COMMISSIONER OF INCOME TAX vs. CHD.BOTTLING CO.

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ITR/213/1999HC Punjab & HaryanaPHHC01038669199930 September 2010Bench: MR. JUSTICE AJAY KUMAR MITTAL,MR. JUSTICE ADARSH KUMAR GOEL2 pages
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What did the High Court hold?

The High Court held that the issue concerning depreciation on new empty bottles (Question 1) and old empty bottles/shells (Question 2) had already been decided by the same Court in the case of the assessee itself, specifically in ITA No. 6 of 2001 (The Commissioner of Income Tax, Chandigarh v. M/s Chandigarh Bottling Co. Chandigarh), decided on November 20, 2007. In that prior decision, the Court had ruled that bottles used by a soft drinks manufacturer constitute 'plant' and that 100% depreciation is allowable if the value of each bottle is less than Rs. 750/-. Consequently, both questions were answered against the revenue and in favour of the assessee. The reference was disposed of accordingly. The Court did not expressly leave any issue undecided.

What were the facts?

This case concerns a reference to the High Court of Punjab and Haryana at Chandigarh regarding an Income Tax Appellate Tribunal (ITAT) order dated January 9, 1992, for assessment year 1978-79. The ITAT had upheld the Commissioner of Income Tax (Appeals) [CIT(A)] findings. The dispute involves the allowability of depreciation on new and old empty bottles used by the assessee, Chandigarh Bottling Co. The revenue, Commissioner of Income Tax, Patiala, is the petitioner, and Chandigarh Bottling Co. is the respondent. The High Court was asked to decide on questions of law referred by the ITAT.

What were the issues?

The Tribunal had to decide two questions of law: 1. Whether the Tribunal was right in upholding the CIT(A)'s finding that new empty bottles of the assessee constitute 'plant' and are therefore eligible for 100% depreciation, given that the value of each bottle is less than Rs. 750/-, as per Section 32 of the Income Tax Act, 1961. 2. Whether the Tribunal was right in allowing 15% depreciation on old empty bottles/shells, also under Section 32. The revenue contended that the bottles should not be treated as plant for the purpose of 100% depreciation. The assessee argued that the bottles are essential to their business of bottling soft drinks and, if their individual value is below the threshold, they qualify for 100% depreciation as plant. For the second issue, the assessee argued for depreciation on old bottles. The judgment does not explicitly record the revenue's arguments on the second question.

Which sections of the Income-tax Act were involved?

Section 32

AI-generated summary — verify with the full judgment below

ITR No.213 of 1999 IN THE HIGH COURT OF PUNJAB AND HARYANA AT CHANDIGARH. ITR No.213of 1999 Date of decision: 30.9.2010 Commissioner of Income tax, Patiala -----Petitioner Vs. Chandigarh Bottling Co., Chandigarh ----Respondent CORAM:- HON'BLE MR JUSTICE ADARSH KUMAR GOEL HON’BLE MR. JUSTICE AJAY KUMAR MITTAL Present:- Ms. Urvashi Dhugga, Advocate for the revenue. --- Adarsh Kumar Goel,J. Following questions of law have been referred for opinion of this Court by the Income Tax Appellate Tribunal, Chandigarh, arising out of its order dated 9.1.1992 in ITA No.230 of 1987 for the assessment year 1978-79:- “1. Whether on the facts and in the circumstances of the case, the Appellate Tribunal was right in law in upholding the findings of CIT(A) that the new empty bottles of the assessee were a plant and therefore depreciation @ 100% is allowable on the new empty bottles purchased during the year since the value of each bottle is less than Rs.750/-? 2. Whether on the facts and in the circumstances of the case, the Appellate Tribunal was right in law and on facts in allowing 15% depreciation on old empty bottles/shells? 1

ITR No.213 of 1999

It is not disputed that in the case of the assessee itself, this Court has dealt with the issue involved in Question Nos. 1 and 2 in ITA No.6 of 2001 (The commissioner of Income Tax, Chandigarh v. M/s Chandigarh Bottling Co. Chandigarh) decided on 20.11.2007 and held that bottles used by soft drinks manufacturer constitute plant and 100% depreciation is allowed thereon if value of each bottle is less than Rs.750/-. Accordingly, the said questions are answered against the revenue and in favour of the assessee.

The reference is disposed of. (Adarsh Kumar Goel) Judge September 30, 2010 (Ajay Kumar Mittal) ‘gs’ Judge 2

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