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

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ITA/97/2001HC Punjab & HaryanaPHHC01042145200129 April 2013Author: MR. JUSTICE HEMANT GUPTA,MS. JUSTICE RITU BAHRI2 pages
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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 a separate, but related, order passed by the same court on the same day in the case of 'The Commissioner of Income Tax (Central), Ludhiana Vs. Munjal Gases, Hero Nagar, Ludhiana' (ITR No.30 of 1994). The High Court explicitly stated that the substantial question of law is answered against the Revenue and in favour of the assessee in terms of the Munjal Gases case. The reasoning and ratio decidendi would be found in the Munjal Gases judgment, which is not provided here, but it established the principle that such an excess is not a trading receipt. The operative direction is to answer the question of law in favour of the assessee.

What were the facts?

The appeal concerns Assessment Year 1984-85 and arises from an order of the Income Tax Appellate Tribunal (ITAT) dated 26.09.2000. The Revenue, represented by the Commissioner of Income Tax, Patiala, is the appellant, and M/s Pure Drinks (New Delhi) Ltd. is the respondent assessee. The core of the dispute involves 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 hearing the appeal under Section 260A of the Income Tax Act, 1961.

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 interpretation of trading receipts). Assessee's Contention: The judgment does not record any specific contentions made by the assessee before the High Court. However, the fact that the High Court answered the question in favour of the assessee implies that the assessee's position, as upheld by the ITAT, was that this excess was not a trading receipt. Revenue's Contention: The Revenue's contention is implicit in the substantial question of law raised, arguing that the excess of security deposits over refunds on the sale of bottles should be treated as a trading receipt.

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.97 of 2001

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 26.09.2000 in respect of Assessment Year 1984-85. 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 10:56 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 10:56 I attest to the accuracy and integrity of this document Chandigarh

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