ARADHANA DRINKS AND BEVERAGES PVT LTD. vs. COMMISSIONER OF INCOME TAX

$-15, 20 to 22 * IN THE HIGH COURT OF DELHI AT NEW DELHI + ITA 745/2017 and CM No. 32388/2017 + ITA 751/2017 and CM No. 32403/2017 + ITA 752/2017 and CM No. 32405/2017 with + ITA 755/2017 and CM No. 32409/2017 ARADHANA DRINKS AND BEVERAGES PVT LTD. Appellant Through Mr. Deepak Chopra, Mr. Rashmi Chopra, Mr. Rashi Khanna and Mr. Yojit Pareek, Advocates versus COMMISSIONER OF INCOME TAX Respondent Through Mr. Zoheb Hossain, Sr. Standing Counsel and Mr. Deepak Anand, Jr. Standing Counsel CORAM: HON'BLE MR. JUSTICE SANJIV KHANNA HON'BLE MR. JUSTICE CHANDER SHEKHAR ORDER % 21.08.2018 This common order will dispose of above captioned appeals by Aradhana Drinks and Beverages Pvt. Ltd. ('appellant-assessee' for short) under Section 260A ofthe Income Tax Act, 1961 ('the Act' for short), assailing the common order of the Income Tax Appellate Tribunal ('Tribunal' for short) dated 05.06.2017 for the assessment years 2008-09 and 2009-10. 2. By order dated 01.12.2017, the following substantial question oflaw was framed in the present appeal: "Did the ITATfall into error in deleting the additions with regard to each ofthefouryears, in respect ofwhich substantial reliefhad been granted by the CIT(A), in the Signed By:RAM DATT Signing Date:09.10.2024 15:41 Certify that the digital and physical file have been compared and the digital data is as per the physical file and no page is missing. Signature Not Verified

circumstances ofthese cases?" 3. Having heard learned counsel for the parties, and with their consent, the aforesaid substantial question of law is modified to read as under: ''Whether the Tribunal was correct in remanding the issue ofthe additions made on account ofdisallowance of operating expenses and rate of depreciation on bottles and crates to the Assessing Officer for a fresh adjudication." 4. Learned counsel for the parties state that direction for remand on "inflated" operating expenses has been dealt with and upheld in the order passed today in ITA Nos.701-702/2017 in the case ofAradhna Foods and Juices Pvt. Ltd. Versus Commissioner ofIncome Tax. In fact the appellant-assessee in ITA No. 701-702/2017 did not object and contest the remand on question of operating expenses. We have while examining remand, on disallowance made from purchases from related parties, upheld the same. For the reasoning given in the said order, we uphold the order of remand on the said aspect, and again clarify that the entire question including the submissions and contentions of the appellant-assessee would be examined afresh. We have not commented and made specific observations and findings on merits. First portion ofthe substantial question of law is accordingly answered against the appellant-assessee and in favour of the respondent-revenue. 5. The Tribunal has remanded in the issue of rate of depreciation on bottles and crates to the Assessing Officer, for the following reasons:-

(D.l) Wefindfrom the perusaloforders of the AO and the Ld.CIT(A) that the above-mentioned points as well as the bottlingprocess have not beenfully considered by them. We are of the view that the aforesaid points as well as bottling process need to befirst considered at lower level as it requires clear understanding offactual aspects having regard to bottling process, marketing, and related business aspects. We have, in any case, set aside the appellate orders passed by Ld.CIT(A) and assessment orders passed by the AO for both the aforesaid assessees for both A.Y. 2008-09 and 2009-10 and we have already restored the matters to the file of the AOfor denovo assessment. We hereby direct the AO to reexamine the matter regarding rate of depreciation on crates, during the proceedings for making denovo assessments and topass fresh order as per law on this matter in the denovo assessment orders. The AO is directed to provide opportunity to the assessee during the proceedings for making denovo assessment before passingfresh order. Thesefour appeals are disposed offin accordance with our order, directions and observations as aforesaid." 6. Learned counsel for the appellant submits that use of bottles and crates is a matter of common knowledge, and is well known and understood. Bottles and crates are used to store, transport and sell the soft drinks. Factual clarification or elucidation is not required and necessary and issue of rate of depreciation is purely legal and relates to interpretation of Appendix 1 (III) (4) of the Income Tax Rules, 1962. 7. During the course of hearing before us, some controversy had arisen as to whether the issue raised before the Tribunal was relating to rate of depreciation onbottle and crates or only crates. Onreading

the grounds ofappeal raised before the Tribunal, it is apparentthat the issue relates toboth bottles and crates. 8. Having noticed the contention raised, we feetthat this issue on rate of depreciation applicable to bottles and crates requires re- examination by the Tribunal, who would examine the relevant heads/item in Appendix I and consider whether the appellant is entitled to depreciation @50% or 15%. The Tribunal would remand the issue only if it is unable to decide the controversy in view of controversial disputed question of facts that camiot be resolved without an order ofremand to the Assessing Officer. 9. Recording the aforesaid, on the second issue in the substantial question of law i.e. rate of depreciation on bottlSs and crates, we accept the appeal with the direction to the Tribunal re-examine the issue afresh. To this extent substantial question of law is answered in favour of the appellant-assessee and against the revenue. We further clarify that the issue and question ofrate ofdepreciation has not been examined and considered by us on merits. This aspect would be examined bytheTribunal. 10. The appeals are accordingly disposed of, without any order as to costs. The stay orders are vacated. august 21, 2018/b SANJIV KHANNA, J CHAT^^SHEKHAR,J