 titled ‘The Commissioner of Income Tax (Central), Ludhiana Vs. Munjal Gases, Hero Nagar, Ludhiana’. Kumar Vimal 2013.05.07 10:55 I attest to the accuracy and integrity of this document Chandigarh

2

Accordingly, the question of law is answered against the Revenue and in favour of the assessee in terms of Munjal Gases case (supra).

(HEMANT GUPTA)

JUDGE

29.04.

2013

(RITU BAHRI) Vimal Vimal Vimal Vimal

JUDGE

Kumar Vimal 2013.05.07 10:55 I attest to the accuracy and integrity of this document Chandigarh

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