LexCOMMISSIONER OF INCOME-TAX, PUNJAB JAMMU & KASHMIR, HIMACHAL PRADESH AND PATIALA versus PUNJAB DISTILLING INDUSTRIES LTD.
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7S.C.R.
SUPREME COURT REPORTS
447
COMMISSIONER OF INCOME-TAX, PUNJAB JAMMU
& KASHMIR, HIMACHAL PRADESH AND PATIALA
v.
PUNJAB DISTILLING INDUSTRIES LTD.
[A.K. SARKAR, M. HIDAYATULLAH AND J.C. SHAH, JJ.]
Income Tax-Distiller taking deposit refundable on return
of bottles-Balance of deposits after refund, if trading re-
ceipt-Indian Income-tax Act, 1922 (11 of 1922), s.10.
The assessee, a distiller of country liquor, carried on the
business of selling liquor to licensed whole salers. The assessee
'5tarted collecting from its customers from the year 1945 besides
the price of the liquor and the bottles in which the liquor was
sold a further charge called "empty bottles return security depo-
sit." The entire sum collected on this account in respect of any
one transaction would be refunded in full on return of 90 per
cent. of the bottles covered by it. The question for consideration
before this Court was whether t~ charge "security deposit"
amounted to a trading receipt assessable to Income Tax.
Held: The amounts paid to the assessee and described as
'security deposit' were trading receipts and therefore income of
the assessee assessable to tax. These amounts were paid as an
integral part of the commercial transaction of the sale of liquor
in bottles and represented an extra price charged for the bot-
tles. They were not security deposits as there was nothing to
secure, there being no right to the return of bottles. These ap-
peals are covered by the judgment of this Court in Punjab Dis-
tilling Industries Ltd. v. Commissioner of Income-tax.
Punjab Distilling Industries Ltd. v. Commissi07leT of Income·
tax [1959] Supp. 1 S.C.R. 693, relied on.
Davies v. Shell Company of China Ltd. (1951)32
T.C. 133
and K.M.S. Lakshmanier & Sons v. Commissioner of Income-
tax and Excess Profits Tax, Madras [1953] S.C.R. 1057, distin-
gW.•hed.
CivIL APPELLATE JuR1so1cnoN:
Civil Appeals Nos.
107-111 of 1963 .. Appeals by special leave from the judgment
and order dated March 23, 1961 of the Punjab High Court in
Income-tax Reference No. 14 of 1960.
R. Ganapathi Iyer and R.N. Saclzthey, for the appellant
(in all the appeals).
S.T. Desai, R.K. Gauba, B.P. Singh and Naunit Lal, for
the respondent (in all the appeals).
March 24. 1964. The Judgment of the Court was deli-
vered by
SARKAR, J.-We think.that these appeals are covered by
the judgment of this Court in Punjab Distilling Industries
.Ltd. v. Commissioner of Income-tax(') and the High . Court
(') [1959] Supp. 1 S.C.R. 693.
Sarkar, I.
1964
Oommiuioner of
lntome-t®;,
Punjab, Jammu
d1 Kashmir,
Himaclial
Pradesh and
Patiala
v.
Pun}ab Diatilling
lnduatries Ltd.
Sarkar, J.
448
SUPREME COURT REPORTS
[19641
was in error in its view that the ratio decidendi of that judg-
ment was not applicable to them. The earlier case had arisen
out of the assessment of the same assessee but it was concern-
ed with the years 1947-48 and 1948-49 while the present ap-
peals are concerned with the years 1946-47, 1949-50, 1950-51,
and 1951-52. The accounting period of the assessee was from
December 1, in one year to November 30 of the following
year. In both the cases the assessments were for income-tax,
excess profits tax and business profits tax, The point for con-
sideration in respect of all these taxes was, however, the same.
A full statement of the facts will be found in the Judg-
ment in the earlier case and it is unnecessary to state them at
length over again. The assessee who was a distiller and seller
of bottled country liquor, started collecting from its customers
from the year 1945 besides the price of the liquor and the
bottles in which the liquor was sold, a further charge called
"empty bottles return security deposit". This charge was made
at a certain rate per bottle delivered depending on its size on
the term that it woud be refunded as and when the bottles were
returned to the assessee and that the entire sum collected on
this account in respect of any one transaction would be refund-
ed in full on return of 90 per cent of the bottles covered by it.
The question is whether this charge is a trading receipt asses-
sable to tax. In the earlier case this Court held it to be asses-
sable. This Court then said (p. 687), "the trade consisted of sale
of bottled liquor and the consideration for the sale was con-
stituted by several amounts respectively called, the Price of the
liquor, the price of the bottles and the security deposit. Excerpt shown. Read the full judgment & AI analysis in Lexace.