COMMISSIONER OF INCOME-TAX vs. SAURSHTRA BOTTLING PVT LTD.

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ITR/9/1986HC GujaratGJHC24010636198627 February 1998Author: HONOURABLE MR. JUSTICE R.K.ABICHANDANI,HONOURABLE MR. JUSTICE KUNDAN SINGH2 pages
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What did the High Court hold?

The High Court addressed the first question by referring to its earlier judgment in Income-tax Reference No. 206 of 1985, concerning the same assessee for assessment year 1978-79. In that judgment, the Court had held that bottles and shells, which remained the property of the assessee even after the supply of soft drinks, constituted 'plant' and were neither supplies nor stock-in-trade. Applying the same reasoning, the Court answered the first question in the affirmative, in favour of the assessee and against the Revenue. Regarding the second question, which concerned the Commissioner's power under Section 263 to revise an assessment order made under Section 143(3) read with Section 144B, the Court deemed it unnecessary to answer in light of its finding on the first question. The Reference was disposed of accordingly, with no order as to costs.

What were the facts?

The Commissioner of Income-tax (Revenue) has referred two questions of law to the High Court of Gujarat at Ahmedabad concerning the assessment of Saurashtra Bottling Pvt. Ltd. (Assessee). The first question pertains to whether bottles and shells used in the business of bottling soft drinks qualify as 'plant' under Section 43(3) of the Income-tax Act, thereby being eligible for depreciation. The second question concerns the validity of an order passed by the Commissioner under Section 263 of the Act, challenging an assessment order made by the Income-tax Officer (ITO) under Section 143(3) read with Section 144B. The Assessee's case for assessment year 1978-79 was previously considered by the High Court in a related reference.

What were the issues?

1. Whether, on the facts and in the circumstances of the case, the Tribunal was right in law in holding that bottles and shells used in the business of bottling soft drinks were 'plant' within the meaning of Section 43(3) of the Income-tax Act and hence entitled to depreciation? - Assessee's Contention: Not explicitly recorded, but implied by the Tribunal's favorable ruling. - Revenue's Contention: Not explicitly recorded, but implied by the referral of the question. 2. Whether, on the facts and in the circumstances of the case, the Tribunal was right in law in holding that no order under Section 263 of the Act can be passed in respect of an assessment order passed by the Income-tax Officer under Section 143(3) read with Section 144B of the Act? - Assessee's Contention: Not explicitly recorded, but implied by the Tribunal's favorable ruling. - Revenue's Contention: Not explicitly recorded, but implied by the referral of the question.

Which sections of the Income-tax Act were involved?

Section 43(3),Section 256(1),Section 263,Section 143(3),Section 144B

AI-generated summary — verify with the full judgment below

IN THE HIGH COURT OF GUJARAT AT AHMEDABAD

INCOME TAX REFERENCE No 9 of 1986

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?

-------------------------------------------------------------- COMMISSIONER OF INCOME-TAX Versus SAURSHTRA BOTTLING PVT LTD. -------------------------------------------------------------- Appearance: Mr.Mihir Thakore, with MR MANISH R BHATT for Petitioner SERVED BY RPAD - (N) for Respondent No. 1

--------------------------------------------------------------

CORAM : MR.JUSTICE R.K.ABICHANDANI and MR.JUSTICE KUNDAN SINGH Date of decision: 27/02/98

ORAL JUDGEMENT (Per R.K.Abichandani,J)

The Income-tax Appellate Tribunal, Ahmedabad has referred the following two questions for the opinion of this Court under section 256(1) of the Income-tax Act.

"

1.

Whether on the facts and in the circumstances of the case the Tribunal was right in law in holding that bottles and shells are used in business of bottling soft drinks were plant within the meaning of section 43(3) of the Income Tax Act and hence entitled to depreciation?

"

2.

Whether on the facts and in the circumstances of the case, the Tribunal was right in law in holding that no order under section 263 of the Act can be passed in respect of an assessment order passed by the Income tax Officer under section 143(3) read with section 144B of the Act?"

2.

The question no.1 had arisen for the consideration of this Court in Income-tax Reference No. 206 of 1985 in the assessee's case for the assessment year 1978-79. By the judgment and order dated 13.2.1998, it was held in that regard that bottles and shells used by the assessee for its business and which continued to be of its ownership even after supply of the soft drinks to the purchaser were "plant" and they were neither supplies nor stock-in-trade. For the same reasons that were given for deciding the said question in Income tax Reference No. 206 of 1985, the question no.1 is answered in the affirmative in favour of the assessee and against the Revenue. The question no. 2 relates to the power of the Commissioner under section 263 of the Act in upsetting the assessment order which was made by the ITO who had taken the view that the bottles and shells used by the assessee were "plant". In view of our finding on the question no. 1, it is not necessary to answer the question no. 2 and therefore, the question no. 2 is not answered. The Reference stands disposed of accordingly with no order as to costs.

(R.K.Abichandani,J)

(Kundan Singh,J)

***darji

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