COMMISSIONER OF INCOME TAX PUNJAB JAMMU AND KASHMIR AND HIMACHAL PRADESH PATIALA Vs. PUNJAB DISTILLING INDUSTRIES LTD

JUDGEMENT

(1.) We think that these appeals are covered by the judgment of this Court in Punjab distilling Industries Ltd. v. Commissioner of Income-tax reported in (1959) 1 Suppl. SCR 683 and the High Court was in error in its view that the ratio decidendi of that judgment was not applicable to them. The earlier case had arisen out of the assessment of the same assessee but it was concened with the years 1947-48 and 1948-49 while the present appeals 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 consideration in respect of all these taxes was, however the same.

(2.) A full statement of the facts will be found in the judgment 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 would 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 refunded in full on return of 90 per cent of the bottles covered by it. The question is whether this charge is a trading receipt assessable to tax. In the earlier case this Court held it to be assessable. This Court then said (p. 686 of (Supp) SCR) "the trade consisted of sale of bottled liquor and the consideration for the sale was constituted by several amounts respectively called, the price of the liquor, the price of the bottles and the security deposit. Unless all these sums were paid the appellant would not have sold the liquor. So the amount which was called security deposit was actually a part of the consideration for the sale and, therefore, part of the price of what was sold."

(3.) In respect of the years now under consideration the Income-tax Officer taxed these charges and on appeal the Appellate Assistant Commissioner confirmed the Income-tax Officer's view. On further appeal, however, the Income-tax Tribunal reversed the dicisions of the authorities below and held that these charges were loans and not trading receipts. It may be stated that all this had happened before the aforesaid earlier judgment was delivered. After the Tribunal's decision, the Commissioner of Income-tax obtained a reference of the following question to the Punjab High Court: