COMMISSIONER OF INCOME TAX vs. M/S.SAURASHTA BOTTLING P.LTD.

ITA/92/1996HC GujaratGJHC24021675199619 March 1998Author: HONOURABLE MR. JUSTICE R.K.ABICHANDANI,HONOURABLE MR. JUSTICE KUNDAN SINGH2 pages
AI SummaryRemanded

What were the facts?

The Commissioner of Income Tax (Revenue) filed an application before the High Court of Gujarat under Section 256(2) of the Income-tax Act, 1961, seeking a direction to the Income-tax Appellate Tribunal (ITAT) to state and refer a case. The application pertained to an assessment year not specified in the judgment. The dispute involved the classification of bottles/shells as plants for depreciation purposes and the allowability of certain expenses under Section 37(3A). The ITAT had previously refused to refer these questions to the High Court.

What did the High Court hold?

The High Court addressed two questions. Regarding the first question concerning bottles/shells being treated as plants for 100% depreciation under Section 32, the Court noted that this issue was squarely covered by its previous decision in ITR 206 of 1985, decided on February 13, 1998, and other related matters. Therefore, this question did not require further determination as it was already answered. For the second question, concerning the deduction of Rs. 1,32,421 under Section 37(3A), the Tribunal had observed that the expenses, comprising costs of soft drinks supplied as trade discount and openers given to dealers, could not be treated as 'advertisement' expenditure as contemplated by Section 37(3A). The Court, however, reasoned that even if the expenditure was not on advertisement, it needed to be examined whether it was incurred on 'publicity' or 'sales promotion' as also covered by Section 37(3A) and its sub-sections. Consequently, the Court held that a question of law arose for consideration and directed the Tribunal to forward a statement of case regarding this second question.

What were the issues?

1. Whether the Appellate Tribunal is right in law in holding that bottles/shells were plants and, given their cost was less than Rs. 750, the assessee is entitled to claim 100% depreciation under Section 32 of the Income-tax Act, 1961? 2. Whether the Appellate Tribunal is right in law in directing the Income-tax Officer to allow the assessee's claim for deduction of Rs. 1,32,421, holding that Section 37(3A) was not applicable to these expenses? Assessee's contentions: Not recorded in the judgment. Revenue's contentions: The Revenue sought to have these questions referred to the High Court for determination. For question 1, the Revenue implicitly disagreed with the ITAT's classification of bottles/shells as plants and the consequent depreciation claim. For question 2, the Revenue argued that the expenses amounting to Rs. 1,32,421, which included costs of soft drinks supplied to purchasers without charge as trade discount and costs of openers given to dealers, should be considered under Section 37(3A).

Which sections of the Income-tax Act were involved?

Section 32,Section 37(3A),Section 256(2)

AI-generated summary — verify with the full judgment below

IN THE HIGH COURT OF GUJARAT AT AHMEDABAD

INCOME TAX APPLICATION No 92 of 1996

For Approval and Signature:

Hon'ble MR.JUSTICE R.K.ABICHANDANI and MR.JUSTICE KUNDAN SINGH ============================================================ 1. Whether Reporters of Local Papers may be allowed to see the judgements?

2.

To be referred to the Reporter or not?

3.

Whether Their Lordships wish to see the fair copy of the judgement?

4.

Whether this case involves a substantial question of law as to the interpretation of the Constitution of India, 1950 of any Order made thereunder?

5.

Whether it is to be circulated to the Civil Judge?

The order continues below.

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