COMMISSIONER OF INCOME TAX Vs. PURE BEVERAGES LIMITED

JUDGEMENT

(1.) THE Tribunal has referred the following questions under S. 256(1) of the IT Act, 1961 ('the Act' for short) for our opinion :

(2.) THE aforesaid questions arise in the background of the facts that in the asst. year 1975 76 the assessee company claimed deduction of Rs. 65,000 for the electric cooler advances. It is the contention of the assessee that it had made arrangement with the United Commercial Bank to give advances to its dealers for purchase of electric coolers. This type of arrangement was required to be done in the year 1969. Prior to 1969, it is the case of the assessee company that it used to purchase and supply electric coolers to the retailers for keeping the beverages (Fanta and Cocacola). That practice was discontinued and the assessee company had pursuaded the dealers to purchase coolers for chilling the drinks. The dealers expressed their difficulties in investing Rs.

(3.) BEFORE the Tribunal, it was contended on behalf of the Department that it was not the assessee's business to deal in such electric coolers and it was the responsibility of the retailers to have coolers and, therefore, it cannot be said that the loss was in the course of assessee's business. Alternatively, it was contended that the expenditure was of a capital nature. Both these contentions were rejected by the Tribunal. It observed that the said expenditure was otherwise allowable and that the only question required to be considered by the ITO is whether the said expenditure is incurred for this purpose in the particular accounting year.